A

Project Report
INVENTORY CONTROL OF PIC N FRAME S

TECHNOLOGIES

In partial fulfillment of the requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION
(Session 2015 2016)

Supervised to: Submitted by:

Miss. Shagun Mandeep kaur
HR Manager 1457263
Pic N Frames HR/FINACE
 PREFACE

Businesses face ever increasing pressure on costs and growing Financing requirements as a
result of intensive competition in globalize markets. Many of them are therefore considering
ways of making themselves more efficient. Identifying possible options it is important not to
focus exclusively on income and expense items, but also to take the balance sheet into account
.Improvements to the existing capital structure can free up valuable resources and bring
increased efficiency. Active working capital management is an extremely effective way to
increase enterprise value. Optimizing working capital results in a rapid release of liquid
resources and contributes to an improvement in free cash flow and to a permanent reduction in
inventory and capital costs. My project on

Analysis of Inventory control in PIC N FRAMES TECHNOLOGIES

.The attempt is aimed to analysis the various s aspects of Production Planning and control of
PIC N FRAMES TECHNOLOGIES with industry standards .By adopting various calculation
and analysis and then making interpretation with the solution of specific problem, best efforts on
giving appropriate suggestion to the company have been made .To this context various methods
and techniques like ratio analysis , statistical tool, Correlation analysis, and working towards the
optimal level of working capital, estimation of working capital and various ratios have been used
to draw an exact picture of company.
 DECLARATION

I Mandeep kaur Student of FEROZEPUR INSTITUTE OF MANAGEMENT hereby

declare that final Research Project Report entitled INVENTORY CONTROL OF PIC N
FRAMES TECHNOLOGIES an original work and data provided in the study is authentic to
the best of my knowledge. This report has not been submitted to any other institute for the award
of any other degree.
 ACKNOWLEDGEMENT

A Formal Statement of Acknowledgement will meet the ends of justice in the matter of my deep
sense of gratitude to all those who help me in completion of my project.

I would like to give special thanks to Miss SHAGUN who was my project guide for guiding
me from time to time, right from giving direction to the research, to the preparation of report. He
provides me with valuable suggestions and information related to the project and really co-
operate me a lot during my project. He was deeply concerned and involved for my wellbeing.

I express my deepest gratitude and reverence to director C.H. Pandey of FIM and all my faculty
members MBA Dept. for their kind consideration, painstaking efforts, and constant encourages
and valuable advice throughout the study of the present research problem as well as preparation
of the research project report.

(Mandeep kaur)
 INDEX

Contents Page Number

Preface I
Declaration II
Acknowledgement IV

Chapter 1: Introduction of Organization (Page Numbers)

1.1Company profile 1
1.2 What we do? 2
1.3Strengths
1.4Directors Desk
Chapter 2: Introduction of Project
2.1 Meanings
2.2 Scope
2.3 Importance
2.4 process
2.5 Limitations
2.6 Techniques

Chapter 3:
3.1 Review of Literature

Chapter 4: Research Methodology

4.1 Research design
Chapter 5: Analysis and Interpretations
Chapter 6: Findings & Suggestions
Chapter 7: Bibliography
Annexure
Questionnaire
 CHAPTER -1
INTRODUCTION OF ORGANISATION
1.1 COMPANY PROFILE
We PIC N FRAMES TECHNOLOGIES are pleased to introduce ourselves, as a
professionally managed software products & web development company
having a workforce of over 75+, highly skilled designers, developers and
other advanced technologies professionals, to provide better solutions for all
your web based needs. We cater to all the web based needs of our clients
with powerful web solutions right from the conception to the completion of
the project. The internet promotion services make sure that the websites
rank well on the popular search engines and gets maximum exposure over
the internet. This is the reason why PIC N FRAMES Technologies is called the
'One Stop Shop' for all your business needs. When PIC N FRAMES
Technologies web professionals do their job, results speak themselves. Feel
free to check our web site design portfolio and see the quality yourself. We
do web sites which make your visitors think about you: "Those guys are
good!" Our competent graphic designers provide creative designs for your
logos, brochures, corporate identity and presentations to your utmost
satisfaction. You'll never interact with automated support systems. Managers
and customer care representatives will contact you personally making sure
they understand your needs. You'll communicate with people who are able to
get inside your problem and find the proper solution.

1.2 WHAT WE DO?

Our work begins by understanding thoroughly what our clients want. Then,
with the perfect blend of web and internet marketing services, we strive to
provide customized solutions that surpass our clients expectations. Be it
custom web design, content, web 2.0 programming, custom database
applications, mobile application development, 3D flash animation or
interactive multimedia business presentations, PIC N FRAMES
TECHNOLOGIES delivers comprehensive solutions in all sectors of web
development domain.

WEBSITE DESIGN AND DEVELOPMENT

A website is a companys online salesperson working 24X7. And

understanding this fact to its core, at PIC N FRAMES TECHNOLOGIES we
provide the unique combination of graphic design, informative content and
clean code to make websites that gives users an appealing contemporary
look and feel, clear message about your firm and interactive experience. Our
team of creative graphic designers, developers, who are never shy of
introducing new programming paradigms ranging from Microsoft to open
source technologies, and expert marketers, make your website:
 Optimized for the newest browsers and search engine data
More engaging
Scalable with robust backend applications
Highly functional
 MOBILE APPLICATION DEVELOPMENT

The world has not just gone online, but mobile as well. And today there is
hardly any major (and even minor) firm, IT or non-IT, that isnt using a mobile
app to engage with its customers. At PNF, creating an app is just the
beginning of the process of attracting and engaging the customer. Therefore,
we focus on building apps that are not just highly functional, but provide an
unparalleled user experience. We offer cutting edge mobile application
development as well as a mobile game developer in Houston for all the
mobile devices of the current generation. We develop applications for all the
major mobile platforms, which are in trend today, namely; IOS, Android and
Blackberry.
1.3 OUR STRENGTHS

ONE-STOP INTERNET SOLUTIONS VENDOR

From custom web designing to developing complex web and mobile

applications, PNFs team has the expertise to use all the latest technology
paradigms effectively and deliver quality solutions that meet latest industry
trends.

