INVENTORY MANAGEMENT TECHNIQUE OF

MAHINDRA CIE AUTOMOTIVE LTD

PROJECT REPORT

Submitted by
Sarath Suresh

11011042

Under the guidance of

ASST PROF JITHIN JOHN

in partial fulfilment of the requirements for the

award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

of
A P J Abdul Kalam Technological University

MOUNT ZION SCHOOL OF BUSINESS MANAGEMENT

KADAMANITTA

JANUARY 2020
INVENTORY MANAGEMENT TECHNIQUE OF
MAHINDRA CIE AUTOMOTIVE LTD

PROJECT REPORT

Submitted by
Sarath Suresh

11011042

Under the guidance of

ASST PROF JITHIN JOHN

in partial fulfilment of the requirements for the

award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

of
A P J Abdul Kalam Technological University

MOUNT ZION SCHOOL OF BUSINESS MANAGEMENT

KADAMANITTA

JANUARY 2020
 DECLARATION

I undersigned, hereby declare that the project titled INVENTORY MANAGEMENT TECHNIQUE OF
MAHINDRA CIE AUTOMOTIVE LTD submitted in partial fulfilment for the award of Degree of Master
of Business Administration of A P J Abdul Kalam Technological University is a bonafide record of work
done by me under the guidance of Asst Prof. Jithin John, Mount Zion School of Business Management,
Kadamanitta. This report has not previously formed the basis for the award of any degree, diploma, or
similar title of any University.
I honestly express that the formation is not collected with any commercial intention and motivation. The
sole motive is to Mahindra CIE Auto.Ltd, the INVENTORY MANAGEMENT TECHNIQUE practice and
prepares fieldwork. Thus the sole object of collecting information is of academic purpose and I sure that
collected information is of academic purpose shall be only for fieldwork report and nothing else.

Date: Sarath Suresh

 MOUNT ZION SCHOOL OF BUSINESS MANAGEMENT
KADAMANITTA

CERTIFICATE

This is to certify that the report titled “INVENTORY MANAGEMENT TECHNIQUE OF MAHINDRA
CIE AUTOMOTIVE LTD” being submitted by Sarath Suresh, 11011042, in partial fulfilment of the
requirements for the award of the Degree of Master of Business Administration, is a bonafide record of the
project work done by Sarath Suresh of Mount Zion School of Business management, Kadamanitta

Jithin John Prof. Dr. T.C Varghese

Assistant Professor Director
 Acknowledgements
(This is only a sample)

Through this acknowledgement I express my sincere gratitude towards all those people who helped me in
this project, which has been a learning experience.

This space wouldn’t be enough to extend my warm gratitude towards my project guide Assistant Professor
Jithin John for his efforts in coordinating with my work and guiding in right direction.

I escalate a heartfelt regards to our Institution Director Prof. Dr. T.C Varghese for giving me the essential
hand in concluding this work.

It would be injustice to proceed without acknowledging those vital supports I received from my beloved
classmates and friends, without whom I would have been half done.

I also use this space to offer my sincere love to my parents and all others who had been there, helping me
walk through this work.

Sarath Suresh
 List of Tables
Table Title of the Table Page
No. No.
2.1
2.2
2.3
2.4
4.1
5.1

List of Figures
Fig. No. Title of the Figure Page
No.
2.1
2.2
2.3
2.4
4.1
5.1

List of Symbols/ Abbreviations

Symbol/ Explanation Page
Abbreviation No.
 TABLE OF CONTENTS
Sl No. Topics Page No
1 INTRODUCTION
1.1 Background of the study
1.2 Need and Significance of the study
1.3 Statement of problem
1.4 Objectives of the study
1.5 Scope of the study
1.6 Limitations of the study
1.7 Organization of the report
2 LITERATURE REVIEW
2.1 (Suitable headings based on reviews)
2.2
2.3
2.4
3 THEORETICAL FRAMEWORK (if any)
3.1 (Suitable headings)
3.2
3.3
3.4
4 RESEARCH METHODOLOGY
4.1 Objectives
4.2 Hypothesis
4.3 Research Design
4.4 Sources of Data
4.5 Primary and Secondary data
4.6 Population
4.7 Sample Design
4,8 Sampling method
4.9 Method of data collection
4.10 Drafting a questionnaire
4.11 Pilot survey (Reliability and Validity of the instrument)
4.12 Data analysis techniques
5 DATA ANALYSIS
5.1 (suitable headings may be provided)
5.2 (Note: If the analysis is lengthy, a new chapter with appropriate
title can be added)

