1.

1 INTRODUCTION
Inventory represents the second largest asset category for manufacturing companies,
next only to plant and equipment.Given substantial investment in inventories, the importance
of inventory management cannot be overemphasized.
Primary executives in production, purchasing and marketing departments, take decisions
relating to inventories. Usually, purchasing raw material policies and production executives
and production and marketing executives evolve finished goods inventory policy. inventory
management has important operational implications, the operation manager has the
responsibility to ensure that inventories are properly monitored and controlled. He has to
emphasize the operational point of view and initiate programmers with the participation and
involveinvolvement of others for effective management of inventories
Definition of 'Inventory
The raw materials, work-in-process goods and completely finished goods that are considered
to be the portion of a business's assets thatare ready or will be ready for sale. Inventory
represents one of the most important assets that most businesses possess, because the
turnover of inventory represents one of the primary sources of revenue generation and
subsequent earnings for the company's shareholders/owners.
The main functions of inventory are summarized below

Smoothing out irregularities in supply

Minimizing the production cost
Allowing organization to cope with perishable material

Need to hold inventories

Maintaining inventories involves trying up of the companys funds and incurrence of storage
and handling costs.

Inventory analysis
Careful inventory management is critical to the financial health of businesses whose primary
venture is manufacturing or retailing. In retail and manufacturing companies, huge amounts
of time and money are pended in keeping and managing inventory. The assumption of basic
inventory model.

Only one item is considered.

An entire order arrives at once.
No shortages are allowed.
The demand is known and constant over time.
The time value of money is zero.
Price for items is not a function of order quantity.
Lead-time is known and constant.

Types of inventory:
There are three basic types of inventory - raw materials, work-in-process, finished good.
based on their uses, inventory can be classified as - cycle inventory, safety stock, anticipation
inventory, and in-transit inventory.
You may have also heard about independent and dependent demand inventories. We will
work with independent demand in our analysis. Independent demand is most frequently
associated with finished goods where the demand is more or less unknown. Dependent
demand inventory is associated with MRP systems and bills of materials.
Cost involved in inventory analysis:
Ordering cost:
Ordering cost is referred to as the cost of placing an order and securing the supplies. It varies
from time to time and also from industry to industry.

Carrying cost:
Carrying cost refers to the cost of keeping the materials in the storehouse which include (1)
capital cost, (2) cost of storage and handling, (3) cost of deterioration and obsolescence, and
(4) other kinds of expenses and losses during storage.
Definition of Supply Chain Management
SCM is the management of a network of all business processes and activities involving
procurement of raw materials, manufacturing and distribution management of Finished
Goods. SCM is also called the art of management of providing the Right Product, At the
Right Time, Right Place and at the Right Cost to the Customer.
Why SCM strategy is important for an Organization
Inventory control and inventory visibility are two very critical elements in any operations for
these are the cost drivers and directly impact the bottom lines in the balance sheet. Inventory
means value and is an asset of the company. Every business has a standard for inventory
turnaround that is optimum for the business. Inventory turnaround refers to the number of
times the inventory is sold and replaced in a period of twelve months. The health of the
inventory turn relates to the health of business.
In a global scenario, the finished goods inventory is held at many locations and distribution
centres, managed by third parties. A lot of inventory would also be in the pipeline in
transportation, besides the inventory with distributors and retail stocking points. Since any
loss of inventory anywhere in the supply chain would result in loss of value, effective control
of inventory and visibility of inventory gains importance as a key factor of Supply Chain
Management function.

1.2 INDUSTRY PROFILE

Although pottery and ceramic industry is of prehistoric origin in India, the HT insulator
industry has a recent origin. The first unit was set up in the fifties at Bangalore. Some units
were set up in the sixties but the main expansion of the industry took place in the seventies
are used in electrical transmission lines, substations and electrical equipment. Different types
of industry are used for each application.
There has been up gradation of transmission voltage and plans are afoot to install 765 KV AC
transmission lines. The industry would need to develop and produce HT insulators of higher
ratings for transmission lines, substations and equipment.
There are 14 units manufacturing electro porcelain high tension insulators. Two of these units
are in small scale sector. These have installed capacity of 85,050 tonnes per annum one small
scale and one organized sector unit have stopped production of insulators. The capacity of
these two units is 5000 tonne per annum.
The demand and average production of the HT Insulators during the last nine year have been
around 31,000 tonne per annum.
More than 60% of the installed capacity is lying idle with the industry due to lack of domestic
demand. With the implementation of the approved projects, the unutilized capacity would
increase from 60,000 tonne to 1,00,000 tonne approximately. Since the domestic is not likely
to increase proportionately at least for the next five years, the only possible way for
improving the efficiency of the industry is to enter the world export market.
All the units in the organized sector have been set up with foreign technology through foreign
collaborations were entered into initially to set up the projects and number of 1 unit
subsequently had entered into supplementary collaborations to upgrade and enhance the
product range. Each unit in the industry has been acting as a sealed compartment and centre
of an exclusive secret technology. There has been very little exchange of technological
information amongst the units of the industry.
The industry has done well to adapt the foreign technology. Over the past decade, it has
produced major equipment and testing equipment on their, own. Porcelain insulator industry

in India has substantially matured and even is in a position to pass on technology to any third
country who may want to set up such a plant in association with them.
Electro porcelain and toughened glass are the two types of insulators that are being used for
high tension transmission lines and equipment throughout the world. The world market
comprises of the power project being set up mainly in the under developed and developing
countries using electro porcelain and toughened glass insulators.
In India also toughened glass insulators are being used in transmission lines. However, it may
be noted that this comparison is not exhaustive, as complete data on properties and
performance of glass insulators is not available due to its limited use so far. Toughened glass
insulator technology acquisition and adaptation has not received sufficient attention so far in
the country. The only unit which has been given the license for manufacture of toughened
glass insulator has set up an assembly line. Production of glass shell which indeed is the real
technology is yet to start.
Generally glass tends to deteriorate in outdoor application as it is not crystalline. It is
amorphous and also in a Metastable state. Also surface damage in glass insulators leads to
shattering, while porcelain insulators can withstand reasonable degree of surface demand.
Performance of glass is yet to be proved in EHV system trial in tropical countries. Long rod
porcelain insulators have been developed and are being used along with disc insulator strings.

1.3 COMPANY PROFILE

Vision:
WSI was established in 1961 with a vision of creating an enduring benchmark in India for
strategic excellence in electro-porcelains.
Goal:
The continuing drive to synthesize material technology with manufacturing competence to
develop innovative product solutions.
A period of expansion:
The foundation of product and process technology from international leaders coupled With
continuing emphasize on in-house development and adaptation to market requirements,
helped WSI to introduce many new product styles for the domestic and export markets as
well as improve manufacturing efficiency.
The company today has an installed capacity of 12,800 CMT on a built-up area of 67,237
square meters and manufactures all types of high voltage porcelain insulators.
Continuing improvement:
The plant is with comprehensive facilities to ensure production consistency and flexibility.
An integrated approach to quality management through comprehensive training at all levels
supported by full-fledged test facilities ensures superior product performance and reliability.
All products are rigorously tested to ensure compliance with not only all international
standards but also stringent customer specific standards. This is supported by periodic testing
at reputed international laboratories.
Extensive usage of information technology for production planning, scheduling and control
creates the ability to track each order through the production process, respond quickly to
customer requirements and maintain minimum throughput time.

