INDUSTRY PROFILE
PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,
TOWARDS PROJECT
PVC pipes polyvinyl chloride pipes have become synonyms with
modern living. It is undoubtedly a product which has deeply
penetrated into common mans life. No wonder the industry has
achieved remarkable goal. The Government of India recognized the
importance of plastics in agriculture appointed on March 7th, 1981.
Plastics are perceived as just simple colorful household products
in the minds of common person. A dominant part of plastics present
and future improved their utilization in the following areas are
agriculture, forestry and water management, automobile and
transportation, electronics and Tele communications, building.
construction and furniture especially food substitutes, food
processing and packaging and power and gas distribution. Sujala
Pipes Pvt Ltd.,Nandyal was incorporated in the year 1979 in the
industrial estate Nandyal and this was promoted by MD.
Mr.S.Y.Reddy. BE(Mechanical), who has decades of experience in
manufacturing industry. The brand name is Nandi Pipes.
The Company Sujala Pipes Pvt Ltd has been supplying variety of
pipes through out India. Even though it has a good Net work. The
company faces different problems like lack of dealer satisfaction,
differences in customers perceptions, lack of financial appraisal
techniques, ineffective inventory management techniques and the
like. Though the Company has several departments the under
researched area is finance and less number of studies have been
conducted on inventory management in the company. The company does
not follow any scientific inventory management system and there
araised a need to device a system which could reduce costs
aconstitutingowar profitability and also provides to maintain a
proper system in inventory of the organization. The main objectives
of the study are to analyse the present practices adopted in
inventory management and inventory of raw materials, to elicit the
maximum utilization level of raw material and inventory in the
company and to ensure effective inventory management techniques for
the company for smooth survival.
There are nine branches located in India, three are located in
Karnataka, one in Tamil Nadu, one in Kerala, one in Maharastra, one
in Pondicheri, one in Orissa and one in Andhra Pradesh, which is
the Head Office located in Nandyal. Among all these branches, the
selected branch of Sujala Pipes pvt Ltd was incorporated at Nandyal
in Andhra Pradesh. The executives and Finance department officials
are enquired for the purpose of the study.A study is mainly based
on the descriptive research design. This design largely interprets
the already available information. It makes up of secondary data.
The data for the present study is collected through primary and
secondary sources.
The present study is confined to only Sujala Pipes Pvt Ltd.,
located in Nandyal. The study is limited to raw material, finished
stock of goods only. The study has been analysed by taking the
information related to both the present and past data with
reference to the performance of the company. The present study is
confined to five years from 2003-04 to 2007-08. The financial tools
used in the present study are Economic Order Quantity, Inventory
turnover ratio, Ordering cost, Carrying cost, Holding period, ABC
analysis and the like.CHAPTER LAYOUT
The study confines to Six chapters :Chapter - 1 Plastic Industry
A Profile.
Chapter 2Sujala Pipes Pvt Ltd.,- A Profile
Chapter 3Research Methodology and DesignChapter 4Inventory
management A Review
Chapter 5Data Analysis and Interpretation
Chapter 6Conclusions, Findings and Suggestions
ABOUT INDUSTRY
PVC Poly Vinyl Chloride pipes have become synonymous. With
modern living. It is undoubtedly a product with has deeply
penetrated in to common mans life. No wonder the industry has
achieved remarkable progress in terms of supply of raw materials,
and diversification of processing capabilities. In addition,
manufacturing of processing machinery and ancillary equipment
sophistication.
This versatile material with superior qualities such as light
weight, easy processing, corrosion resistance, energy conservative,
non-taxis etc. May substitute to large estimate of many
conventional and costly industrial materials like wood, glass metal
etc. in the future the manifold applications of plastics in the
filed of automobiles, electronic, electrical packaging and
agriculture give its immense utility in PVC plastics.
At present as percent of total requirement of raw material and
almost all types of plastic machines required for the industry or
not adequately available. The present investment in all the three
segments namely, production of raw materials, expansion and
diversification of raw materials, expansion and diversification of
processing capacities, manufacturing of processing machinery.
Equipment is 1250 crores and it provided employment at more than 8
lakhs people.
Plastic have been subjected to levies not at the central level
but also at the state local governments. These levels have affected
the price of the plastic products adversely. The per-capita
consumption of plastic is very low at 0.5kg. As against the world
average of 11 Kgs. The per-capita consumption is 687 Kgs in FRANCE,
33 Kgs in U.K. and even in Asian countries likes SOUTH KOREA it is
8.5 Kgs.
On account of their inherent advantage in properties and
versatile in adaption and use, plastics have come to play a vital
role in a variety of applications the world over. In our country
plastics are used in marketing essentials consumer goods which are
of daily use for common man. Such as baskets carry bags, bottles,
piles, pens, chairs etc. They also have applications in
agriculture, building constructions, water management resources,
engineering and electronics.
The government of India recognized the importance of plastics in
agriculture appointed on March 7th 1981 a national committee on the
use of plastics in agriculture under chairmanship of Dr. G.V.K.
Rao. The committee has forecast a treatment as fright of drip
irrigation through a net work of plastic tubes and pipes. In its
origin large scale adoption of irrigation would lead to support in
demand of P.V.C. pipes LDPE tubes and play proper by lane emitter.
The committee maintains a number number of recommendations of
promoting the use of plastics. The implementation of the
recommendations would so a long way is increasing the consumption
of plastics, which at present is very low.
The committee has highlighted the importance of use of PVC resin
is the manufacture of rigid piped, flexible pipes and sheets which
are being used for agricultural to carry water from place to place
and living of panels and reservoirs to reduce sweepers and most
important in drip irrigation sequence.
A break through had already taken lace in the filed of channel
lining iwht poly urethane in the state of Gujarat, Madhya Pradesh,
Punjab and Haryana. The irrigation departments in these states have
taken concrete steps to incorporate canal living within LDPE (Low
density) pipes on priority basis. Another verity of plastic that
requires artificial manufacturing relates to true engineering which
is used as a alternative to (or) replacement of metals in load
needing applications.
Modified P.P.O. Nylon, Polyhedral, Polycarbonates, polyester
(PBT/PET) phonic are same of the plastics are being increasingly
used for various applications in automatic, telecommunications and
other industries. Te plastics are plastics are classified into two
classes.
Thermo plastics
Thermostats
The thermo plastics become sufficiently soft as the application
of heat. The thermostats are the initial application of heat and
pressure subjected for fire, but upon further application of heat
and pressure they are cured to heat and pressure. They are cured to
hard molded piece which cannot be resifted by reheating.
LDPE: Low Density Poly EthlineProduction of LOFE was started in
the year in 1995. At present there are 3 units manufacturing LOPE
with a total capacity of 1.15 lakh tones. Products targeted of LOPE
by the end of 1999 are placed at 1.86 lakh tones.
HDPE: High Density Poly EthyleneProduction of HOPE in India
commended in 1968, at present there is a unit(play Offices
industries Ltd.) in India, producing HOPF by the end of 1989-90 was
producing 1.25 Lakh tones.
PVC: Poly Vinyl ChlorideProduction of PVC stated in 1961,
against first production of PVC in the world, 1927. At present
there are 6 units manufacturers PVC resins. The totals installed
capacity comes to 1.7 lakh tones. The production target of PVC by
the end of 1989-90 is placed is lakh tones.
P0lystyrenePolystyrene was first manufactured in India in May
1987. The production target of polystyrene by the end of 1989-90 is
set out to 29,000 tones. Poly PropyleneThe first production of poly
propylene in India commenced in 1978. A production target of 36,000
tones is achieved by the end of 1993-94.
ADS (Acrvlonitril Butadiene styrene)
The production of P.BS in India started in 1978. The present
total installed capacity is 5000 tones.
Problems
Raw material is always been a problem to be recorded with the
plastic industry. The situation was slightly and is expected to
change considerably by commissioning the major petrol chemical
project in the pipe line by the year 1990.
The Maharastra Gas cracker. Complex, Haldia petrol chemicals and
Reliance petrol chemicals together with the expansion of existing
giants will go a long way to mitigate this long, study problem. By
the terminal year of the plan, the installed capacity targeted in
almost 8 lakh tones.
The steep rice in the raw materials as a result of imposition of
duties and taxes poses another problem to the public industry. On
account of this domestic price'of finished goods are higher than
the rest of world. Apart from this, The administered pieces for
basic raw materials have not been implemented with a balanced view
to accommodation the interests of both consumers and manufactures.
The feed stocks for pertro chemical industries are naphtha feeds
stocks. Hence the pricing naphtha by the government has cascading
effect.
Export of the plastic goodsPlastics have been excellent
potentialities. Our country equipped with all kinds of processing
machines and skilled labor and undoubtedly, an extra effort to
boost export finished plastic goods will yield rich divided.
Today, India exports plastics product to as many 80 countries
all over the world. The reports, which were stagnated at around
Rs:60-70 crore per annum doubled to 129 crore in early 1990's. in
1991-92 plastic industry has taken up a challenged of achieve
export target of 250 cores. Major export markets for plastic
products and usage are Australia, Bangladesh, Canada, Egypt,
France, Holland, Italy, Hong, SriLanka, Sweden, Taiwan, Taiwan,
U.K, U.A.S and Russia.
With a view to boosting the exports, the plastics and Iinoleums,
export promotion council has requested the government to reduce
import duty on plastic raw materials supply of raw materials at
international prices, fix duty free backs on weighty base
interested of volume basis.