5.3
5.4
6 FINDINGS (DISCUSSION)
6.1
6.2
6.3
6.4
7 RECOMMENDATIONS
PROPOSED MODELS (if any)
7.1
7.2
8 CONCLUSIONS
8.1
8.2
REFERENCES
APPENDICES
APPENDIX A
APPENDIX B
APPENDIX C
LIST OF PAPERS PUBLISHED ( if any)
 1. INTRODUCTION

INVENTORY MANAGEMENT

Inventory management and supplychain management are the backbone of any business operations.
With the development of technology and availability of process driven software applications,
inventory management has undergone revolutionary changes.In any business or organization, all
functions are interlinked and connected to each other and are often overlapping. Some key aspects
like supply chain management, logistics and inventory form the backbone of the business delivery
function. Therefore these functions are extremely important to marketing managers as well as
finance controllers. Inventory management is a very important function that determines the health
of the supply chain as well as the impacts the financial health of the balance sheet. Every
organization constantly strives to maintain optimum inventory to be able to meet its requirements
and avoid over or under inventory that can impact the financial figures. Inventory is always
dynamic. Inventory management requires constant and careful evaluation of external and internal
factors and control through planning and review. Most of the organizations have a separate
department or job function called inventory planners who continuously monitor, control and
review inventory and interface with production, procurement and finance departments.
A term inventory refers to the stock file of the products a firm is offering for sale and the
components that make up the product. In other words, inventory is composed of assets that will be
showed in future in the normal course of the business operations. The assets which firms store as
inventory in anticipation of need are:

Raw materials
Work in process (Semi Finished goods)
Finished goods

The raw material inventory contains item that are purchased by the firm from other and are
converted into finished goods through the manufacturing (production) process. They are an
important input of the final product. The working process inventory consists of items currently
being used in the production process.

They are normally semi finished goods that are at various stages of production in a multi stage
production process. A finished goods represented final or completed products which are available
for sale .The inventory of such goods consists of items that have been produced but are yet be sold.

Inventory, as a current asset, differs from other current assets because only financial managers are
not involved. Rather all the functional areas, finance, marketing, production, and purchasing are
involved. The views concerning the appropriate level of inventory would differ among the
different functional areas.
1.1 BACKGROUND OF THE PROBLEM

Manufacturing products began as a process of filling orders one at a time. A

customer wanting a product either made it or went to a skilled craftsperson to deliver the
product requested. Manufacturers looked for alternate methods of production to improve
cost and availability of products. Several manufacturers worked on the idea of producing
more than one product at a time, or mass production. Mass production relies on building
products, in most instances, to address a forecast. Producing items based on a forecast
versus actual orders requires purchasing and making materials ahead of sales in many
instances. The unsold material creates inventory, which includes
(a) raw materials,
(b) raw materials partly processed into semifinished goods, and
(c) assembled finished products

1.2 NEED TO HOLD INVENTORIES

Martin and miller identified three general motives for holding inventories

 TRANSACTION MOTIVE:
This refers to the need of maintaining inventory to facilitate smooth production and sales
operations.

 PRECAUTIONARY MOTIVE:
Precautionary motive for holding inventory is to provide a safeguard when then actual level
of activity is differ than anticipated. This inventory serves when there is a unpredictable changes
in the demand and supply forces.

 SPECULATIVE MOTIVE:
This motive influences the decision to increase or decrease the levels of inventory to take the
advantage of price fluctuations.

BASIC REASONS TO KEEPING AN INVENTORY:

There are three basic reasons for keeping an inventory:

1. TIME:
The time lags present in the supply chain, from supplier to user at every stage, requires that you
maintain certain amount of inventory to use in this “lead time”.

2. UNCERTAINTY:
Inventories are maintained as buffers to meet uncertainties in demand, supply and movement of
goods.
 3. ECONOMIES OF SCALE:
Ideal condition of “one unit at a time at a place where user needs it, when he needs it “principle
tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings.

1.3 STATEMENT OF PROBLEM

The purpose for this qualitative case study was exploring strategies that managers
use to optimize and control inventory levels in manufacturing processes.

1.4 OBJECTIVES OF THE STUDY

1) To Study the Inventory Management Techniques.

2) To Study the procedure of Implementation of ABC Analysis.

3) To Study the Different types of Inventory Control techniques.