Quality A company Wide commitment:

The quality system, certified for compliance to ISO 9001(achieved in 1991) is used as the
primary tier of product and process control. This is supplemented by comprehensive usage of
other techniques including SQC, SPC, PDCA and continuous improvement project in all
areas of operations.
An international outlook:
WSI believes in serving global market while retaining a strong domestic presence. Today,
WSI products are in service in many countries in severe operating environments. WSI has put
in place an extensive network of sales agent and distributors supplementing direct marketing
efforts to provide comprehensive service to its customer.
All our product have been tested extensively at various international laboratories in
accordance with the international standards.
Since its inception WSI has won numerous awards for its export performance from the
Government of India.
An On-going saga:
WSI continues to enhance its competence in design and manufacturing expertise in the
electro-porcelain industry in its mission to provide increasing value to the customers.

1.4 PRODUCT PROFILE

A true insulator is a material that does not respond to an electric field and completely resists
the flow of electric charge. In practice, however, perfect insulators do not exist. Therefore,
dielectric materials with high dielectric constants are considered do not exist. Therefore,
dielectric materials with high dielectric constant are considered insulators. In insulating
materials valence electrons are tightly bonded to their atoms. These materials are used in
electrical equipment as insulators or insulation. Their function is to support or separate
electrical conductors without allowing current through themselves. The term also refers to
insulating supports that attach electric power transmission wires to utility poles or pylons.
Some materials such as glass, paper or Teflon are very good electrical insulators. Even
though they may have lower bulk resistivity, a much larger class of materials are still good
enough to insulate electrical wiring and cables. Examples include rubber-link polymers and
most plastics. Such materials can serve as practical and safe insulators for low to moderate
voltages (hundreds, or even thousands, of volts).
Insulators are commonly used as a flexible coating on electric wire and cable. Since air is an
insulators, in principle no other substance is needed to keep power where it should be. High
voltage power line commonly use just air, since a solid(e.g., plastic) coating is impractical.
However, wires which touch each other will produce cross connection, short circuits, and fire
hazards.
In coaxial cable the center conductor must be supported exactly in the middle of the hollow
shield in order to prevent EM wave reflection. Finally, wires which expose voltages higher
then 60V can cause human shock and electrocution hazards. Insulating coatings help to
prevent all of these problems
Every insulator manufactured is subjected to an array

of thermal, electrical and mechanical

tests. Apart from the routine tests, samples from each lot are subjected to acceptance tests in
line with the relevant standards
Suspension Insulators
Service environments necessitate the use of the proper profile of the insulator, to ensure
hassle-free operation under severe site conditions. To cater to the needs of the customers WSI

manufactures three different profiles catering to site conditions ranging from lighting /
moderate pollution to severe sand pollution.
Every insulator manufactured is subjected to an array of thermal, electrical and mechanical
tests. Apart from the routine tests, samples from each lot are subjected to acceptance tests in
line with the relevant standards.
Insulators for substations and apparatus require a high degree of safety and service reliability.
These insulators may be subjected to high degree of static and dynamic loading, severe
climatic conditions and very heavy levels of pollution.
"Suspension" and "Strain" insulators are the same thing; when used in the vertical position
(with the conductor hanging below) they are called "suspension"; when used in the
horizontal, to dead-end a conductor, they are called "strain".
There are two basic types of suspension insulators: Unipart and multipart.
Multiparts are no longer produced, and original units are rare today. There are only two
known styles: Cochrane and Byllesby, both dating from the late 1910s.
Uniparts (see left and right) were first developed in the 1910s and are the common style still
in production today. Each unit has a single glass shell bonded to a steel cap (above) and a
steel pin (below). The modular units connect with each other cap-to-pin, forming a chain or
"string".
The mechanical strength of a string is determined by the rating of the metal parts of a single
unit, but the electrical rating can be increased by simply adding more units. This system
allows for much higher insulation value than any pin-type insulator: the largest one-piece pintype power insulator ever made in the U.S. was the Corning Pyrex No. 701, which is rated at
only 70,000 volts, while a string a suspension insulators could be assembled that stands off
1,000,000 volts or more.
There are three basic styles of Unipart suspension insulator shells: (1) "sombrero" (so-called
by collectors), which is flat, with multiple ridges or "skirts" on the under-side which increase
the leakage distance; (2) fog or "bell", in which the disk is curved into a bell or nearly
hemispheric shape, the indent being to keep the ridge less underside from being wetted as

easily; and (3) aero(dynamic) style, a wide flat disc (also with no ridges) which presents little
cross-section and so is least affected by high winds.
Ceramic

Disc

Suspension

Insulator/Porcelain

Suspension

Insulator/Suspension

Insulator
Ceramic Disc Suspension Insulator/Porcelain Suspension Insulator/Suspension Insulator
Disc Suspension Porcelain Insulator is used for insulation and supporting in high voltage
overhead transmission and distribution lines. They are usually connected and assembled into
insulator string and used on different levels of line voltage.
Connected

fitting

type:

ball

&

socket

type;

clevis

&

tongue

type

Strength can be 40 KN, 45KN, 60KN, 70KN, 80KN, 100KN, 110KN, 120 KN,
125KN,160KN, 210KN, 300KN
According to different use environment and region, the insulator can be divided into standard
type and anti-pollution type.

Standard suspension insulator:

10

ANSI type:
52-1, 52-2, 52-3, 52-4, 52-5, 52-6, 52-8, 52-9 according to ANSI C29.2

EC type:
U70BL, U70BS, U100B, U120B, U160B, U210B, U300B according to IEC383, BS137
The fog type has big creep age distance. According to the shed shape and structure, the fog
type disc suspension insulator can be divided into double-shed anti-pollution insulator, trished anti-pollution insulator, aerodynamic suspension porcelain insulator and bell-type antipollution suspension insulator

Fog type anti-pollution ceramic disc suspension

The fog type has big creepage distance. According to the shed shape and structure, the fog
type disc suspension insulator can be divided into double-shed anti-pollution insulator, trished anti-pollution insulator, aerodynamic suspension porcelain insulator and bell-type antipollution suspension insulator.

Double shed suspension insulator

11

Three shed suspension insulator

According to connected way, the suspension insulator can be divided into ball and socket
type & clevis and tongue type. The surface of the cap and pin ball of insulator should be hot
dip galvanized. If the area is highly polluted, the pin ball can be added the zinc sleeve. The
locking device of W and R spring split is made of bronze or stainless steel. They have good
flexibility and anti-corrosion nature.

Aerodynamic suspension insulator

12

Bell-type anti-pollution suspension insulator

Insulators for substations and apparatus require a high degree of safety and service reliability.
These insulators may be subjected to high degree of static and dynamic loading, severe
climatic conditions and very heavy levels of pollution.

13

Color: Brown, Grey, White, Blue

Type: standard type, Orient design, customer requirement and drawings
Ceramic / Porcelain Solid Core Station Post Insulator:

This electrical insulator is an insulator of generally columnar shape, and it consists of one
post insulator unit or an assembly of such units and is intended to give rigid support to a live
part which is insulated from earth or from another live part.
Solid-core station post insulator may be manufactured according to IEC, ANSI, BS and other
standards, with cantilever strength from 4kN to 18kN, which is used on 15kV to 750kV
station and substation.
There are two types for this series, normal type and anti-pollution type.
Station Post Insulators including:
Solid-Core Station Post Insulators to meet ANSI C29.9:
TR-202, TR-205, TR-208, TR-210, TR-214, TR-216, TR-286, TR-287, TR-288, TR-289, TR291, TR-304, TR-312, TR-362, TR-369, TR391
Station Post Insulators to meet IEC 273:
C4-125, C4-150, C4-170, C4-200, C4-250, C6-325, C6-450, C6-550, C6-650, C8-750, C10950, C10-1050, C12.5-1550, C10-1675C C10-1800, C10-2100, C10-2550.

