CHAPTER - I

1. INTRODUCTION

1.1. About the study

In our present day economy, finance is defined as the provision of money at

the time when it is required every enterprise, whether big, medium or small, needs
finance to carry on its operation and to achieve its targets. In fact, finance is so
indispensable today is rightly said to be the lifeblood of an enterprise without
adequate finance no enterprise can possibly accomplish its objectives.

Finance may be defined as the provision of money at the time when it is

required, finance refers to the management of flows of money through an
organization. It concerns with the application of skills in the manipulation, use and
control of money. Different authorities have interpreted the term finance
differently. However, there are three main approaches to finance.

(i) The first approach views finance as to providing of funds needed by a

business on most suitable terms. This approach confines finance to the
raising of funds and to the study of financial institutions and instruments
from where funds can be procured.

(ii) The second approach relates finance to cash.

(iii) The third approach views finance as being concerned with rising of funds
and their effective utilization.
1.2 About the organization

PAPER INDUSTRY

Introduction

Paper is an essential requirements of modern life. The amount of paper

consumed is one of the yardsticks of economic development. This is because the
demand for paper increases with the literacy rate of the country. Paper has many
other uses as well paper is fast replacing many commodities and is new being used
on a large scale as a packing material.

Paper is necessary to communicate with each other and to record certain

things or future reference. Initially rocks and trees did it after removing their bark
and making, a level surface. After that palm leaves were used for communication
purpose. Then metal sheets were made communication used to be done through
them by inscribing with sharp instruments. In olden days the kings used silken
cloth to write important documents.

ORIGIN OF PAPER

The word paper owes its origin of the Egypt word papyrus. The plants
(papyrus) which grew in abundance in the delta of Egypt. After processing the
leaves was used as a writing material. This method was followed by ancient
Egyptians.
The art of paper making

The art of paper making was first discovered in China, and its origin was
kept a secret in china for a long time.

Then the art of paper making was slowly traveled to west-ward and reached
mark and in West Asia.

First paper mill in the world

The establishment of first paper Mill in China was took place at Baghdad in
793 A.C. After 40 years paper mill was established on Hainault in France.. Then
the paper making entered England via Switzerland and Netherlands. In 1800 a
book was pullished and that book described some practical methods for
manufacture of paper from wood and vegetable pulp.

Paper industry in India

The art of paper making reached India through Arabs who initially learnt
from Chinese prisoners. In olden days hand-made paper industry existed
throughout the country from Kashmir to Kanyakumari.

The art of paper making was further improved upon as a small cottage
industry during the 10th Century. The traditional craftsman called Kagzis made
paper from gunny bags, rags, etc.

During the 18th century, when the first attempt to make paper was made in
1812 by setting up a manufacturing unit at Serampur in West Bengal. This attempt
did not prove successful. The real beginning was made in 1870 with the setting up
of the royal Bengal paper mills at Kolkatta.
Paper mills in Tamilnadu

The important centres having paper mills are located at Pugalur,

Pallipalayam, Cheranmaha Devi and Udumalaipet. Climatically, Tamil Nadu is a
suitable place for growing eta bamboo (a special variety of bamboo) which forms
one of the best raw materialss for paper pulp. The paper mills of Tamilnadu are
mostly based on hydro electric power.

Organization of the industry

The Indian paper industry can be categorized into the following six groups.

 The large integrated paper and paper board units based primarily an
conventional raw material like bamboo and wood. These units
generally have in-house pulping facilities.

 Small paper units based either exclusively on non-conventional raw

materials like bagasse, wheat and rice straws or in combination with
imported pulps.

 Small paper units based on waste paper.

 Paper units setup as a part of large integrated sugar complexes using

by- products like bagasse.

 The large integrated newsprint manufacturing units.

 The group of 400 handmade paper units producing paper using cotton
rogs, jute waste etc., These units are under the overall control of the
Khadi and Village Industries Commission (KVIC).

Development of the Newsprint Industry

 Till the 1980’s the only newsprint mill in India was the national Newsprint
and Paper Mills, a public sector undertaking. Despite the fact there was a
substantial gap between domestic production and requirement, which was being
met by imports, the private sector evinced little interest in taking up manufacture
of newsprint.