The main objective behind this project is to study the approach of Integrated Material Management
for better Inventory Control; this in turn affects overall working capital efficiency in relation to
Mahindra CIE Auto.Ltd. This can be achieved by

a) Elimination of Non-Value-added activities.

b) Bench marking the best practices.
c) Converting Fixed cost as Variable cost
d) Import Raw Material substitution
e) Better Inventory control
f) Alternate Material without affecting the quality & features.
g) Negotiation with Vendor/ Service providers.

1.5 SCOPE OF THE STUDY:

Due to lack of facilities provided by organization, people are not working efficiently and it has
indirect affect on their performance and outcome, so
1) Assessing their needs,
2) Working conditions,
3) Providing the development opportunities,
4) Helping skill development through training interventions and planning. And through this the
employee satisfaction level can be increases & productivity also increases.
1.6 LIMITATIONS OF THE STUDY:

1) Work responsibility & daily works.

2) Process of planning & issue, ABC Analysis, Packing supplier wise rejection.
3) Just In Time.
4) Wastes.
5) Inventory Value of Plant & stores.
6) Commodity wise inventory value.
7) Types of Inventory.
8) The study of receiving process of material, issue process, dispatch process inventory control the
process for all items.
9) All the information regarding material was not disclosed due to Company policy.
 2. LITERATURE REVIEW