Cut-out Insulator:
14

The solid core insulators have the following distinct advantages:

1.

Reliability of service

2. Absolutely puncture proof

3.

Very high mechanical strength

4.

Very low deflection at bending loads

5.

Free from internal partial discharges

Every insulator manufactured is subjected to an array of tests. Apart from the routine tests,
samples from each lot are subjected to acceptance tests in line with the relevant standards.
Insulators comply with relevant IEC / ANSI standards.

15

Porcelain Bushing/ Hollow Insulator/ Ceramic Bushing

Porcelain bushing and big hollow insulators:
Color: Brown, Grey, White, Blue glaze
Type: IEC, ANSI, DIN, BS AS standard type, Orient design, customer requirement and
drawings.

The hollow insulator, porcelain bushings are used extensively in electrical apparatus.
Porcelain bushing is the device that enables one or several conductors to pass through a
partition such as a wall or tank and insulates the conductors from it. The means of attachment
to the partition, such as flange or other fixing device, forms part of the bushing.

Big
Upside

porcelain
down

bushing,

hollow insulator up to 1000KV:

transformer

bushing

Capacity voltage transformer

bushing

SF6

bushing

current

transformer

Outdoor cable end bushing

Voltage transformer bushing
Current transformer bushing

16

17

2.1NEED FOR THE STUDY

Insulator industry is efficiently utilizing in the electricity& Atomic energy system.

Since the demand for power in accelerating the demand for insulators will go shout up.
Therefore to meet tough competition, any between organizations tend to reduce the cost being
locked up in inventory.
Inventory control and inventory visibility are two very critical elements in any operations for
these are the cost drivers and directly impact the bottom lines in the balance sheet. Inventory
means value and is an asset of the company. Every business has a standard for inventory
turnaround that is optimum for the business. Inventory turnaround refers to the number of
times the inventory is sold and replaced in a period of twelve months. The health of the
inventory turn relates to the health of business.
In a global scenario, the finished goods inventory is held at many locations and distribution
centres, managed by third parties. A lot of inventory would also be in the pipeline in
transportation, besides the inventory with distributors and retail stocking points. Since any
loss of inventory anywhere in the supply chain would result in loss of value, effective control
of inventory and visibility of inventory gains importance as a key factor of Supply Chain
Management function.

18

2.2 OBJECTIVES OF THE STUDY

Primary objective

To study the inventory analysis and supply chain management in WS industries.

Secondary objective

To classify insulators using ABC analysis.

To find out maximum inventory level of raw material using P system.
To suggest appropriate review period.

19

2.3 SCOPE OF THE PROJECT

The study of the project is the inventory flow procedure prevailing in a insulators company
mainly in WS industries. It will help the company to know about the various level of supply
chain management that the company has to concentrate
The study seeks to find out the factors used in inventory analysis. The research was analysed
from the statements, purchase order of raw material data, finishing goods data and other
books of operation management of the concern. The data collect has been analysis and
arrived on findings which have proved it worth to know about the areas of inventory analysis
and supply chain management.

20

2.4 LIMITATIONS OF THE STUDY

The study was conduct only in WS Industries.

Data collected is from company for 1 year only so it is data constraint.
The study is carried out for 3 months only so it time constraint.

21

2.5 RESEARCH METHODOLOGY

P .Radhakrishnan, V M Prasad, M R Gopalan ,in their thesis titled Genetic Algorithm
Based Inventory Optimization Analysis in Supply Chain Management did a research
On Inventory management is one of the significant fields in supply chain management.
Efficient and effective management of inventory throughout the supply chain significantly
improves the ultimate service provided to the customer. Hence there is a necessity of
determining the inventory to be held at different stages in a supply chain so that the total
supply chain cost is minimized. Minimizing the total supply chain cost is meant for
minimizing holding and shortage cost in the entire supply chain. This inspiration of
minimizing Total Supply Chain Cost could be done only by optimizing the base stock level at
each member of the supply chain. The dilemma occurring here is that the excess stock level
and shortage level is very dynamic for every period. In this paper, we have developed a novel
and efficient approach using Genetic Algorithm which clearly determines the most possible
excess stock level and shortage level that is needed for inventory optimization in the supply
chain so as to minimize the total supply chain cost.
Dawn Barnes-Schuster, Yehuda Bassok, Ravi Anupindi in their thesis titled Optimizing
delivery lead time/inventory placement in a two-stage production/distribution system In
this paper we study a system composed of a supplier and buyer(s). We assume that the buyer
faces random demand with a known distribution function. The supplier faces a known
production lead time. The main objective of this study is to determine the optimal delivery
lead time and the resulting location of the system inventory. In a system with a singlesupplier and a single-buyer it is shown that system inventory should not be split between a
buyer and supplier. Based on system parameters of shortage and holding costs, production
lead times, and standard deviations of demand distributions, conditions indicating when the
supplier or buyer(s) should keep the system inventory are derived. The impact of changes to
these parameters on the location of system inventory is examined. For the case with multiple
buyers, it is found that the supplier holds inventory for the buyers with the smallest standard
deviations, while the buyers with the largest standard deviations hold their own inventory.

22

J F Dong, L H Wang, J X Wang in their thesis titled Research on reverse logisticsoriented multi sources inventory control modelto improve enterprise inventory control
strategy and optimize control parameters of inventory including external and interior reverse
logistics, through applying periods' inventory checking strategy, a multi-sources inventory
control model helpful to simulate the real logistics operations was proposed. Based on the
arrival time of returned products following Poisson distribution, the returns production with
lot-size processing method and the nonzero lead time of a rational cost function of inventory
control was established. Then the genetic algorithm was used to solve the inventory cost
function so as to obtain the optimum solution of inventory checking periods, safe inventory
point, production lot-sizes and processing lot-sizes of returns production. An example was
presented to prove the feasibility and validity of the proposed method, and the proposed
model can help the enterprises to implement multisource inventory control strategy.

Stefan Minner Multiple-supplier inventory models in supply chain management:This

paper reviews inventory models with multiple supply options and discusses their contribution
to supply chain management. After discussing strategic aspects of supplier competition and
the role of operational flexibility in global sourcing, inventory models which use several
suppliers in order to avoid or reduce the effects of shortage situations are outlined. Further,
related inventory problems from the fields of reverse logistics and multi-echelon systems are
presented. Finally, issues for future research and a synthesis of available supply chain
management and multiple supplier inventory models are discussed.
R D H Warburton, in their thesis titled An exact analytical solution to the production
inventory control problem The full set of continuous, differential delay equations describing
the inventory and orders for a typical industrial production control system are solved exactly
for a step function surge in demand. The replenishment delay is explicitly included. The order
rate is tuned with three parameters, which modulate the demand smoothing, the recovery of
the inventory deficit, and the desired level of work-in-process. The analytical solutions are
validated by comparison with numerical integration and confirm the instabilities and
inventory deficits found elsewhere. Useful management strategies can be deduced, and the
approach should be widely applicable in supply chains. 2003 Elsevier B.V. All rights
reserved.