ProspectsThe production of various plastics raw materials the
country is expected to double by the end of the seventh five years
plan. when the PCV's capacity expansion programmed is completed as
well as the new plants by other manufactures programmed is
completed as well as new plants by other manufactures like PIL,
century Enka, Reliance are set up during the period, the
consumption of commodity plastic including LDPE, HDPE, PP,PS, and
PVC is expected to touch the one million tones mark by 1989-90.
There is immense scope for the use of plastics in agriculture,
electronics telecommunication, automobile, irrigation and thus, the
plastic industry is on the threshold of an explosive growth.
Role of plastics in the Nations Economy:
Plastics are perceived as just simple colorful household
products in the minds of common person. A dominant part of plastics
of present and future improved their utilization in the following
areas. Agriculture, Forestry and water management
Automobile and transportation
Electronics and Telecommunications, building.
ConstructionandFurnitureespeciallywoodsubstitutes
Food processing and packaging.
Power and Gas distribution.
Products & Services
Product/Services
Other plastic pipes
Other plastic profile shapes
Plastic drain, waste and vent pipes
Plastic industrial and mining pipes
Plastic pipe fittings and unions
Polyethylene rods, tubes and profile shapes
PVC water pressure pipes
Vinyl copolymer rods, tubes and profile shapes
MANUFACTURING PROCESSTubes are manufactured from mild steel
strips slitted from Hot Rolled Low Carbon Steel coils conforming to
IS: 10748-1995. The strip passes through a series of drive forming
and fin rolls and takes the required circular shape and is welded
continuously by passage of an electric current of high frequency
i.e.4,50,000 cycles/second across the abutting edges. The tubes
thus formed and welded pass through the sizing sections where
dimensional deviations if any are corrected before the tubes are
cut into required length by automatic cutting machines. The tubes
are then end debarred and pressure tested. Thereafter protective
surface finishing operations such as hot dip Galvanizing or
varnishing is done as per specific requirement. The tubes are
offered as plain, beveled, threaded ends or with flanges.
Flow Chart
Global demand to grow4.6% yearly through 2012
Worldwide demand for plastic pipe is forecast to increase 4.6
percent annually through 2012 to 8.2 billion meters, or 18.2
million metric tons. Gains will be based on continued strong
prospects in developing nations, particularly in China. In fact,
China will account for 30 percent of overall length demand gains
for plastic pipe between 2007 and 2012.
PVC to remain leading plastic pipe resin
Polyvinyl chloride (PVC) is the leading plastic pipe resin,
accounting for nearly two-thirds of plastic pipe demand by weight
in 2007. PVC pipe is popular because of its low cost, durability,
strength and ease of extrusion, allowing it to make inroads against
non-plastic pipe materials. Demand for HDPE pipe will benefit from
use as small-diameter pipe in natural gas transmission, as conduit
for electrical and telecommunications applications, and as
corrugated pipe for drains and sewers. While comparatively small,
demand for fiberglass pipe will post well above average gains,
reflecting growth in extreme environment uses.
Developed countries to continue accounting formost plastic pipe
demandDespite below-average growth, developed countries will
continue to account for the majority of total plastic pipe demand.
These regions (Western Europe and North America, as well as certain
nations in the Asia/Pacific region, such as Japan and Australia)
have the highest levels of pipe use intensity. However, they are
also comparatively mature markets, where growth in construction
activity tends to be well below the global average inhibiting
growth rates for plastic pipe.
In the developing countries of Eastern Europe, Asia (exclusive
of Japan) and the Africa/Mideast region, gains will outpace the
global average, benefitting from ongoing infrastructure
development. Economic growth in these countries will create demand
for plastic pipe in networks for telecommunications and in
residential home building applications. In addition, ongoing
efforts across these regions to upgrade water treatment systems
will boost demand for plastic pipe used for potable water delivery
and in drainage and sewage applications.
Finally, in many nations, demand will benefit from the expansion
of natural gas distribution networks. A large number of these
networks are currently under construction, in response to
accelerating demand for natural gas in heating, industrial fuel and
electricity generation applications. In particular, growth in these
applications will benefit high density polyethylene (HDPE)
pipe.
Product Description
Plastic flexible wash basin pipe.
Material: Pp Size: 11/2"*40mm or 11/4"*32mm. Length: 80-120cm as
custom request. Draining in sink, flume, or wash basin... This hose
can fit with other fitting like stainless bowl, or other fitting
see the picture
Plastic Water Pipes Affect Odor and Taste Of Drinking
WaterPlastic pipes, which are increasingly being used in place of
copper water pipes, can significantly affect the odor and taste of
drinking water, according to a pioneering study on the subject.
"Fruity plastic" may seem like a connoisseur's description of
the bouquet of a bottle of Chardonnay or Merlot gone bad. However,
that was among several uncomplimentary terms that a panel of water
"sensory experts" used to describe the odor of drinking water from
the plastic piping that is finding its way into an increasing
number of homes these days.
The sampling was part of pioneering research on how plumbing
materials affect the odor and taste of drinking water, which was
reported at the 234th national meeting of the American Chemical
Society (ACS).
Andrea Dietrich, Ph.D., who reported to the ACS, the world's
largest scientific society, pointed out that a rash of costly
pinhole leaks in recent years in commonly used copper water pipes
has led to renewed interest in lower priced plastic pipes. Dietrich
and colleagues at Virginia Tech are among those scientists leading
the way in evaluating how plastic might affect water quality and
odor.
"Although water is a complex mixture of organic and inorganic
chemicals, most people expect their drinking water to have little
or no flavor," Dietrich noted. With those expectations, any taste
or odor in a glass of water can be "highly noticeable."
Dietrich's team is using two methods to evaluate odors
associated with several types of plastic piping. First, sensory
panelists smell and describe the odor of the water after it has sat
in the pipes for several days. Then, the water undergoes chemical
analyses for metals and organics and basic water quality
parameters, such as pH.
Using specially prepared, neutral-smelling water as their
control, panelists described the test water samples in terms that
included "waxy plastic citrus," "fruity plastic" and "burning
plastic." Fortunately, the odors are not long lasting, Dietrich
said. "We find that after about two months, most of the odors and
water quality effects have gone to background." How quickly the
odors disappear depends on the amount of water usage, she added.
When a household uses more water, the odors fade faster.
Dietrich told the ACS that her group evaluated several types of
plastic piping: cPVC (chlorinated polyvinyl chloride), HDPE
(high-density polyethylene), and PEX-aA and PEX-b, which are cross
linked polyethylene. Each is approved and certified for use in
drinking water applications by NSF International, an independent
certification, standards and testing organization, and ANSI, the
American National Standards Institute.
"We found that PVC has a low odor potential and it doesn't seem
to release many organic chemicals," Dietrich said. "HPDE actually
had the highest odor production, although it didn't release very
many organic materials. The PEX-b pipe had a moderate amount of
odors and also a moderate amount of organic chemicals that were
released into the air. PEX-a had fewer odors and organics release
than the PEX-b pipe."
Asked about her personal preference in plastic piping, Dietrich
replied: "I would recommend people talk to their neighbors and find
out what type of plumbing materials they have and if they are
having problems. We do suspect that certain materials are going to
be more compatible in certain areas," due to the differences in
water quality from one part of the country to another.
For now, Dietrich's group is focused mainly on the odors
imparted by plastic pipes and the analysis of any organic compounds
that may leach into the water from the pipes. Asked if there may be
any health effects from the leached compounds, Dietrich said that
is still under investigation and she doesn't have any answers at
this point.ABOUT SUJALA INDUSTRIES Sujala Pipes Pvt Ltd. Nandyal
was incorporated in the year 1988 it is located in the industrial
estate, Nandyal. The company has "Rain Plastic Pipes Industry" as
its sister concern in the manufacture of PVC pipes. This company is
promoted by the Managing Director Sri .S.P.Y.Reddy, B.E (Mech) who
has decades of experience in the manufacturing industry.
The company has three main PVC pipes brands. They are "Nandi",
"SUJALA", and "Rani". But the flagship brand is "NANDI PIPES". The
name "NANDI" derives form the historical aspects of this town,
Nandyal. The brand name "NANDI PIPES" as taken from the pilgrimage
place called "MAHANANDI" which is 15 km from Nandyal. The company
has diversified in to various fields in the recent past. Apart from
manufacture of mineral water under the brand name "Name mineral
water" dairy products "Nandi dairy" which supplies regular milk to
the people of Nandyal and Villages in and around Nandyal?
The company rightly thinks there is an inseparable relation
between education and business. Managing Director Mr. S.P.Y.Reddy
encouraging women to educate by establishing women colleges in
Nandyal. Sujala pipes also gone for expansion program. They have
taken over "monarch pipes" Anantapur which was a main
competitor.
The company is providing good source of employment to the people
who are at both workmen level as well as administrative level.
sujala Pipes which was once upon a time a sole manufacturer of
plastic goods in to many companies. Their turnover touched a
remarkable figure nearly Rs. 30 crores in the year 1999-2000.
The main objective in starting this industry was to cater to the
needs of farmers to facilitate water flow in this area which lakhs
rainfall and to use the water resources productively. This helps
the farmers in lifting the ground water to the surface as well as
free flow of the water as an and when necessary.
Initially the industry was producing polythene pipes and
PVC(poly vinyl chloride) pipes were introduced under the same brand
name later in 1984-85 the growth of PVC industry in Rayalaseema
area of A.P. has seen rapid growth in the early 90's. The company
also produce PVC fittings. In short it can be concluded that the
company enjoys 95% of south Indian company does is free offer of
transportation to the door steps of the customers when he purchases
100 or more pipes. The company also provides free medical
facilities to the employees. SUjala pipes also involved in social
activities by providing free water supply to the needy people.