Inventory management is considered as major concerns of every organization. In

inventory holding, many steps are taken by managers that result a cost involved in this row. This
cost may not be constant in nature during time horizon in which perishable stock is held. To
investigate on such a case, Taygi (2014) proposes an optimization of inventory model where
items deteriorate in stock conditions.
In this paper, based on a real-world case study for a municipal district in Tehran, a multi
objective mathematical model is developed for the location-distribution problem. The proposed
model considers the role of demand in an urban area, which might be affected by neighbor
wards. Integrating decision making process for a disaster helps to improve a better relief
operation during response phase of disaster management cycle. In the proposed approach,
Esmaeili (2014) says, a proactive damage estimation method is used to estimate demands for the
district based on worst-case scenario of earthquake in Tehran
This paper deals with the application of six most potential preference ranking methods
for selecting the best FMS for a given manufacturing organization. Chatterjeea and Chakraborty
(2014) say, it is observed that although the performances of these six methods are almost similar,
ORESTE method slightly outperforms theothers.
It is particularly applicable to those situations where the decision maker is unable to
provide crisp evaluation data and attribute weight. Ulrich and Pearson (1998)introduce
approaches for the integration of the Quality Function Deployment method as well as feedback
with system components for computer aided product development. The integration is based on
information models representing product, process and factory information. Pastore and Martin
(2012) study was to examine students’ perceptions of designing and
developing mobile based instructions by interviewing and surveying of graduate students.
Results of the survey and qualitative data analysis indicated that usability was a key issue on the
mobile device. Users enjoyed quick access, good organization, user control, single column
layouts, and large links/buttons. These findings contribute to the literature base on the design and
development of mobile based instruction.
Norman E (2012) discusses, while existing factors identified in the literature were found to be
present in the context of today’s design program, the critical perspective of this study
recontextualized these factors, along with the identification of new or underrepresented factors.
Taking on the perspective of a student’s experience of pedagogy foregrounds issues of
uncertainty and ambiguity, highlighting the social interactions between fellow students, and the
role of communication and individual effort in learning to think in a more designerly way.
A design literature discusses the role of the studio and its related pedagogy in the
development of design thinking. Scholars in a variety of design disciplines pose a number of
factors that potentially affect this development process, but a full understanding of these factors
as experienced from a critical pedagogy or student perspective is lacking. In this study, Gray
(2013) explains the experiences of six first-year design students were examined as they evolved
in their conceptions of design.
Agnelo and Fernandes(2012) aims to analyze, through a case study called Researching
the Value of Project Management, the relations of the constructs of this conceptual model and to
show how they interfere with the organizational values, possibly in programs conducted by a
government agency, from the perspective of the senior management directly involved.
The term emerging technology (ET) has been frequently used by IT professionals and
academics. However, little research has shed light on this term and specified its characteristics
and what it means. Halaweh M (2013) aims to define and conceptualize the characteristics of ET.
These characteristics are uncertainty, network effect, unseen social and ethical concerns, cost,
limitation to particular countries, and a lack of investigation and research. Today’s industry
projects and extensive literature suggest the importance of customer integration for companies’
innovation success. In this exploratory study, Strub and et al (2013),
build on established customer role concepts to study the status quo of customer integration in
industry, as well as reservations against the roles and negative experiences from customer
integration projects. The study reveals a gap between reservations and actual negative
experiences in losing know-how, as well as a positive effect of experience in customer
integration on perceived benefits for the company.
Antonelli and et al (2013)aims to identify Information Technology benefits in individual
work. With technologies fully implemented, greater satisfaction was observed for all constructs
of the survey, with statistically significant differences. When comparing age, it was found that
younger users were more satisfied with the benefits of technology. Concerning the number of
employees, small business users were less satisfied with Information Technology.
Alderete (2013) presents an econometric model to determine whether an SME (Small and Medium
Sized Enterprise)’s probability of outsourcing depends on their levels of innovation and
information and communication technology use. The model predicts that the level of innovation
of an SME will significantly influence its probability of outsourcing. Besides, it stresses the
negative incidence of the information and communication technologies (ICT) access on the
outsourcing decision.
Didonet and Díaz, (2012) explains, the supply chain management studies have verified
that integration and collaboration in the supply chain can provide important benefits to the
companies involved. Among these benefits are added value, the creation of efficiencies and
client, which are represented by the reduction in inventories, improvements in service delivery
and quality and shorter product development cycles.
Zabala (2012) investigates whether decisions considered as common in new product
development literature are also valid in a region characterized by traditional industries. The
author aims to link the theoretical and empirical fields in the context of new product
development and product innovation management.
Leber (2014) reports the results of a survey on the use of innovation management
techniques with the potential to improve effectiveness of new product development, and
customer satisfaction. Failure mode and effects analysis was found as the most applied IMT in
Slovene firms with the highest perceived utility potential to reduce development costs and
improve customer satisfaction.
Nezhad (2013) employed the decision on belief (DOB) approach for fault detection in
univariate process control. The concept of DOB and its application in decision making problems
were introduced, and then methodology of modeling fault detection in statistical process control
by DOB approach was discussed.
Dou (2014) paper is committed to design a logistics industry development policy model
based on system dynamic to simulate the policy measures which promote region economic and
logistics efficiency. The interaction between logistic industry development policy and economy
needs to be investigated and the influence degree of logistic efficiency affected by industry
policy needs to be identified too.
Jha (2012)presents an overview of new approaches in rapid product development in
production networks from design points of view. Due to evolution of production networks, it has
become possible to obtain the mass production within a key short time, using emerging
technology that affect the speed and efficiency of product development.
Cheng (2013) proposes a multi-objective production planning optimization model based
on the point of view of the integration of production planning and control, in order to achieve
optimization and control of enterprise manufacturing management.
Babazadeh(2012) studies a multi-period, multi echelon and multi-product integrated
forward-reverse logistics network under uncertainty. First, an efficient complex mixed-integer
linear programming (MILP) model and then stochastic counterpart of the proposed MILP model.
Internal rate of return (IROR) method as a decision making tool receives widespread use
and acceptance in economic analysis. Ahmad and Khaldoun (2011) research aims at presenting a
realistic approach for resolving the multiple rate of return (MROR) problem. The key advantage
of the proposed approach is that it reflects real life opportunities and its decisions are consistent
with worth methods as well as with other approaches.
Mandahawiand et al (2012) presents a process improvement study applied at a local
paper manufacturing company based on customized Lean Six Sigma methodologies. The
DMAIC (Define, Measure, Analyze, Improve, and Control) project management methodology
and various lean tools are utilized to streamline processes and enhance productivity.
Heskett(2009) examines the influence of major economic theories in shaping views of
what constitutes value as created by design system. Its focus on markets and prices as set by
market forces are believed to solve all problems if left free from government interference. The
implosion of this system and its emphasis on unrestricted individualism is a crisis of theory as
well as practice.
This paper, Kim and Kang (2008), identifies the critical factors of cross-functional
cooperation for design teams in new product development. The empirical research available
defines eleven critical success factors for the achievement of effective cross-functional teamwork
with design teams in NPD and provides evidence of the positive relationships of these factors
with cooperative work performance.
Vendanand Sakthidhasan (2010) addresses the application of lean manufacturing
concepts to the continuous production sector with a focus on the motor manufacturing industry.
The goal of this research is to investigate how lean manufacturing tools can be adapted from the
discrete to the continuous manufacturing environment.
Davis (2008) identifies the pressures on knowledge generation exerted by the shift from a
mechanical, object centered paradigm for design practice to one characterized by systems that:
evolve and behave organically; transfer control from designers to users or participants;
emphasize the importance of community; acknowledge media convergence; and require work by
interdisciplinary teams to address the complexity of contemporary problems.
Desmet and Hekkert (2007)say that surprisingly little is reported on the pragmatic influence of
project stakeholders on industrial designers’ selection of product materials and
manufacturing processes. This paper reports on a descriptive scoping study that revealed these
influences as critical in making effective selection decisions. Using interview and case study
methods, the study elicited the professional practices of industrial designers.
This paper, Thomas Tieke(2009), we propose a framework for understanding congruence
effects in design based on recent studies addressing processing fluency. Based on these findings,
the authors propose that incongruence thwarts impression formation of product and brand by
inducing ambiguity, thereby negatively affecting attitude formation.
Berrah and François (2012) paper deals with the wide issue of overall performance
expression of a system made of interacting entities. Supply chain being a network of
interconnected business entities, it is proposed to consider it as a system of systems. Because
system behavior depends on process dynamics, the performance of any company of the SC
highly depends on the performance of its processes.
Finger S and Dixon (1990) says that formal design research seems to have begun in the 1960’s,
with so-called “first generation” models used to attempt to find generic optimization
routines that could be applied to any type of problem. The architectural models tended to include
cognitive processes, while engineering models attempted to define stages in the design process.
Forlizzi (2008) introduces Product Ecology as a theoretical design framework to describe
how products evoke social behavior, to provide a roadmap for choosing appropriate qualitative
research methods and to extend design culture within by allowing for flexible, design-centered
research planning and opportunity-seeking. This product-centered framework is illustrated as a
method for selecting a set of design research methods and for working with other research
approaches that study people in naturalistic settings.
Jerrard and et al (2008)research elicited the risks and risk perceptions involved in
designing and developing new products. Design practices will be able to identify with common
practices and utilize techniques in the research in order to recognize risk in design processes.
Stolterman(2008) based on a comparison between the notion of complexity in science and
in design, it is argued that science is not the best place to look for approaches and methods on
how to approach design complexity. Instead, the case is made that any attempt by interaction
design research to produce outcomes aimed at supporting design practice must be grounded in a
fundamental understanding of the nature of design practice
 3. THEORETICAL FRAMEWORK