23

Keenan D Yoho, James A Rappold in their thesis titled Beyond lean : Production and
inventory policy for the old economy Lean manufacturing has fundamentally changed the
way business leaders think about the production of manufactured goods and services. Over
the past three decades, firms have dedicated considerable resources to reducing production
setup times, shrinking inventories, and organizing work into cellular flows. Discrete parts
manufacturing has benefited from production planning schemes that smooth production and
level- load the plant to reduce idle time and overtime. But in the process industries, where
production occurs 24 hours a day, seven days a week, what does it mean to level-load the
production facility? In those industries, capacity stabilization is defined as creating
production cycles that are predictable, and level-loading consists of stabilizing manufacturing
lead times. In this article, we describe the differences between what we call inventory-centric
versus capacity-centric modes of production and inventory control, and we present data
collected from a large chemical plant operation that illustrates a mismatch between inventory
policy and capacity characteristics. We also describe policies appropriate for old economy
firms in the face of increasing consolidation and pressures to reduce costs and increase
responsiveness
J F A B Zhao, in their titledA New Kind Of Supply Chain Management Inventory
Optimization Model Based On Cooperation And Coordination Mechanisms did a
research on Cooperation and coordination problem is one of the main problems of supply
chain inventory optimization controlling currently. The MTP (matter, thing and people)
ideology was introduced and used to optimize the traditional F.Harris inventory model. On
this basis, a new kind of supply chain management inventory optimization batch Elasticity
model based on cooperation and coordination mechanisms was established. Optimizing
results were analysed through batch flexibility theory based on coordination mechanisms. A
new and feasible method to optimize inventory management was provided. In this thesis, the
inventory optimization problems were discussed from the quantitative study perspective
andbased on cooperation and coordination mechanisms using MTP ideology and combining
with F.Harris inventory model.

24

Ibeas A Herrera J Vilanova R Garcia C A, in their thesis titled A New Kind Of Supply
Chain Management Inventory Optimization Model Based On Cooperation And
Coordination Mechanisms did a research on inventory management, In this paper, an
Internal Model Control (IMC) scheme is incorporated in production inventory control
systems in a complete supply chain. This control scheme presents a good target inventory
tracking under the perfect knowledge of the system. Furthermore, the inventory tracking and
load disturbance rejection control problems can be tackled separately.
However, the closed-loop performance of the IMC scheme may be degraded due to a
mismatch between the modelled and actual delay or to the fact that delays may be timevarying. Thus, the IMC control scheme is enhanced in this work with a novel method for the
online identification of lead times based on a multimodel scheme. In this way, all benefits of
the IMC scheme can be exploited. A detailed discussion of the proposed production inventory
system is provided including stability and performance analysis as well as the identification
capabilities of the algorithm. Several simulation examples illustrate the efficiency of the
approach
D L Olson, M Xie, in their thesis titled A Comparison Of Coordinated Supply Chain
Inventory Management System did a research on Supply chain operations are widely
used, as they have proven very effective in contemporary business environments. Traditional
supply chain coordination has suffered from well-known bullwhip effects, which have been
alleviated in part through greater information exchange from Efficient Consumer Response
(ECR) and more coordinated systems such as Vendor-Managed Inventory (VMI). The
refinements of VMI include Continuous Replenishment (CR) and Collaborative Planning,
Forecasting and Replenishment (CPFR). This paper reviews the definitions of these variant
supply chain inventory management systems. Simulation studies of VMI have studied the
expected impact on supply chain operations. This paper evaluates the relative benefits and
costs of alternative supply chain inventory systems and provides an analysis of the conditions
for which coordinated inventory management systems are appropriate.

Huafei Chen.in their thesis titled Research On Uncertainty Demand Inventory Control
In Supply Chain. did a research on overall operations of supply chain are affected by the
25

increase of demand uncertainty. Inventory control is an important part in supply chain

management. Under the requirement mentioned above, this paper studies the inventory
control with uncertainty demand. Three-echelon inventory model of manufacture regarded as
core enterprise is model, which assumes that uncertainty demand subjects to normal
distribution. Redundancy inventory in the node enterprise of supply chain is discussed under
the two inventory replenishment strategy (continuous review inventory and periodic review
inventory). It 's shown that the result of this study is valuable to reduce the total cost of
inventory and improve the performance of supply chain.

26

3.1 RESEARCH METHODOLOGY

RESEARCH
Research is a process in which the researcher wishes to find out the end result for
the given problems and thus the solutions help in future course of action.
RESEARCH DESIGN
Research design is an arrangement of condition for collection and analysis of data
in a manner that aims to combine relevance to the research purpose with economy in
procedure.
A plan outlining how information is to be gathered for an assessment or evaluation that
includes identifying the data gathering method(s), the instrument to be used/created, how the
instruments will be administered, and how the information will be organized and analysed.
The design used in this study is the analytical research.
NATURE OF THE RESEARCH
ANALYTICAL RESEARCH
In the analytical research, the research uses the facts or information already available
and analysis the existing data to make a critical evaluation of the material. The research
method used for the project involves an analytical research, which has been carried out
respect to the existing system in the company and a critical evaluation of the same is made. In
this type of research has to use facts or information already available, and analyse these to
make a critical evaluation of the material. The researcher depends on existing data for his
research work. The analysis revolves round the material collected/ or available.
SOURCES OF DATA

27

It is collected from the internal records of the company such as library records, trade journals,
various manuals of the company; it is also conducted from the officials of the pursed
department in the factory. Secondary data provides a better view of the problem study, tools
and other references were also mean important in this study.
The data collected for the purpose of this analysis is secondary. Secondary data refer to
information gathered from sources already existing. Some source of secondary data are data
available from previous research, information available from any published or unpublished
sources available either within or outside the organization, library records, online data,
websites and the internet.
There was no need for collecting primary data as the study involves analysis of data
available. The data has been collected through the annual report and statements available with
the company.
ANALYTICAL TOOLS
In order to extract meaningful information from the data collected, the data
analysis is carried out. The analysis is basically aimed at giving inferences of associations or
difference between the various variables present in the research. The data collected was
edited, coded and tabulated for analysis. The analysis can be conducted using analytical tools.
The analytical tools comprise of both statistical and financial tools. In this survey only three
of the statistical tools were used.
TOOLS & TECHNIQUES
To analyse the secondary data:
1. ABC analysis:
Always better control is the technique used for analysing the inventory. The
material are classified and controlled according to the value of the material involved. It is
also called proportional part value analysis.
Thus, high value items are paid more attention that low value items. The material are
classified under A, B or C designation on the basis of their value and importance. A category
consists of a few items of high value. Category B includes more items of medium value and
category C includes all other materials of small value.
28

PARETO CURVE

ABC inventory analysis:

ABC inventory analysis is one of the ways of classifying the inventory. Not all the items have
equal importance and therefore they do not require the same management attention. The ABC
analysis provides you helpful information to evaluate each item and decide the method to
monitor and control it. It is a basic inventory management tool. An ERP (Enterprise Resource
Planning) system also constitutes both ABC analysis and a control mechanism within itself.
Inventory Classification:
With ABC inventory analysis, the inventory is classified into three categories: A, B and C and
each category is given a different treatment:
29

Class A materials these are usually the most expensive, highly important items and main
raw materials in the production. A class items need tight monitoring and control. They should
be managed by JIT (Just in Time) since its close management is most cost-effective.
Class B materials these materials are usually the medium expensive items that still require
more control and some management effort. They may not require a micromanagement by JIT,
but they should also be tracked methodically.
Class C materials these items have low value and lower importance. C class items require
the minimum controls and they generally consist of the largest volume of the inventory. They
are mostly managed by two bin system. When a bin is empty or when the system sends a
signal of reaching a minimum stock level, an order is placed.
ECONOMIC ORDER QUANTITY:
Economic order quantity is referred to as the size of the order that gives maximum economy
in purchasing the materials.
Economic order quantity for Q system:
In this system of inventory, whenever the stock level touches the reorder level, an order is
placed for a fixed quantity which is equal to EOQ.
Economic order quantity for P system:
In this system of inventory, the stock position is reviewed once in a fixed period and an order
is placed depending on the stock position, unlike a fixed quantity in the Q system of
inventory. The review period is approximately equal to EOQ/D.
WS insulators industries using P system for calculating economic order quantity.

