Letter of Transmittal

To,
Dr. Ferdous Sarwar
Professor (MBA Department),

School of Business & Economics,

North South University,

Dhaka.

Subject: Submission of the group term paper.

Dear Sir,

We would like to submit our Term Paper on “Operation system management of Agora retail
store” which is a course requirement for our BUS 650, Operation Management . It was a great
opportunity for us to implement all the theories we have learnt from this course to make this
project. For this purpose, we have gone through internet, text book, articles, journals website of
respective organization to collect the relevant information of the topic.

We have put in our best effort to make this assignment successful. We have followed all the
criteria and guidelines you provided. However, we are sure that this report could have been a
more superior one, if we had enough time for preparation. However, this has obviously been a
great source of learning for us to conduct similar types of studies in future. We would like to
express our sincere gratitude to you for your guidance and suggestions. We will be happy to
provide any further explanation regarding this assignment if necessary.

We hope this writings on Agora retail store will be accepted by you as our group term paper. We
really appreciate the chance you gave us.

Sincerely Yours,
Rifayat Ali Rifa 1635101660
Md. Rakibur Rahman: 1715320660
Sweety Rani Dhar 1635262060
Gazi Joynal Abiddin 1715212660

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 Introduction
In recent years there have been rapid development in the retail industry. Indeed, there have been
radical changes taking place in the traditional idea of shopping. This is evident as there is a
gradual shift towards retailers providing a complete range of goods under one of roof catering to
daily needs accompanied by a wide array of facilities ranging from car parks, air-conditioning
and escalators.

Keen amid competition from every form of retailers. Starting from the bazaars to chain stores,
super-markets, and department stores spring up in residential areas, the focus is now towards
making the shopping experience as pleasant as possible and to induce the shopper to make
maximum purchases.

This rapid development in the retail business can be associated with the unprecedented rise in
living standards in the city. The steady rise in income levels has make retailing on such large
scale practicable. Besides, the emergence of the modern working housewife who has only limited
time to shop for groceries and other daily necessities has largely contributed to the acceptance of
such retail practices.

The relatively low income of the mass of the population results in significant proportion of
earnings being taken up by expenditure on daily necessities. The reliance towards small grocery
stores at the street corners and “Kacha Bazaars” still predominate among many. Hence the
success of these stores hinge very much on their ability to capture as much of consumer spending
as possible of directing expenditure away from the small stores and “Kacha Bazaars” – their
main rivals! So, it is only a very small fraction for who visits these large stores. Nevertheless,
(their expenditure account for a significant proportion of consumer spending of the middle –
class, higher, middle class as well as the elite which by no means is insignificant.

Overview of “Agora”
Bangladesh entered the supermarket era‘ on August 24, 2001 with Rahimafrooz Superstores Ltd.
launching Agora, a retail chain superstore in Bangladesh, introducing a new way to shop. The
company has already opened four outlets Rifles Square, Gulshan Avenue, Maghbazar and Mirpur
Zoo Road in Dhaka and many more are in progress in Chittagong andother cities of the country.
The superstores are open from 9 am to 8 pm every day. Rush of customers is experienced in the
morning and evening. Most of the employees of Agora are young and well-educated, some with
Masters and MBA degrees. Agora superstores are currently focused in food retailing, ranging
from a wide variety of fresh vegetable, fruits, meat and fish to grocery, bakery, dairy, personal
and household products. Agora provides its customers with guaranteed quality and freshness. It
carries more than 30,000 varieties of products and has plans to expand its product portfolio to
carry other ranges of consumer products in the coming years. It aims at building a chain of more