MEANING OF INVENTORY

Inventory is a list for goods and materials, or those goods and materials themselves, held available
in stock by a business. It is also used for a list of the contents of a household and for a list for
testamentary purpose of the possessions of someone who has died. In accounting inventory is
considered an asset

TYPES OF INVENTORIES

Inventories play a major role in a business or depending on nature of the businesses. The
inventories may be classified as under.

(I) Raw Materials

Materials and components scheduled for use in making a product. These are the basic
inputs, which are converted into finished products through manufacturing process. Raw material
inventories are those units, which have been purchased and stored for future production.

(II) Work in process / Progress

Materials and components that have begun their transformation to finished goods.
Materials issued to the stop floor, which have not yet become finished products they are value
added materials to the extent of labor cost incurred.

(III) Finished Goods

A finished goods is a completed part that is ready for a customer order. These goods have
been inspected and have passed final inspection requirements so that they can be transferred out
of work-in-process and into finished goods inventory. From this point, finished goods can be sold
directly to their final user, sold to retailers, sold to wholesalers, sent to distribution centers, or held
in anticipation of a customer order.

STORES & SPARES

The level of four kind of inventory depends upon the nature of the business. Supplies
include office and cleaning materials like soap, brooms, oil, light, blubs etc. these materials do
not directly enter production, but are necessary for production process.
INVENTORY MANAGEMENT

Inventory management is primarily about specifying the size and placement of stocked goods.
Inventory management is required at differ locations within a facility or within multiple locations
of a supply network to protect the regular and planned course of production against the random
disturbance of running out of materials or goods. The scope of inventory management also
concerns the fine lines between replenishment lead time, carrying costs of inventory, asset
management, inventory forecasting, inventory valuation, inventory visibility, feature inventory
price forecasting, physical inventory, available physical space for inventory, quality management,
replenishment, returns and defective goods and demand forecast.