30

31

3.2 ANALYSIS AND INTERPRETATION

Com No

Description

Price/Unit

Code

(in Rs.,)

C01
Bushing Insulators 3.434.0A-B
C02
Bushing Insulators 3.542.0A-B
C03
Bushing Insulators 4.1008/3A-B
C04
Bushing Insulators 4.1099.0A-B
C05
Bushing Insulators 4.173/3J-B
C06
Bushing Insulators 4.529/3A-B
C07
Bushing Insulators 4.684.0A-B
C08
Bushing Insulators 4.691/3A-B
C09
Bushing Insulators 4.760/2A-B
C10
Bushing Insulators 4.935.0A-B
C11
Bushing Insulators 4.936.9A-B
C12
Bushing Insulators 4.968/3A-B
C13
Bushing Insulators
5.3023.0A
3.2.1 TABLE SHOWING ABC ANALYSIS

Annual
Unit/Year

Consumption

(in Rs.,)
4695
76
356820
3200
100
320000
72455
15
1086825
36390
1
36390
51000
5
255000
90000
8
720000
32740
19
622060
100000
3
300000
31000
21
651000
26940
11
296340
29570
12
354840
52433
1
52433
3020
15
45300
OF BUSHING INSULSTORS (APRIL 2011

TO MARCH 2012)

FINAL WORKING OF ABC ANALYSIS:

Com
No

Description

Code

Price/Unit
(in Rs.,)

32

Unit/Year

Annual

Cumulative

Consumptio

Consumptio

Class

C03
C06
C09
C07
C01
C11
C02
C08
C10
C05
C12
C13
C04

Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators
Bushing Insulators

4.1008/3A-B
4.529/3A-B
4.760/2A-B
4.684.0A-B
3.434.0A-B
4.936.9A-B
3.542.0A-B
4.691/3A-B
4.935.0A-B
4.173/3J-B
4.968/3A-B
5.3023.0A
4.1099.0a-B

Class
A
B
C

72455
90000
31000
32740
4695
29570
3200
100000
26940
51000
52433
3020
36390

% of items
38
31
31

15
8
21
19
76
12
100
3
11
5
1
15
1

(in Rs.,)
1086825
720000
651000
622060
356820
354840
320000
300000
296340
255000
52433
45300
36390

(in Rs.,)
1086825
1806825
2457825
3079885
3436705
3791545
4111545
4411545
4707885
4962885
5015318
5060618
5097008

% of values
67
25
8

3.2.1 CHART SHOWING THEABC ANALYSIS OF BUSHING INSULSTORS (APRIL

2011 TO MARCH 2012)

33

A
A
A
A
A
B
B
B
B
C
C
C
C

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

INTERPRETATION:
It is inferred that the percentage of a items is high so the inventory should be minimized.

34

3.2.2 TABLE SHOWING ABC ANALYSIS OF HOT PRESS INSULATORS

INSULSTORS (APRIL 2011 TO MARCH 2012)

Com No

C01
C02
C03
C04
C05
C06
C07
C08
C09
C10
C11

Description
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators

Code

Price/Unit
(in Rs.,)

Annual
Unit/Year

Consumption
(in Rs.,)

1.001.0Q

465

3220

1497300

1.001.0Q

500

7872

3936000

1.009.0Q

570

11000

6270000

1.033.0Q

475

16002

7600950

1.059.0Q

400

300

120000

1.093.0Q

600

12868

7720800

1.204.0Q

560

12500

7000000

1.228.0Q

850

39713

33756050

1.256.0Q

350

250

87500

1.289.0Q

1300

668

868400

1.299.0Q

1550

1801

2791550

35

FINAL WORKING OF ABC ANALYSIS:

Com No

C08
C06
C04
C07
C03
C02
C11
C01
C10
C05
C09

Descriptio
n
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators
Hot Press
Insulators

Class
A
B
C

Price/Uni
Code

t
(in Rs.,)

Annual

Cumulative

Unit/Yea

Consumptio

Consumptio

(in Rs.,)

(in Rs.,)

Class

1.228.0q

850

39713

33756050

33756050

1.093.0q

600

12868

7720800

41476850

1.033.0q

475

16002

7600950

49077800

1.204.0q

560

12500

7000000

56077800

1.009.0q

570

11000

6270000

62347800

1.001.0q

500

7872

3936000

66283800

1.299.0q

1550

1801

2791550

69075350

1.001.0q

465

3220

1497300

70572650

1.289.0q

1300

668

868400

71441050

1.059.0q

400

300

120000

71561050

1.256.0q

350

250

87500

71648550

Percentage of items
27
19
54

36

Percentage of values
68
19
13

3.2.2 CHART SHOWING ABC ANALYSIS OF HOT PRESS INSULATORS

INSULSTORS (APRIL 2011 TO MARCH 2012)

120
100
80
percentage of consuption

60
40

percentage of
consumption values

20
0
percentage of no items

INTERPRETATION:
It is inferred that the percentage of a items is high so the inventory should be minimized.

3.2.3 TABLE SHOWING ABC ANALYSIS OF SOLID CORE INSULATORS

INSULSTORS (APRIL 2011 TO MARCH 2012)

37

Com No

Description

Price/Unit

Code

(in Rs.,)

Annual
Unit/Year

Consumption

C01
C02
C03
C04
C05
C06
C07
C08
C09
C10
C11

Solid Core Insulators

Solid Core Insulators
Solid Core Insulators
Solid Core Insulators
Solid Core Insulators
Solid Core Insulators
Solid Core Insulators
Solid Core Insulators
Solid Core Insulators
Solid Core Insulators
Solid Core Insulators

5.6080.0Q
5.6102.0Q
5.6105.0Q
5.6264.0Q
5.6401.0Q
5.6446.0Q
5.6464.1Q
5.6483.0Q
5.6483.1A-B
5.6483.2A-B
5.6498.0Q

5500
8000
12750
16000
45000
5500
6700
32500
10000
12000
16500

23
1
18
72
36
4
9
9
1
9
8

(in Rs.,)
126500
8000
229500
1152000
1620000
22000
60300
292500
10000
108000
132000

C12

Solid Core Insulators

5.6676.1Q

5500

5500

38

FINAL WORKING OF ABC ANALYSIS:

Price/Uni
Com No

Description

Code

Annual
Unit/Year

(in Rs.,)
C05
C04
C08
C03
C11
C01
C10
C07
C06
C09
C02
C12

Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators
Solid Core
Insulators

Class
A
B
C

Consumption
(in Rs.,)

Cumulative
Consumptio

Clas

(in Rs.,)

5.6401.0Q

45000

36

1620000

1620000

5.6264.0Q

16000

72

1152000

2772000

5.6483.0Q

32500

292500

3064500

5.6105.0Q

12750

18

229500

3294000

5.6498.0Q

16500

132000

3426000

5.6080.0Q

5500

23

126500

3552500

5.6483.2A-B

12000

108000

3660500

5.6464.1Q

6700

60300

3720800

5.6446.0Q

5500

22000

3742800

5.6483.1A-B

10000

10000

3752800

5.6102.0Q

8000

8000

3760800

5.6676.1Q

5500

5500

3766300

Percentage of items
16
34
50

39

Percentage of values
73
21
06

3.2.3 CHART SHOWING ABC ANALYSIS OF SOLID CORE INSULATORS

INSULSTORS (APRIL 2011 TO MARCH 2012)

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

INTERPRETATION:
It is inferred that the percentage of a items is high so the inventory should be minimized.

40

41

3.2.4 TABLE SHOWING ABC ANALYSIS OF FREE HOT PRESS INSULATORS

INSULSTORS (APRIL 2011 TO MARCH 2012)

Com
No
C01
C02
C03
C04
C05
C06
C07
C08
C09

Description
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators

Code

Price/Unit
(in Rs.,)

Annual
Unit/Year

Consumption
(in Rs.,)

1.009.0Q

550

217

119350

1.009.0Q

570

135

76950

1.027.0Q

700

98

68600

1.033.0Q

510

916

467160

1.040.0Q

615

1112

683880

1.059.0Q

430

651

279930

1.059.0Q

450

157

70650

1.064.0Q

775

263

203825

1.228.0Q

925

5550

FINAL WORKING OF ABC ANALYSIS:

42

Com
No

C05
C04
C06
C08
C01
C02
C07
C03
C09

Description

Free Hot Press

Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators
Free Hot Press
Insulators

Class
A
B
C

Price/Unit

Code

(in Rs.,)

Annual
Unit/Year

Consumption
(in Rs.,)

Cumulative
Consumptio
n

Class

(in Rs.,)

1.040.0Q

615

1112

683880

683880

1.033.0Q

510

916

467160

1151040

1.059.0Q

430

651

279930

1430970

1.064.0Q

775

263

203825

1634795

1.009.0Q

550

217

119350

1754145

1.009.0Q

570

135

76950

1831095

1.059.0Q

450

157

70650

1901745

1.027.0Q

700

98

68600

1970345

1.228.0Q

925

5550

1975895

Percentage of items
34
33
33

Percentage of values
72
20
08

3.2.4 CHART SHOWING ABC ANALYSIS OF FREE HOT PRESS INSULATORS

43

INSULSTORS (APRIL 2011 TO MARCH 2012)

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

44

INTERPRETATION:
It is inferred that the percentage of a items is high so the inventory should be minimized.

3.2.5 TABLE SHOWING ABC ANALYSIS OF VAP INSULATORS INSULSTORS

(APRIL 2011 TO MARCH 2012)

Price/Uni
Com No

Description

Code

C01
C02
C03
C04
C05
C06
C07
C08

VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators

1.009.0Q
1.014.0Q
1.025.0Q
1.027.0Q
1.059.0Q
1.064.0Q
1.074.0Q
1.093.0Q

(in Rs.,)
550
225
534
700
400
775
255
550
45

Annual
Unit/Year Consumption
93392
3072
1843
31000
60
30000
4953
1100

(in Rs.,)
51365600
691200
984162
21700000
24000
23250000
1263015
605000

C09
C10
C11
C12
C13
C14

VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators
VAP Insulators

1.168.0Q
1.204.0Q
1.256.0Q
1.351.0Q
1.355.0Q
1.377.0Q

655
500
350
180
515
33

995
66
69
640
120
7584

651725
33000
24150
115200
61800
250272

FINAL WORKING OF ABC ANALYSIS.

Com
No

C01
C06
C04
C07
C03
C02
C09
C08

Description

VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS

Code

Price/Unit
(In Rs.,)

Annual
Unit/Year

Consumption
(in Rs.,)

Cumulative
Consumptio
n

Class

(in Rs.,)

1.009.0Q

550

93392

51365600

51365600

1.064.0Q

775

30000

23250000

74615600

1.027.0Q

700

31000

21700000

96315600

1.074.0Q

255

4953

1263015

97578615

1.025.0Q

534

1843

984162

98562777

1.014.0Q

225

3072

691200

99253977

1.168.0Q

655

995

651725

99905702

1.093.0Q

550

1100

605000

100510702

46

C14
C12
C13
C10
C11
C05

VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS
VAP
INSULATORS

1.377.0Q

33

7584

250272

100760974

1.351.0Q

180

640

115200

100876174

1.355.0Q

515

120

61800

100937974

1.204.0Q

500

66

33000

100970974

1.256.0Q

350

69

24150

100995124

1.059.0Q

400

60

24000

101019124

Class
A
B
C

Percentage of items
14
07
79

Percentage of values
73
22
05

3.2.5 CHART SHOWING ABC ANALYSIS OF VAP INSULATORS INSULSTORS

(APRIL 2011 TO MARCH 2012)

47

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

48

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

49

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

50

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

120
100
80
percentage of consuption

60
percentage of
consumption values

40
20
0

percentage of no items

51

INTERPRETATION:
It is inferred that the percentage of a items is high so the inventory should be minimized.

52

3.2.6 TABLE SHOWING EOQ VALUES FOR THAN CLAY

(APRIL 2011 TO MARCH 2012)

CARRI
DEM
S

DESCRIP

AND

NO

TION

IN
TONS

ORDER

YING

PURCH

ING

COST

ASE

COST

PER

PRICE

PER

UNIT

PER

ORDER

PER

UNIT

YEAR
1

THAN
CLAY

450

400

15%

575

CALCULATION OF EOQ MODEL (P SYSTEM)

Annual demand, D = 450
Ordering cost per order = Rs.400.
Purchase price per unit = Rs.575.
Carrying cost per unit year = 15% of the purchase price

Economic Order Quantity =

2 c oD
PC C

Economic Order Quantity = 65

53

DETERMINATION OF MAXIMUM INVENTORY LEVEL FOR P SYSTEM

Review period = EOQ/D
=0.144 year
=7.51 weeks
The review period can be either 7 weeks or 8 weeks.
Selection of review period:
Total cost when the review period = 7 week:
Total cost = ordering cost + carrying cost

= (52/7) * 400 +

7 )
( 450
52

/2*575*.15

= 2971 +2612 = 5583

Total cost when the review period = 8 week:
Total cost = ordering cost + carrying cost

= (52/8) * 400 +

8 )
( 450
52

/2*575*.15

= 2600 +2985 = 5585

INTERPRETATION:
The about calculation show that total cost is minimum when the review period is 7 weeks.
Hence, select the review period as 7 weeks.