FULL-CYCLE DEVELOPMENT SERVICES

We ensure that every stage of Software Development Life Cycle gets the
time and attention it deserves. From defining the requirements to post
deployment support, PNF provides end-to-end solutions for application
development.

EXPERIENCE AND EXPERTISE

With the credit of providing effective solutions in countless scenarios under

our belt, over years our team has acquired exceptional skill sets and built a
knowledge base that enable us to provide the best possible solutions tailor-
made to our clients specific needs.

QUALITY STANDARDS

At PIC N FRAMES, our three-pronged approach of hiring the best talent,

using proven processes and ensuring seamless communication, helps us
create solutions that wow the end user and bring faster returns for our
clients.

VAST POOL OF IT PROFESSIONALS

From top IT Professionals with expertise in a particular domain to teams with

diverse skill sets, PIC N FRAMES TECHNOLOGIES is haven to some of the best
IT minds, who can cater to the needs of projects of any size and complexity.

COMPLETE TRANSPARENCY

At PIC N FRAMES TECHNOLOGIES, we believe in providing our clients

complete satisfaction with our solutions, and that is why we take our clients
through each phase of the proposed solution so that both teams understand
the process and outcome.
1.4 FROM DIRECTORS DESK

PIC N FRAMES TECHNOLOGIES INC. is striving to become one of the leading

web solution and service providers in the country. Our focus remains on
bridging the skill gap, whether it for our clients or for the IT industry at large.
Our commitment to delivering world-class digital solutions enables our
clients to get the IT edge, they were looking for, and our comprehensive
training for budding IT professionals ensures that they are industry ready and
taking the right steps to a successful career. This way, we are also
contributing to the IT industry by giving its young and promising talent.
Knowledge of different APIs and specific tools are enough to develop
websites and applications; however, developing a product that not only
meets the clients requirements but surpasses their expectations as well,
requires a great deal of experience and dedication. At PNF we work on
principles; and with high standards that we have set for our services, we
strive to work with the utmost professionalism; and our products speak the
rest.

- SUMIT KUMAR SETHI

INVENTORY CONTROL
Control of inventory, which typically represents 45% to 90% of all
expenses for business, is needed to ensure that the business has the right goods
on hand to avoid stock-outs, to prevent shrinkage (spoilage/theft), and to
provide proper accounting. Many businesses have too much of their limited
resource, capital, tied up in their major asset, inventory. Worse, they may
have their capital tied up in the wrong kind of inventory. Inventory may be old,
worn out, shopworn, obsolete, or the wrong sizes or colors, or there may be an
imbalance among different product lines that reduces the customer appeal of
the total operation.
Inventory control systems range from eyeball systems to reserve stock
systems to perpetual computer-run systems. Valuation of inventory is normally
stated at original cost, market value, or current replacement costs, whichever is
lowest. This practice is used because it minimizes the possibility of overstating
assets. Inventory valuation and appropriate accounting practices are worth a
book alone and so are not dealt with here in depth.
The ideal inventory and proper merchandise turnover will vary from one
market to another. Average industry figures serve as a guide for comparison. Too
large an inventory may not be justified because the turnover does not warrant
investment. On the other hand, because products are not available to meet
demand, too small an inventory may minimize sales and profits as customers go
somewhere else to buy what they want where it is immediately available.
Minimum inventories based on reordering time need to become important
aspects of buying activity. Carrying costs, material purchases, and storage costs
are all expensive. However, stock-outs are expensive also. All of those costs can
be minimized by efficient inventory policies.
2.1 Inventory MEANING
Inventory control involves the procurement, care and disposition of
materials. There are three kinds of inventory that are of concern to managers:
Raw materials,
In-process or semi-finished goods,
Finished goods.

If a manager effectively controls these three types of inventory, capital

can be released that may be tied up in unnecessary inventory, production
control can be improved and can protect against obsolescence, deterioration
and/or theft,

The reasons for inventory control are:

Helps balance the stock as to value, size, color, style, and price line
in proportion to demand or sales trends.
Help plan the winners as well as move slow sellers
Helps secure the best rate of stock turnover for each item.
Helps reduce expenses and markdowns.
 Helps maintain a business reputation for always having new, fresh
merchandise in wanted sizes and colors.

Three major approaches can be used for inventory control in any type and
size of operation. The actual system selected will depend upon the type of
operation, the amount of goods.

2. In General sense,

"Inventory control is a method where all stocks of goods are properly and promptly
issued, accounted, and preserved in the best interest of an entity that handles its
inventory."

3. In terms of Business,

"Inventory control is a method designed by the top level of management of a

company. It requires a strategic decision to be taken for its effective
implementation. Its proper implementation is the responsibility of the store
manager."

4. In an Academic perspective,

"Inventory control is a method to identify those stocks of goods, which can be used
for the production of finished goods. It shall be supported by a schedule which gives
details regarding; opening stock, receipt of raw-materials, issue of materials, closing
stock, and scrap generated."

