INVENTORY CONTROL AND STORE MANAGEMENT OF

ELECTRIC EQUIPMENT IN RUET

MAHBUB-A-JANNAT
SONIA AKHTER
UMME KHATUNE JANNAT

The thesis is submitted to the department of Industrial & Production Engineering in
partial fulfillment of the requirements for the degree
B.Sc. Engineering
In
Industrial & Production Engineering

Department of Industrial & Production Engineering
Rajshahi University of Engineering & Technology
(RUET), Rajshahi
September, 2012


Heavens light is our guide
RAJSHAHI UNIVERSITY OF ENGINEERING & TECHNOLOGY












DEPARTMENT OF INDUSTRIAL & PRODUCTION ENGINEERING

A THESIS REPORT
ON

INVENTORY CONTROL AND STORE MANAGEMENT OF
ELECTRIC EQUIPMENT IN RUET












SUBMITTED BY,
Mahbub-A-Jannat, Roll No: 075008
Sonia Akhter, Roll No: 075014
Umme Khatune Jannat, Roll No: 075026

SUPERVISED BY,
Khan Md. Ariful Haque
Assistant Professor
Department of Industrial & Production Engineering
Rajshahi University of Engineering & Technology
DECLARATION

This thesis work is submitted to the Department of Industrial & Production Engineering,
Rajshahi University of Engineering & Technology, Rajshahi-6204 in the partial fulfillment of the
requirements for the Degree of Bachelor of Science in Industrial & Production Engineering.

We, the undersigned, hereby declare that the work contained in this under graduate thesis is our
own original work and that we have not previously in its entirely or in part submitted it at any
university for a degree.



















Signatures of Students


Mahbub-A-Jannat, Roll No: 075008


Sonia Akhter, Roll No: 075014


Umme Khatune Jannat, Roll No: 075026


..
Date

Heavens light is our guide

Rajshahi University of Engineering & Technology (RUET), Bangladesh
Department of Industrial and Production Engineering

CERTIFICATE
This is to certify that the project work entitled Inventory Control and Store Management of
Electric Equipment in RUET has been carried out by Mahbub-A Jannat Roll No: 075008,
Sonia Akhter Roll No: 075014, Umme Khatune Jannat Roll No: 075026 under my supervision in
the Department of Industrial and Production Engineering at Rajshahi University of Engineering
& Technology (RUET), Bangladesh.
Supervisor Signature of the students






Countersigned


..

Dr. Md. Mosharraf Hossain
Head,
Department of Industrial and Production Engineering
Rajshahi University of Engineering & Technology
Rajshahi-6204, Bangladesh

Khan Md. Ariful Haque
Asst. Professor,
Department of Industrial and Production Engineering
Rajshahi University of Engineering & Technology



(Mahbub-A-Jannat, Roll No: 075008)


(Sonia Akhter, Roll No: 075014)


(Umme Khatune Jannat, Roll No:
075026)

ACKNOWLEDGEMENT

At first with great respect the authors wish to express their deep gratefulness to Almighty Allah
for the successful completion of the thesis work by his grace and mercy.
Authors would like to express his heartiest gratitude, respect and appreciation to their supervisor
Khan Md. Ariful Haque Assistant Professor, Department of Industrial and Production
Engineering and also grateful to their honorable teacher Md. Ariful Islam Assistant Professor and
Ripon Kumar Chakrobortty, Lecturer of the Department of Industrial and Production
Engineering, for their valuable suggestions about this thesis work during seminar classes.
Authors also would like to give thanks to all the staff members who are responsible for the
electric equipment at RUET and who helped them to get necessary data for completing the thesis
work and also for enduring mistakes and immaturity. At last but not least, authors are indebted to
those, who have directly or indirectly helped to complete the work.


Authors
Date











i
Abstract
Most of the companies develop and implement inventory control and store management strategy
which will give them a competitive advantages. Not only companies but institutions can develop
and implement these strategies to achieve these advantages.
In this paper, implementation of these strategies to the store of electric equipment in RUET is
presented. This paper contains two parts: one is concerning implementation of inventory control
and other concerning implementation of store management. At the first part all items of electric
equipment are classified using ABC analysis. From this classification three classes of items such
as A class (costlier items), B class (less costlier items) and C class (economical items) are
obtained. Then demand of A class items are forecasted using Weighted Moving Average
Method. After that, using this forecasted demand Economic Order Quantity (EOQ) for joint
replenishment is calculated. Then forecasted demand is compared with the actual order quantity
and saved amount in Tk. is obtained. In the part of store management some guidelines about
maintenance of stores record. Proper location and stocking of materials, disposal and efficient
handling of materials and preservation of stores are given to proper the management system. The
aim of this thesis work is to systematize the existing situation for better function.
Key words: Inventory control, Competitive advantage, ABC analysis, Forecast, Economic Order
Quantity, Store management, Systematize.











ii
TABLE OF CONTENTS
Page No.
Acknowledgement...i
Abstract .............................................ii
Table Of Contents.....iii
List of Tables...viii
List of Figures..ix
Chapter-1: Introduction1-2
1.1Introduction..1
Chapter-2: Literature Review...3-7
2.1 Literature Review....3
2.2 Objective..7