Company organize free medical camps to the poor people. It also
gives loans to unemployed youth in fulfilling their career
objective.
As the company caters to the needs of farmer and its main
products is agricultural related product they enjoy maximum
benefits given by the government. They are no unions in the
organization as there an there is good relation and working climate
exists in the organization between
Management and employees. It basically work on 2 shifts.
Residences are also provided by the company to its workforce and
employees at confessional rent.
Financially the company markets sounds very good. It gives a
credit of 21 days to its customers. It has a wide distribution
network both in A.P. as well as neighbor states in the south India.
Industrial accidents are also nil in the company. The company
markets products through telephone orders. It has a wide network of
distributors all over south India.
BRANCHES OF NANDI PIPES
Monarch pipes, Anantapur.
ITL, Hyderabad
COMPETITIORS
Sudhakar pipes
Finolex in Karnataka & Maharastra.
MAN POWER
The personnel manager plan and provide for future openings,
anticipating deaths, dismissals, resignations anticipating future
promotion future transfer, estimating future positions
PRODUCT PROFILE The main products manufacture by the company is
rigid PVC pipes NANDI RIGID PVC PIPES with their good quality,
trouble free service durability and economical use are better
choice than mild steel, galvanized steel, cast iron, plastic pipes.
Kolsite compact Monolayer film plants.
Compact chiller.
Innovative Extrusion
Thin screw RPVC extruder.
Reprocess extruder plant.
Kolsite-Ballenfeld next generation pipe plant.
Trusted name in plastic machinery (President plastic
machinery)
Payal industries Ahmadabad.
Micro Injection MouldING machines.
Net plant. MANUFACTURING PROCESSThe manufacturing process for
NANDI pipes is as follows:
The power form out of the motor is transmitted to main gearbox
through a No. of U-belts& pulleys to the input shaft of the
gearbox.
The main gearbox is worm gear box having reduction ratios of
15:1 the gearbox is mounted on the top of base on a well-machined
pad and held. Firmly by 4 NOs. of hexagonal headed screws,
The output shaft of gearbox is connected to the output shaft of
the thrust assembly through ageavy-duty flexible coupling. The two
output shafts are perfectly aligned by Checking the run of this
coupling and gear box and hopper Block are dwelled to the base in
correct position.
The splinted end of the extended screw engages with splinted
bore of the screw. There will be two heating zones called barrel
zone & die zones. Raw material will be passed from hopper to
first barrel zone where source constant temperatur4e will be
maintained to bring the raw materials in tb the form of paste. Raw
materials will be passed from barrel zone to die zone. Where the
raw material come to require conditions form the pie cool water
will be supplied on the through out the length of pipe hard shape
pipes will be separated by cutter in required length of 6mts.
Manufacturing process in sujala pipes pvt.ltd,
Firstly take 100kg PVC.
add Calcium Carbonate & one pack stablizers at 700
temparuture
Then mix at 1250 heat of that mixture
cool up to 450 This mix will transfer through Vaccum Tubes
through feeder
take this mixture through vaccum tubes at any place in the
feeder machine
transfer through 5 zones those are heat in tempature at 1250 to
1900 Feeder zone
Comparison zone
Melting zone
Degases zone
Dry zone
In this connecting lead is there which causes to pull the pipe
then cool haul off: it is used to pull the pipes uniform
ally.QUALITY CONTROL MEASURES Wall thickness is checked by
Screwguage.
Outer Diameter is checked by Venire Calipers pipe Tape.
The above are heat at 1300 temperature & 90mm length to
98mm.
4985 TESTS ON SUJALA PIPES MEASURING FOR QUALITYWhile testing in
lab after preparing pipes their weightage, temparuture, oiling bag
tests. After these conducting these tests introduce in market for
saleTHERE ARE THREE TYPES OF TESTS THOSE AREI. Impact Test
II. Hydrostatic Test
III. Reversion Test
I. Impact test In this test we have to measure pipe length with
Weighting Machine
.In this we have to strike the pipe with 25 strokes on 3 lines
measuring scale.
After doing this keep the pipe in cooling place.
In this we have to take 2 types of cooling measures those areI.
De Fridge & the
II. Air Conditioners.
These can do with the help of Chillers.
II. Defreedge Processes In the defreedge we have to take 8.6mm
below wall thickness of pipe & time duration is 2 hours &
temperature upto 0 0 to +/- 10centigrade (c).
When the pipe piece 200mm we have to defreedge with +/- with
10mm. In this we have to cut the 200 pipe with 10mm & stay in
cool with 1 hour.
III.Hydrostatic Test Processes1. Short term test
2. Long term test
1) In the first test we have to maintain temperature 250 c &
water temperature duration is 1 hour.
2) In the second test we have to maintain temperature 600 c
& water temperature duration is 100 hours or 42 days.IV.Testing
In this test we have to cut the pipe piece in 750mm and fit the end
gaps in water. One side redcap fill with water & the other side
with white cap for closing the edges of pipe.
We have to forecaster this test with weather forecasting machine
to know the water pressure while putting pipes in water formula for
measuring this is as follows:
4.19*normal pressure
e.g.: 4.19*4 we have to get 16.73 approximately. 17Watts
Pressure. V.Reversion Test Processes
In the above testing the pipes are coming outside with a heat of
1900temparuture to overcome that elasticity temperature we have to
introduce this test. In this test we have to take 200mm piece of
pipe. cut this pipe into 2 pieces & locate front side 10mm
& opposite side 20mm put those pipes in reversion test oil bag.
In this there is oil content name is Transformer oil /Glistering
mineral oil. We have to test this with the temperature with 1500 to
+/- 200.
In 8.6mm pipe piece we have to test temperature with below 500 c
in oil bag above 8.6mm to 14mm,& the time duration is 1 hour
above for 14.1mm to 17mm 1 hour time duration is necessary. After
doing this cool those pipes in room temperature.
Sink age is lie below 5% & above 5% we have to put it in
hydrostatic (i.e., water) pressure.
Ingredients of PVC pipes PVC (poly vinyl chloride)
Tri basic lead sulphate(TBCS)
Die basic lead sulphate (DBLS)
Calcium steric
Lead steric
Calcium carbonate(Ca Co3)
Titanic dioxide
Steric acid
Wax
The above material is mixed in fixed proportion in a big
container and they get processed in to a solidified product.
Immediately pipes of various diameters are manufactured by using
various moulds. Once the pipes are manufactured they will be
shifted to warehouse. As and when the requirement comes, they will
be dispatched to the designated place.
NANDI RIGID PVC PIPES AT A GLANCE Color
- Light Grey
Length
-6 Mtrs
Pressure
-2.5Kg, 4Kg, 6Kg, 10Kg / Cm2 and 15Kg/Cm2
Manufactured with ISI mark - IS4958: 2000
Range available - 20mm to 400 O.D
NANDI GROUP OF PRODUCTS Nandi PVC Products
Nandi special Blue Casing Pipes
Nandi Electrical PVC Pipes
Nandi S.W.R. Pipes
Nandi Submersible Pipes
Srikanth water containers
Nandi Flex Pipes
Nandi Garden Tubes
Nandi Krishi Pipes
Nandi LDPE Pipes
Nandi HDPE Pieps
Nandi Drip Irrigation Pipe
Mahanandi SWR fitting
Nandi solvent cement.
Mahanandi Mineral Water Nandi milk dairy products
S.P.Y.REDDY Educational Institutions.
Nandi super market.
BENEFITS OF NANDI RIGID PVC PIPES
Economy
Being cheaper than conventional cement and steel pipes. NANDI
RIGID PVC PIPES are very economical.
Light weightPVC pipes are 1/6th the weight of steel pipes. This
makes them easy to carry and install doing away heavy material
handling equipment. This reduces labor cost as well, as the process
of installation is faster.
Rugged and DurableManufactured out of the best PVC material,
NANDI RIGID PVC PIPES do not get rust and are not affected by most
chemicals. Hence, they last longer, render trouble-free service and
require less maintenance.
More flowFrictional losses in NANDI RIGID PVC PIPES are 40%
lower than conventional pipes. Hence there is approximately 25%
more flow than from pipes of the same size.
Raw materialThe important raw materials in manufacturing of PVC
pipes Resin (Poly vinyl chloride)
TBLS (Tri Basic lead Sulphate)
DBLS (DI Basic Lead Sulphate)
CS (Calcium Steric)
LS (Lead Steric)Quality inspection
After manufacturing PVC pipes as per ISI standards following
tests will be conducted to confirm the quality.
Reversion test
V.S.T
Impact test at OOC
Internal hydro- static test
Opacity test
Type test at 600C
Sulphated Ash Content
Effect on water test
WarrantiesWarranties are given to customers except an assurance
that the product is reliable for 18 months.
Payment period For Nandi brand zero credit policy adopted by the
company and goods are not delivered unless cash refinance are made.
For monarch and sugar brands credit is entitled up to a week. The
difference between these brands is due to brand image.
Transportation Transportation of SUHALA PIPES is very admirable.
This unique strength of organization enables delivery to be
efficient. This even helps the dealers to reduce inventory levels
to the minimum. OperationsTo ensure optimum use of human resources
currently employed.
To determine of forecast future skill requirements.
To provide control measures to ensure that necessary resources
are available and when required.
To avoid unnecessary dismissals.