A note on spreadsheets: spreadsheets are an excellent tool for managing inventory.

Their flexibility is unrivaled by todays database control systems. However,
spreadsheets have serious weaknesses. Recent studies have shown that 9 out of 10
spreadsheets have errors in them. In addition if more than one person is interacting
with the spreadsheet, it quickly becomes difficult to maintain the integrity of the
data. Remember the time you sent a spreadsheet to Sue who then sent it to Bob
and then sent it to Jim and then you all forgot about it for a month or so. After that
month was up you probably had no idea which version had the correct information
in it. Those organizations with multiple product lines and hundreds or thousands of
pieces of inventory should invest in barcodes or RFID technology along with a
database system to keep everything in one central location.
2.2 Scope of Inventory control
1. Inventory Control & Management
2. Inventory System- A set of policies and controls that monitors levels of
inventory and determines what levels should be maintained, when stock should
be replenished, and how large orders should be placed. Inventory-A physical
resource that a firm holds in stock with the intent of selling it or transforming it
into a more valuable state.INTRODUCTION
3. Finished goods Work-in-process Subassemblies Components
Purchased parts Raw materialsItems carried in inventory can be
4. To keep pace with changing market conditions To prevent loss of
orders(sales) To meet the demand during the replenishment period To take
advantage of price discounts To stabilise productionReasons for keeping
Inventories
5. Objectives and Benefits Inventory control aims at keeping track of inventories.
In other words, inventories of good quality and right quantities should be made
available to different departments as and when they needed.
6. Shortage cost Inventory carrying costs (holding costs) Ordering cost
Capital cost Purchase (or Production) costCOSTS ASSOCIATED WITH
INVENTORY
7. Inventory Planning and Control
For maintaining the right balance between high and low inventory to minimize
cost
8. When to order? How much to order? Inventory Control Decisions:
9. ECONOMIC ORDER QUANTITY Annual Cost ($) Higher Minimum Total Annual
Stocking Costs Total Annual Stocking Costs Annual Carrying Costs Lower Annual
Ordering Costs Order Quantity Smaller EOQ Larger 16
10. Inventory model under risk EOQ model with stock outs allowed EOQ
modelTYPES OF INVENTORY MODELS
11. Simple EOQ model
12. EOQ model with stock outs allowed
13. Inventory model under risk
14. Procurement difficulties, criticality, frequency of usage Usage rate Lead
time Based on the cost of product Selective control refers to the variation in
 method of control from item to item on some selective basis. Many criteria used
for this purpose areSELECTIVE CONTROL OF INVENTORY
15. Material requirements planning .

2.3 Importance of Inventory control

1.Inventory to Sales (Total Inventory/Sales for the Period)

The ratio explains variations in the level of investment. An

increase in inventory levels, substantially beyond that
which might be expected from an increase in sales, may reflect
such phenomena as the result of a conscious policy shift to higher
stock levels, of unintended accumulation of unsold stocks, and of
inventory speculation, or simply stocking in anticipation of an
almost certain surge of orders.

(2) Inventory Turnover (Cost of Goods Sold/Average Inventory)

The ratio tells us the rapidity with which the inventory is

turned over into receivables through sales. Generally, the higher
the inventory turnover, the more efficient the management of a
firm is. However, a relatively high inventory turnover ratio may be
the result of too low a level of inventory and frequent stock outs.
Therefore, the ratio must be judged in relation to the past and
expected future ratios of the firm and in relations of similar firms
or the industry average or both.

(3) Sales to Inventory (Annual Net Sales/Inventory at the End

of Fiscal Period)

The ratio indicates the volume of sales in relation to the amount

of capital invested in inventories. When inventory for a firm is
larger in relation to sales (the condition which causes it to have a
lower net sales to inventory ratio than other firms) the firms rate
of return is less since it has more working capital tied up in
inventories than has the firm with a higher ratio.
(4) Inventory to Current Assets (Total Inventory/Total Current
Assets)

The ratio indicates the amount of investment in inventory

per rupee of current assets investment. Generally an increasing
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proportion of inventory is indicative of inefficient inventory
management. The ratio may also indicate the state of liquidity
position of concern. The lower the inventory to current assets
lowers the liquidity as compared to other current assets, viz.,
receivables, cash and marketable securities.
(5) Inventories Expressed in Terms of Number of Days Sales
(Inventory/Sales x 365)
The ratio indicates the size of inventory in terms of number
of days sales. For this purpose first the sales per day are
calculated and inventory is divided by the amount of sales per
day. The increasing inventory in terms of number of days sales
may indicate either accumulation of inventory or decline in sales.
Inventory for this purpose is assumed to include finished goods
only. While the former situation signifies poor inventory
management, the later indicates the poor performance of the
marketing department.
(6) Sundry Creditors to Inventory (Sundry Creditors/Inventory)

The ratio reveals the extent to which inventories are

procured through credit purchases. Inventories for this purpose
are assumed to include raw materials and stores and spares only.
If the ratio is less than unity, it reveals that the credit available is
lower than the total inventory required. It also explains the extent
of inventory procured through cash purchases. Indirectly it
emphasizes the inventory financing policy of the firm. If the ratio
is more than one, it explains that the entire inventory is
purchased on credit.
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(7) Inventory to Net Working Capital (Inventory/Net Working

Capital)

The ratio explains the amount of inventory per rupee of

equity/long-term financed portion of current assets. A higher ratio
may mean greater amount of net working capital investment in
inventory. In order to control each category of inventory, the
following ratios can be calculated
2.4 Process of Controlling Inventory

Controlling inventory does not have to be an onerous or complex

proposition. It is a process and thoughtful inventory management. There are no
hard and fast rules to abide by, but some extremely useful guidelines to help
your thinking about the subject. A five step process has been designed that will
help any business bring this potential problem under control to think
systematically thorough the process and allow the business to make the most
efficient use possible of the resources represented. The final decisions, of
course, must be the result of good judgment, and not the product of a
mechanical set of formulas.