OPERATING CYCLE OF INVENTORY MANAGEMENT

Operating Cycle is the time duration to convert sales after the conversion of resources into
invention, into sales there is difference between current assets and fixed assets. A firm required
many
years to recover initial invests in fixed assets such plant and machinery or land buildings or
furniture
and fixtures etc. On the contrary, investment in current assets such as inventory and books debts
are
realized during the firms operating cycle, which in usually less than a year.

The operation cycle can be said to be the heart of the working capital. The need for
working capital or current assets cannot be over emphasized as already observed. The main
motive of many business firms is to achieve maximum profits, which can be earned depending
upon the magnitude of the sales among other things. However, sales do not convert in to cash
instantly. There is invariable time lag between sale of goods and receipts of cash. Therefore the
need of working capital in the form of current assets to deal with the problem arising good sold.
Therefore, sufficient working capital requires sustaining sales activity. Technically this is refer to
as the operating the cash cycle. The continuous flow form cash to supplies to inventory to
accounts receivable and back into cash what is called operating cycle.
The operating cycle of manufacturing company has three phases namely

1. Acquisition of resources
2. Manufacturing products
3. Sale of product

Acquisition of resources:-

In the phase first operating cycle, include phases of raw materials, fuel & power etc., which
are totally required or manufacturing product

Manufacturing products:-

In the phase 2 of the operating cycle includes conversion of raw material in to work-
inprogress and the work in progress is converted into finished goods.

Sale of product:-

In the phase 3 of the operating cycle may sale the product either for credit is made to
customers.

Costs involved in Inventory

Every firms maintains inventory depending upon requirement and other features of firm for
holding such inventory some cost will be incurred there are as follows .

Carrying Cost

This is the cost incurred in keeping or maintaining an inventory of one unit of raw materials,
work-in-process or finished goods. Here there are two basic cost involved.

Cost of Storage

It includes cost of storing one unit or raw materials by the firm. This cost may be for the storage
of materials. Like rent of spaces occupies by stock, stock for security, cost of infrastructure, cost
of insurance, and cost of pilferage, warehousing costs, handling cost etc.

Cost of Financing

This cost includes the cost of funds invested in the inventories. It includes the required rate of
return on the investments in inventory in addition to storage cost etc. The carrying cost include
therefore both real cost and opportunity cost associated with the funds invested in the inventories.
 The total carrying cost is entirely variable and rise in directly proportion to the level of inventories
carried.

Total carrying cost = (carrying cost per unit) X (Average inventory)

Cost of Ordering

The cost of ordering includes the cost of acquisition if inventories. It is the cost of preparation and
execution of an order including cost of paper work and communicating with the supplier.

The total ordering cost is inversely proportion to annual inventory of firm. The ordering cost may
have a fixed component, which is not affected by the order size: and a variable component, which
changes with the order size.

Total Ordering Cost = (No of orders) X (cost per order).

Cost of Stock out

It is also called as hidden cost. The stock out is the situation when the firm is not having units of
an item is stores but there is a demand for that item either for the customers or the production
department. The stock out refers to zero level inventories. So there is a cost of stock out in the
sense that the firm faces a situation of lost sales or back orders. The stock outs are quite often
expensive.

Even the good will of firm also be effected due to customers dissatisfaction and may lose business
in case of finished goods, where as in raw materials or work in process can cause the Production
process to stop and it is expensive because employees will be paid for the time not spine in
producing goods.

The carrying cost and the ordering cost are opposite forces and collectively. They determine the
level of inventors in a firm.
Total Cost = (Cost of items purchased) + (Total Carrying and ordering cost)

INVENTORY MANAGEMENT TECHNIQUES

Managing inventory can be a daunting task, and if it isn’t done properly it could cost company
thousands of dollars. Inventory management grows more and more complicated with increase in
sales volume and diversification of product assortment.

A. STOCK REVIEW

Stock review is a regular analysis of stock versus projected future needs. This can be done through a
manual review of stock or by using inventory software. Defining your minimum stock level will allow
you to set up regular inspections and reorders of supplies. Make sure to take into account certain
situations that can arise, such as vendors taking longer than average to replenish stock. This will aid you
in using just-in-time ordering, where the inventory is held for a minimum amount of time before it moves
to the next stage in the supply chain.
In businesses where manual inventory management techniques are still in use, the primary
inventory control methods include:

• Visual control
• Tickler control
• Click-sheet control

You shouldn’t perform manual reviews because they can take a lot of time and possibly produce
errors. Businesses are starting to invest in software to automate the review, and it will help
organizations keep track of their inventory, ensure timely reorders, and avoid costly shortages.

