An industrial training report on Inventory Management Undergone at

Mahesh Twisto Tech PVT.LTD

Prepared by: Vinay h savani T.Y.B.B.A (FINANCE) guided by: ISHA MAM

Submitted to G.L.C.C.M. (B.B.A) BHAVNAGAR UNIVERSITY BHAVNAGAR-364001

BATCH:-

ACCADEMIC YEAR:2011-2012

DECLARATION I HEREBY DECLARE THAT THIS REPORT TITLED FINANCE ON INVENTORY MANAGEMENT AT MAHESH TWISTO TECH PVT.LTD UNDER THE GUIADAVCE OF BAKUL BHAI PATEL (OWNER) THIS IS MY ORIGNAL AND BONAFIED WORK CARRIED OUT IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE DEGREE OF B.B.A.

BACHELOR OF BUSINESS ADMINISTRATION OF BHAVNAGAR UNIVERSITY

PLACE: BHAVNAGAR

VINAY H SAVANI

PREFACE G.L. KAKADIA COLLEGE OF COMMERCE AND MANAGEMENT of Bhavnagar university helps the students to develop practical skill in the industrial field by pactiscing them about all the activities done in the factory on the basis of preparing the report. An industrial activity plays an important role in overall economic development of the country. In the case of developing countries like India, industrial acivity contributes much in its devlopment. As a part of our B.B.A. programme students are required to undertake a practical repot to apply the theoritical and fundamental management concepts learned during the programme in order to undergo the real life working. The purpose of the training was to have practical experience of working in an organisation and to have exposure to the various management practices in the field of finance. This training has also given me on the job experience of financial management. In this report I have tried my level best by preparing it with the help of information alloted by MAHESH TWISTO TECH. PVT.LTD.

ACKNOWLEDGEMENT
Industrial visit report is the outcome of the effect of many people who helped me throughout in the preparation of this project report and its also my sincere duty to thank all those who helped me directly or indirectly. In todays world of modern organization, each and every person wants to survive in the market. I the student of G.L.K.C.C.M. studying in third year in B.B.A. department In Bhavnagar University is thankful to the university that has given me a golden chance to get training in an industry. I would like to extend my sincere gratitude to MS. POOJA RANA. For encouragement and inspiration throughout the course. I am extremely thankful to MS ISHA TRIVEDI, faculty of G.L.K.C.C.M. highly esteemed and distinguished guide for expert advice and support. It is my privilege to express my deep sense of gratitude to Mr.Bakul Bhai Patel, MD. Mahesh Twisto Tech. PVT.LTD. Bhavnagar for giving me an opportunity to undergo this project and their valuable support and encouragement throughout my research study.

VINAY H SAVANI.

INDEX NO 1 2 3 4 5 6 7 8 9 TOPIC INTRODUCTION GENERAL INFORMATION HISTORY AND DEVLOPMENT MARKETING ARRANGEMENT OF THE COMPANY HR ARRANGEMENT OF THE COMPANY FINANCE ARRANGENMENT OF THE COMPANY EXECUTIVE SUMMARY SCOPE OF THE STUDY OBJECTIVES OF THE STUDY PAGE NO

1. INTRODUCTION MAHESH TWISTO TECH PVT.LTD. is located in plot no:349, phase-2 G.I.D.C., Chitra, Bhavnagar- 364004. The manufacturing activity started in 1985 and in present it is the most preferred brand across the globe for rope making machine catering to widest range of industry and applications. It is CE based company. MTP is using robotic plasma cutting machinery, CNC press breaker and CNC & VMC for parts development and production. It manufactures rope making machines, winders, cooling machines and twisters. Its production capacity is 150 machines. It has a standard method of working throughout the projects, machine manufacturing life cycle where in it intrects with customers directly to understand their requirement. It has built its reputation as one of the most respected market leaders.

2. GENERAL INFORMATION MAHESH TWISTO TECH PVT.LTD. (MTP) is one of the most important brand in rope making machineries and needle looms. MTP is a large sale industry in Bhavnagar.it has gained its name in producing various high speed needle looms and rope making machineries. It produces machines with minimum weight of 400 kg and maximum weight of 4200 kg. the minimum price of its 1 machine is 25 lakhs and maximum is 28 lakhs. The company has been continuing its establishment at Chitra in Bhavnagar. It was first established in 1985 as the plastic processing machinery by MR B.D. PATEL. The company purchases electronic parts and bearings as raw material from Alang, Ahmedabad and Baroda. It caters mostly plastic industries the machines can be packed in bubble sheet, wooden box an as per the demand of its customer. The company has improved its goodwill by increasing the quality of its product. Its share in domestic market is 70% and in global market is 30%. It has given tough competition in national as well as international market.

3. HISTORY AND DEVELOPMENT MTP was established in 1985 with the vision of Mr. B.D.PATEL, a well established in the plastic processing machinery in India. Then after some years they started producing needle looms and rope making machineries and it has worked so hard that its worlds third number industry. It exports maximum in Europe. MTP produces high quality machines, strong design and reliable equipment for making ropes and narrow fabrics. Its competitors are Roblon (Denmark) which is the first numer industry all over the world and Sima (Italy) which is the second.