STEP 1: Inventory Planning

Inventory control requires inventory planning. Inventory refers to more

than the goods on hand in the retail operation, service business, or
manufacturing facility. It also represents goods that must be in transit for arrival
after the goods in the store or plant are sold or used. An ideal inventory control
system would arrange for the arrival of new goods at the same moment the last
item has been sold or used. The economic order quantity, or base orders,
depends upon the amount of cash (or credit) available to invest in inventories,
the number of units that qualify for a quantity discount from the manufacturer,
and the amount of time goods spend in shipment.

STEP 2: Establish order cycles

If demand can be predicted for the product or if demand can be measured
on a regular basis, regular ordering quantities can be setup that take into
consideration the most economic relationships among the costs of preparing an
order, the aggregate shipping costs, and the economic order cost. When
demand is regular, it is possible to program regular ordering levels so that stock-
outs will be avoided and costs will be minimized. If it is known that every so
many weeks or months a certain quantity of goods will be sold at a steady pace,
then replacements should be scheduled to arrive with equal regularity. Time
should be spent developing a system tailored to the needs of each business. It is
useful to focus on items whose costs justify such control, recognizing that in
some cases control efforts may cost more the items worth. At the same time, it
is also necessary to include low return items that are critical to the overall sales
effort.
STEP 3: Balance Inventory Levels
Efficient or inefficient management of merchandise inventory by a firm is a
major factor between healthy profits and operating at a loss. There are both
market-related and budget-related issues that must be dealt with in terms of
coming up with an ideal inventory balance:
Is the inventory correct for the market being served?
Does the inventory have the proper turnover?
What is the ideal inventory for a typical retailer or wholesaler in this
business?

STEP 4: Review Stocks

Items sitting on the shelf as obsolete inventory are simply dead capital. Keeping
inventory up to date and devoid of obsolete merchandise is another critical
aspect of good inventory control. This is particularly important with style
merchandise, but it is important with any merchandise that is turning at a lower
rate than the average stock turns for that particular business. One of the
important principles newer sellers frequently find difficult is the need to mark
down merchandise that is not moving well.
Markups are usually highest when a new style first comes out. As the style
fades, efficient sellers gradually begin to mark it down to avoid being stuck with
large inventories, thus keeping inventory capital working. They will begin to
mark down their inventory, take less gross margin, and return the funds to
working capital rather than have their investment stand on the shelves as
obsolete merchandise. Markdowns are an important part of the working capital
cycle. Even though the margins on markdown sales are lower, turning these
items into cash allows you to purchase other, more current goods, where you
can make the margin you desire.
 Stock turnover is really the way businesses make money. It is not so much
the profit per unit of sale that makes money for the business, but sales on a
regular basis over time that eventually results in profitability. The stock turnover
rate is the rate at which the average inventory is replaced or turned over,
throughout a pre-defined standard operating period, typically one year. It is
generally seen as the multiple that sales represent of the average inventory for
a given period of time.

Stock turns or turnover, is the number of times the "average" inventory of

a given product is sold annually. It is an important concept because it helps to
determine what the inventory level should be to achieve or support the sales
levels predicted or desired. Inventory turnover is computed by dividing the
volume of goods sold by the average inventory. Stock turns or inventory
turnover can be calculated by the following equations:

Stock Turn = Cost of Goods Sold

Average Inventory at Cost

Stock Turn = Sales

STEP 5: Follow-up and Control

Periodic reviews of the inventory to detect slow-moving or obsolete stock

and to identify fast sellers are essential for proper inventory management.
Taking regular and periodic inventories must be more than just totaling the
costs. Any clerk can do the work of recording an inventory. However, it is the
responsibility of key management to study the figures and review the items
themselves in order to make correct decisions about the disposal, replacement,
or discontinuance of different segments of the inventory base.
2.5 LIMITATIONS OF INVENTORY CONTROL

1. Demand is known-- Using past data and future plans a

reasonably accurate prediction of demand can often be made.
This is expressed in unit sold in a year.
2. Sales occur at a constant rate-- This model may be
used for goods that are sold in relatively constant amount
throughout the year. A more complicated model is needed for
firms whose sales fluctuate in response to there seasonal cyclical
factors.
3. Cost of running of goods are ignored-- Cost
associated with storage, delays or lost sales are not considered.
These costs are considered in the determination of safety level in
the re-order point subsystem.
4. Safety stock level is not considered-- The safety stock
level is the minimum level of inventory that the firm wishes to
hold as a protection against running out. Since the firm must
always be above this level the EOQ need not be considered the
safety stock level.
Total Ordering Cost (TOC)=(A/Q)*O
Average Inventory=Q/2
Total Carrying Cost (TCC)=(Q/2)*C
 Total Inventory Cost=TOC+TCC
Total Cost=(AO/2)+(QC/2)
Where A=total annual demand
Q=Quantity order in units
O=Order cost per order
C=Carrying cost per unit
The basic formula is EOQ = 2(U)(OC)
CC%PP
Where 2=mathematical factor that occurs during the deriving of
the formula, U-Units sold per year, a forecast provided by the
marketing department. OC=Cost of placing each order for more
inventory provided by cost accounting. CC% = Inventory carrying
cost expressed as a percentage of the average value of the
inventory, an estimate usually provided by cost accounting.
PP = Purchase price per each unit of inventory supplied by the
purchasing department.
Trial and error approach
Select a number of possible lot (Order) sizes to purchase, then
determine the total cost for each lot size chosen, now select the
ordering quantity that minimizes the total cost.
Quantity Discount and Order Quantity
The standard EOQ analysis is based on the assumption that the
price per unit remains constant irrespective of the order size.
When quantity discount are available which is often the case,
price per unit is influenced by the ordered quantity. This violates
the applicability of the EOQ formulas.