In view of the interest on the part of the private sector, said the recurring
outflow of foreign exchange on newsprint. It was centrally/ state governments who
came forward to take up the manufacture of newsprint. The first newsprint mill in
the country NEPA Mills was commissioned in 1956 – 57, the newsprint of Mysore
paper Mills and the Kerla Newsprint project of the Hindustan paper corporation
LTd. Were commissioned in 1981 and 1982 and the newsprint /paper project of
Tamil Nadu Newsprint and paper Ltd was commissioned in 1984 – 85.

Process of paper-making

The paper making process begins with the debarking of the logs. The logs
are then sent through a series of chippers that break them down into small pieces.
The tiny fragments are then pressure cooked with chemicals in a large vat called a
digestor to separate the fibres. At this point, recovered fibres one often added to the
pulp.

In the final stage of preparation, the wood pulp in cleaned, refined, bleached,
and run through series of beaters until it is a fine slush. Fillers and other additives
can be included, when the preparation in complete, the slush in pumped onto a fast
moving wire screen where it dries to become a continuous sheet of paper.

As a slush travels down the screen, excess water is drained leaving a crude
paper sheet called the ‘web’. The web in then squeezed between rollers to remove
remaining moisture and ensure uniform thickness and smoothness. Finally, the
web is run through a series of heated rollers to remove any residual water. The
finished paper is spooled on to ‘parant rolls’, which contains 30 feet wide and
weight 25 tons. The parent rolls are run through machine called a slitter. Which
cuts them into smaller, more manageable rolls.
1.2.1 COMPANY PROFILE

Tamil Nadu Newsprint and Papers Limited (TNPL) was established by

the Government of Tami Nadu during early eighties to produce Newsprint and
Printing & Writing Paper using bagasse, a sugarcane residue, as primary raw
material. The Company commenced production in the year 1984 with an initial
capacity of 90,000 tonnes per annum. Over the years, the production capacity has
been increased to 2,45,000 tonnes per annum and the Company has emerged as the
largest bagasse based Paper Mill in the world consuming about one million tones
of bagasse every year. The Company is in the process of implementing the Mill
Expansion Plan for increasing the capacity to 4,00,000 tonnes per annum from July
2010.

TNPL exports about 1/5th of its production to more than 30 countries.

Manufacturing of quality paper for the past two and half decades from bagasse is
an index of the company’s technological competence. A strong record in adopting
minimum impact best process technology, responsible waste management, reduced
pollution load and commitment to the corporate social responsibility make the
company one of the most environmentally compliant paper mills in the world.
Board of Directors

Thiru. Rajeev Ranjan, I.A.S Chairman

Thiru. T.K. Ramachandran, I.A.S Managing Director

Thiru. V. Narayanan Director

Thiru. A. Velliangiri Deputy Managing Director

Thiru. R .R . Bhandari Director

Thiru. R. Thiagarajan, I.A.S Director

Thiru. N. Kumaravelu Director

Thiru. Vikram Kapur I.A.S Director

Thiru. D. Krishnan Director

Audit Committee

Thiru. V. Narayanan Chairman of Audit Committee

Thiru. R .R . Bhandari Director

Thiru. N. Kumaravelu Director

Thiru. D.Krishnan Director

Awards

Felicitations

In pursuit of excellence, TNPL has won many accolades. This is in

recognition of its continuous innovation and constant improvement in all spheres
of its activity.

Best Paper Mill 2007-08

TNPL has bagged the prestigious "Paper Mill of the year 2007-08" award.
The award is given in recognition of the Indian paper mill which sets an example
in the areas of productivity, quality, human resource development, research &
development, developing export markets, community services etc. besides striving
to attain global competitiveness by the Indian Paper Manufacturers Association
(IPMA), New Delhi.

Earlier, the Company received the award for 2001-02 for TNPL's overall
performance, approaches for meeting social obligations, ensuring global
competitiveness and sustainable development & technology options.

Certificate of Excellence

TNPL bagged, the Certificate of Excellence in Productivity, Quality,

Innovation and Management from the "Institute of Economic Studies", New Delhi.
Environment Protection

Recognising TNPL's concern for the environment, the Rotary Club of

Chennai (East) and Earth Care, bestowed the "Dr M.S. Swaminathan Award for
Environment Protection 2002" on TNPL.

Export Award

TNPL has bagged the CAPEXIL "SPECIAL EXPORT AWARD" for the
10th consecutive year, for its outstanding export performance during the year
2007-08.The Government of India has given "TRADING HOUSE" status to TNPL
recognising the export performance.

TNPL has been bestowed the "Niryat Shree Award" by Federation of Indian
Export Organisation (FIEO) for the high degree of excellence it has demonstrated
in exports.