ORGANISATION STRUCTURE M.D.

GENERAL MANAGER

PRODUCTION MANAGER

DESIGN MANAGER

MARKETING MANAGER

FINANCE MANAGER

FIELD WORKER

OFFICE WORKER

ACCOUNTANT

TIME KEEPING SYSTEM Time keeping system is the crucial part of the organization. Taking in to consideration, todays keen competition, time is precious factor. Production of the organization depends up on the employee and workers. In the case if workers are not regular how can other officers manage.

MTP has the following time keeping system:

For workers
First shift :- 8:00 am to 8:00 pm

Second shift :- 8:00 pm to 8:00 am Break time :- 1:00 pm to 2:00 Pm

SIZE OF THE UNIT Size of the unit means what is the investment of the company, turnover of their standard. There are some basis on which the size of the unit can be fixed. According to the government policy, there are certain standards, scale operations which are as follows. NO 1. 2. 3. SIZE OF THE UNIT SMALL SCALE MEDIUM SCALE LARGE SCALE INVESTMENT UP TO 5 CRORE 5 TO 10 CRORE ABOVE 10 CRORE

MTP is a large scale industry. The investment of the company is more than 30 crore. There are 200 workers in the company.

COMPANY PROFILE
Company Name Company address : MAHESH TWISTO TECH PVT.LTD : PLOT NO:- 349, PHASE 2 GIDC, CHITRA-A. BHAVNAGAR, 364004. OWNER OF THE UNIT YEAR OF ESTABLISHMENT SIZE OF THE UNIT CONTACT Phone No. Fax No. WEB E-MAIL BANK ACCOUNTING YEAR ANNUAL OUTPUT AREA TRANSPORT : BAKUL BHAI PATEL : 1985 : LARGE SCALE : BAKULBHAI PATEL, RASHESH BHAI : 0278-2448857, 2449413 : +91-278-2445851 : www.maheshengineers.com : infomtp@maheshengineers.com : HDFC AND SBI : 1ST APRIL TO 31ST MARCH : 25 CRORE : 3000 SQ FEET. : IN INDIA THROUGH ROADS IN ABROAD BY SEA WAYS PRODUCTS : ROPE MAKING MACHINERIES, COOLING MACHINERIES, WINDERS, TWISTERS TOTAL EMPLOYEES : 200 APPROX

4. MARKETING ARRANGEMENT OF THE COMPANY According to the modern concept of marketing marketing is a process by which products are matched with market ant through which transfer of ownership is affected. Marketing management includes to attract new customers and to retain the existing customer by providing worth of their money. Marketing is basically related with the satisfaction of the customers needs.

ORGANISATION STRUCTURE OF MARKETING SYSTEM MANAGING IRECTOR

GENERAL MANAGER

MARKETING MANAGER

PRODUCT MIX Product is the total of physical and psychological satisfaction it provides to buyer. While deciding the product mix one takes in to account the market and technological strengths, the potential demand, history, tradition of organization and financial capability. In MTP, product mix includes the following type of products : Rope making machines Winders Cooling machines Twisters

PRICING POLICY Price is the wonderful instrument in which both the buyers and sellers are interested. The main objective of a firm is to earn profit, it depends up on a current price decision. Product pricing is a very significant. It plays a very crucial role in marketing. If the firm is in the position of monopoly, it can take higher prices from the customers by restricting the output. MTP decides price of its products as follows Cost of raw material Cost of production Other factory expenses And in case of export, it decides price as per the requirement of the party.

ADVERTISMENT In the sales promotion of any company, advertising plays a major role. It is any paid form of non-personal presentation and promotion of idea, goods and services of identified sponsors. MTP gives advertisement through its website and it has also registered in Google.

SALES PROMOTION Sales promotion includes those marketing activates that stimulate customer purchases and dealer effectiveness such as displays, demonstration, exhibition and various non recurrent selling efforts. MTP takes part in the exhibition of plastic products which is held in Europe till 2005. And they have also taken part in the exhibition named as Saudi. pppp@riad plastic exhibition 2009 in Saudi Arabia at the time of diwali .

CHANNEL OF DISTRIBUTION distribution channel means the marketing activity related to the movement of finished goods from the industry to the final consumer. Channel of distribution should be such that the goods can be easily reached to the other party according to the demand and supply of the product. MTP includes the following consumer channel MTP

Consumer QUALITY CONTROL MTP has a complete in house, equipped with all required and most sophisticated tool machines like CNC, cylindrical grinder, internal grinder, lath, tapping machine, hydraulic press and measuring instrument, where raw materials in process in finished products are rigorously tested and manufactured. Research and development department continuously engaged in developing innovative machinery by using latest technology. Each batch is fully categorized to meet customers requirements and specifications.