2.6 Techniques of Inventory control

ABC Analysis of Inventories

The ABC inventory control technique is based on the principle that

a small portion of the items may typically represent the bulk of
money value of the total inventory used in the production
process, while a relatively large number of items may from a
small part of the money value of stores. The money value is
ascertained by multiplying the quantity of material of each item
by its unit price.
It may also be clear with the help of the following examples:
A Category 5% to 10% of the items represent 70% to 75%
of the money value.
B Category 15% to 20% of the items represent 15% to 20%
of the money.
C Category The remaining number of the items represent
5% to 10% of the money value.
The relative position of these items show that items of category A
should be under the maximum control, items of It may also be
clear with the help of the following examples:
A Category 5% to 10% of the items represent 70% to 75%
of the money value.
B Category 15% to 20% of the items represent 15% to 20%
of the money.
C Category The remaining number of the items represent
5% to 10% of the money value.
An efficient inventory management, therefore, requires the
company to maintain inventories at an optimum level where
inventory costs are minimum and at the same time there is no
stock out which may result in loss of sale or stoppage of
production. This necessitates the determination of the minimum
and maximum level of inventories.
Minimum Level
The minimum level of inventories of their reorder point may be
determined on the following bases:
1 Consumption during lead-time.
2 Consumption during lead-time plus safety stock.
3 Stock out costs.
 4 Customers irritation and loss of goodwill and production
hold costs.