To ascertain future housing needs of employee
MODELS PIPES
1. Agricultural Pipes
Water, is indispensable for agriculture. However, only 15% of
agricultural land, the world over, gets dependable water supply. In
India too, only a fraction of cultivated land gets dependable
supply of water. Pipes is an effective way of overcoming the
problem caused by canal irrigation as they can be laid underground
and moreover, water loss due to percolation and evaporation is
eliminated. Lift irrigation is employed to draw water from a lower
to a higher level. Here, various kinds of pipes are used. Nandi
Rigid PVC Pipes with their good quality, trouble free service,
durability and economical use are a better choice than mild steel,
galvanized steel, cast iron and plastic pipes2. Electrical
Pipes
Apart from manufacturing UPVC pipes M/s.Sujala Pipes Pvt Ltd, is
specialized in the manufacture of entire gamut of other standard
products including Electrical conduits, plumbing SWR pipes covering
all applications in which PVC pipes can be used meeting the ISI
requirements. or the past about three decades, Nandi Pipes(p) Ltd.,
Nandyal had been manufacturing UPVC Electrical Conduits under the
brand names Nandi, Nandi Premium, Nandi Delux, Nandi Gold, Nandi
Platinum and Nandi Diamond using cutting-edge technologies to keep
pace with the modern technology and the choice of the customers.
The company believes in total Quality Control measures and as a
part of it each pipe is thoroughly checked at the manufacturing
stage, so as to ensure that customer is supplied with good quality
product. The company's Electrical Conduits are of ISI Standards and
used for domestic & industrial purposes, the pipe sizes ranging
from 16 mm to 63 mm to outer diameter.3. SWR PipesNandi Pipes Pvt
Ltd.,Nandyal, a unit of Nandi Group of companies, has been
manufacturing 'NANDI' brand Unplasticized Polyvinyl Chloride(UPVC)
Plain and Socket end pipes with nominal outside diameter from 75.90
,110 & 160mm. These pipes are used in soil and waste discharge
system inside the building including ventilating and rain water
applications. The pipe's surface colour is dark shade of gray.
Pipes are made and supplied in nominal lengths of 4,6,8 and 10 feet
either plain or with solvent typed socket/'O' ring typed grooved
socke
The company's Nandi Gold brand SWR Pipe enjoys ISI
recognition
(IS: 13592-1992). The Company also manufacturers SWR pipes under
the brand names of Nandi Premium and Nandi Deluxe as per customer's
choice and requirements. These pipes are manufactured with virgin
material only.Ring fit Pipes An innovative new product Integrated
Thermoplastics Ltd., a unit of Nandi Group of Companies had
developed Ringfit pipes to overcome problems commonly experienced
in solvent cement joining of higher diameter (above 160 mm) UPVC
Pipes.
These Nandi Gold branded Ring fit pipes offers excel lent
advantages over other UPVC pipes specially for undergoing
applications. Pipelines Utilizing Ring fit pipes can be taken up
for pressure testing immediately on completion of the section.
Unlike for solvent cement joints, the waiting period required for
solvent cement joining is entirely eliminated, resulting in short
installation duration. Ring fit pipes are easy to install in the
field. Ring fit pipes of diameters below 140 mm can be joined by
hand pressure. For large sizes a pipe jack is available for the
purpose.
5. Plumbing PipesThe Company also manufactures Grey Color
plumbing pipes as per ISI standards IS:4985-2000
INTRODCTION
PVC pipes polyvinyl chloride pipes have become synonyms with
modern living. It is undoubtedly a product which has deeply
penetrated into common mans life. No wonder the industry has
achieved remarkable goal. Plastics are perceived as just simple
colorful household products in the minds of common person. A
dominant part of plastics present and future improved their
utilization in the following areas.
Agriculture, forestry and water management. Automobile and
transportation, Electronics and Tele communications, building.
Construction and furniture especially food substitutes. Food
processing and packaging. Power and gas distribution.
Sujala Pipes PvtLtd.,Nandyal was incorporated in the year 1979
in the industrial estate Nandyal and this was promoted by MD.
Mr.S.Y.Reddy. BE(Mechanical), who has decades of experience in
manufacturing industry. The brand name is Nandi Pipes. The name
Nandi derives from the historical aspects of this town Nandyal. The
brand name as taken from the pilgrimages place called Mahanandi
which is 15 km from Nandyal.
STATEMENT OF THE PROBLEM
The Company Sujala Pipes Pvt Ltd has been supplying variety of
pipes through out India. Even though it has a good Net work. The
company faces different problems like lack of dealer satisfaction,
differences in customers perceptions, lack of financial appraisal
techniques, ineffective inventory management techniques and the
like.
Inventory is the main source of the pipes limited. There is no
proper management in inventory, the company shall not meet the
customers desires and does not satisfy the customers and their
demands. Hence, the study concentrates on various techniques
adopted in the management of inventory in the organization.
NEED FOR THE STUDY
Though the Company has several departments the under researched
area is finance and less number of studies have been conducted on
inventory management in the company. The company does not follow
any scientific inventory management system and there raised a need
to device a system which could reduce costs aconstitutingowar
profitability and also provides to maintain a proper system in
inventory of the organization.
REVIEW OF LITERATUREThe data has been collected for the study
from various books and websites
BooksAccording to Khan M.Y &Jain P.K, Management accounting
is concentrated on various financial management and Inventory
management decisions elaborately.
According to Man Mohan & Goyal S.N, Principals of Management
accounting is concentrated on various financial management and
Inventory management decisions elaborately. According to
V.K.Bhalla, working capital Management is concentrated on various
financial management and Inventory management decisions
elaborately. According to C.Vann home, financial Management is
concentrated on various financial management and Inventory
management decisions elaborately.
According to I.M.Pandy & Prasanna Chandra home, financial
Management is concentrated on various financial management and
Inventory management decisions elaborately.
Websiteswww.inventorymanagement.com gives about inventory
concepts, status, and
significance.www.inventorymanagementreview.com gives about
inventory concepts, status, and
significance.www.infliwinventory.com gives about inventory
concepts, status, and significance. www.effective inventory.com
gives about inventory concepts, status, and significance.OBJECTIVES
OF THE STUDY
The main objectives of the study are : To analyze the present
practices adopted in inventory management and inventory of raw
materials.
To elicit the maximum utilization level of raw material and
inventory in the company.
To ensure effective inventory management techniques for the
company for smooth survival.
RESEARCH METHODOLOGY
There are nine branches located in India, three are located in
Karnataka, one in Tamil Nadu, one in Kerala, one in Maharastra, one
in Pondicheri, one in Orissa and one in Andhra Pradesh, which is
the Head Office located in Nandyal. Among all these branches, the
selected branch of Sujala Pipes pvt Ltd was incorporated at Nandyal
in Andhra Pradesh. The executives and Finance department officials
are enquired for the purpose of the study.A study is mainly based
on the descriptive research design. This design largely interprets
the already available information. It makes up of secondary
data.DATA SOURCE
The data for the present study is collected through primary and
secondary sources. Secondary data is obtained from the annual
report of Sujala Pipes Pvt Ltd. Nandyal and also from internal
reports of the company from time to time and primary data collected
by interacting financial executives of the companyPRIMARY DATA
The primary data of this study was collected by consulting
account officer of that company through oral interviews and
queries
SECONDARY DATA
The study is mainly based on the source of secondary data. The
secondary data forthis study was collected from the published
sources i.e., annual reports, records of Sujala Pipes Pvt Ltd, and
www.sujalapies.com.
SCOPE OF THE STUDY
The present study is confined to only Sujala Pipes Pvt Ltd.,
located in Nandyal. The study is limited to raw material, finished
stock of goods only. The study has been analysed by taking the
information related to both the present and past data with
reference to the performance of the company.
PERIOD OF THE STUDY
The present study is confined to five years from 2003-04 to
2007-08TOOLS FOR THE STUDY
The data relating to the performance of the Sujala Pipes Pvt
Ltd., from different activities that is operating, investing and
financing activities have been carefully analysed by using the
financial tools. The financial tools used in the present study are
Economic Order Quantity, Inventory turnover ratio, Ordering cost,
Carrying cost, Holding period, ABC analysis and the
like.LIMITATIONS OF THE STUDY
The major limitations found in the study period are: Time and
finance of the limiting fact for the study.
For ABC analysis consumption of raw material is only taken and
EOQ main raw material are only considered.
Some of the information is kept confidential and has not been
disclosed by the executives.
This study is further limited to Raw material and packing
material only.
CHAPTER LAYOUT
The study confines to SIX Chapters : Chapter-1 Plastic Industry
A Profile.
Chapter 2 Sujala Pipes Pvt Ltd.,- A Profile
Chapter 3 Research Methodology and Design
Chapter 4 Inventory management A Review
Chapter 5 Data Analysis and Interpretation
Chapter 6 Conclusions, Findings and Suggestions
INTRODUCTION
Inventory in wider sense, is defined as any idle resource of an
enterprise. It is a physical stock of goods kept for the purpose of
future affairs. a term is generally used to indicate raw materials
in process, finished products, packing, spares and others stocked
in order to meet expected demand or distribution in the future.
Through inventory of materials is an idle resource it is not meant
for immediate use it is almost essential to maintain some
inventories for the smooth functioning of an enterprise.
For example, let us consider an enterprise that has no inventory
of materials at all. When this enterprise receives a sales order,
it will have to order out the raw material required to complete the
order, wait till these arrive and then start production. This would
kept the customers invariably to wait too long for the delivery of
the goods ordered. Among other disadvantages of not maintaining the
inventories, the enterprise may have to purchase the raw materials
at very high prices because of piece-meal buying: the production
costs would also be high because of not being able to take
advantage of batching; the load on manufacturing shops would vary
from period to period depending upon the orders on hand; the load
on manufacturing shops would vary from period to period depending
upon the orders on hand; the company may not be able to provide
adequate customer service in the matter of completion, waiting and
price.