5. HUMAN RESOURCE ARRANGEMENT OF THE COMPANY. To manage a man is a challenging task, every organization whether private or public needs personnel depart met. Now a days importance of a personnel management of any unit is called as a heart of unit. Personnel management is like a keeper of other department. It is also like the blood by which all the activities of the organization are continued in proper way. ORGANISATION STRUCTURE OF THE HR DEPATMENT MANAGING DIRECTOR GENERAL MANAGER H.R MANAGER SUPERVISOR WORKERS

RECUITMENT AND SELECTION: Recruitment means searching prospective workers and stimulating to apply for jobs in the organization. In MTP recruitment of workers is done through following sources: INTERNAL SOURCES: PROMOTION WAITING LIST EXTERNAL SOURCES: ADVERTISEMENT IN THE NEWSPAPER IN CAMPUS INTERVIEW EMPLOYEES RECOMMENDATION

Selection means right person for the right job out of the application pool. It is a process of selecting the best and rejecting the rest. Selection is done as per the rules and condition of the industry.

TRAINING AND DEVLOPMENT:Training can be defined as the act of increasing knowledge and skill of an employee for doing a particular job. MTP provides APPRIANTICE TRAINING to students and it also provides training to newly employed workers. It is given by experienced staff members. WAGE AND SALARY ADMINISTRATION:Wage means any monantary compensation paid by the employer under some contract to his workers for the service given by them for hours, daily, weekly and monthly etc. Salary is used to denote payment to the clerical supervisory and managerial employees. MTP provides wage from Rs: 1800-35000 to its workers. It pays its employees on fifth date every month. It provides Sunday as a holiday.

It provides the following benefits to its workers.

Medical service. Bonus Increment Incentives Provident fund-5.5%. Gratuity

PROMOTION POLICY:Promotion means an increase in the salary and wage of an employee. If any employee retires from the job, at that time for that particular place, first internal source is selected and if any qualified employees are there then they are given promotion. In MTP promotion is done as per the experience and quality of an employee. PERSONAL RECORDS: NAME AND ADDRESS OF EMPLOYEE TELEPHONE NUMBER ATTANDANCE RECORD SALARY RECORDS MEDICAL RECORDS ABSEENTISM RECORDS OF SUPERVISORS COMPLAINTS RECORDS OF OVERTIME OTHER IMPORTANT MATTERS CAN BE FOUND OUT.

6. ABOUT FINANCIAL DEPARTMENT. Financial management is concerned with the efficient use of an important economic resource that is working capital. Financial management is mainly concerned with the proper management of funds. The finance manager must see that the funds are proceed in manner that risk, cost and control consideration are properly balanced in given situation and there is optimum utilization of funds. ORGANISATION STRUCTURE OF FINANCE DEPARTMENT MANAGING DIRECTOR GENERAL MANAGER FINANVE MANAGER ACCOUNTANT COMPUTER OPERATOR

MANAGEMENT OF FIXED ASSETS Fixed assets are those which are fixed and permanent in nature and which remain for a long duration in the business. It releases to selection of an assets whose benefits are likely to be available in the future over the lifetime of the product. In MTP the investment in fixed assets is as below: LAND PLANT AND MACHINERY FURNITURE COMPUTER AND VEHICLES TOTAL CAPITAL BUDGETING According to Murphy. the capital expenditure budget will show the future expenditure on fixed assets over a period of time. Spending of money in acquisition of permanent facilities is called capital expenditure and planning of such expenditure is called capital budgeting. A number of capital budgeting techniques are in use classified in to two categories:1. DISCOUNTING METHODS NET PRESENT VALUE METHOD INTERNAL RATE OF RETURN PROBABLLITY INDEX DISCOUNT PAY BACK PERIOD :-1 CRORE :-28 CRORE :-50 lakh :-50 lakh :-30 CRORE

2. NON DISCONTING METHODS PAY BACK PERIOD ACCOUNTING OF RETURN MTP adopts capital budgeting method as per its requirement MANAGEMENT OF WORKING CAPITAL Generally working capital refers to that part of capital which is not tied up in fixed assets but is used to meet the day to day requirements of the business. Working capital is the difference between inflow and outflow of the funds. It is the net cash inflow. MTP has enough working capital to pay its day today expenses. So it does not require any capital from outside. MANAGEMNET OF INVENTORIES Inventory can be defined a the decision of the firm as to the extent to which inventories can be economically stored. According to finance inventory means the value of raw materials, consumables, spares, working progress, finished goods and scraps in which companys fund have been invested. In MTP raw material is fabric, bearings, electric parts etc. so, inventory management time is very large.

MANAGEMENT OF RECIEVABLES According to O. M. JOY The term receivable is defined as debt owned to the firm by customers arising from sales of goods or service in ordinary course of business. In MTP all the transactions are done on cash basis. Before accepting any contract, it takes 25% advance and after preparing the product, it takes remaining 75% and than only delivers the goods. So we can say that there is no credit period available in MTP as all the goods are sold on cash and there are receivables available.