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than 40 superstores by year 2010.Other supermarket brands have since emerged but Agora
continues to be the leader and trendsetter. Agora has been the venue of launching of Thai
products, which have by now become commonplace. Californian apples were launched here as
have been Agora buys products direct from the growers, which benefits the latter as well as the
customers.
Classifications of Stores: Considering variations of socio-economy class of people has
established different stores in different segment. Like for “A” class people whose monthly
income more than 90,000 they have established “A” type store where Air-conditioned ambience
is available and space is more than 3000 square feet and good equipment is available. But for
lower middle class people they have created different stores which are less than 2000 square feet
but air-conditioned ambience is not always available. Price proposition is also different from
store to store. They have four type of stores “A” “B” “C” & “D”.
Australia‘s red apples, and crystal products from France were unveiled here. Unilever chose to
launch L‘Oreal range of cosmetics at Agora superstores. The big-sized ‗Boroi‘ so common in the
market was launched here. Recently the scientist behind the cultivation of Strawberry in
Bangladesh launched the delicious fruit at Agora. Over 8 million have purchased products at
Agora since the opening of Agora‘s fist superstore, with 2,000 customers using the Agoras every
day on an average. Rifles Square and Gulshan super markets pull more crowd than the other two.
Customers prefer using both cash and creditcards. Agora constantly launches attractive
promotions like Bazimat, Value Week or Super Value Offeror Diamond Ring Offer.The promoter
of the Agora project, Rahimafrooz, is one of the most respected companies inBangladesh
manufacturing and marketing stored power systems for the automotive industry. All of
Rahimafrooz‘s activities are in the service sector, focusing on consumers, an official of
Agora‘s operating company Rahimafrooz Superstores Ltd., said. The Agora project was a
ground-breaking project that underlines the potential for harnessing thelatent market in
Bangladesh, said an executive of a leading corporate house adding, they haveproduced a service
offering of international standard.

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 Inventory Management in “Agora”

Literature overview of Inventory

Inventory is a list for goods and materials, or those goods and materials themselves, held
available in stock by a business. Naturally many of the items a firm carries in inventory relate to
the kind of business it engages in. Inventory management is primarily about specifying the size
and placement of stocked goods. Inventory management is required at different locations within
a facility or within multiple locations of a supply network to protect the regular and planned
course of production against the random disturbance of running out of materials or goods. The
scope of inventory management also concerns the fine lines between replenishment lead time,
carrying costs of inventory, asset management, inventory forecasting, inventory valuation,
inventory visibility, future inventory price forecasting, physical inventory, available physical
space for inventory, quality management, replenishment, returns and defective goods and
demand forecasting.

What Is Retail Inventory Management?

Retail inventory management is the process and methods used to keep track of the stock in a
retail business. These methods control everything from ordering, shipping, receiving, tracking
inventory, retail turn-over, and storage. Retail inventory management can help keep a business’
profits at a steady margin as well as reducing theft and loss of inventory. Many retail businesses
lose money every year because they do not have a successful inventory management system in
place.
How to Manage Inventory?
Most businesses use some form of computer software to manage their inventory. Unless the retail
business is very small, doing it manually would be very impractical, especially for large
companies that deal in thousands of individual products.
A business that has a successful system for retail management will allow the business to keep a
sufficient amount of stock to meet customer demand. If a business does not have enough
inventories, then it can slow down cash flow. Too much inventory can cost business money and
take up more room. Managing retail inventory involves several characteristics and steps. One of

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the most important steps is to make sure that you always remove products from the system as
soon as they are sold. The same is true for receiving shipments of new stock. Make sure you
record it as quickly as possible.

Inventory classifications in view of Category

1. Baby Food 2. Baby Care 3. Beverage
4. Commodities 5. Dairy 6. Gift & Toys
7. Home Care 8. Infotainment 9. Kitchen Additives
10. Packaged Foods 11. Perishables 12. Protein
13. Stationeries 14. Body Care

Process Flow Diagram of Inventory Movement

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Company Goods:

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Perishables Goods:

Inventory shelving and storage

Supervisors need not to check each product from each cartoon if the cartoon is intact. Normally
there is a batch no. on the cartoon. If a product is checked for date expired and each of the
cartoons is for the same batch no. that means that, the Manufacturing and Expiry date is similar.
Different Batch no. indicating possibility of different mfd. and Exp. Date. Similar Batch refers to
same Date for Mfd and Exp. After receiving it would be helpful if the supervisors tag the cartoon
with colored paper, etc. to track the product anytime easily. In this process, we can follow the
below arrangement.