Meaning of Inventory
The dictionary meaning of the word inventory is detailed list of
movable goods, but in management inventory is used to designate the
aggregated of those items of tangible property, which are held for
sale ordinary course of business thus the inventory means stock of
items kept in reserve for certain period of times, it includes raw
materials, work in progress or semi finished goods, finished goods
and spare parts for the maintenance of equipment, etc.,
Raw Materials
These are the basic inputs, which are converted into finished
product through manufacturing process. Raw materials, inventories
are those units, which have been purchased and stored for future
production.
Work in Progress
Materials issued to the stop floor which have not yet become
finished products, they are value added materials to the extent of
labor cost incurred.
Finished Goods
Finished goods are those which are ready for sale.Definitions of
Inventory
JOHN HAMPTON treats inventories, as Locked up capital. Inventory
measured by rupee value constitutes the major element in the
Working Capital (approximately 60% of current assets).
Good inventory management is nothing but good financial
management according to S.C.KUCHAL.Types of Inventory Inventory can
be classified in to five basic types on the basis of their
production. These various types of inventories cannot be identified
and segregated within the organization. As such types will not be
represented in all organization. These five types areManagement
inventory There are needed because of the time required to move
stocks from one place to another.Lost Size inventory
These are result of buying materials in quantities larger than
the immediately requirement, with a view to minimizing cost of
transportation, buying, receipt and handling and to obtaining
quantity discount
Fluctuation inventory
These are carried to ensure ready suppliers to consumer even
when these are irregular and unpredictable fluctuation in their
demand.Anticipation inventoryThese are usually maintained to meet a
predictable but changing pattern of future demand.Cycle
inventory
These result from management attempt to minimize the total cost
of carrying and ordering inventory. They arise from ordinary in
batches or lots, rather from needed basis.
PURPOSE OF INVENTORIES
The overall goal of inventory management is to feed the
production with right quantity of raw materials with right quality
at right time. The purpose of holding inventories is to allow the
firm to separate the processes of purchasing, manufacturing and
marketing of its primary products. The goal is to achieve
efficiencies in areas where costs are involved and to achieve sales
at competitive prices in the market place. With in this broad
statement of purpose we can identify specific benefits that accure
from holding inventories.
Avoiding Lost Sales
Without goods in hand which are ready to sold, most firms would
lose business. In most cases, a firm must be prepared to deliver
goods on demand.
Gaining Quantity Discounts
In return for making bulk purchases, many suppliers will reduce
the price of supplies and component parts. The willingness to place
large orders allow firm to achieve discounts on regular prices.
These discounts will reduce the cost of goods sold and increase the
profits earned on a sale.
Reducing Order Costs
Each time places on order, it incurs certain expenses. Forms
have to be completed; approvals have to be obtained and goods that
arrive must be accepted, inspected and counted. Later an invoice
must be processed and payment made. Each of these costs will be
very with the number of orders placed. By placing fewer orders, the
firm will pay less to process each other. Achieving Efficient
Production Runs
Each time a firm sets up workers and machines to produce on it,
start up costs is incurred. This are then absorbed as production
begins. The longer the runs the smaller the cost of begin producing
the goods.
Reducing the risk of production shortages
Manufacturing firms frequently produce goods with hundreds even
thousands of components. If any of these are missing the entire
production operation can halted, with consequent expenses. To avoid
starting a producing run and then discovering the shortage of a
vital raw materials or other component, the firm can maintain
larger than needed inventories.
These benefits arise because inventories provide a buffer
between purchasing, producing and marketing of goods. Raw Materials
and other inventory items can be purchased at appropriate times and
in proper amounts manufacturing process can occur in sufficiently
long production runs and with pre-planned schedules to achieve
efficiency and economics. The sales force can respond to customer
needs and demands based on existing finished goods. To allow each
area to function effectively, inventory separates the area to
function efficiency and economics. The sales force can respond to
customer needs and demands based on existing finished goods, to
allow each area to function effectively, inventory separates the
areas to function effectively; inventory separates the three
functional areas and facilitates the interaction among them.
REASONS FOR CARRYING INVENTORIES
The need of management to make decisions regarding inventory
arises because of alternative courses of action (Strategies)
available to any firm or organization. Thus a set of decision rules
are sought which satisfy an objective function (such as available
facilities, availability of finance etc.,) imposed by the firm
policy. Hence it becomes essential for an enterprise (firm) to have
inventory because of the following reasons.
It helps in smooth and efficient running of business.
It provides adequate service to customers.
It reduces the possibility of duplicating of orders.
It helps in maintain economy by absorbing some of fluctuations
when the demand for an item fluctuates or is seasonal.
It helps in minimizing the loss due to deterioration,
obsolescence, damage or pilferage etc.,
It acts as a buffer stock when raw materials are received late
and shop rejections are too many.
Takes advantage of price discounts by bulk purchasing.
It reduces the cost of product because of an added advantage of
batching and long, uninterrupted production runs.
It improves the manpower, equipment and facility utilization, by
better planning and scheduling.
Though the inventories are essential and provide an alternative
to production/purchase in future, they also mean locking up capital
of an enterprise. Maintenance of inventories also costs money by
way of expenses on stores, equipment, personnel, insurance etc.,
Thus excess inventories are undesirable. This calls for controlling
the inventories in the most profitable way.
NEED FOR CARRYING INVENTORIES It helps in smooth and efficient
running of business.
It provides adequate service to customers.
It reduces the possibility of duplicating of orders.
It helps in maintaining economy by absorbing some of
fluctuations when the demand for an item fluctuates or is
seasonal.
It helps in minimizing the loss due to deterioration,
obsolescence, damage or pilferage etc.
It acts as a buffer stock when raw materials are received late
(and shop rejections are too many.)
Takes advantage of price discounts by bulk purchasingNEED TO
HOLD INVENTORY
Maintaining inventories involves tying up of the companys funds
and in currency of storage and handling costs. There are three
general motives for holding inventories.Transaction
MotiveEmphasizes the need to maintain inventories to facilitate
smooth the production and sales operations.
Precautionary MotiveIt necessitates holding of inventories to
guard against the risk of unpredictable changes in demand and
supply forces and other factors.
Speculative MotiveIt influences the decision to increase or
reduce inventory levels to take advantage of price
fluctuations.
THE MAJOR DANGERS OF OVER INVESTMENT IN INVENTORIES ARE
Unnecessary tie up of the funds and loss of profit.
Excessive carrying cost.
The risk of liquidity.
THE CONSEQUENCES OF UNDER INVESTMENT IN INVENTORIES ARE
Production hold- ups
Failure to meet delivery commitments inadequate raw
materials
Work-in-process will result in frequent in production
interrupts.
AN EFFICIENT INVENTORY MANAGEMENT SHOULD Ensure a continuous
supply of raw materials to facilitate uninterrupted production.
Maintain sufficient supply of raw materials in periods of short
supply and anticipate price changes.
Maintain sufficient finished goods inventory for smooth sales
operation and efficient customer service.
Minimize the carrying cost on time.
Control investment in inventories and keep it at an optimum
level.TOOLS OF THE INVENTORY MANAGEMENMT ABC analysis.
Economic Order Quantity
Materials Turn over Ratio
ABC Analysis
This analysis is based on the annual consumption value. It is
based on Paretos law. Under this analysis all items of stores are
classified into three main categories A, B and C.10% of the total
number of items account for about 70% of the total consumption
value. These items are called A items. 20% of the total number of
items account for about 20% of the total consumption value these
items are called B items. The remaining number of items account for
the balance 10% of the total issue value, these items are called C
items.
Procedure
The procedure of classifying the items into A, B and C
categories is described in the following steps.
Calculate rupee annual issues for each item in inventory by
multiplying the until cost by the number of units issued in a year.
It is assumed that the issues and consumptions are the same.
Sort all items by rupee annual issues in descending
sequence.
Prepare a list from these ranked items showing item number, unit
cost, annual units issued and annual rupee value of units
issued.
Starting at the top of the list, compute a running total, item
issue value and the rupee consumption value.
Compute and print for each item the cumulative percentages for
the item count and cumulative annual issues value.
10 percent of the top number of items account for about 70
percent of the total consumption value. These items are called A
items. 20 percent of the number of items account for 20 percent of
the total consumption value. These items are called B items. The
remaining number of items account for the balance 10 percent of the
total issue value. These items are called C items. Differences
between A, B and C class itemsS. NoA ItemsB ItemsC Items
1.High Consumption Value Moderate
Consumption value Low consumption value
2.Very strict control Moderate Control Loose control
3.Very Low safety stocksLow safety stocksHigh safety stocks
4.Frequent ordering or weekly deliveries Once in three months
Bulk ordering once in 6 months.
5.Accurate forecast in materials planningEstimates based past
data on present plansRough estimates for planning
6.Minimization of waste and surplus(review every 15 days)
Quarterly control over surplus and obsolete items Annual review
over surplus and obsolete material
7.Maximum efforts to reduce lead timeModerate effortMinimum
clerical efforts.
Economic Order Quantity (EOQ)
The inventory problems in which demand is assumed to be fixed
and completed predetermined are usually referred to as the EOQ or
lot size. It is also termed as re-order quantity. When the size of
order increases, the ordering cost will decrease whereas the
inventory.