To continue production during Lead Time it is essential to

maintain some inventories. Lead Time has been defined as the
interval between the placing of an order (with a supplier) and the
time at which the goods are available to meet the consumer
needs.
There are sometimes fluctuations in the lead-time and/ or in
the consumption rate. If no provision is made for these
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 variations, stock out may take place-causing disruption in
the production schedule of the company. The stock, which takes
care to the fluctuation in demand, varies in lead-time and
consumption rate is known as safety stock. Safety stock may be
defined as the minimum additional inventory, which serves as a
safety margin or buffer or cushion to meet an unanticipated
increase in usage resulting from an unusually high demand and or
an uncontrollable late receipt of incoming inventory. It can be
determined on the basis of the consumption rate, plus other
relevant factor such as transport bottleneck, strikes or shutdowns.
In the case of uncertainly, the probabilistic approach may be
applied to determine the safety margin. To avoid stock out arising
out of such eventualities, companies always carry some minimum
level of inventories including safety stock. Safety stock may not
be static for all the times. A change in the circumstances and in
the nature of industry demand, necessitates are adjusted in its
level. In this study an effort has been made to examine how the
current companies determine their minimum level for re-order
inventories, safety stock, whether a level of study is maintained
throughout the year or not.
For each type of inventory a maximum level is set that
demand presumably will not exceed as well as a minimum level
representative a margin of safety required to prevent out of stock
condition. The minimum level also governs the ordering point. An
order to sufficient size is placed to bring
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 inventory to the maximum point when the minimum level is
reached.
Maximum Level
The upper limit beyond which the quantity of any item is not
normally allowed to rise is known as the Maximum Level. It is
the sum total of the minimum quantity, and ECQ. The fixation of
the maximum level depends upon a number of factors, such as,
the storage space available, the nature of the material i.e.
chances of deterioration and obsolescence, capital outlay, the
time necessary to obtain fresh supplies, the ECQ, the cost of
storage and government restriction.
Re-Order Level
Also known as the ordering level the reorder level is that
level of stock at which a purchase requisition is initiated by the
storekeeper for replenishing the stock. This level is set between
the maximum and the minimum level in such a way that before
the material ordered for are received into the stores, there is
sufficient quantity on hand to cover both normal and abnormal
circumstances. The fixation of ordering level depends upon two
important factors viz, the maximum delivery period and the
maximum rate of consumption.
Re-Order Quantity
The quantity, which is ordered when the stock of an item
falls to the reorder level, is know as the reorder quantity or the
EOQ or the economic lot size. Although it is not a stock level as
such, the reorder quantity has a direct bearing upon the stock
level in as much as it is necessary to consider the maximum
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 and minimum stock level in determining the quantity to be
ordered. The re-order quantity should be such that, when it is
added to the minimum quantity, the maximum level is not
exceeded. the re-order quantity depends upon two important
factors viz, order costs and inventory carrying costs. It is,
however, necessary to remember that the ordering cost and
inventory carrying cost are opposed to each other. Frequent
purchases in small quantities, no doubt reduce carrying cost, but
the ordering costs such as the cost inviting tenders of placing
order and of receiving and inspection, goes up. If on the other
hand purchases are made in large quantities, carrying costs, such
as, the interest on capital, rent, insurance, handling charges and
losses and wastage, will be more than the ordering costs. The
EOQ is therefore determined by balancing these opposing costs.
EOQ
Cost
Ordering cost
Carrying Cost
Units Per Order
Economy Order Quantity
The EOQ refers to the order size that will result in the lowest
total of order and carrying costs for an item of
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 inventory. If a firm place unnecessary orders it will incur
unneeded order costs. If a firm places too few order, it must
maintain large stocks of goods and will have excessive carrying
cost. By calculating an economic order quantity, the firm
identifies the number of units to order that result in the lowest
total of these two costs.
The constraints and assumption followed:
1. Demand is known-- Using past data and future plans a
reasonably accurate prediction of demand can often be made.
This is expressed in unit sold in a year.
2. Sales occur at a constant rate-- This model may be
used for goods that are sold in relatively constant amount
throughout the year. A more complicated model is needed for
firms whose sales fluctuate in response to there seasonal cyclical
factors.
3. Cost of running of goods are ignored-- Cost
associated with storage, delays or lost sales are not considered.
These costs are considered in the determination of safety level in
the re-order point subsystem.
4. Safety stock level is not considered-- The safety stock
level is the minimum level of inventory that the firm wishes to
hold as a protection against running out. Since the firm must
always be above this level the EOQ need not be considered the
safety stock level.
Total Ordering Cost (TOC)=(A/Q)*O
Average Inventory=Q/2
Total Carrying Cost (TCC)=(Q/2)*C
204
 Total Inventory Cost=TOC+TCC
Total Cost=(AO/2)+(QC/2)
Where A=total annual demand
Q=Quantity order in units
O=Order cost per order
C=Carrying cost per unit
The basic formula is EOQ = 2(U)(OC)
CC%PP
Where 2=mathematical factor that occurs during the deriving of
the formula, U-Units sold per year, a forecast provided by the
marketing department. OC=Cost of placing each order for more
inventory provided by cost accounting. CC% = Inventory carrying
cost expressed as a percentage of the average value of the
inventory, an estimate usually provided by cost accounting.
PP = Purchase price per each unit of inventory supplied by the
purchasing department.
Trial and error approach
Select a number of possible lot (Order) sizes to purchase, then
determine the total cost for each lot size chosen, now select the
ordering quantity that minimizes the total cost.
Quantity Discount and Order Quantity
The standard EOQ analysis is based on the assumption that the
price per unit remains constant irrespective of the order size.
When quantity discount are available which is often the case,
price per unit is influenced by the ordered quantity. This violates
the applicability of the EOQ formulas. However
205
the EOQ framework can still be used as a starting point for
analyzing the problem.
To determine the optimal order size when quantity discount is
available, the following procedures may be followed:
1. Determine the order quantity using the standard EOQ formula
assuming no quantity discount.
2. If Q enable the firm to get quantity discount then it represents
the optimal order size.
3. If Q is less then the minimum order size required for quantity
discount (call it-G2) compute to change in profit as a result
of increasing the order quantity from O1 to O2 as follows.
=AD+[A/Q1-A/Q2] O-[Q2((P-D)/2-(Q1PC/2)
= Change in profit, A = total demand, D = discount per
unit when quantity discount in available, Q1 = EOR assuming
no discount, Q2 = minimum order size required for quantity
discount, O = order cost, P = Purchase price without
discount, C = carrying cost
4. If change in profit is positive = Q2
If change in profit is positive = Q1
Stock Level Sub-system
This system keeps track of the goods held by the firm, the
insurance of goods, and the arrival of order. It is made up of the
records accounting for the goods in stock. Thus the stock level
subsystems maintain record of the current level of inventory for
any period of time, the current level is calculated .
 CHAPTER - 3
REVIEW OF LITERATURE
 Review of Literature

The basic idea of microfinance is to provide credit to the poor people who otherwise
would not have access to credit services. Micro-credit programmed extend small
loans to very poor people for self-employment projects that generate income and
allow them to take care for themselves and their families. This programmed is
working in many developing countries. There is no dearth of literature related to
microfinance. In order to find the impact of microfinance programmed, impact
assessment studies have been done by many authors in different countries like
Bangladesh, India, Pakistan, Nepal, Thailand, Ghana, Rwanda, Peru and many other
countries of South Asia and Africa. The literature on microfinance offers a diversity
of findings relating to the type and level of impact of the programmed. There are
various studies which confirm that microfinance programmed has a significant
positive impact in increasing employment and reducing poverty. A number of
studies show that the participant households enjoy higher standard of living as
compared to the non-participants. The programmed reduces consumption as well as
income vulnerability among its beneficiaries. Some of the studies also confirm that
the programmed is helpful in attaining millennium development goals by reducing
poverty, hunger, infectious diseases and through women empowerment. There are
a number of studies which explain that participation in the programmed has led to
greater levels of women empowerment in terms of increase in knowledge, self
confidence, economic, social and political awareness, mobility, development of
organizational skills etc. However, some of the studies show that the programmed is
not reaching the bottom poor people and the group loans are utilized for non-
income generating activities such as consumption and other emergency needs. The
studies also show that the women participants have limited control over the use of
group loans, therefore, the programmed results in limited empowerment of women
participants. Thus the literature on microfinance provides mixed results about the
impact of microfinance programmed on the programmed participants. The review of
impact assessment studies provides valuable 25 insights into the benefits and
drawbacks associated with microfinance programmed. Some important studies
which are relevant to the present study have been discussed below: 2.1
Microfinance and Its Operation She ok and (2000) discussed the evolution of Indian
banking and its failure to provide credit facilities to poor people. NABARD started
Self Help Group Bank Linkage Programmed in 1992, which was considered as a
landmark development in banking with the poor. It was observed that Regional Rural
Banks security-oriented individual banking system was replaced by the delivery of
credit to focused groups. According to him the government sponsored programmed
had occupied much of the economic space but did not achieve the objective of
alleviating poverty.