B. ABC ANALYSIS

This is a popular way to analyze your inventory. Under this method, you classify the inventory
into three categories, such as A, B and C. These categories are based upon the inventory value and
cost significance. Also, the number of items and values of each category are expressed as a
percentage of the total.

- Items of high value and small in number are termed as “A”

- Items of moderate value and moderate in number are termed as “B”
- Items of small in value and large in number are termed as “C”

To manage each category separately: The nice thing about group C is that it can be fairly hands-
off, while group A requires special attention. You can use ABC analysis in conjunction with the
just-in-time technique to help you get your reorder timing just right.

C. VED ANALYSIS:

VED analysis represents classification of items based on criticality. The analysis classifies the
items into three groups called Vital, Essential, and Desirable.
Vital category encompasses those items for want of which production would come to halt.
Essential group includes items whose stock outs cost is very high. Desirable group comprises of
items which do not cause any immediate loss of production or their stock-out entail nominal
expenditure and cause minor disruptions for a short duration.

D. SDE ANALYSIS:

SDE analysis is based on problems of procurement namely:

• Non-availability
• Scarcity
• Longer lead time
• Geographical location of suppliers
• Reliability of suppliers, etc.
SDE analysis classifies the items into three groups called ‘Scarce’, ‘Difficult’ and ‘Easy’.
The information so developed is then used to decide purchasing strategies.

E. JUST IN TIME:

The objective of JUST IN TIME method is to increase the inventory turnover and at the same time
reduce the inventory holding cost. JIT inventory system also exposes the unwanted or the dead
inventory held by the retailer/ manufacturer. This method is ideal for manufacturing organization
and it is not used in Retail industry in general. This will also involve usage of Kanban card to track
inventory movement.

F. VENDOR MANAGED INVENTORY:

As the name explains, it involved SKUs(stockkeeping unit) managed directly by the supplier.
Inventory is replenished based on the sales on regular intervals by the vendor. The retailer provides
shop floor space and the vendor is charged a consignment rate on every product sold at the location.
The ownership of the items from receiving to sales and inventory loss if any will be with the
supplier.
 4. RESEARCH METHODOLOGY

MEANING OF RESEARCH

Research means the systematic investigation in to the study of materials and sources in order to
establish facts and reach new conclusions. It aims at discovering the truth. It is the search of knowledge
through objective and systematic method of finding solution to problems.

Research is necessary to examine the extend of validity of the old conclusions or to find out
some new facts and generating new ideas in connection with the existing ones. Research is carried on both
for discovering new facts and verification of old ones. Research is not an end to problem since every
research gives birth to a new question.

DEFINITION OF RESEARCH

According to Clifford Woody,

“Research comprises of defining and redefining problems, formulating hypothesis, collecting,

organizing and evaluating data, making deductions and research conclusions and at last carefully testing
conclusions to determine whether they fit the formulating of hypothesis”.

RESEARCH METHODOLOGY

Research methodology is the process used to collect information and data for the purpose of
making business decisions in the study of conducting research. Research methodology is a way to
systematically solve the research problem. It is essentially an investigation, a recording and an analysis of
evidence for the purpose of gaining knowledge. The method used for sample survey was simple random
sampling is used. The questionnaire was made to be filled by the customers of Toyota Motor Corporation
Ltd. Both primary and secondary data are used to accomplish the project work. The data was collected from
50 customers of Toyota Motor Corporation Ltd and this was the sample size for the study.

TOPIC

“A STUDY ON INVENTORY MANAGEMENT TECHNIQUE OF

MAHINDRA CIE AUTOMOTIVE LTD”

OBJECTIVES OF STUDY

Objectives have been classified as primary and secondary objectives.

Primary Objectives

To study the approach of Integrated Material Management for better Inventory Control

Secondary Objectives

 To Study the Inventory Management Techniques.

 To Study the procedure of Implimentation of ABC Analysis.
 To Study the Different types of Inventory Control techniques.
 To study Mahindra CIE automotive LTD
 To know about the inventory control of Mahindra CIE automotive LTD

RESEARCH DESIGN
Research design is the plan, structure and strategy of investigation conceived so as to obtain
answers to research questions and to control variances. It constitutes the blue print for the collection,
measurement and analysis of data. It is simply a specific presentation of the various steps in the process of
research.

UNIVERSE/POPULATION

A population it the aggregate of all the units under study in any field of enquiry. It is a collection
of individuals or their values which can be numerically specified. A population can be finite.

