A

PROJECT REPORT

ON

Effectiveness Of Inventory Control Management.

Master of Business Administration

By

Ms. B.VIJAYA LAKSHMI

(226010672049)

TKR INSTITUTE OF MANAGEMENT AND SCIENCE

(AFFLIATED TO OSMANIA UNIVERSITY)

Medbowli, Meerpet, Saroornagar, Hyderabad-500079.

2010-2012

A STUDY ON EFFECTIVENESS OF INVENTORY CONTROL MANAGEMENT

WITH SPECIFIC REFRENCE TO

FACTSET SYSTEMS INDIA PVT. LTD

By

B. VIJAYA LAKSHMI

(Hall Ticket No: 226010672049)

Project submitted in partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By

Osmania University, Hyderabad-500007.

2010-2012.

DECLARATION

I hereby declare that this project report titled A STUDY ON EFFECTIVENESS

OF INVENTORY CONTROL MANAGEMENT submitted by me to the Department of

Business Management, O.U Hyderabad, is a bonafide work undertaken by me and it is not

submitted to any other University or Institution for the award of any degree diploma/certificate

or published any time before.

Name & Address of the student: Signature of the Student

B.VIJAYA LAKSHMI,

H.NO.:-12-1-1119/293,

INDIRA NAGAR COLONY,

NORTH LALLAGUDA,

SECUNDERABAD.

Date:

Place:

Certificate

This is to certify Ms. B.VIJAYA LAKSHMI student of MBA Finance bearing Roll

No. 226010672049 from TKR Institute of Management & Science, Osmania University has

successfully completed her project work on A STUDY ON EFFECTIVENESS OF

INVENTORY CONTROL MANAGEMENT as partial fulfillment of her master’s degree in

Business Administration for a period of 45 Days.

During her tenure, we found her sincere and hard working. We wish her all success for all

her future Endeavors.

CERTIFICATION

This is to certify that the Project Report title A STUDY ON EFFECTIVENESS OF

INVENTORY CONTROL MANAGEMENT Submitted in partial fulfillment for the award of

M.B.A Programme of Department of Business Management, O.U., Hyderabad, was carried out

by B.VIJAYA LAKSHMI (H.T.No:226010672049) under my guidance. This has not been

submitted to any other University or Institution for the award of any degree/diploma/certificate.

Name and address of the Guide: Signature of the Guide

Mrs. T.S. ARCHANA,

Assistant Professor,

TKRIMS,

Hyderabad.

ABSTRACT

Every enterprise needs inventory for smooth running of its activities. It

serves as a link between the production and distribution process. The greater a time

lag, the higher the requirement of inventory the unforeseen fluctuation of inventory

demand supply of goods, fluctuation inventory prices, necessitate the need for

inventory management. Every industry on average spends 70% on raw materials

(inventory). Therefore there is a need to know the raw material cost and also there

is a great important to understand the inventory management system of this

industry. The study helps a log to various departments to take step to control the

inventory process.

The study is based on primary and secondary data. The primary data has

been collected by interaction with the Accounts and divisional managers. The data

regarding the present systems of controlling inventory is collected. The secondary

data is obtained from the past records and files, annual reports, periodicals, books,

manuals, journals, magazines, newspaper and internet.

The financial information obtained was analyzed using the appropriate

techniques and it was found that the inventory management technique deployed by

the company is efficient. The company also maintains positive correlation between

sales and inventory. It maintains good relationship their distributors, vendors and

sales executives. Further, it was found that the debtor turnover ratio and the work

in progress decreased. It is suggested to the company to arrange capital to meet

future requirement since it requires huge amount of inventory in order to achieve

more sales. Also, periodical review of the inventory should be carried out for its

proper control. Proper communication should be maintained between purchases

and production department and also the inventory turnover ratio and the debtor

turnover ratio.

ACKNOWLEDGEMENTS

I am grateful to Mr.RAM DEV, Financial consultant of FACTSET, for his guidance at every

stage of the project.

I would like to convey my heartiest thanks to my guide Mrs.T.S.Archana, Assistant professor

and Dr.J.VaraPrasad Reddy, Director, T K R Institute of Management & Science, for his

continuous support in making my project a success.

I thank my family and friends for being a source of inspiration and support.

(B.VIJAYA LAKSHMI)

TABLE OF CONTENTS

CONTENTS PAGE NUMBERS

List of Tables i

List of Figures ii

1. INTRODUCTION 1-3

2. REVIEW OF LITERATURE 4-24

3. INDUSTRY PROFILE 25-40

4. DATA ANALYSIS 41-53

5. SUMMARY & CONCLUSIONS 54-56

6. BIBLIOGRAPHY 57

7. APPENDICES 58-60

LIST OF TABLES

TABLES PAGE NUMBERS

1. RAW MATERIAL AT COST 42

2. WORK IN PROGRESS AT COST 43

3. INVENTORY TURNOVER RATIO 45

4. WORKING CAPITAL TURNOVER RATIO 46

5. CURRENT RATIO 47

6. QUICK RATIO 48

7. INVENTORY TO NETWORKING CAPITAL 50

8. WORK-IN-PROGRESS TO IVENTORY 51

9. CURRENT ASSET TO INVENTORY RATIO 52

10. DEBTORS TURNOVER RATIO 53

LIST OF FIGURES

FIGURES PAGE NUMBERS

1. INVENTORY CLASSIFICATION 5

2. THE RE-ORDER LEVEL 22

3. RAW MATERIAL AT COST 42

4. WORK IN PROGRESS AT COST 43

5. INVENTORY TURNOVER RATIO 45

6. WORKING CAPITAL TURNOVER RATIO 46

7. CURRENT RATIO 47

8. QUICK RATIO 48

9. INVENTORY TO NETWORKING CAPITAL 50

10. WORK-IN-PROGRESS TO INVENTORY 51

11. CURRENT ASSET TO INVENTORY RATIO 52

12. DEBTORS TURNOVER RATIO 53