CHAPTER 4
RESEARCH
METHODOLOGY
Meaning of Research design
Research design is different from the method by which data are
collected. Many research methods texts confuse research designs with
methods. It is not uncommon to see research design treated as a mode of
data collection rather than as a logical structure of the inquiry. But there
is nothing intrinsic about any research design that requires a particular
method of data collection. Although cross-sectional surveys are frequently
equated with questionnaires and case studies are often equated
with participant observation
data for any design can be collected with any data collection method. How
the data are collected is irrelevant to the logic of the
design.
Failing to distinguish between design and method leads to poor
evaluation of designs. Equating cross-sectional designs with questionnaires,
or case studies with participant observation, means that the
designs are often evaluated against the strengths and weaknesses of the
method rather than their ability to draw relatively unambiguous conclusions
or to select between rival plausible hypotheses.

4.1 RESEARCH DESIGN

Before examining types of research designs it is important to be clear
about the role and purpose of research design. We need to understand
what research design is and what it is not. We need to know where
design its into the whole research process from framing a question to
nally analysis and reporting data. This is the purpose of this chapter.
TYPES OF RESEARCH DESIGN

1.Descriptive research
Although some people dismiss descriptive research as `mere
description',
good description is fundamental to the research enterprise and it
has added immeasurably to our knowledge of the shape and
nature of
our society. Descriptive research encompasses much government
sponsored
research including the population census, the collection of a wide
range of social indicators and economic information such as
household
expenditure patterns, time use studies, employment and crime
statistics
and the like.

1. Explanatory research
Explanatory research focuses on why questions. For example, it is
one
thing to describe the crime rate in a country, to examine trends
over time
or to compare the rates in different countries. It is quite a
different thing
to develop explanations about why the crime rate is as high as it
is, why
some types of crime are increasing or why the rate is higher in
some
countries than in others.
 CHAPTER - 5
ANALYSIS AND INTERPRETATIONS
Q:-1. Designation in the company
INTERPRETATION:--

From the above analysis we come to know that out of 50 respondents 50% of employees are at
upper level, 30% of respondents are finance officer and 20 % are procurement officer.
Q:-2.How long have you served in the current

position?
INTERPRETATION:--

From the above analysis we come to know that out of 50 respondents, 35%of members served
for 0-2 years .And 30% of members served for 2-4 years.10%of the members served for 8-10
years.15%of members served for 4-6 year son its current position. And 10% of members served
for 6-8 years.
Q:-3.Leading source of your receivables

INTERPRETATION:--

Out of 50 respondents, 40% of respondents said that their receivables come from sales, 20% of
receivables come from loan and interest, 10% of receivables come from other sources,15%of
receivables come from return from investment, & 15% of receivables come from subscriptions.
Q:-4. Days you allow prior to actual receipts from
date of notice?

INTERPRETATION:--

Out of 50 respondents, 45 %of respondents said that their actual receipts come within 30-45
days, 25 %of respondents said that their actual receipts come within 15-30 days, 10%of
respondents said that their actual receipts come within 15 days, 5 %of respondents said that their
actual receipts come within 0 day, 5 %of respondents said that their actual receipts come within
60-75days, 5 %of respondents said that their actual receipts come within 45-60day
Q:-5. Classify the company in terms of its credit
uptake?

INTERPRETATION:--

Out of 50 respondents, 35%of respondent said that company give credit to low credit consumer,
15%of respondent said that company give credit to moderate credit consumer, 20%of respondent
said that company give no credit at all, 30%of respondent said that company give credit to high
credit consumer.
Q:-6. Creditors depending on their credit volume
advancement to company.

INTERPRETATION:--

Out of 50 respondents, 30% respondents said that company advances credit from lending
institutions. 35% respondents said that company advances credit from suppliers, 3% respondents
said that company advances credit from others,32% respondents said that company advances
credit from members.
Q:-7.What is the companys preferred period for
credit payment?

INTERPRETATION:--

Out of 50 respondents, 20% of respondent said that companys preferred period for credit
payment is 30-45 days, 25% of respondent said that companys preferred period for credit
payment is 15-30 days, 10% of respondent said that companys preferred period for credit
payment is 15 days, 5% of respondent said that companys preferred period for credit payment is
0 day, 10% of respondent said that companys preferred period for credit payment is 60-75 days,
30% of respondent said that companys preferred period for credit payment is 45-60 days.
.

CHAPTER- 6
FINDINGS AND SUGGESTIONS
6.1 FINDINGS--:

From the above analysis we have concluded that designation of the members is
50% of procurement officer .And served for the organization as for its current
position is maximum for 0-2years which is also considered as higher %age also.
The maximum companies leading sources of receivables are sales which is 40%.
The company receives actual receipts within 30-45 days which is 45% of its total
receipts. And company gives more credit to low credit consumer. The company
advances loan of maximum %age of 35% from its suppliers. The last is that the
company does payment within 45-60days for its credit purchases which is 30%.
6.2 SUGGESTIONS:--

After having analyzed the data, we have come to know that companies credit payment
period is good
Their term of their actual receipts from their customers is also scheduled as per their
terms and conditions .
As it is advised to company that all members should be informed regarding day to day
business transactions so that it will help them in smooth flow of their business activities
Generally company gives credit to low credit consumer. Because if company lends credit
to high credit consumer then they may have fear of their bad debts also.
As after calculating various ratios it is advised to company that it should check their
workings so that if any changes are needed it should be done .
The company should also maintain their financial statements for their smooth working of
their business
The company should also advised to prepare quarterly, half yearly, yearly profit and loss
account which helps them to know whether firm runs in profit or loss.
6.3 CONCLUSION OF STUDY

While production managers of today appear to have more education than before, little else
seems to have changed over many years. Production managers in New Zealand continue to
have a wide range of responsibilities and appear to be happy with their job, status, and
remuneration. Production managers feel they need further training in computer skills,
accounting, and business management.