Excellence in Cost Management

TNPL has bagged ICWAI National Award for "Excellence in Cost

Management - 2008" (Second) under the category of Public Sector Manufacturing
- Organisation (Medium). The Award is given by the "Institute of Cost and Works
Accountants of India" (ICWAI) for the best costing practices in the companies.

Credit Rating by ICRA Ltd.

ICRA has assigned the following ratings for the Bank borrowings of TNPL
under BASEL II norms.

Long Term Loan - LAA

 Short Term Loan - A1+

Safety Award

TNPL was awarded the commendation award on "CII Leadership &

Excellence Award in Safety, Health & Environment (SH&E) year 2002".

Energy Award

TNPL bagged the National Energy Conservation Award for the year 2001
from Government of India in recognition of its outstanding achievement in energy
management.

Best Corporate Citizen

Loyola Institute of Business Administration (LIBA) Chennai adjudged

TNPL as the "Best Corporate Citizen 1999" and bestowed the Mother Theresa
Award by recognizing its Outstanding social commitment Exploring eco-
friendly technology , Professional Management ,Customer friendly and community
caring enterprise.

Innovative Project

The Confederation of Indian Industry (CII) recognised the Bio-methanation

plant of TNPL as "Innovative Project" and bestowed an award for Excellence in
Energy Management.

Green Rating
 The Centre for Science and Environment, New Delhi has awarded TNPL "3
Leaf - Green Rating" award in appreciation of Environmental Management
System.

Excellence in Corporate Governance

The Institute of Company Secretaries of India(ICSI), New Delhi has

conferred on TNPL, the "ICSI National Award for Excellence in Corporate
Governance" for the year 2004 in the Public Sector category. This is the first time
such a prestigious award in Corporate Governance has been given to a State Public
Sector Undertaking.

The Energy and Resources Institute (TERI) Corporate Award

Most recently, TNPL has been awarded second prize in the prestigious
"TERI Corporate Environmental Award 2008" in recognition of its various
initiatives taken in Corporate Environment Management.

Energy Award

TNPL bagged the National Energy Conservation Award for the year 2001
from Government of India in recognition of its outstanding achievement in energy
management.

Supply Chain Performance Excellence Award

TNPL has bagged the Supply Chain Performance Excellence Award for the
year 2009 from Indian Institute of Materials Management (IIMM), Chennai Branch
in recognition of the company's performance in the area of Inventory Optimisation.

Corporate Social Responsibility (CSR) Award

 TNPL has bagged the CSR award for 2007-2008 from Government of
Tamilnadu for the exemplary service rendered in rural and urban development.
Instituted by the Rural Development Department, the award is given to industrial
units, taking into account their service relating to CSR in the last five years.

2.5 PRODUCT PROFILE

TNPL offers high-quality surface sized and non-surface sized paper to suit
the needs of modern high speed printing machines. TNPL's cutting edge
technology backed by experienced professionals ensures quality products to
customers. TNPL’ s manufacturing processes are equipped with state-of-the-art
control systems to maintain critical quality parameters on line. The paper produced
by TNPL is eco- friendly as the pulp is manufactured out of renewable raw
material and is subjected to Elemental Chlorine Free (ECF) bleaching. As the
paper is acid free, it has a longer colour stability and enhanced permanency in
terms of strength characteristics.

TNPL caters to the requirements of multifunctional printing processes like

sheet-fed, web offset, and digital printers. The paper reels have uniform profile
with strength properties to cope even with high speed machines. TNPL
manufactures Printing and Writing Papers in substances ranging from 50 GSM to
90 GSM.

The broad product range of TNPL is given below:

 NEWSPRINT

 PRINTING & WRITING PAPER

  Cream wove

 Super printing

 Hi-tech Map litho

 Excel Map litho

 Ultra white Map litho

 Magazine Printing

 COPIER PAPER

 TNPL Copier

 TNPL OS 2000

Hitech Maplitho Plus is the super bright paper with 90% + brightness. This paper
is well received in local as well as overseas markets.

TNPL Maplitho is the general-purpose map litho with 85% brightness, a high
quality with great economy paper.

Ultra White Maplitho a premium product with logic of brightness (90 %+) versus
capacity was introduced in the year 2000-2001. This super bright surface sized
paper has been specially made for high quality multicolor printing applications.

