A STUDY ON THE

INVENTORY
MANAGEMENT IN
VIJAYKANT DAIRY AND
FOOD PRODUCTS PVT
LTD.
.

Introduction
: company
profile

VDFPPL DAIRY AT A GLANCE

Full name:
Ltd

Vijaykant Dairy & Food Products Pvt

Address: Vijaykant Dairy & Food Products Pvt

Ltd Village-Neginhal, Bailhongal talluk, distBelgaum.
Chairman : Vijay Shannkeshwar.
Manging director : Shivakant Sidnal.
Year of establishmrent: 22nd may 2005
Purpose: Basically milk procurement but now milk
&
milk Products like ice cream, curd, buttermilk,
butter & Ghee etc., are manufactured
Head office:
road, Belgaum.

11, 2nd floor, Bilgi Plaza, college

Brand name:

ADITYAA MILK

Introductio
n to topic :

Every company aims for good management

of its inventory, more over dairy industry
deals with the perishable goods whose
management will be quite difficult.

In todays world every business tries to

strike a balance in inventory between what
is needed and what is deemed, considering
the major factor of cost cutting or reduction.
This control is called inventory management.

Statement
of the
problem

The intent of inventory management is to

continuously hold optimal inventory levels.
So it deals with different issues, lead
time,carrying costof inventory,asset
management, inventory forecasting,
inventoryvaluation , physical inventory,
available physical space for inventory,
quality management etc.
So proper inventory management is to keep
proper balance between these issues.

Scope of the
study and
objectives

Study is exclusively conducted for Vijaykant

Dairy and Food Products PVT LTD.
Covers general information of the industry
and company.
The 5 year financial data related to cost and
inventory has been analyzed.
The trend may differ year to year.

Objectives

PRIMARY OBJECTIVE
To analyse the efficiency of Inventory
Management of Vijaykant Dairy and Food
products pvt ltd..
SECONDARY OBJECTIVE
To study the existing practices of inventory
management
To study the inventory control techniques.
To identify optimum level of inventory which
minimizes the cost.
To classify the various components based on
its value and movements.
To identify inventory requirement of the
company for the next year.

Research
methodology

RESEARCH DESIGN
The research design used in this project is
Analytical in nature the procedure using,
which researcher has to use facts or
information already available, and analyze
these to make a critical evaluation of the
performance.
DATA COLLECTION
Primary Sources
Data are collected through personal
interviews and discussion with FinanceExecutive.
Data are collected through personal
interviews and discussion with Material
Planning- Deputy Manager.

Secondary Sources
The data are collected from the annual
reports maintained by the company for the
past 5 years viz .
Data are collected from the companys
website.
Books and journals pertaining to the topic.
Tools used in the analysis :
Linear Regression method.
Inventory turnover ratios.
Economic Order Quantity.
ABC Analysis.
FSN Analysis

1. Trend analysis

YEAR
march)
(x)
2011

Inventories
(31st (Rs. In crore)

X2

XY

b= 9.22
a = y b x = 66.696 9.22 * 0 = 66.69
y = a + bx

(Rs)

51.52

2012

4
43.24

-103.04
-43.24

2013

81.65

2014

75.66

75.66

2015

81.41

162.82

333.48

10

92.2

y = 66.696 + 9.22 x.

=66.696+ 9.22 x
=66.696+9.22 (x-2013)
y =94.356

Therefore inventory for the year 2016 will be approximately Rs.94.356 cr

Percentage
change in
the
inventory
year after
year

Years

Inventories

Percentage

2011

51.52

12.041

2012

43.24

10.010

2013

81.65

19.084

2014

75.66

17.684

2015

81.41

19.028

2016

51.52

22.054

TOTAL

100

percentage
22.05
19.08

12.04

2011

17.68

19.03

10.01

2012

2013

2014

2015

2016

2. Inventory
turnover
ratio

The formula for the ratio is

sales
Avg. Inventory

Inventories Turnover Ratio & Velocity

Net Sales

Avg. Inventory (Rs.)

Ratio

Velocity

Year

(Rs.)

2011

2012

306.83

47.38

6.47:1

56.36

2013

304.59

62.445

4.87:1

74.84

2014

335.40

78.655

4.26:1

85.59

2015

430.63

78.535

5.48:1

66.60

(in Days)

Net

Table 4.3.1 ABC ANALYSIS

ABC
Analysis

Chart Title

60

Total No. Items in

Classes
Categories

Percentage

50

40

13
A

52

30

7
B

28

20

20

10

25
Total

100

4. FSN
Analysis

FSN Analysis

Total No. items in Classes

Categories

60

Percentage

50

13
F

52

40

30

12
S

48

20

0
N

10

25
Total

100

PERCENTAGE
F

5. Economic reorder quantity

Sl. No.

Components

Carrying
Demand

Cost/unit/yea EOQ

No.

of

units No. of order

Ordered

per year

Per year

Re-Order Cost/ order r

Milk

9125000

27000

36

116993.58

70000

77.99

Cups

5475000

6200

184241.68

170000

29.71

Bottles

200000

12000

40000

24000

Cones

400000

6200

49799.5

40000

8.03

Packets

5475000

6200

184241.68

200000

29.71

1.

2.

3.

4.

5.

Findings
and
conclusion

It is found that, there is a variation in the

EOQ & no. of unit purchased.
It is good that the company maintains its
inventories based on its value using
controlling techniques
the company maintains low percentage in
fast moving items in compared to Slow
moving inventories based on movements
using controlling techniques.
. It shows satisfactory position of inventories
as it implies increasing production & demand
for the product.

Conclusion

From the analysis we can conclude that the

company can follow the EOQ for optimum
purchase.
There should be tight control on stock level
based on ABC analysis & maintain high
percentage in fast moving items as per FSN
analysis.
Since the inventory turnover ratio shows
increasing trend, there will be more demand
for the products.
If they could properly implement and follow
the norms and techniques of inventory
management, they can enhance the profit
with minimum cost.

Suggestions

Company should follow the EOQ.

Under ABC analysis, the management must
have more control on A than B&C, because A
class constitutes more (52%) of higher values.
There should be tight control exercised on
stock levels, to avoid deterioration.
The company must not go to the Non-moving
items as far as possible, because there will be
unnecessary blocking of working capital
The past data shows increase in inventory the
company is also expecting more inventories
for future period i.e. 2016. The management is
required to maintain the same inventory trend
in the forth coming year also.