54

3.2.7 TABLE SHOWING EOQ VALUES FOR FELDSPAR POWDER

(APRIL 2011 TO MARCH 2012)

CARRIYI
DEMA
S

DESCRIPT

ND

NO

ION

IN
TONS

ORDERI

NG

PURCH

NG

COST

ASE

COST

PER

PRICE

PER

UNIT

PER

ORDER

PER

UNIT

YEAR
1

FELDSPAR
POWDER

2184

1700

10%

CALCULATION OF EOQ MODEL (P SYSTEM)

Annual demand, D = 2184

Ordering cost per order = Rs.1700.
Purchase price per unit = Rs.4160.
Carrying cost per unit year = 10% of the purchase price

Economic Order Quantity =

2 c oD
PC C

Economic Order Quantity = 134

55

4160

DETERMINATION OF MAXIMUM INVENTORY LEVEL FOR P SYSTEM

Review period = EOQ/D
=0.061 year
=3.19 weeks
The review period can be either 2 weeks or 3 weeks.
Selection of review period:
Total cost when the review period = 2 week:
Total cost = ordering cost + carrying cost

= (52/2) * 1700 +

2 )
( 2184
52

/2*4160*.10

= 44200 + 17472 = 61672

Total cost when the review period = 3 week:
Total cost = ordering cost + carrying cost

= (52/3) * 1700 +

3 )
( 2184
52

= 29466 +26208 = 55674

INTERPRETATION:
56

/2*4160*.10

The about calculation show that total cost is minimum when the review period is 3 weeks.
Hence, select the review period as 3 weeks

3.2.8 TABLE SHOWING EOQ VALUES FOR QUARTZ POWDER

(APRIL 2011 TO MARCH 2012)

CARRIY
DEMA
S

DESCRIPT

ND

NO

ION

IN
TONS

ORDERI

ING

PURCH

NG

COST

ASE

COST

PER

PRICE

PER

UNIT

PER

ORDER

PER

UNIT

YEAR
1

QUARTZ
POWDER

2112

2000

10%

CALCULATION OF EOQ MODEL (P SYSTEM)

Annual demand, D = 2112

Ordering cost per order = Rs.2000.

57

5096

Purchase price per unit = Rs.5096.

Carrying cost per unit year = 10% of the purchase price

Economic Order Quantity =

2 c oD
PC C

Economic Order Quantity = 128

DETERMINATION OF MAXIMUM INVENTORY LEVEL FOR P SYSTEM

Review period = EOQ/D
=0.060 year
=3.15 weeks
The review period can be either 2 weeks or 3 weeks.
Selection of review period:
Total cost when the review period = 2 week:
Total cost = ordering cost + carrying cost

= (52/2) * 2000 +

2 )
( 2112
52

/2*5096*.10

= 52000 +20697 = 72697

Total cost when the review period = 3 week:
Total cost = ordering cost + carrying cost

= (52/3) * 2000 +

58

3 )
( 2112
52

/2*5096*.10

= 34667+31046 = 65713.

INTERPRETATION:
The about calculation show that total cost is minimum when the review period is 3 weeks.
Hence, select the review period as 3 weeks

59

3.2.9 TABLE SHOWING EOQ VALUES FOR PLASTER OF PARIS

(APRIL 2011 TO MARCH 2012)

CARRIY

DESCRIPT

NO

ION

ORDERI

ING

PURCH

DEMA

NG

COST

ASE

ND IN

COST

PER

PRICE

TONS

PER

UNIT

PER

ORDER

PER

UNIT

YEAR
1

PLASTER
OF PARIS

120

400

15%

CALCULATION OF EOQ MODEL (P SYSTEM)

Annual demand, D = 120

Ordering cost per order = Rs.400.
Purchase price per unit = Rs.6000.
Carrying cost per unit year = 15% of the purchase price

Economic Order Quantity =

2 c oD
PC C

Economic Order Quantity = 10

60

6000

DETERMINATION OF MAXIMUM INVENTORY LEVEL FOR P SYSTEM

Review period = EOQ/D
=0.083 year
=4.33 weeks
The review period can be either 3 weeks or 4 weeks.
Selection of review period:
Total cost when the review period = 3 week:
Total cost = ordering cost + carrying cost

= (52/3) * 400 +

3 )
( 120
52

/2*6000*.15

= 6934+3115= 10049
Total cost when the review period = 4 week:
Total cost = ordering cost + carrying cost

= (52/4) * 400 +

4 )
( 120
52

= 5200+4154= 9354

INTERPRETATION:

61

/2*6000*.15

The about calculation show that total cost is minimum when the review period is 4 weeks.
Hence, select the review period as 4 weeks

62

3.2.10 TABLE SHOWING EOQ VALUES FOR LILITE CHINA CLAY

(APRIL 2011 TO MARCH 2012)

CARRIY

DESCRIPT

NO

ION

ORDERI

ING

PURCH

DEMA

NG

COST

ASE

ND IN

COST

PER

PRICE

TONS

PER

UNIT

PER

ORDER

PER

UNIT

YEAR
LILITE
1

CHINA

7200

4000

5%

CLAY

CALCULATION OF EOQ MODEL (P SYSTEM)

Annual demand, D = 7200
Ordering cost per order = Rs.4000.
Purchase price per unit = Rs.5200.
Carrying cost per unit year = 5% of the purchase price

Economic Order Quantity =

2 c oD
PC C

Economic Order Quantity = 470

63

5200

64

DETERMINATION OF MAXIMUM INVENTORY LEVEL FOR P SYSTEM

Review period = EOQ/D
=0.065 year
=3.39 weeks
The review period can be either 2 weeks or 3 weeks.
Selection of review period:
Total cost when the review period = 2 week:
Total cost = ordering cost + carrying cost

= (52/2) * 4000 +

2)
( 7200
52

/2*5200*.05

= 104000+36000= 140000
Total cost when the review period = 3 week:
Total cost = ordering cost + carrying cost

= (52/3) * 4000 +

3 )
( 7200
52

/2*5200*.05

= 69334+54000= 123334

INTERPRETATION:
The about calculation show that total cost is minimum when the review period is 3 weeks.
Hence, select the review period as 3 weeks

65

66

3.2.11 TABLE SHOWING EOQ VALUES FOR CHINA CLAY(ORISSA)

(APRIL 2011 TO MARCH 2012 )

CARRIYI

DESCRIPTI

NO

ON

ORDERI

NG

PURCH

DEMA

NG

COST

ASE

ND IN

COST

PER

PRICE

TONS

PER

UNIT

PER

ORDER

PER

UNIT

YEAR
CHINA
1

CLAY(ORIS

1360

1000

10%

SA)

CALCULATION OF EOQ MODEL (P SYSTEM).

Annual demand, D = 1360

Ordering cost per order = Rs.1000.
Purchase price per unit = Rs.2800.
Carrying cost per unit year = 10% of the purchase price

Economic Order Quantity =

2 c oD
PC C

67

2800

Economic Order Quantity = 99

68

DETERMINATION OF MAXIMUM INVENTORY LEVEL FORP SYSTEM.

Review period = EOQ/D
=0.072 year
=3.78 weeks
The review period can be either 3 weeks or 4 weeks.
Selection of review period:
Total cost when the review period = 3 week:
Total cost = ordering cost + carrying cost

= (52/3) * 1000 +

3 )
( 1360
52

/2*2800*.10

= 17334+10984 = 28318
Total cost when the review period = 4 week:
Total cost = ordering cost + carrying cost

= (52/4) * 1000 +

4 )
( 1360
52

/2*2800*.10

= 13000+14646 = 27646

INTERPRETATION:
The about calculation show that total cost is minimum when the review period is 4 weeks.
Hence, select the review period as 4 weeks.