7. EXECUTIVE SUMMARY MANAGING DIRECTORS QUALITY MANAGER PRODUCTION MANAGER MARKETING MANAGER FINANCE MANAGER :-BAKULBHAI PATEL :- GHANSHYAMBHAI PATEL :-DINESHBHAI VEGAD :- RAMESHBHAI BAPODRA :- MAHESHBHAI PATEL

Todays industrial era is so competitive, so an enterprise which wants to follow the same method will not be ablt to survive. So every enterprise has to adopt changes as per the requirement of the situation. In this report, I have followed the working process of an industry. I have collected information through both primary and secondary sources like personal observation of the working process of the industry and also through discussion with the manager.

SCOPE OF THE STUDY Inventory has been considered as one of the most important part of the total current asset of the business. It comprises about 60 to 70% of the total current assets. Due to this I was encouraged to investigate how a company practically maintains its inventory and exercises an effective control over it. So I undertook inventory management as topic of my project report in order to get practical knowledge about the inventory control tools and techniques.

OBJECTIEVE OF STUDY I found out the efficiency of inventory management in MTP To have a practical experience of the functioning of the finance department. To study how inventory management practices plays an important role in supporting other activity of an organization. To gain familiarity with the various methods and techniques followed by MTP in maintaining their inventory. To judge the success of management in balancing the production with the demand To gain in-depth knowledge of through tricks of faster conversion of inventory into cash. To find out then difference between theoretical and practical aspects on inventory management. To study a come out with any solution for improvement of inventory management.

INVENTORTY MANAGEMENT

INDEX
NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. TOPIC INTRODUCTION MEANING TYPE OF INVENTORY OBJECTTIVE OF INVENTORY MANAGEMENT FUNCTIONS OF INVENTORY MANAGEMENT MOTIVE OF HOLDING INVENTORIES BENEFIT OF INVENTORY MANAGEMENT TECHNIQUES IF INVENTORY REASEARCH METHODOLOGY RESEARCH DESIGN AND ITS TYPES TYPES OF DATA DATA ANALYSIS AND INTERPRETATION LIMITATION OF THE STUDY FINDING AND RECOMMENDATIONS CONCLUSION BIBLIOGRAPHY

INTRODUCTION The operational definition of inventory would be the amount of raw materials, fuel and lubricants, spare parts and semi processed materials to be stored from the smooth running of the plant. Since these resources are ideal when kept in stores, inventory is defined as idle resources of any kind having an economic value. Inventory are maintained basically for the operational smoothness, with they can affect by un coupling successive stages of production where as the monetary value of inventory serves as a guide to indicate the size of the investment made to achieve the connivance. The materials management department is expected provide this operational connivance with a minimum possible investment in inventories. The assets which firm stores as inventory in anticipation of need are: Raw material Working process Finished goods

MEANING OF INVENTORY Inventory refers to the stock not only for the material, but for finished and semi finished goods, spare parts, tools & equipments and general stores like, oil, grease, belt, etc. it is necessary to carefully decide how much goods produced or purchased should be kept in stock, because storing each unit of inventory has advantages and disadvantages from the view point of cost.

inventory is money temporarily in the form of a bar of brass, a sheet of steel, iron casting, a bag of chemicals, a bale of cloth or a spare grinding wheel. But it is not at all like money in the bank. It is money on which you pay interest instead of earning interest. After a year rupees 100 in the bank may be worth Rs 110. After a year on the shelf, Rs 100 worth of inventory is worth nearer to Rs 90 and it has cost you Rs 10 expenses to carry it. According to Shree F.G.MOORE

TYPES OF INVENTORY Inventories can be classified into: 1) 2) 3) 4) 5) RAW MATERIALS WORK IN PROGRESS FINISHED GOODS COMPONENTS SCRAP

1) RAW MATERIAL :These are gods which have not yet been committed to production in a manufacturing firm. They may consist of basis raw material or finished components. Eg. The finished goods of spinning mills is cotton which becomes raw material of weaving mill. 2) WORK IN PROGRESS:These inventories are semi manufactured products. They represent products that need more work before they become finished products for sales. They are unfinished goods and lying at a various stage of production. 3) FINISHED GOODS:These are completed products awaiting sales. They are the final output of the production process in a manufacturing firm. The level of three different kind of inventory depends up on the nature of business. 4) SUPPLIES:A forth kind of inventory, supplies or what is called consumables stores is also maintained by the firm. These materials are of low value and do not enter the production process like oil, fuel, bulbs, soap, etc. 5) COMPONENT PARTS:When two or more parts to be joined to prepare a final product, component parts are either bought from outside or are manufactured in

the factory. These parts are also of a considerable value of the total inventory. For Eg. Motorcar is manufactured by assembling more than 2500 parts. 6) SCRAPS:The waste of material arising during manufacturing process is also a part of the inventory. Even defective pieces to be disclosed off a part of inventory.

