INVENTORY MANAGEMENT IN SHIPBUILDING COMPANY

PRESENTED BY

AKSHAY MANJAREKAR [16 - A]

Company Profile
Mazagon Dock Ltd. situated at Dock Yard Road. It is one of the leading shipbuilding and offshore fabrication yards in India.

It was established in the 18th century .

It was incorporated as a Public Limited Company in 1934. Taken over by government in 1960 & is now a PSU of the Government of India.

Companys Activities
Involved in Building Commercial projects Offshore platforms Commercial vessels Naval projects

Warships Submarines

Defining Inventory
It is an idle stock of physical goods that contain economic value, and are held in various forms by an organization in its custody awaiting packing, processing, transformation, use or sale in a future point of time.

Types Inventory
Raw materials inventory Work in process inventory Finished goods inventory

Inventory Management
To maintain inventory at appropriate level to avoid excessive or shortage of inventory because both the cases are undesirable for business. Other Objectives: To keep investment in inventory at optimum level. To minimize carrying cost of inventory. To minimize inventory ordering costs.

Costs of Holding Inventories

1. Material Cost: This include the cost of purchasing the goods, transportation and handling charges less any discount allowed by the supplier of goods. 2. Ordering Cost: This includes the variables cost associated with placing an order for the goods. The fewer the orders, the lower will be the ordering costs for the firm. 3. Carrying Cost: This includes the expenses for storing and handling the goods. It comprises storage costs, insurance costs, spoilage costs, cost of funds tied up in inventories etc.

Techniques of Inventory Control

Economic Order Quantity Technique (EOQ) ABC system of control

Economic Order Quantity Technique

It is that size of the order which gives maximum economy in purchasing any material and ultimately contributes towards maintaining the materials at the optimum level and at the minimum cost.
Economic order quantity = A = Demand for the year Cp = Cost to place a single order Ch = Cost to hold one unit inventory for a year

ABC system of control

The A group will include more expensive items with high investment and it will require more intensive control. The B group will consist of the items accounting for the next largest investment. The C group will consist of a large number of items of inventory accounting for small investment. CATEGORY NO. OF ITEMS VALUE

A
B C

5%
25% 70%

70%
20% 10%

Data Analysis
ITEM MAXIMUM STOCK LEVEL ORDER LEVEL SAFETY STOCK LEVEL

ARGON
CYINDERS STEEL SHEETS PAINTS

45

20

10

150 100

60 45

30 20

STEEL PIPES
PETROL/DIESEL (LITRES)

200
5000

90
1800

50
1000

Data Analysis

Data Analysis

Data Analysis

Data Analysis

Data Analysis

Conclusion
Proper Inventory management system is followed using SAP. The firm follows inventory control techniques such as A-B-C technique EOQ Analysis which is quite effective. Storage facility in Mazagon Dock Ltd. is quite large and up to the mark.

Findings
Mazagon Dock Ltd. Faces the problem of competition from private companies. There is no proper sequence & acknowledgement board for certain items in store department. It is not good when external auditing held in company. Organization has no record of wastage items. It is not good for operating profit of the company.

Recommendations
The new recruits and less experienced employees should be given proper training on related SAP modules. Proper work division should be done so that employee knows what work is assigned to them. Sometimes during my training period I noticed that in the goods receipt process because of lack of coordination there confusion as to who do it. The paper work should be reduced and computerization should be increased for more successful working.

References
Website en.wikipedia.org/wiki/MDL www.mazagondock.gov.in/ www.google.com

Books Inventory manual - stores (Mazagon dock Ltd.) Essentials of inventory management - Max Muller