Carrying costs will increase. Thus in the production process
there are two opposite costs, one encourages the increase in the
order size and the other discourages. EOQ is that size of order
which minimizes total cost of carrying inventory and cost of
ordering.
Q = (2*D*S)/H
Where K= annual demand
C= carrying cost
H= holding cost
EOQ can be calculated with the help of a mathematical formula.
Following assumptions are applied in the calculation
1 Demand for the product is constant and uniform through out the
Period.
2 Lead time (time from ordering to receipt) is constant.
3 Price per unit of product is constant.
4 Inventory holding cost is based on average inventory.
5 Ordering cost is constant.
6 All demands for the product will be satisfied (no back orders
are allowed).
T.C = DC + [(D/Q) *S] + [ ( Q/2)*H]
Where T.C = Total cost
D = Annual demand
C = Purchase cost per unit
Q= Quantity to be ordered
S= Cost of placing on order
H= Holding Cost per unit of average Inventory per Annum
From the figure we can say that total cost is minimum at the
point where cost of ordering is equal to holding cost.
((D*S)/Q) = (Q/2)*H
D*S = ((Q*Q)/2)*H
Q^2 = (2*D*s)/H
Q =
The graph showing The Procurement & Consumption cycle
INVENTORY TURNOVER RATIO
It is a ratio of materials consumed during a period to the
average stock of materials during the period. It indicates the
efficiency of the firm in producing and selling its products.
Inventory Turnover Ratio = Materials Consumed
Average InventoryThe reciprocal of inventory turnover gives
average inventory holding in percentage term. When the number of
days in a year (say 360) is divided by turnover, we obtain days of
inventory holdings (DIH).
DIH= No. of days in a year Inventory Turn Over
RatioCLASSIFICATION AND CODINGGood store keeping requires proper
classification and codification of various items stores in
stock.
Classification of Inventory
Classification of inventory is the first step to determine
optimum inventory levels. As already seen one way to classify them
as raw materials, machinery spares, semi finished, work in progress
and finished goods. Another ways to classify each of the above as
ABC, VED etc.
Codification of MaterialsCodification is the procedure of
assigning distinctive symbols for each item of store. Such symbols
may be numeric or alphabetic or a combination of the two. These
symbols are known as codes. Thus each material is also known by a
code in addition its own name.
[Advantages
Systematic grouping of similar items for correct identification
of each and every item.
The usage of long description is simplified and possible
confusion avoided.
Avoid duplicate stock of the same item being held under
different names, description, brand names, part number and
different stores.
Enable reduction in sizes and varieties.
Ensures accuracy in posting of receipts and issue in appropriate
records.STOCK LEVELS
For efficient material control and to avoid overstocking and
under stocking of materials, an important requirement is to decide
upon various levels of materials, these levels are minimum level
and re-order level. By making action on the basis of these levels,
each item of material will automatically be held with in
appropriate limits of control. These levels are not permanent but
need revision according to the changes in the factors which
determine these levels are not permanent but need revision
according to the changes in the factors which determine these
levels.
Factors
The Following factors help in the fixation of these levels.
Rate of consumption of materials.
Lead the time, i.e., time lag.
Storage capacity.
Availability of funds for investment in inventories.
Cost of storage.
Risk of loss due to deterioration theft fire etc.,
Seasonal factors certain materials are cheaply available during
certain seasons.
Fluctuations in market prices.
Insurance costs.
Maximum Level
The maximum stock level is that quantity of material above which
the stock of any item should not generally be allowed to go up.
This maximum level may be exceeding certain special cases, For
instance, if a particular lot is purchased at a reasonably low
price, the maximum level may be crossed. This level is fixed after
taking into account such factory as:
1 Rate of consumption of material.
2 Amount of capital needed and available.
3 Storage space available.
4 Incidence of insurance costs which may be important for some
materials.
5 Costs of storing above normal stock.
6 Risk of obsolescence and deterioration and
7 Re-order quantity.
Danger Level
It is that level below which stock should not be allowed to
except under emergency conditions. When stock reaches this level
urgent action for purchases is initiated.
Danger Level= Average Consumption*Maximum Re-order Period
For Emergency period
Danger level is below the minimum level. But some firms prefer
to fix the danger level above the minimum level and below the
re-order level. However fixing danger level below the minimum level
is meant for taking corrective action where as fixing it above the
minimum level is for preventive action.
The Formula for computing maximum level is follows.
Maximum Level= Re-order Level + Re-order quantity Minimum
Consumption * Minimum Re-order PeriodMinimum Level
The minimum level is that level of stock below which it should
not normally be allowed to fall. This is essentially a safety stock
and will not normally be touched. In case of any item falling below
this level, there is danger of stoppage in production and,
therefore, management should give top priority to the acquisition
of new supplies. This level is fixed after the consideration if the
following factors.
Rate of Consumption.
Minimum level.
Delivery Time.
Variation in delivery time.
Re-order Level= (Maximum Consumption * Maximum Re-order
Period)Average Stock Level This is computed with the help of the
following formula.
Average stock level = Minimum level+ (1/2 of Re-order quantity)
or
Average stock level = (1/2)* (Minimum level+ Maximum level)
TYPES OF INVENTORY CONTROL
Classification of inventory is the first step to determine
optimum inventory levels. As already seen one way to classify them
as raw materials, machinery spares, semi finished, work in progress
and finished goods. Another ways to classify each of the above as
ABC, VED etc.
ABC
HML
VED
FSN
TWO-BIN
SDE
EOQ
MAXMIUM MINIMUMMEANING OF INVENTORY CONTROL
Inventory control is a system, which ensures the provisions of
the required quality of inventories of required quality at the
required time with the minimum amount investment. Thus the function
of inventory control is to obtain the maximum inventory turn over
with sufficient stock to meet all requirements.
NEED TO HOLD INVENTORY CONTROL
Demand inventories have a tendency to grow beyond economic
limits, tie-up funds and increase the cost of maintenance or
carrying cost.
Non-availability of inventory involves cost of stock outs,
reordering costs and additional transit cost.
Central core idea for material management is inventory
control.
To minimize the locking of funds or working capital
commitments.
To determine the working capital operating cycle is
essential.
Depending upon the operating cycle the company requirements for
locked up funds will follow. The length of operating cycle depends
upon the nature of business, production policies, manufacturing
process, terms of purchase and conditions of sales and demand.
PURPOSE OF INVENTORY CONTROL The need of controlling inventory
is expressed as below : To improve customer services.
Permits purchase and transaction economies.
Transportation economies.
Hedge against price fluctuations.
Production economies.
Hedge against demand uncertainties
Protects against demand and lead time uncertainties.
FACTORS INFLUENCING INVENTORY CONTROL To control the
inventory
How much to buy at one time ?
When to buy this quantity ?
Following four fundamental factors govern for these
questions.
Requirements break down time wise.
Quantity in stock or an order.
Procurement time or lead time.
Obsolescence.
FACTORS TO BE CONSIDERED WHEN ESTABLISHING THE CONTROL
LEVELS
Average consumption or production requirements
Reordering periods-the time between raising an order and
receiving delivery of goods
Storage space available
Market conditions
Economic order quantity
Likely life of stock-bearing in mind the possibility of loss
through deterioration or obsolescence and
The cost of placing orders including generating and checking the
necessary paper work as well as physical checking handling
procedures.
The key issue for a business is to identify the fast and slow
movers with the objectives of establishing optimum stock levels for
each category and, thereby minimize the cash tied up in stocks.
Control policies should include designating responsibility for
raising and authorizing orders, signing delivery notes and
authorizing orders, signing delivery notes and authorizing payment
of invoices. INVENTORY ANALYSIS METHODS
ABC Analysis
This analysis is based on the annual consumption value. It is
based on Paretos law. Under this analysis all items of stores are
classified into three main categories A, B and C.
10% of the total number of items account for about 70% of the
total consumption value. These items are called A items. 20% of the
total number of items account for about 20% of the total
consumption value these items are called B items. The remaining
number of items account for the balance 10% of the total issue
value, these items are called C items.
Economic Order Quantity
The inventory problems in which demand is assumed to be fixed
and completed predetermined are usually referred to as the EOQ or
lot size. It is also termed as re-order quantity. When the size of
order increases, the ordering cost will decrease whereas the
inventory.
Carrying costs will increase. Thus in the production process
there are two opposite costs, one encourages the increase in the
order size and the other discourages. EOQ is that size of order
which minimizes total cost of carrying inventory and cost of
ordering.
Q = (2*D*S)/H
Where K= annual demand
C= carrying cost
H= holding cost
VED Classification
This analysis is based on criticality of inventories. It is used
to determine the criticality of an item and its effect on
production and other services. It is specially used for
classification of spare parts. If a part is vital, it is given V
classification, if it is essential, then it is given E
classification and if it is not essential, the part is given D
classification. For V items, a large stock of inventory is
generally maintained, these items have immediate effect on
production and more attention paid for these items.
HML Classification
The High, Medium and Low (HML) classification follows the same
procedure as is adopted in ABC classification. Only difference is
that in HML, the classification unit value is the criterion and not
the annual consumption value. The items of inventory should be
listed in the descending order of unit value and it is up to the
management to fix limits for three categories. For example, the
management may decide that all units with unit value of Rs. 2000
and above will be H items, Rs. 1000 to Rs. 2000 M items and less
than Rs. 1000, L items.