OBJECTIVES OF INVENTORY MANAGEMENT Objectives can be mainly classified as under 1) TO ENSURE ADEQUATE STOCK:The main objective of inventory management is to see that any department will get the raw materials or other necessary items as and when required. Hence an effective system of purchasing, storage and maintenance in effectively arranged so that enough stock is available on hand. 2) TO MINIMISE INVENTORY ON HAND:It has to insured that excessive stock is not kept and unnecessary capital is not locked up. But must be consisted with adequate stock. So that production is not disrupted. 3) TO MAINTAIN CONTINUITY IN PRODUCTION: - The supplies of materials spare parts consumable stores, etc, must be stored to the optimum level so that continuity of operations is maintained. The inventory control system should ensure that production is completed as per schedule. 4) MINIMISE THE COST OF PURCHASING AND STORAGE: - There should be economy in cost purchasing, cost of purchasing, cost of receiving and inspection, storage and issue of materials, etc. The expense to be reduced to minimum is interested on capital locked, insurance, maintenance, inspection and transportation costs. 5) TO RISK THE RISK OF DETERIORATION:- If a considerable time elapses in the storage of goods, there arises two types of risk The deterioration of goods stored The goods becoming obsolete and outdated Hence, Inventory control ensures that such risk is minimized

6) EFFECTIEVE USE OF AVAILABLE CAPITAL:-various levels like maximum level, minimum level, reordering level, etc, are fixed in system of inventory control, which ensures that unnecessary capital is not locked up in inventory. Order is placed at a right time and right quantity, talking in to account reordering level. This will make efficient purchasing possible. 7) TO BE HELPFUL IN EFFICIENT PURCHASING:- The maintenance of optimum stock is closely connected with a system of inventory control. One of the major objectives of inventory control is to assist in efficient purchasing. 8) TO GIVE MAXIMUM SSTISFACTION TO THE CUSTOMERS:The customer satisfaction is a sign of progressive enterprise. Inventory control assists in supplying goods at a proper price and at the right time. Inventory control leads to economical purchased, makes possible continuity of production and maintaining enough stock. 9) MINIMUM USE OF STORAGE CAPACITY:One of the objectives of inventory control is to make maximum use of storage capacity available, this will reduce storage cost. 10) TO MINIMISE LOSS DUE TO PRICE DECLINE:When considerable investment is made in inventory, the price decreased on a large scale may involve the firm in considerable loss. This is reduced to a great extent by proper inventory control.

FUNCTION OF INVENTORY MANAGEMENT If inventory are not useful, no business firm will like to tie up even a rupee in inventory. In fact inventory have proved to be highly useful. This is due to the following functions: INVENTORIES GIVES PROTECTION AGAINST UNCERTAINITY:Some times forecast of market demand go wrong, creating disturbance in production flow. Such disturbance can be easily absorbed through the use of inventory. Supposing there is an unexpected sudden increase in the demand for the companies product. In such a case, production will require additional material. This material can be easily withdrawn from the stock. I.e. inventory. INVENTORY ENABLES CONTINOUS PRODUCTION FOR SEASONAL GOODS:- Even in industries in which products of seasonal demand are manufactured, men and machines are continually and smoothly used. This is made possible due to the adequate inventory. INVENTORY HELPS IN GETTING QUANTITY DISCOUNT:- It is account of that a company can have the facility of discount associated with large scale buying of materials. Also, inventory of finished goods allows into produce on a large scale and thereby get all the economies of large scale production.

MOTIVES FOR HOLDING INVENTORY

There are three types of motives: TRANSACTION MOTIVES PRECAUTIONERY MOTIVES SPECULATIVE MOTIVES 1) TRANSACTION MOTIVES:This refers to the maintaining inventory to facilitate smooth production and sales operation. The transaction motive of holding inventories to satisfy expected level of operations in the firm. 2) PRECAUTIONARY MOTIVES:This inventory serves as a reserve when there are unpredictable changes in the demand and the supply force. E.g. there may be unexpected big order received from a customer to supply a large quantity of finished goods. 3) SPECULATIVE MOTIVES:Speculative motives present an aggressive approach to exploit profitable opportunity. Advance purchase of raw materials in inflationary times is one form of speculative behavior.

BENEFITS OF HOLDING INVENTORY

The benefits of inventory management are as follows

EFFICIENT AND ECONOMICAL PRODUCTION PROTECTIOOON AGAIIINST TO LITTLE OR EXCESSIVE STOCK PROTECTION OF STOCK LESS WASTAGE AVOIDING LOSS OF SALES AND CUSTOMER SATISFACTION OPTIMUM USE OF FINANCE EFFICIENT STOCK TAKING 1) EFFICIENT AND ECONOMICAL PRODUCTION:Inventory control minimizes or removes the possibilities of delay in production. It helps reduce ordering cost when order for a large quantity is placed at a time. Maintenance of large inventory helps a firm in reducing setup cost associated with each production run. 2) PROTECTIOOON AGAIIINST TO LITTLE OR EXCESSIVE STOCK:Excessive inventory results in locking unnecessary capital, high inventory carrying charges; possible loses, due to price decline and deterioration. To little inventory will interrupt production, making machine and man idle and will cause sales losses. 3) PROTECTION OF STOCK:Inventory control protects the stock from losses and damages due to improper handling and stealing of goods by workers. There is an ample possibility of theft in case of those goods which can be easily sold in the market or which can be used in workers home. 4) LESS WASTAGE:If inventory control system is efficient, there will be no surplus materials and spare parts, etc. waiting for the order in production department.