Ultra White Maplitho is best suited for most corporate applications like
brochures, calendars, diaries, balance sheets, etc. This branded paper will soon be
made available in 60, 70 and 80 GSM in convenient packs of 250 sheets.
 TNPL Copier is well accepted for its combination of cost and quality. It is
marketed in attractive packing of 500 sheets in A4, A3 and Folio sizes.

OS 2000 (launched in 2000-01) has the right blend of characteristics to suit

the requirements of a modern office. The extra-bright, multipurpose office
stationery is suitable for a variety of high end corporate printing applications.

OS 2000 is an excellent choice for

 Laser printing

 Inkjet printing

 High speed digital copying

 Plain paper faxing

 General purpose office stationery

 Business letterheads

OS 2000 is marketed in A4 size in attractive multicolor packs of 250 sheets

each.
1.3. STATEMENT OF THE PROBLEM

The study emphasis on “TNPL - InventoryAnalysis”

Paper industry is one of the leading and dominative industries in India. It

faced various problems like scarcity of raw material, changes in government
policy, reduced demand due to paperless office and usage of electronic papers and
environmental threats. Amidst this circumstances how TNPL perform in a past
decade.

The trend can be change day to day by introducing the new players in the
business so that the company may face many problems regarding the financial
performance like shareholders wealth, profit margin.
1.4 Scope of the study

Inventory management is a simple concept-don’t have too much stock and

don’t have too little. Since there can be a substantial costs involved in staying
above and below the optimal range, careful inventory management can make a
huge difference in the right balance can be quite a complex and time consuming
task without the right technology.
It enables the business to meet or exceed expectations of the customers by
making the products readily available/ The scope of the study includes the ABC
Analysis of Raw Materials, work in progress and finished goods for four financial
years. This study provides insight to the management of high value items and also
brings attention of management towards movement of ‘A’ class items over period
of 4 years

 A financial performance engagement is an analysis of a company’s past and

current financial performance and compares such performance to similar
sized companies within its industry providing insight into a company’s
historical growth, profitability, debt capacity and overall liquidity. All such
factors can be important indicators of a company’s ultimate value. The
researcher analyze the past five-year history of financial statements as well
as financial information relative to the industry. The resercher calculate
financial ratios (liquidity, coverage, leverage and operating) for the
company, prepare common size financial statements, and analyze the
information on a trended and composite basis

 The trend analysis was used to Identify financial strengths such as sales,
profit and also to evaluate financial performance in relation to the industry
 performance as a whole, and acquire useful information concerning
competitors.

 Historical financial ratio analysis can be used as an effective preliminary

step in preparing a budget or in making a forecast.

 Evaluate past performance and set objectives for future performance. Also
provides an ongoing means to evaluate a company’s performance
financially.

 Evaluate a proposed sale, merger or acquisition. Determine the financial

strengths and weaknesses of the company and ultimately the transaction.

 A greater awareness of financial statements and their interrelationship can

lead to improved profitability or cash flow.
2. REVIEW OF LITERATURE

It provides a review of some notable theoretical and empirical works done

by various institutions and authors in evaluating the management of working
capital. A few studies of this type are given below. An evaluation of this kind
would yield valuable insight for evolving the efficiency of enterprise in the
management of working capital.

According to V.E.Ramamoorthy (1978) profitability and solvency and the

twin objectives of working capital management. Survival and growth of the
company thus depend on its ability to meet the two sets of profitability and
solvency. He also viewed that if liquid assets are adequate to pay off current
liabilities, a feeling of confidence in the financial strength of the company is
automatically created and its credit reputation is sustained.

The study by S.P. Vijaya Saradi (1980) attempted to highlights the

problems of working capital management based on the study of aggregate
financial data of public enterprises and as revealed by a few case studies of
individual units. The study pointed that the share of inventories in the total
current investment was the highest and increased.

N.Mishra (1980) in his study states that the management of

working capital occupies an important place in almost all the text books on
finance. However, the problems of working capital management during
inflation are yet to receive due attention from authors on financial management.
His study pointed out that the measures which a financial manager would be
required to tackle the problems relating to the management of working capital
during inflation includes accounting for price changes, controlling costs,
managing inventories, controlling new investments, improving turnover,
managing credit and collection, managing creditors, managing cash and
exploring other possibilities. The study conclude that under present inflationary
conditions management of working capital is perhaps more important than even
the management of profits and this problem requires greatest attempt and effort
from the financial manager.