The HML analysis is useful for keeping control over consumption
at departmental levels for deciding the frequency of physical
verification, and for controlling purchases. SDE Classification
The SDE analysis is based upon the availability of items and is
very useful in the context of scarcity of supply. In this analysis.
s refers to scarce items, generally imported, and those which are
in short supply. D refers to difficult items which are available
indigenously but are difficult items to procure. Items which have
to come from distant places or for which reliable suppliers are
difficult to come by fall into D category. E refers to items which
are easy to acquire and which are available in the local
markets.
The SDE classification, based on problems faced in procurement,
is vital to the lead time analysis and in deciding on purchasing
strategies.
FSN Analysis
FSN stands for fast moving slow moving and non-moving. Here,
classification is based on the pattern of issue from stores and is
useful in controlling obsolescence. To carry out an FSN analysis,
the date of receipt or the last date of issue, whichever is later,
is taken to determine the number of months, which have lapsed since
the last transaction. The items are usually grouped in periods of
12 months. FSN analysis is helpful in identifying active items
which need to be received regularly and surplus items which have to
be examined further. Non-moving items may be examined further and
their disposal can be considered. Minimum Maximum Technique
The Minimum Maximum system is often used in connection with
manual inventory control systems. The minimum quantity is
established in the same way as any re-order point. The maximum is
the minimum quantity plus the optimum lot-size. In practice, a
requisition is initiated when, a withdrawal reduces the inventory
below the minimum level, and the order quantity is the maximum
minus the inventory status after the withdrawal. If the final
withdrawal reduces the stock level substantially below the minimum
level, the order quantity will be higher than the calculated EOQ.
The effectiveness of a minimum-maximum system is determined by the
method and precision with which the minimum and maximum parameters
are established.
Two-Bin System
One of the oldest systems of inventory control is the Two-bin
system which is mainly adopted to control C group inventories. In
the two-bin system, stock of each item is separated into two bins.
One bin contains stock, just enough to last from the date a new
order is placed until it is received in inventory. The other bin
contains a quantity of stock, enough to satisfy probable demand
during the period of replenishment. To start with, the stock is
issued from the first bin. When the first bin is empty, an order
for replenishment is placed, and the stock in the second bin is
utilized until the ordered material is received.
Such a method is appropriate to ideal conditions in which the
rate of consumption is fairly constant and for items, the lead time
of which is fairly established and regular. Although the system
itself possesses a high degree of automaker, in practice, we need
to allow for variations in the rate of consumption as well as lead
time. However, for such a systems. The most desirable quantity to
re-order is the EOQ. Since the quantity to re-order is fixed in
advance, initiation of replenishment action can be delegated to the
lower level staff and there is need to take physical count of
inventory levels.
Inventory in wider sense, is defined as any idle resource of an
enterprise. It is a physical stock of goods kept for the purpose of
future affairs. a term is generally used to indicate raw materials
in process, finished products, packing, spares and others stocked
in order to meet expected demand or distribution in the future.
Through inventory of materials is an idle resource it is not meant
for immediate use it is almost essential to maintain some
inventories for the smooth functioning of an enterprise. The data
has been analysed through various Inventory Turn Over Ratios, ABC
Analysis, Ordering Cost, Carrying Cost, Holding Period, EOQ and the
Like.
Table 5.1 gives the inventory turnover ratio of Sujala Pipes Pvt
Ltd., for the years 2003-04 to 2007-08.It is the ratio between Cost
of Goods Sold and Average Stock.
Inventory Turnover Ratio = Cost of Goods Sold Average Stock
Table 5.1INVENTORY TURNOVER RATIO OF SUJALA PIPES PVT
LTD.,YEARCOST OF GOODS SOLDAVERAGE STOCKINVENTORY TURNOVER
RATIO
2003-0425657425254321.54100.88
2004-0532456235532175.460.98
2005-06356588900243185.4281466.32
2006-07112629178.11026357910.97
2007-08716612780.220755354.1334.52
INTERPRETATION
In Year 2003-04,2005-06 Stocks are Converted into Liquid More
Faster When Compared to the Below Years
i.e.,2005,2006,2007&2008.In the Year 2006-07 Turn Over Ratio is
Very Low When Compared to Other Ratios. In the Year 2007-08
Inventory has not been Sold Fast and Stayed On the Shelf for a
Longer Period. It is also predicted in the Graph 5.1.Graph
5.1INVENTORY TURN OVER RATIO OF SUJALA PIPES PVT LTD.,
Table 5.2 gives the holding period of Sujala Pipes Private
Limited. Inventory Turn Over Ratio = Cost Of Goods Sold Average
Stock
Holding Period = Average Stock X 365
Cost Of Goods Sold Table 5.2
HOLDING PERIOD OF SUJALA PIPES PVT LTD.,YEARAVERAGE STOCKCOST OF
GOODS SOLDHOLDING PERIOD
2003-04254321.54256574253.61
2004-05532175.4324562355.98
2005-06243185.4283565889000.24
2006-0710263579112629178.133.26
2007-0820755354.13716612780.29.80
INTERPRETATION
In The Year 2003-04, 2005-06 the Holding Period was Very Low
When Compared to Other Period of Years.In the Year 2006-07 Period
was Tremendously Increased When Compared to Other Periods. In The
Year 2004-05, 2007-08 the Period was Decreased When Compared to the
Above Year. It is also predicted in the Graph 5.2. Graph 5.2HOLDING
PERIOD OF SUJALA PIPES PVT LTD.,
Table 5.3 depicts the ABC analysis for the year 2003-04.Table
5.3PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE YEAR
2003-04ITEMVALUE IN (Lacs)AMOUNT IN RS VALUE IN (%)
A494269.2
B393312.0
C23257.45
D4355.80
E2233.98
F1241.57
TOTAL11982100
INTERPRETATION
In the year 2003-04 the A class item has more value when
compared to other classes of pipes. Its market value %are as
follows: A class item print with red mark its % of sales are 49.02%
& B class item print with blue mark its % of sales are 12.20%
& C class item print with green mark its % of sales are 10.50%
& D class item print with brown mark its % of sales are 18.18%
& E class item print with yellow mark its % of sales are 5.01%
& F class item print with black mark its % of sales are
5.00%.It is also Predicated in the Graph 5.3.Graph 5.3 PERCENTAGE
VALUE OF A, B, C ANALYSIS FOR THE YEAR 2003-04
ITEMVALUE IN (LACS)AMOUNT IN RS VALUE IN(%)
A3942570.15
B294510.45
C14356.35
D6225.54
E5654.82
F2452.69
TOTAL54991100
Table 5.4 provides ABC analysis for the year 2004-05.Table
5.4
PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE YEAR
2004-05INTERPRETATION
In the year 2004-05 the A class item has more value when
compared to other classes of pipes. Its market value %are as
follows: A class item print with red mark its % of sales are 49.02%
& B class item print with blue mark its % of sales are 12.20%
& C class item print with green mark its % of sales are 10.50%
& D class item print with brown mark its % of sales are 18.18%
& E class item print with yellow mark its % of sales are 5.01%
& F class item print with black mark its % of sales are 5.00%.
It is also predicated in the Graph 5.4.Graph 5.4 PERCENTAGE VALUE
OF A, B, C ANALYSIS FOR THE YEAR 2004-05
Table 5.5 gives percentage value of ABC analysis for the year
2005-06.Table 5.5 PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE YEAR
2005-06ITEMVALUE IN (LACS)AMOUNT IN RS VALUE IN (%)
A2820149.02
B944712.2
C904810.5
D533418.18
E16675.01
F15745
TOTAL55271100
INTERPRETATION
In the year 2005-06 the A class item has more value when
compared to other classes of pipes. Its market value %are as
follows: A class item print with red mark its % of sales are 49.02%
& B class item print with blue mark its % of sales are 12.20%
& C class item print with green mark its % of sales are 10.50%
& D class item print with brown mark its % of sales are 18.18%
& E class item print with yellow mark its % of sales are 5.01%
& F class item print with black mark its % of sales are 5.00%.
It is also predicated in the Graph 5.5.
Graph 5.5 PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE YEAR
2005-06
Table 5.6 analyse the Percentage of Value of A, B, C Analysis
for the Year 2006-07
Table 5.6 PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE YEAR
2006-07ITEMVALUE IN (Lacs)AMOUNT IN Rs. Value in (%)
A2914838.61
B1965615.6
C1301722.3
D503812.22
E12866.15
F49635.12
TOTAL73108100
INTERPRETATION
In the year 2006-07 the A class item has more value when
compared to other classes of pipes. Its market value %are as
follows: A class item print with remark its % of sales are 38.6%
& B class item print with blue mark its % of sales are 25.60%
& C class item print with green mark its % of sales are 12.30%
& D class item print with brown mark its % of sales are 12.22%
& E class item print with yellow mark its % of sales are 6.15%
& F class item print with black mark its % of sales are 5.12%.