5) AVOIDING LOSS OF SALES AND CUSTOMER SATISFACTION:Production is finished in time due to efficient inventory control and timely delivery to the customer is made possible. All these will lead to customer satisfaction. 6) OPTIMUM USE OF FINANCE:Various level of material is fixed under inventory control, due to which unnecessary investment of working capital is avoided. In addition due to reduction in wastes also, less working capital is needed. 7) EFFICIENT STOCK TAKING:The efficient inventory is a part of inventory control. It is necessary to fix various quantity levels in any system of inventory control.

TECHNIQUES OF INVENETORY MANAGEMENT The financial manager should aim at optimum level of inventory on the basis of trade-off between cost and benefit to maximize the owners wealth. Many sophisticated mathematical techniques are available to handle inventory management problems. They are as follows: ABC METHOD PERPECTUAL METHOD EOQ METHOD 1) ABC METHOD:In large companys inventory consist of thousand of items and a number of employees are employed to control them. In order to bring economy in controlling such a large inventory, a system known as ABC has been widely used. Such items include in the inventory are of very low value and its detain accounting is not economical. Hence, such items must be stored in sufficient quantity and its use is not restricted. Some items in the inventory are of very high value. Hence, more attention must give to control of such items. For that purpose, all the items are divided in to three categories i.e. A,B&C. i) In category A, those items which are of very important and of high value but having only small proportion of total quantity of inventory are included. They constitute hardly 10% of the total number of items. But represent 70% value of stores. Strict control over receipt, storage and issued should be there for such items. In MTP these category items make up about 12 to 16.5% of the total items and comprise about 60 to 75% of the total value of the inventory. ii) Items included in the B category are not important as important as those in A group, but are important enough for its proper record to be maintained. They constitute 20 to 25% of the total numbers of items but represents 15 to 25% of the total value. In

iii)

MTP this items make up about 18 to 21.5% of total inventory and companies 25 to 37% of the total number of the quantity. The remaining items must be placed in category C. they are not important from the view point of maintaining control over their receipts and consumptions. Such items constitutes 70 to75% of the total number of items. But, they represent 5 to 10% of the total value. Hence its consumption s is unrestricted. In MTP, this items make up nearly 8 to 11.9% of the total value and comprises 54 to69% of the total inventory. CLASS NO OF ITEMS VALUE OF ITEMS A 15 70 B 30 20 C 55 10 TOTAL 100 100

In MTP, top management checks A category items at certain intervals and exercises an effective control over it. As these items are important the control system is very effective. The issue, storage of checking these items should be very strict. B categories items are periodically checked by the accounts department to maintain an efficient control over the issue, storage and recording of this item. C category are less important compared other two categories from the view point of control only but their recording issue and receipt is equally important. This shows good management of an industry. 2) PERPECTUAL METHOD:Perceptual system implies maintenance of up to date stock records and in its broad sense it covers both continuous stock taking as well as up to date recording stores book. According to WELDON, it may be defined as a method of recording stores balances after every receipt and issue to facilitate regular checking and to obviate closing down for stockstaking. The basic object of this system is to make available details about the quantity and value of stock of each item at all times. The system

thus provides a rigid control over stock of each item of store can regularly be verified with the stock records in the bin cards kept in the stores and stores ledger maintained in the cost office.

Advantages of perpetual inventory system:

1.)Saving in time: The long and costly work of stocktaking is avoided. Hence, interim and final financial accounts can be prepared with greater convience. 2.)Arrangement of proper verification: In this system a detailed and more reliable checking of the store is excericed because of the continuous and random checking 3.)Verification of errors: Errors are easily located and rectified. This gives an opportunity a recurrence in many cases. 4.)Double control: Due to separate records in bin card and stores ledger, double control is maintained 5.)Optimum size of material: Overstocking and under stocking can be avoided because peroetual system covers verification of stock with regards to maximum, minimum and other levels 6.)Lack of misuse of material: Under this system effective control on isse of material is possible thus misuse of material can be avoided 7.)Moral check on stores staff: Due to continuous checking, his system serves as a moral check on the stores staff. They are discouraged from committing dishonesty.

8.)Loss of stck due to obsolescence It is detected at an early stage and so timely action can be taken to prevent recurrence

3) EOQ METHOD:EOQ is that quantity ordered at which the total ordering cost and inventory carrying costs will be the minimum. Alternatively, it is also known as economic lot size if orders are placed for a relatively small quantity frequently the company will have to place orders againand again during a year, consequently, it will have to incur a considerable in the form of transportation cost and clerical wzpense and vice-versa. Therefore, a company is required to consider a numberof factors before fixing an economic quantity of these factors important ones are inventory carrying costs and ordering cost. Carrying cost It refers to the ost of maintaining inventory of goods Ordering cost It includes clerical exps ad time involved in desnding inquiry, opening of ltenders, preparing schedules of quotations and cost of placing orders.