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 Color Tagging (might be by Paper) Formula:
Green: Will be expired between Jan-Mar
Yellow: Will be expired between Apr-Jun
Black: Will be expired between Jul-Sep
Red: Will be expired between Oct-Dec

Chart: Color tagging Formula (Need to be tagged on Cartoon)

Racking: When the tagging will be completed the product should be racked in master category
(product type wise) system, keeping a blank column so that product can be delivered
accordingly; and the product shuffling would become easy in case of necessity. It’s like the game
of matching the no. as per consecutive sl no. which we have played in childhood.

1 7 5
B Before Snuffling After Shuffling (need as per color code)
3 Blank 4
l 2 6 8
a
: Racking, Maintaining a blank column.
n
k
k Inventory Picking and Delivery process: At the time of delivery supervisors will pick as per
k
the color code. Say for example today is the 13th March, 2017 and so; the supervisor will pick
the green color product then yellow and so on. If the yellow color product suggests that there are
only few days to be date expired, then it should go in return to vendor location of that both
physically and as well as in system. Here a question may arise that yellow color may be for Jan –
March of 2015 or 2016. Then the simple answer is that the outlook of the product is giving the
answer.
EOQ Model
How much to order is determined by using an economic order quantity model. It identifies the optimal
order quantity by minimizing the sum of certain annual costs that vary with order size. It is used to
determine a fixed order size that will minimize the sum of the annual costs of holding inventory and
ordering inventory The unit purchase price of items in inventory is not generally included in the total cost
because unit cost is unaffected by the order size unless quantity discounts are a factor. Thus given annual

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demand, the ordering cost per order and the annual carrying cost per unit, one can compute the optimal
order quantity.

Carrying Cost
Rental for Animal Penn/ (Taka15/ Sq. Ft./ month* 32 Sq. Ft./ Cattle*50 cattle
Shed (Hub) 288000 (carrying capacity of the shade*12 months)

Caretaker Wages 438000 (Taka 200/ caretaker/ day*6 persons*365 days)

Cattle Feed 693500 (Taka 38/ cattle/ day*50 cattle*365 days)

Annual Total Carrying
Cost for 50 cows 14195000
Annual carrying cost per (Storage capacity of the shade = 50 cows; weight of 1
kg 283.9 cow = 100 kg)
Ordering Cost
Hashil & Commission 4800 (Taka200/ cattle*24 cattle/ truck)
Caretaker cost 800 (Taka 400/ 12 cattle*24/12)
Inbound transportation cost 12000 (Taka1a2000/ truck)
Ordering cost/ order 17600 (where 1 order = truckload)

Example of EOQ model applied for Beef in “Agora”

Annual Demand is 1224000 kg (51 outlets* 80 kg per outlet per day*300 days in a year)
EOQ = Square Root Over (2x Annual demand * ordering cost)/Annual carrying cost
= Square Root Over (2x1224000x 17600)/283.9
=12319kg
No of Orders per year= 1224000/12319= 99
Average Quantity ordered/ store per order=12319/51= 242 kg
Time gap between successive orders (In days) = 365/99=3.7 days

Safety Stock System:

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For safety stock system, it is essential to have reliable estimates of the amount & timing of
demand. Similarly, it is essential to know how long it will take for orders to be delivered as well
as the extent to which demand & lead time might vary. Thus there is crucial link between
forecasting & inventory management. In Agora for company goods, outlets consider weather
forecast, festival occasion for maintaining safety stock whereas safety stock management at DC
consider uncertainty of supplier production, supply constraint in the whole sale market,
fluctuation of the outlet consumption etc. For perishable items, there is no defined safety stock at
DC except some specialized items like Hilsha which is preserved in cold room whereas in each
& every outlet keeps some safety stock of perishable items to cater uncertainty of demand.