According to John J.Hampton (1983) the trend analysis is the

functional area of finance that covers all the current accounts of the firm. It is
concerned with the adequacy of current assets as well as the level of risk posed
by current liabilities. He also viewed that the firm’s policies for managing its
working capital should be designed to achieve three goals such as adequate
liquidity, minimization of risk and contribute to maximizing firm value.

Shri. S.P. Ghesh Akwa (1983) the trend analysis willl appear in different forms
at different time over the entire cycle. The life span of these forms depends
upon the time taken by basic activities of business cycle e.g. production sale
and collection. The more time consuming activities will be and more the extent
to which these activities are unsynchronized, the more will be the demand for
financial performance
3 Research Methodology

3.1 OBJECTIVES OF THE STUDY

 To study about the ordering levels for the important components of

inventory.
 To understand and measure economic order quantity for the selected raw
material items.
 To analyze its inventory management methods with the help of ABC
analysis, VED analysis etc.
 To evaluate the inventory management practices of TNPL.
 To offer suitable suggestions for the improvement of inventory management
practices.
3.2 Data and sources of data

The data has been gathered through interaction and discussions with the
executives working in the division. Some important information has been gathered
through couple of unstructured interviews of executive. Annual reports and other
magazines published by the company are used for collecting the required
information.

3.3 Time period covered

This study covers a period of ________________. The accounting year

commenced from April to March.
 CHAPTER IV

4. ANALYSIS

This ratio is often a firm’s inventory turns over during the course of the year.
Because inventories are the least liquid form of assets, a high inventory turnover
ratio is generally positive. On the other hand, and usually high ratio compared to
the average for the industry could mean a business is losing sales because of
inadequate stock on hand.
If a firm’s business has significant assets tied upon inventory, tracking its
turnover is critical to successful planning. If inventory is turning too slowly, it
could indicate that is may be hampering the firm’s cash flow. Because this ratio
judge’s annual inventory turns, it is usually conducted once a year.

Economic order quantity:

During 2013-2014:
The firm requires below given units of material for manufacturing of papers.
The following are the details of their operation during 2013-2014.

PARTICULARS
Quaintly 28,889Qty(mt)
Ordering cost per order Rs. 2000
Carrying cost 10%
Purchase price per unit 400
1. Calculation of EOQ:-
Total units required (A) =28889
The ordering cost per order (O) = Rs.2000
Carrying cost per unit (C) = 10%
(i.e.) 10% of Rs.400 =Rs.40
EOQ =⌐√2AO/C
= 2*28889* 2000/40
= Rs.1699.67
2. Number of orders for the year = A/EOQ
=2889/1699.67
=16.99~17orders
3. Total annual cost = carrying cost + ordering cost
= 1445000+ 34000
= Rs.1479000
Carrying cost = order size * average inventory
Order size = A/no of orders
= 28889/17
= 1699.67
Average inventory = order size/2
=1700/2
= Rs.850
Carrying cost = 1700*S850
= Rs.1445000
Ordering cost = cost per order * no of orders
= 2000*17
= Rs.34000
STOCK LEVELS
During 2013-2014
The company requires 28889 units of billets/blooms to manufacture of
papers for the year 2013-14.EOQ is 1700 units. The company makes safety stock
equal to 30 day requirement and the normal lead time is 10-20 days. The company
works for 300days in a year.

a. Reorder level = lead time*Average usage+ safety stock

= (10*96.29) + 2888.9
= 3851.9
Safety stock = usage * period of safety stock/ total working days in a year
= 28889*30/300
= 2888.9

Average usage = usage/total working days in a year

= 28889/300
= 96.29
b. Minimum stock level = re-order level –(Average usage * Average lead time)
= 3851.9 – (96.29* 10+20/2)
= 2408
c. Maximum stock level = re-order level + re-ordering quantity- (Minimum usage
* minimum lead time)
= 3851.9+1700-(96.29*10)
= 5551.9-962.9
 = 4589
d. Danger level = Average usage * Maximum re-order period for emergency
purchases
= 96.29*20
= 1925.8
e. Average stock level = ½(Minimum stock level + Maximum stock level)
= 2408+4589/2
= 3496

