MATERIAL MANAGEMENT

Under the guidance of: Prof. S.S. Tikhe

Presented by: Gaurav Kataria-41 Pratik Khairnar-42 Snehal Raut-79

CONTENTS
Introduction What is Material Management?? Objectives Material Flow Process What is EOQ?? Assumptions Underlying EOQ Model Formula For EOQ Classification & Codification of Material Importance

INTRODUCTION
The major resources in construction are : Men, Machine, Material and Money Material costs- 5060% of the total project cost 10-20% Material is either wasted or illegally removed during construction.

WHAT IS MATERIAL MANAGEMENT?

Material management deals with management of materials along with cost. It is responsible for the co-ordination of material:

Planning Purchasing Storing Inventory control Departmental Efficiency

OBJECTIVES

To ensure uninterrupted production by maintaining steady flow of materials To achieve economy Speedy disposal of materials that are not required To maintain good supplier and customer relationship Losses due to deterioration are kept to a minimum

MATERIALS FLOW PROCESS

Vendor/Supplier Production planning and control Sales and Marketing

Stores
Purchasing and procuring activities

Production/ Manufacturing

Logistics
Inventory Control Receiving and inspection Materials flow Information flow

Warehousing/ Customer

ECONOMIC ORDER OF QUANTITY

ECONOMIC ORDER OF QUANTITY(EOQ)

PURCHASING COST

CARRYING COST

WHAT IS EOQ?
Economic Order of Quantity is the level of inventory that minimizes the total inventory carrying costs and ordering costs. It is a rational approach needed for fixing order quality and quantity of an item

ASSUMPTIONS UNDERLYING THE EOQ MODEL

Production is instantaneous.
Lead time is Zero.

Demand is deterministic.
Demand is constant over time.

A production run incurs a constant setup cost.

Products can be analyzed singly.

Total cost

Holding Costs

COSTS

Ordering Costs

Economic Ordering Quantity

ORDER SIZE

FORMULA FOR EOQ

qo = 2SCo/Cui
qo = Economic Order Quantity S = annual consumption of item (units) Co = ordering/procurement cost per order(Rs.) Cu = price per unit (Rs.) i = inventory carrying cost

CLASSIFICATION AND CODIFICATION OF MATERIALS

IMPORTANCE OF CLASSIFICATION
To identify To supply To store Helps departments in locating and handling them To select proper suppliers to purchase proper materials at proper time

CLASSIFICATION

Direct materials Indirect materials Supporting materials Office materials

CODIFICATION

The code numbers are symbols or numerical codes given to a particular item. They identify the various materials used in any organization.

ADVANTAGES
Long names not repeated Duplication of material avoided Storing, sorting, documentation easier Location of materials easier Accounting and costing better

DISADVANTAGE

Mistakes Misunderstandin g Large no. of codes

SYSTEMS OF CODIFICATION

Numerical system Alphabetical system Alpha-numeric system Colour codification

CONCLUSION
Material management is an important management tool. It is thus very useful in: getting the right quality & quantity of supplies at the right time having good inventory control

It ultimately makes the working atmosphere healthy in any type of organization