Quality Control
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One of the key factors in running a successful supermarket is establishing consistent quality
control – both in terms of having a high volume of stock and in the quality of individual products
as they are delivered to the store. Inadequate attention to these areas can lead to loss of sales.

Stock Control: Stock control measures are used to monitor inventory. Agora uses these
measures which include taking inventory of stock as it is delivered and again within the store to
ensure proper amounts are maintained and reduce loss. Using sales data is a control measure that
provides information about product movement and trends for a given time period.

Theft: Control measures to reduce stolen merchandise take various forms. Agora uses
plainclothes detectives patrol sales floors within the large retail stores. Hidden or visible cameras
are used to monitor areas of the store which sales associates cannot monitor on a consistent basis.
Electronic tags are attached to few items such as clothes or videos that can trigger an alarm if the
item passes through a detection device before the tag is removed or deactivated. Locked cases
are used to bar access to expensive or high-risk items, such as cigarettes, tools, perfumes or
electronics. Cables or hanger locks requiring the aid of a sales associate to remove the item from
the shelf are used with clothing, electronics, weapons or small-carded items.

Health: Various control measures are used by Agora dealing with food products. These controls
involve proper handling of food items to ensure product quality and safety. Inspections of retail
stores by health inspectors or management personnel are a control measure to ensure compliance.
Other health control measures include guidelines and training on proper use of equipment and
protocols for emergency situations. Some examples of BSTI, ISO guidelines are found in
Material Safety Data Sheets.

Employees: Agora uses various control measures for employees. These include time
management controls, such as time cards and work schedules. Training programs are a method
used to control how employees interact with customers. Work lists or charts control completion
of specified tasks within a time frame.

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Produce: Produce is a particular area for attention. When Agora buy produce at wholesale
markets, it's important that the buyer is knowledgeable and can recognize the freshest items that
will also appeal to the customer. Consumers are not going to shop at a supermarket that is known
for spoiled or rotten produce and visual appeal is just as important as freshness. The 2015 Food
and Beverage Industry Survey found that 16 percent of small firms and 33 percent of large firms
predicted that locally grown/produced foods would be responsible for increased sales in 2015.
This means it’s important that produce buyers are knowledgeable about the seasonal produce of
their local geographic area in addition to being able to identify “fresh” products from abroad.
Agora also uses buying services which are used by many large supermarket chains when
purchasing produce. Advantages of this service include the elimination of the need for every
store to have a dedicated produce buyer and the ability to secure better prices due to the large
volume of purchases. There is also the ability to return damaged or substandard produce more
easily.

The Importance of Displays: In addition to price, quality of goods and customer service,
displays are an important element that requires a lot of quality control in Agora, because they
play a key part in attracting and retaining customers. Boxed items, canned goods and beverages
must be accessible and any items with expired dates must be removed from shelves. Bakeries,
health and beauty aids, stationery, seasonal products and fresh flowers all require attention to
their display. It's particularly important to make sure there are enough varieties of these items in
order to attract shoppers with many different needs.

Maintaining the Right Product Mix: Employees of Agora must have a working knowledge of
the supply and demands of their respective stores. Monitoring inventory and purchases are
absolutely essential. Customers are not happy to find their favorite product out of stock.
Customer loyalty is key – so the quality control of your inventory and store are very important. If
customers are finding they can’t rely on a store to have what they want and/or need, it's likely
they will go to a competitor.
Though automation has taken over a significant degree of business oversight, it's still critical for
personnel to watch the inventory. Department managers are responsible for the daily monitoring
of store aisles and displays.

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Effective quality control requires management and staff to work together toward the goal of a
successful supermarket business. If you're not careful, improper quality control can be the cause
of huge losses. Always remember to constantly and carefully track what you have in stock, make
sure it's of the best possible quality, and monitor how much you're selling.

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