SAMPLE DESIGN

A sample design is a definite plan for obtaining a sample from a given population. It refers to
the procedure, adopted by a researcher for selecting items for a sample.

SAMPLE

A finite subset of a population, selected from it with the objective of investigating its
properties is called a sample of that population. A sample is a representative part of the population.

SAMPLE SIZE

It refers to the number of items to be selected from the universe to constitute a sample. For this
study, sample size is 50 employees.
SAMPLE SURVEY OR SAMPLING

Sampling may be defined as the process of obtaining information about an entire population by
examining only a part of it. It is any investigation if data are collected only from a representative part is
called a sample.

SAMPLING METHOD

For this particular study researcher has used Simple Random Sampling method.

SIMPLE RANDOM SAMPLING

A simple random sample is a sample selected from a population in such a way that every member of the
population has an equal chance of being selected and the selection of any individual does not influence
the selection of any other.

TYPES OF DATA

A researcher can collect his required information from the two sources namely:

I. Primary Data
II. Secondary Data

I. Primary Data

When the researcher himself trying to collect the data for his particular purpose from the sources
available, it becomes primary data. Therefore primary data are those collected by the investigator himself
for the first time and thus they are original in character. They are collected for a particular purpose. Since
they are collected for the first time for the purpose of a study it is primary in nature. Primary data can be
collected by four methods:

A. Observation
B. Interview Method
C. Questionnaire Method
A. Observation

This is one of the cheaper and more effective techniques of data collection. This approach to
the collection of information is as old as human race. Much of our knowledge about human beings,
rounding is collected only through this process. Observation is indispensable not only in sciences but
in social sciences research also observation has its own utility. It is not always possible to quantify the
data and draw accurate conclusions on the basis of such data. Thus, the observation method is
generally adopted for testing hypothesis

B. Interview Method

This is a direct method of collecting data and is the most important method of collection of data.
It is based on interview. It is a verbal method of securing data in the fields of surveys. Through this method
we can know the views and ideas of other persons. It is a method of social interaction.

C. Questionnaire Method

This is an important and very popular method of data collection. This is adopted by individuals,
organizations and government. In this method a questionnaire is prepared and sent to respondents by post.
Questionnaire is a printed list of questions. The questionnaire when sent to the respondents the success of
this method largely depends on the proper drafting of questions. Drafting questionnaire requires a great
deal of skill and experience.

II. Secondary Data

Secondary data are those data which have been collected by some other person for his purposes
and published secondary data are usually in the shape of finished products therefore primary data in the
hands of one well as secondary in the hands of another the information can be collected at least cost and
time.
Secondary Data Used

The secondary data for the study has been taken from the company website, other online
services, books, documents and records of organization and the annual reports.

TECHNIQUES USED FOR PRESENTATION

The main statistical tools used for the collection and analyses of data in this project are:

1. Tables
2. Graphs

1. Table: Tables are used to present numerical data in a wide variety of publications from newspapers,
journals and textbooks to the sides of grocery packets. They are the format in which most numerical data
are initially stored and analyzed and are likely to be the means you use to organize data collected during
experiments and dissertation research.
2. Graphs: Graphs are a good means of describing, exploring or summarizing numerical data because
the use of visual image can simplify complex information and help to highlight patterns and trends in the
data. They are a particularly effective way of presenting a large amount of data but can also be used instead
of a table to present smaller datasets. There are many different graph types to choose from and a critical
issue is to ensure that the graph type selected is the most appropriate for the data. Graphs used for
representation are Pie charts and Bar charts.
 Pie Charts: Pie charts are a visual way of displaying how the total data are distributed between
different categories. It should be only used for displaying nominal data (i.e. data that are classed
into different categories). They are generally best for showing information grouped into a small
number of categories and are a graphical way of displaying data that might otherwise be
presented as a simple table. The study guide pie chart gives more details about designing pie
charts and using them to compare them.
 Bar Charts: Bar charts are one of the most commonly used types of graph and are used to
display and compare the number, frequency or other measure for the different discrete categories
or groups. The graph is constructed such that the heights or lengths of the different bars are
proportional to the size of the category they represent. Since the x-axis (the horizontal axis)
represents the different categories it has no scale. The y-axis (the vertical axis) does have a scale
and this indicates the units of measurement. The bars can be drawn either vertically or
horizontally depending upon the number of categories and length or complexity of the category
labels.