As in earlier studies, this survey reinforces the importance placed by production

management practitioners on concept-related topics. Among these, the subject areas of
production planning, quality management, and manufacturing strategy are considered the
most practically relevant for New Zealand. Analytical techniques are given very low
importance. This polarization (concept vs. technique) in the perception of the practitioners
is perhaps even more marked in this study than in overseas studies. People skills and
monetary issues are given high preference, even though these topics are usually taught
outside the discipline of production management in most institutions. The stress on human
resource is emphasized by this typical comment from a production manager:

"You do not seem to have included much of staff training methods and
assessment of effectiveness, conflict resolution, motivational theory,
human resource. People are the most important thing in production.
How to manage them is vital."

Ensuring health and safety is seen as one of the top tasks of production managers, but this
topic is given scant attention in PM teaching. International operations management, and
supply chain management, which are two "hot" topics in overseas PM circles are perceived
to be of low value to New Zealand production managers. Even though information
technology (IT) was given low rating currently, it was seen as having the highest impact on
future PM practice. This justifies the current trend in stressing IT in PM teaching.
One comes away with an overall impression that production management teaching needs to
move away from being a sub-discipline of industrial engineering / operational research and
needs to emphasise "softer" topics such as human resources, health and safety,
environmental issues, and strategic concerns in order to accord with production
management practice. The evidence seems to be that, compared to overseas, New Zealand
PM education goes more towards meeting practitioners needs, but there is still a wide gap.
An academic offered the following comments:

CHAPTER 7
BIBLIOGRAPHY
Bibliography

1. Pandey, Financial Management

2. Sharma, Production planning and control

3. Dr. Prasana Chandra, Financial Management Theory and Practice

4. www.google.com

5. www.slideshare.net

6. www.allprojects.com

7. www.managementparadise.com

8. www.camstvm.org
 ANNEXURE

QUESTIONNAIRES

Q:- 1.Gantt chart is used for

1. material handling
 2. production schedule

3. inventory control

4. machine repair schedule

Q:- 2.The type of organization preferred for a steel industry, is

1. functional organization

2. line, staff and functional organization

3. line organization

4. line and staff organization

Q:- 3.The aim of value engineering is to

1. find the depreciation value of a machine

2. determine the selling price of a product

 3. all of the above

4. minimize the cost without change in quality of the product

Q:- 4.Probabilistic time for completion of any activity can be found out from

1. most likely time

2. pessimistic time

3. all of these

4. optimistic time

Q:- 5.Which one of the following chart gives simultaneously information about the progress
of work and machine loading?

1. Process chart

2. Gantt chart

3. Machine load chart

 4. Man-machine chart

Q:- 6.Fixed position layout is also known as

1. analytical layout

2. synthetic layout

3. static product layout

Q:-7.The procedure of modifying work content to give more meaning and enjoyment to the
job by involving employees in planning, organization and control of their work, is termed
as

1. job enrichment

2. job rotation

3. job evaluation

4. job enlargement
Q:-8.A diagram showing the path followed by men and materials while performing a task is
known as

1. string diagram

2. flow process chart

3. flow diagram

4. travel chart

Q:- 9.Work sampling is applied for

1. finding out time standards, specially where the job is not repetitive and where

time study by stop watch method is not possible

2. estimating the percentage of the time consumed by various job activities

3. estimation of the percentage utilization of machine tools

4. all of the above

Q:- 10.Production cost refers to prime cost plus

 1. factory, administration and sales overheads

2. factory and administration overheads

3. factory overheads

4. factory, administration, sales overheads and profi

Q:-11.Bar chart is suitable for

1. large project

2. all of these

3. major work

4. minor work

Q:-12.Military type of organization is known as

1. functional organization

2. line organization
 3. line, staff and functional organization

4. line and staff organization

Q:- 13.A systematic job improvement sequence will consist of

1. motion study

2. all of these

3. job enrichment

4. time study

Q:-14.In time study, the rating factor is applied to determine

1. standard time of a job

2. merit rating of the worker

 3. normal time of a worker

4. fixation of incentive rate

Q:- 15.The main object of scientific layout is

1. to produce better quality of product

2. to utilize maximum floor area

3. to minimize production delays

4. all of these

Q:- 16.In inventory control theory, the economic order quantity is

1. capacity of a warehouse

2. average level of inventory

3. lot size corresponding to break-even analysis

4. optimum lot size

Q:-17.In value engineering, the term value refers to

1. selling price of the product

2. manufacturing cost of the product

3. total cost of the product

4. utility of the product

Q:-18.A device used for lifting or lowering objects suspended from a hook at the end of
retractable chains or cable is called

1. jib crane

2. portable elevator

3. chain conveyor

4. hoist
Q:- 19.When slack of an activity is negative

1. it represents a situation where extra resources are available and the completion

of project is not delayed

2. it represents that a programmed falls behind schedule and additional resources

are required to complete the project in time

3. the activity is critical and any delay in its performance will delay the completion

of whole project