There are three methods of determining EOQ:1.) Graphic method 2.) Formula method 3.) Trail and error method

TRIAL AND ERROR METHOD According to this method, the ordering and caring cost for different size of orders of purchase inventories are computed and the order size with the lowest total cost is considered to be the economical order quantity. A- Firm can buy total inventory is one single lot in the beginning of the year. In that case, ordering coat is incurred only once, but caring cost would be heavy. Alternatively, in the inventory may be purchased in small lots at a certain intervals. In that case, the average inventory would be low and so caring cost would be low but the ordering cost would be high.

Suppose, a firm needs 30,000 units during the year. It can have various options to place an order. A firm can purchase these 30,000 units by placing order once in year twice in a year and so on. For each order size, total cost found out and order size that is having the lowest total cost is considered as EOQ.

RESERCH METHODOLOGY Research originate as a matter of curiosity of human mind to k now, to examine and to reexamine things. The main aim of a research is to eliminate vague, superstitions and dogmatic idea by reasoned, objectives and scientific ideas. Methodology in the applied sense refers to various methods used by the researcher right from data collection and various techniques used for the same for interpretation and inference.

According to dhondyal (1944),

Research methodology is a procedure designed to the extent to which it is planned and evaluated before concluding the inquiry and the extent to which the method of making decision is evaluated. In order to solve research problem, research methodology is used. Any of the industry does research study for the purpose of analyzing its inventories which can be four types 1. 2. 3. 4. Raw material Work in process Finished goods Supplies inventory

Here, we are required to analyze the investments we have done investments we have done in inventories and the balance of inventories at the end of the year. For this purpose we calculate reorder point, maximum level and safety stock. MTP invests about 55% of the total assets in inventories which should be analyzed in their records.

SCIENTIFIC RESEARCH Scientific method may be defined as A collective term denoting the various processes by the aid of which the sciences are built up Scientific research is the activity of using a method of inquiry to add to this body of knowledge. RESEARCH DESIGN AND ITS TYPES Research design involves selecting the most appropriate method and techniques to solve the problems of under investigation Eg designed a research project can be compared to that of an architect designing a building. Designing research is the planned sequence of the entire process involved in conducting a research study A good research design must possess the important characteristics of objectivity, reliability, validity and generalization. A research design is not rigid plan to be followed without change. As a research progress, a change in original design may become imperative due to new facts , ideas and conditions. There are specifically two methods of research 1. Interview techniques 2. Sampling

1. Interview techniques
The information is gathered mostly by the means of interview, no other approach enables the investigator to glean so much information and yet remain so flexible. While conducting an interview, some details should be taken care of which are as follow:1. Members of the same back ground would give similar responses to questions asked. 2. The basic ideas of this form of interviews is to seek a great diversity of response 3. Each idea represented should be valued for its contents 4. Prior to the interviews all published and secondary sources should be surveyed. 5. The interviewer must have the minimum knowledge about the topic and questions should be developed in proper manner.

The ways which are mostly used for conducting an interview are as follow

1. The free story:This is the method which is rarely used in which the interviewer asks questions on the basis of story told by him.

2. Aided recall, recognition and identification:In this method, the respondent is shown certain pictures and then questions are asked on that basis

3. Focused interview:In this method, respondent is encouraged by asking certain questions by the interviewer. The results are usually biased towards the interview, but workers and departmental heads and through the meeting with the manager.

2. Sampling
1. Population 2. Sampling

1. Population
The group of all things or objects which come under the area of study is called population E.g. 1. Employees of Municipality Corporation 2. Industrial units of G.I.D.C. 3. Tossing of coin There are two types of population 1. Finite 2. Infinite 1. Finite the population which has limited and countable number objects is called population. 2. Infinite The population which has unlimited number of objects is called infinite population 3. Sampling Sampling, that is the selection of an aggregate of material to represent the whole aggregate is a long established practice Example 1. Bulb test 2. Product test

Sample can be classified as either 1. Random sample 2. Judgment sample 1. Random sample

The random sample is the only sample that contains reliable information about a population. The area sample and stratified sample are example of random sample 2. Judgement sample A judgement sample utilizes personal judgment in the selection of sampling, quota sample is the part of judgement sample

The tools like telephone calls, interviews and meeting etc, help to collect the information for sample study Procedure for sampling The principle step taken of any sampling procedure is as below 1. 2. 3. 1. Purpose of study Sample design Sample size Purpose of study Before a sampling techniques can be determined, the problem and population must be clearly defined. And then, next decision will have to be made to determine whether a survey will be of any value in providing the information need 2. Sample design Before any data are collected, a sample design which is a definite plan should be completely determined, for obtaining a sample from a given population 3. Sample size There are six criteria that have to be met which are as 1. Usefulness and comprehensiveness of content 2. Reliability of results, sufficient for the purpose 3. Intelligibility (classification and definition understood) 4. Speed 5. Economy of operation 6. Accurate interpretation and presentation

In mtp, I have gathered information in various ways like 1. Firstly I made observation of the procedure of an industry 2. Then I followed random sampling method that is I gathered information from some of the selected workers particularly regarding production department 3. The information left was gathered from manager 4. Lastly I made the observation of quality policy and collected necessary information regarding it and storage department