It is also predicated in the Graph 5.6.Graph 5.6 PERCENTAGE VALUE
OF A, B, C ANALYSIS FOR THE YEAR 2006-07
Table 5.7 depicts the percentage value of ABC analysis for the
year 2007-08.Table 5.7PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE
YEAR 2007-08ITEMVALUE IN (Lacs)VALUE IN (%)
A2977949.63
B1206020.1
C1166916.68
D171314.18
E147014.26
F13714.15
TOTAL73480100
INTERPRETATION
In the year 2007-0 the A class item has more value when compared
to other classes of pipes. Its market value %are as follows: A
class item print with remark its % of sales are 38.6% & B class
item print with blue mark its % of sales are 25.60% & C class
item print with green mark its % of sales are 12.30% & D class
item print with brown mark its % of sales are 12.22% & E class
item print with yellow mark its % of sales are 6.15% & F class
item print with black mark its % of sales are 5.12%. It is also
predicated in the Graph 5.7.Graph 5.7PERCENTAGE VALUE OF A, B, C
ANALYSIS FOR THE YEAR 2007-08
Table 5.8 gives Percentage of Value of A, B, C Analysis for the
Year 2003-08
Table 5.8PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE YEAR
2003-08ITEM2003-04 VALUE IN (%)2004-05 VALUE IN (%)2005-06 VALUE IN
(%)2006-07 VALUE IN (%)2007-08 VALUE IN (%)
A69.270.1549.0238.6149.63
B12.010.4512.215.620.1
C7.456.3510.522.316.68
D5.805.5418.1812.224.18
E3.984.825.016.1514.26
F1.572.6955.124.15
TOTAL100100100100100
INTERPRETATION In the above 200308 classes of pipes shows that
the % of sales are decreased, when compared to the quality items.
The percentage of sales are decreasing /increasing as according to
their consumer tastes & preferences in present market
conditions. It is also predicated in the Graph 5.8Graph
5.8Percentage Value of A, B, C Analysis for the Year 2003-08
Table 5.9 gives annual consumption in quantity and in value from
the year
2003-08.ItemParticulars2003-042004-052005-062006-072007-08
Raw materialsQtyValue QtyValue QtyValue QtyValue QtyValue
1Poly Vinal
chloride64.2812.4245.4521.5524.7127.8427.2830.7335.6540.15
2Tri Basic Sulphate
12.4510.4026.2410.3411.4110.2712.8610.1511.6010.44
3Die Basic Lead
Sulphate15.4642.05745.2538.4749.1732.9547.3431.7255.8437.41
4Calcium Steric
16.4284.6254.5674.6265.8098.7167.2210.0869.2710.39
5Calcium Carbonate
62.4574.3926.2455.6257.2480.1361.0985.5369.0196.62
6Lead Steric
52.4524.5823.4554.2612.4956.2116.8375.7417.9380.72
7Titanic
Dioxide84.6256.2445.2364.5716.0256.0920.8172.8613.6547.77
8Steric Acid
64.2510.2462.4510.5621.7610.8823.8811.9426.7313.36
9Wax46.2518.4232.4515.6227.0921.6731.1524.9241.1132.88
10Lubricants32.6233.4814.2545.6258.5144.4642.5532.3444.6733.95
Total43.1953.0192.6898.7411.35
Table 5.9
ANNUAL CONSUMPTION IN QUANTITY AND VALUE FOR 2003-08 (Rs. in
crores)
Table 5.10 gives annual consumption in quantity and in value
from the year 2003-08.
Table 5.10Annual Consumption In Quantity And Value For
2003-08Item No.Particulars2003-042004-052005-062006-072007-08
1.Raw materials :
Poly VInal ChlorideValue percent28.45Value percent32.56Value
percent
30.04Value percent
31.13Value percent
35.37
2.Tri Basic Sulphate
1.451.621.111.030.92
3.Die Basic Lead Sulphate40.2038.1535.5532.1332.96
4.Calcium Steric
9.6258.26010.6510.219.15
5.Calcium Carbonate
8.257.328.658.668.51
6.Lead Steric
4.324.026.067.677.11
7.Titanic Dioxide4.254.856.057.384.21
8.Steric Acid
2.251.691.171.211.18
9.Wax0.750.990.240.250.29
10Lubricants0.450.620.480.330.3
Total100100100100100
INTERPRETATION
The above table clearly shows that major role of raw materials,
are PVC increase in its value percentage from 28.45 percentage in
2003-04, 32.56 percentage in 2004-05 & 30.04 percentage in
2005-06 to 31.13 percentage in 2006-07 and later increased to 35.37
percentage in 2007-08. Tri basic sulphate value percentage
decreased from 1.45 percentage in 2003-04, 1.62 percentage in
2004-05 & 1.11 percentage in 2005-06 to 1.03 percentage in
2006-07 and later decreased to 0.92 percentage in 2007-08. The
value percentage titanic dioxide increased from 4.25 percentage in
2003-04, 4.85 percentage in 2004-05 & 6.05 percentage in
2005-06 to 7.38 percentage in 2006-07 and later decreased to 4.21
percentage in 2007-08. It is also predicated in the Graph 5.9.Graph
5.9ANNUAL CONSUMPTION FOR THE PERIOD 2003-08
Table 5.11 analyses the ordering cost for the period 2003-08
Table 5.11ORDERING COST FOR THE PERIOD
2003-08Particulars2003-042004-052005-062006-072007-08
Transportation1532457816543256192256682467768426894172
Sales tax18487272257498242267277340-
Salaries4245674564546890983081349785814047769
Printing and stationary487684-477284382258547765
Insurance20472843848705257248495296753798589
Telephone bills25374562659846371771028451362976286
Total2649140330954773375141265100995148264581
Table 5.12 analyse ordering cost of transportation for the year
2003-08. Table 5.12ORDERING COST IN PERCENTAGES FOR THE PERIOD
2003-08 (Rs. In
Crores)Particulars2003-042004-052005-062006-072007-08
Items
Ordering cost % of ordering cost
Ordering cost
% of ordering costOrdering cost % of ordering cost
Ordering cost % of ordering costOrdering cost
% of ordering cost
Transportation1.5384.581.6589.251.9291.102.4691.602.6890.76
Sales tax1.8411.522.257.000.246.67773406.32-6.69
Salaries4.240.455.640.650.900.121.340.111.400.18
Printing and
strategy0.480.002-0.0050.470.0010.380.0050.540.007
Insurance2.043.000.382.542.572.090.951.953.792.33
Telephone bills2.530.4480.260.5550.370.020.280.022.900.03
Total2.641003.091003.751005.101004.82100
INTERPRETATION
In the year 2003-04, 2004-05, 2005-06 transportation increased
from 84.58, 89.25, and 91.10 percent in 2005-06 to 91.60 percent in
2006-07 and later decreased to 90.76 percent in 2007-08. Sales tax
and salaries decreased from 6.67 percent, 0.12 percent in 2005-06
to 6.32 percent, 0.11 percent in 2006-07 and later increased to
6.69, 0.18 in 2007-08. The printing expenses increased from 0.01,
0.002, and 0.005 percent in 2003-04, 2004-05, and 2006-07 to 0.005
percent in 2006-07 and later increased to 0.007 percent in 2007-08.
The telephone bills inconstantly from 2005-06 to 2006-07 i.e., 0.02
percent and later increased to 0.03 in 2007-08.Graph 5.10 shows the
results. Graph 5.10ORDERING COST FOR THE PERIOD 2003 - 08
Table 5.13 provides ordering cost per order for the year 2003-08
in Rupees for raw material.Table 5.13ORDERING COST PER ORDER FOR
THE PERIOD 2003-08 (Amount in Rs.)
Raw materials2003-042004-052005-062006-072007-08
Poly VInal Chloride 184551564512,283105429732
Tri Basic Sulphate125409468837879525699
Die Basic Lead Sulphate1045512456187561522517102
Calcium Steric84625463736257226924
Calcium Carbonate (caco3)31202610525032612053
Lead Steric124606761793352613739
Titanic Dioxide845571505132488332637
Steric Acid1216154561021185626316
Wax51402450215636221152
Lubricants61524540317233252992
Table 5.14 gives ordering cost for the year 2003-08 in
percentages.
Table 5.14ORDERING COST IN PERCENTAGE FOR THE PERIOD 2003-08
(Amount in Rs.)
Particulars2003-042004-052005-062006-072007-08
Raw materialsOrdering cost
% of ordering costOrdering cost
Percentage of ordering costOrdering cost
% of ordering costOrdering cost
% of ordering costOrdering cost
% of ordering cost
Poly VInal Chloride
1845518.91564521.721228323.261054214.77973216.68
Tri Basic
Sulphate1254012.9946813.1583789.13795211.1456999.77
Die Basic Lead
Sulphate1045510.731245617.30187566.511522521.341710229.31
Calcium Steric
84628.6854637.5873629.8457228.02692411.87
Calcium Carbonate (caco3)
31203.2026103.6252506.3632614.5720533.52
Lead Steric
1246012.0867619.40793312.6752617.3737396.41
Titanic Dioxide84558.6871509.9351322.67788311.0526374.52
Steric Acid
1216112.0554567.60102113.93856212631610.83
Wax51405.3024503.40215610036225.0811521.97
Lubricants61526.3145406.30317233254.6629925.12
Total9740010071999 100806337135510058346100
INTERPRETATION
The above table clearly shows that the major role of raw
materials in ordering costs per order are caco3 decreased from 3.20
percent in 2003-04 to 3.62 percent in 2004-05 & 6.51 percent in
2005-06 to 4.57 percent in 2006-07 and later decreased to 3.52
percent in 2007-08.
Wax and Lubricants ordering cost per order are increased from
5.30 percent, 3.40 percent, 2.67 percent, 3.93 percent in 2003-04
to 2004-05 & 2005-06 to 5.08 percent, 4.66 percent in 2006-07
and later weight chemicals, ordering cost decreased to 1.97 percent
in 2007-08 and Lubricants ordering cost increased to 5.12 percent
in 2007-08.shows the results Graph 5.11.Graph 5.11ORDERING COST PER
ORDER FOR THE PERIOD 2005-08 IN PERCENTAGES
table 5.15 gives the details of carrying cost for the year
2003-08Table 5.15CARRYING COST