69

70

3.2.12 TABLE SHOWING EOQ VALUES FOR BALL CLAY

(APRIL 2011 TO MARCH 2012)

CARRI
DEM
S

DESCRIP

AND

NO

TION

IN
TONS

ORDER

YING

PURCH

ING

COST

ASE

COST

PER

PRICE

PER

UNIT

PER

ORDER

PER

UNIT

YEAR
1

BALL
CLAY

4200

2000

10%

1250

CALCULATION OF EOQ MODEL (P SYSTEM)

Annual demand, D = 4200

Ordering cost per order = Rs.2000.
Purchase price per unit = Rs.1250.
Carrying cost per unit year = 10% of the purchase price

Economic Order Quantity =

2 c oD
PC C

Economic Order Quantity = 366

71

72

DETERMINATION OF MAXIMUM INVENTORY LEVEL FOR P SYSTEM

Review period = EOQ/D
=0.087 year
=4.53 weeks
The review period can be either 4 weeks or 5 weeks.
Selection of review period:
Total cost when the review period = 4 week:
Total cost = ordering cost + carrying cost

= (52/4) * 2000 +

4 )
( 4200
52

/2*1250*.10

= 26000+20192 = 46192.
Total cost when the review period = 5 week:
Total cost = ordering cost + carrying cost

= (52/5) * 2000 +

5 )
( 4200
52

/2*1250*.10

= 20800+25240 = 46040.

INTERPRETATION:
The about calculation show that total cost is minimum when the review period is 5 weeks.
Hence, select the review period as 5 weeks

73

74

3.2.13 TABLE SHOWING EOQ VALUES FOR GIJRI T.P LAVIGATED CLAY
(APRIL 2011 TO MARCH 2012)

ORDERI
S NO

DESCRIPTION

DEMA

NG

ND IN

COST

TONS

PER
ORDER

CARRIYI
NG COST
PER
UNIT
PER
YEAR

PURCH
ASE
PRICE
PER
UNIT

GIJRI T.P
1

LAVIGATED

10800

5000

10%

CLAY

CALCULATION OF EOQ MODEL (P SYSTEM)

Annual demand, D = 10800

Ordering cost per order = Rs.5000.
Purchase price per unit = Rs.1250.
Carrying cost per unit year = 10% of the purchase price

Economic Order Quantity =

2 c oD
PC C

Economic Order Quantity = 849

75

1500

76

DETERMINATION OF MAXIMUM INVENTORY LEVEL FOR P SYSTEM

Review period = EOQ/D
=0.078 year
=4.08 weeks
The review period can be either 3 weeks or 4 weeks.
Selection of review period:
Total cost when the review period = 3 week:
Total cost = ordering cost + carrying cost

= (52/3) * 5000 +

3 )
( 10800
52

/2*1500*.10

= 86667+46730 = 133397.
Total cost when the review period = 4 week:
Total cost = ordering cost + carrying cost

= (52/4) * 5000 +

4 )
( 10800
52

/2*1500*.10

= 65000+62307 = 127307

INTERPRETATION:
The about calculation show that total cost is minimum when the review period is 4 weeks.
Hence, select the review period as 4 weeks

77

78

3.3FINDINGS

From the 13 items considered for the study, 5 items found to be 30 %,( A category)
which is item very important. 4 items found to be 31%, (B category) which is items

important. 4 items found to be 31 %,( C category) which is item marginally important.

From the 11 items considered for the study, 3 items found to be 27 %,( A category)
which is items very important. 2 items found to be 18%, (B category) which is
itemsimportant.6items found to be 54 %,( C category) which is items marginally

important.
From the 12 items considered for the study, 2 items found to be 16%, (A category)
which is items very important. 4 items found to be 34%, (B category) which is items
important. 6 items found to be 50 %,( C category) which is items marginally

important.
From the 9 items considered for the study, 3 items found to be 34%, (A category)
which is items very important. 3 items found to be 33%, (B category) which is items
important. 3items found to be 33 %,( C category) which is items marginally

important.
From the 14 items considered for the study, 2 items found to be 14 %,( A category)
which is items very important. 1 items found to be 07 %,( B category) which is items
important. 11 items found to be 79 %,( C category) which is item marginally

important.
For theabove calculation it is found that cost is 5583 for 7 week and 5583 for 8 week.
From the above calculation it is found that cost is 61672 for 2 week and 55674 for 3

week.
From the above calculation it is found that cost is 72697 for 2 week and 65713 for 3

week.
From the above calculation it is found that cost is 10049 for 3 week and 9354 for 4

week.
From the above calculation it is found that cost is 140000 for 2 week and 123334 for

3 week.
From the above calculation it is found that cost is 28318 for 3 week and 27646 for 4

week.
From the above calculation it is found that cost is 46192 for 4 week and 46040 for 5
week.

79

From the above calculation it is found that cost is 133347 for 3 week and 127307 for
4 week.

80

3.4 SUGGESTIONS & RECOMMENDATION

The company should take some measures for controlling wastage of raw material.
The class change according to the number of items
For ex a product of 13 items are bought it comes under one class say A class items
and the some product is purchased now the number of item purchased is 1 then it will
come under B/C class items. Hence the combination of XYZ analysis helps in case

of such items.
A revised system has to be horizontally deployed to all the material i.e. all the direct
materials have to be classified into A,B,C category items and scheduling should be

done based on the parameter.

The company should forecast the customer demand in order to reduce the cost of

inventory
The safety stock should be calculated and main tainted to meet the customer demand.
The review period must be followed for ordering the raw materials

81

3.5 CONCLUSION

The inventory management technique is more useful in determine the optimum level of
inventory and finding answers inventory control and to problems of safety stock and lead
time. WS industries using maintain strict inventory control and will utilize in many areas.
There by any become concept leaders in the near future.

82

APPENDIX
S NO

DESCRIPTION

1 THAN CLAY

DEMAN
D

ODERI
NG
COST

CARRIYI
NG
COST

PURCHASE
PRICE

review
period(ye
ar)

review
period(i
n
week)
0.144444 7.5111
11

450

400

15%

575

65

2 FELDSPAR
POWDER

2184

1700

10%

4160

134

0.061355

3.1904
76

3 QUARTZ
POWDER

2112

2000

10%

5096

128

0.060606

3.1515
15

120

400

15%

6000

10

0.083333

4.3333
33

5 LILITE CHINA
CLAY

7200

4000

5%

5200

470

0.065278

3.3944
44

6 CHINA
CLAY(ORISSA)

1360

1000

10%

2800

99

0.072794

3.7852
94

7 BALL CLAY

4200

2000

10%

1250

366

0.087143

4.5314
29

10800

5000

10%

1500

849

0.078611

4.0877
78

4 PLASTER OF
PARIS

8 GIJRI T.P
LAVIGATED CLAY

83

BIBLIOGRAPHY

Books :

Research methodology, Kothari.C.R(2002), washman prakashan publications, new

delhi
Material management, Robert B.ballot, 11th edition, pearson education.
Supplier and material management, H.K. Compton
Production and operation management, R.panneerselvam
Introduction to material management, J.R.Tony Arnold, Stephen N.chapman, R.V.
Ramakrishnan.

Websites:
www.sciencedirect.com
www.mendely.com
www.engineeringletter.com
www.google.com

84