Type of data and data collection 1. Primary data Primary data are those data that are originated very first time or fresh data with the help of primary data formulated the research objectives. Primary data are the accurate reliable and useful data. There are following types of primary data 1. Inventory control techniques used by the company 2. Inventory systems as perpetual and periodic systems. 3. Stock levels etc 4. Companies website 2. Secondary data The secondry data are those data the already in presence for specific purpose. We use the secondary data about inventory for getting information about the old records of the company In mtp, I have collected information through secondary data along with primary data because secondary data alone is not sufficient for proper study of inventory Data analysis and interpretation the statistical ratios used for establishing the relationship between the data and the unknown and methods used to evaluate the accuracy of results

that is analytical tools of research are very important for scientific analysis of the problem. The ratios which are generally used for analyzing inventory are 1. Inventory turnover ratio 2. Inventory holding ratio 3. Inventory to total ratio 1. Inventory turnover ratio This ratio is necessary to indicate the number of times the inventory is handled during the year. If ratio is higher than the standard then it is an indicative of good inventory management fo the industry Inventory turnover ratio = cost of goods sold/ average inventory Cost of goods sold = sales gross profit Average inventory = opening stock + closing stock/2 2010-2011 Cost of goods sold= rs. 5, 00, 00,000 rs. 1,50,00,000= rs. 3, 50, 00,000 Average inventory = rs. 60,00,000 + rs. 40,00,000/2 = rs. 50,00,000 Inventory turnover ratio = rs. 3, 50,00,000 / rs. 50, 00,000 = 7 times 2008-2009:COST OF GOODS SOLD=Rs.8,00,00,000 - Rs.3,20,00,000=Rs.4,80,00,000 AVERAGE INVENTORY=Rs.70,00,000+Rs.40,00,000/2= Rs.55,00,000 INVENTORY TURNOVET RATIO= Rs.4,80,00,000/55,00,000=8.73 times. Year Inventory turnover ratio 2007-2008 7 times 2008-2009 8.73 times

Interpretation The standard is 4 to 6 times. Higher the ratio better it is. The inventory turnover ratio of MTP has been increased in the year 2008-2009 as

compared to the previous year which shows high efficiency in inventory management by the industry Inventory holding ratio This ratio indicated the time duration which an inventory requires to be converted into cash. Lower ratio indicates good inventory management of the company and vice-verse INVENTORY HOLDING RATIO = 365 / INVENTORY TURNOVER RATIO 2007-2008 INVENTORY HOLDING RATIO = 365/7 = 52 DAYS 2008-2009 INVENTORY HOLDING RATIO = 365/8.73 = 42 DAYS INTERPRETATION From the above ratio we can say that inventory holding ratio reduces from 52 to 42 days which shows that carrying cost of an industry has been reduced as compared to the previous year which efficiency of the management policy of the firm Inventory to total current assets ratio This ratio is necessary in order to find what proportion of inventory is invested out of total current assets. Higher ratio indicates less liquidity position of the firm and vice-verse INVENTORY TO TOTAL CURRENT ASSETS RATIO INVENTORY / TOTAL CURRENT ASSETS. 2007-2008 INVENTORY TO TOTAL CURRENT ASSETS RATIO = Rs. 40,00,000 / Rs. 1,00,00,000 = 0.4 times 2008-2009 : INVENTORY TO TOTAL CURRENT ASSETS RATIO = Rs. 40,00,000 / Rs. 1,10,00,000 = 0.36 times Interpretation From the above table, it can be said that investment of an industry of an industry out of the current assets has less i.e. the industry invests about

36% of the total current assets in inventory which shoes good position of the firm. Limitations of study 1. The period of training is very short 2. Certain information was not provided by the company official which they consider personal 3. The inventory topic is so wider and of time limitation, we can not collect all the information required. Finding and recommendations Findings 1. MTP checks its audit report time by time. 2. It has special quality department which checks the quality of its products regularly. 3. It has good efficiency of inventory 4. It has good relation with all of its employees. Recommendations 1. MTP should maintain special ratio for inventory 2. There should be suggestion box in order to get review of its workers Conclusion It was great opportunity to be trained in MTP. It was an unforgettable experience as I learnt the working of various department like finanace management, human resource management, marketing management and specially inventory management. During the training I have got very good response from all the staff members so I am thankful to all persons for giving me full support and also being co-operative with us. Most of the manufacturing companies hold inventories in the form of raw material, work in process and finished goods. Inventories helps to face risk of unexpected changes and it facilitates smooth production.

There are some factors like cost, risk and return to be taken care of while managing an inventory. 1. The industry utilizes its inventory at its maximum level. 2. From the above interpretation, we can say that inventory holding ratio has been reduced as compared to the previous year. 3. The firm has efficiently reduced its proportion of investment in inventories out of total current assets. 4. The firm has been successful in converting its inventory into cash immediately. So, we can conclude that the overall performance of MTP has been satisfactory. Bibliography 1. Companys report 2. Khan and jain 3. Sudhir prkashan 4. I.M pandey 5. Companys website 6. B.S.SHAH