During 2014-2015
The company requires 123596 units of billets/blooms to manufacture of
papers for the year 2007-08.EOQ is 3335 units. The company makes safety stock
equal to 30 day requirement and the normal lead time is 10-20 days. The company
works for 300days in a year.
a. Reorder level = lead time*Average usage+ safety stock
= (10*412) + 12360
= 16480
•Safety stock = usage * period of safety stock/ total working days in a year
= 123596*30/300
= 12360
• Average usage = usage/total working days in a year
= 123596/300
= 412
b. Minimum stock level = re-order level – (Average usage * Average lead time)
= 16480 – (412* 10+20/2)
= 10300
c. Maximum stock level = re-order level + re-ordering quantity-
 (Minimum usage * minimum lead time)
= 16480+3335-(412*10)
= 19815-4120
= 15695
d. Danger level = Average usage * Maximum re-order period for emergency
purchases
= 412*20
= 8240

e. Average stock level = ½(Minimum stock level + Maximum stock level)

= 10300+15695/2
= 13000

During 2015-2016
The company requires 106066 units of billets/blooms to manufacture of
papers for the year 2008-09.EOQ is 3257 units. The company makes safety stock
equal to 30 day requirement and the normal lead time is 10-20 days. The company
works for 300days in a year.
a. Reorder level = lead time*Average usage + safety stock
= (10*354) + 10606.6
= 141476
• Safety stock = usage * period of safety stock/ total working days in a year
= 106066*30/300
= 10606.6
•Average usage = usage/total working days in a year
= 106066/300
= 354
b. Minimum stock level = re-order level –(Average usage * Average lead time)
= 14147 – (354* 10+20/2)
= 8837
c. Maximum stock level = re-order level + re-ordering quantity- (Minimum usage
* minimum lead time)
= 14147+3257-(354*10)
= 13864
d. Danger level = Average usage * Maximum re-order period for emergency
purchases
= 354*20
= 708

e. Average stock level = ½(Minimum stock level + Maximum stock level)

= 8837+13864/2
= 11350

During 2016-2017
The company requires 184661 units manufacture of papers for the year
2016-17. EOQ is 6155 units. The company makes safety stock equal to 30 day
requirement and the normal lead time is 10-20 days. The company works for
300days in a year.
a. Reorder level = lead time*Average usage+ safetystock
= (10*615.53) + 18466.1
= 24621.4
•Safety stock = usage * period of safety stock/ total working days in a year
= 184661*30/300
 = 18466.1
•Average usage = usage/total working days in a year
= 184661/300
= 615.53

b. Minimum stock level = re-order level –(Average usage * Average lead time)
= 24621.4 – (615.53* 10+20/2)
= 15389

c. Maximum stock level = re-order level + re-ordering quantity-

(Minimum usage * minimum lead time)
= 24621.4+6155- (615.53*10)
= 24521.1

d. Danger level = Average usage*Maximum re-order period for emergency

Purchases
= 615.53*20
= 12310.6

e. Average stock level = ½(Minimum stock level + Maximum stock level)

= 15389+24521.1/2
= 27649.55
FINDINGS & SUGGESTIONS
 The company is having good sales for their products during all the years of
the study.
 The inventory turnover ratio is on a declining trend year after year in the
period of the study.
 It indicates inefficiency of management in turning of their inventory into
sales.
 The company should adopt sophisticated techniques manage its inventory in
a better manner.
 The EOQ calculated is suggesting that the company should obtain its
inventory requirements by placing orders frequently to its suppliers rather
than one time replenishment.
 Company should take measures for maintenance of proper stores and spares
so as to avoid the frequent breakdown of the machinery.
 There is a need to develop good communication system between various
departments like marketing, planning, procurement, and production and
distributions functions.
 The company should follows Just-in-Time technique, their by it can do away
with waiting time for a receipt of materials.
CONCLUSION
Inventory management has to do with keeping accurate records of finished
goods that are ready for shipment. This often means posting the production of
newly completed goods to the inventory totals as well as subtracting the most
recent shipments of finished goods to buyers. When the company has a return
policy in place, there is usually a sub-category contained in the finished goods
inventory to account for any returned goods that are reclassified or second grade
quality.
Accurately maintaining figures on the finished goods inventory makes it
possible to quickly convey information to sales personnel as to what is available
and ready for shipment at any given time. Inventory management is important for
keeping costs down, while meeting regulation. Supply and demand is a delicate
balance, and inventory management hopes to ensure that the balance is
undisturbed. Highly trained Inventory management and high-quality software will
help make Inventory management a success. The ROI of Inventory management
will be seen in the forms of increased revenue and profits, positive employee
atmosphere, and on overall increase of customer satisfaction.
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