2.3 Pre-plan to success the objective 7

2.4 Methodology....7

Part-A

Chapter-3: Inventory Control.8-13

3.1 Inventory Control ...8

3.2 Reasons for holding inventory.9

3.3 Approaches used for inventory control...9

3.3.1 The Eyeball System...9

3.3.2 Reserve Stock (or Brown Bag) System.....9

iii
3.3.3 Perpetual Inventory Systems.10

3.4 Controlling Inventories......10

3.4.1 Purchase systematically........10

3.4.2 Keep track of inventories.....................10

3.4.3 Make someone responsible for checking the inventory...10

3.4.4 Use storage facilities efficiently...11

3.4.5 Know the costs of inventories.....11

3.4.6 Determining Inventory Costs.......11

3.4.7 Determining the Most Profitable Level of Inventory......12

3.4.8 Determining How Much and How Often to Order..12

3.5 Company profile....13

3.6 Problem statement.....13

Chapter-4: Data Collection......14-18

Chapter-5: Data Analysis and Calculation.19-41

5.1 ABC Analysis....19
5.1.1 ABC analysis categories.......19
5.1.2 Example of the Application of Weighed Operation based on ABC class...20
5.2 Demand Forecast.......33
5.2.1Weighted Moving Average...35
5.3 Economic Order Quantity (EOQ)..37
iv
5.3.1 Economies of joint replenishment...37
5.3.2 Assumptions......37
.
5.3.3 Joint replenishment order quantity model.....37

5.3.4 Calculation of the optimal value of all items in taka ordered during a cycle...38

5.4 Comparison between forecasted quantity and actual order quantity of A
Class items41

Part- B
Chapter-6: Store Management....43-53
6.1 Maintenance of stores records..43
6.1.1 Annual/Other Checks....44
6.2 Proper location and stocking of materials.45
6.2.1 Storehouses and Stock Yards...45
6.2.2Floors.45
6.2.3 Structure....45
6.2.4 Storehouse Doors..46

6.2.5 Window and Ventilation...46

6.2.6 Receipt and Dispatch Docks.46
6.2.7 Issue-Bay/Counter.46
6.2.8 Provision of Stores Shelving.....46

6.2.9 Office....47

6.2.10 Lighting.......47

6.2.11 Provision for Hot Room & Cold Room..47

6.2.12 Fire Risk..47
6.2.13 Ancillary services....48
v
6.2.14 Extensions.......48
6.3 Preservation of Materials...48

6.3.1 Factors influencing deterioration..49

6.3.2 Damages due to biological process...49

6.3.3 Damages due to non-biological causes.....49

6.3.4 Effect of environment generated by interaction....49

6.3.5 Storage Hygiene....50

6.4 Storage & Preservation of Electronic Equipment and Components..50

6.4.1 Causes of deterioration50

6.4.2 Following precautions shall be taken during storage and use..50

6.5 Principles of materials handling51

6.5.1 Principle of planning..51

6.5.2 Principle of system.51

6.5.3 Materials flow principles...51

6.5.4 Principle of Simplification52

6.5.5 Principle of Gravity....52

6.5.6 Principle of space utilization.52

6.5.7 Principle of Unit loads..53

6.5.8 Principle of Safety.53

6.5.8.1 Safety in manual materials handling..53

6.5.8.2 Safety in stores operations.54

6.6 Some guidelines of OSHA for material handling and safety...54
vi

6.6.1 What precautions should workers take when moving materials manually...54

6.6.2 What safeguards must workers follow when stacking materials......................................55
6.7 Proposed arrangement of racks in the store house....56
Chapter-7: Conclusion and Recommendations...58

7.1 Conclusion.....58
7.2 Limitations.58
7.3 Further Recommendation..58

References...59-60

Appendix-A...61-62

















vii
List of Tables


Tables Page No.

Table 3.1: The types of inventory and reason for holding the inventory....8

Table4.1: Preliminary data of (2007-2008 fiscal year) annual demand and price per units of
111 items....14

Table4.2: Data of receipt and actual number of items of three fiscal years.....18
Table5.1.1: Computation of annual consumption.21

Table 5.1.2: Computation of cumulative consumption and % of annual consumption....25

Table 5.1.3: Summary of A, B and C items..29

Table5.2.1: A guide to selecting an appropriate forecasting method34

Table5.2.2: Calculation of demand forecasting ( Weighted moving average method)35

Table5.3.1: Data for calculating the optimal value of A Class items in taka ordered during per
cycle...39
Table 5.4: Comparison between Economic Order Quantity and Actual Order Quantity of A
Class items.41















viii

List of Figures


Figures Page No.

Figure5.1.1: Pie chart of Percentage of number of items in A, B and C classes.32

Figure5.1.2: Pie chart of Percentage of annual consumption A, B and C class items.33

Figure5.3.1: Economic Order Quantity and Unit Cost of A Class items.40

Figure5.4.1: Graphical Representation of Actual Order Quantity and Forecasted Quantity..42

Figure 6.7.1: Store house of electric equipment in RUET (all dimensions are in feet.57

ix