INTRODUCTION

“Adequate inventories facilitates production activities and help to customers satisfaction by

providing good service.”
The basic financial aim of an enterprise is maximization of its value. At the same time, a large
both theoretical and practical meaning has the research for determinants increasing the firm
value. Most financial literature contains information about numerous factors influencing the
value. Among those factors is the net working capital and elements creating it, such as the level
of cash tied in accounts receivable, inventories and operational cash balances. A large majority
of classic financial models proposals, relating to the optimum current assets management, were
constructed with net profit maximization in view. In order to make these models more suitable
for firms, which want to maximize their value, some of them must be reconstructed. In the
sphere of inventory management, the estimation of the influence of changes in a firm’s decisions
is a compromise between limiting risk by having greater inventory and limiting the costs of
inventory. It is the essential problem of the corporate financial management.

The basic financial inventory management aim is holding the inventory to a

minimally acceptable level in relation to its costs. Holding inventory means using capital to
finance inventory and links with inventory storage, insurance, transport, obsolescence, wasting
and spoilage costs. However, maintaining a low inventory level can, in turn, lead to other
problems with regard to meeting supply demands. The inventory management policy decisions,
create the new inventory level in a firm. It has the influence on the firm value. It is the result of
opportunity costs of money tied in with inventory and generally of costs of inventory managing.
Both the first and the second involve modification of future free cash flows, and in consequence
the firm value changes.

Inventory changes (resulting from changes in inventory management policy of the

firm) affect the net working capital level and the level of operating costs of inventory
management in a firm as well. These operating costs are result of storage, insurance, transport,
obsolescence, wasting and spoilage of inventory.

Maximization of the owners’ wealth is the basic financial goal in enterprise

management. Inventory management techniques must contribute to this goal. The modifications
to both the value-based EOQ model and value-based POQ model may be seen in this article.
Inventory management decisions are complex. Excess cash tied up in inventory burdens the
enterprise with high costs of inventory service and opportunity costs. By contrast, higher
inventory stock helps increase income from sales because customers have greater flexibility in
making purchasing decisions and the firm decrease risk of unplanned break of production.
Although problems connected with optimal economic order quantity and production order
quantity remain, we conclude that value-based modifications implied by these two models will
help managers make better value-creating decisions in inventory management.

INTRODUCTION OF INVENTORY

Inventories constitute the most significant part of current assets of a large majority of companies in
India. On an average, inventories are approximately 60% of current assets in public limited
companies in India. Because of the large size of inventories maintained by firms, a considerable
amount of feuds is required to be committed to them. It is therefore, absolutely imperative to ménage
inventories efficiently and efficiently in order to avoid unnecessary investment. A firm neglecting
the management of inventories will be jeopardizing its long run profitability and may fail ultimately.
It is possible for fore a company to reduce its levels of inventories to a considerable degree e.g. 10 to
20 percent, without any adverse effect on production and sales, by using simple inventory planning
and control techniques. The reduction in excessive inventory carries a favourable impact on a
company’s profitability.

MEANING OF INVENTORY:-

Inventory is the physical stoke of goods maintained in an organization for its smooth sunning. In
accounting language it may mean stock of finished goods only. In a manufacturing concern, it
may includes raw materials, work-in-progress and stores etc. In the form of materials or supplies
to be consumed in the production process or in the rendering of services.

In brief, Inventory is unconsumed or unsold goods purchased or manufactured.

NATURE OF INVENTORIES :-
 Inventories are stock of the product a company is manufacturing for sale and
components that make up the product. The various forms in which inventory exist in a
manufacturing company are raw materials, work in progress and finished goods.

RAW MATERIALS:-
Raw materials are those inputs that are converted into finished product though
the manufacturing process. Raw materials inventories are those units which have been
purchased and stored for future productions.
WORK IN PROGRESS:-
These inventories are semi manufactured products. They represent products that need
more work before they become finished products for sales.
PACKAGING MATERIAL:-

Packaging material includes those items which are used for packaging of

perfumery product i.e. cap of the bottle, pump, coller,liver, box etc.

FINISHED GOODS:-

Finished goods inventories are those completely manufactured products which

are ready for sale. Stock of raw materials and work in progress facilitate production. While stock
of finished goods is required for smooth marketing operation. Thus, inventories serve as a link
between the production and consumption of goods.

The levels of four kinds of inventories for a firm depend on the nature of its
business. A manufacturing firm will have substantially high levels of all three kinds of
inventories, while a retail or wholesale firm will have a very high and no raw material and work
in progress inventories. Within manufacturing firms, there will be differences. Large heavy
engineering companies produce long production cycle products, therefore they carry large
inventories. On the other hand, inventories of a consumer product company will not be large,
because of short production cycle and fast turn over.

INVENTORY MANAGEMENT
As the cost of logistics increases the manufacturers are looking to inventory management as a
way to control costs. Inventory is a term used to describe unsold goods held for sale or raw
materials awaiting manufacture. These items may be on the shelves of a store, in the backroom
or in a warehouse mile away from the point of sale. In the case of manufacturing, they are
typically kept at the factory. Any goods needed to keep things running beyond the next few
hours are considered inventory.

"Inventory" to many small business owners is one of the more visible and tangible aspects of
doing business. Raw materials, goods in process and finished goods all represent various forms
of inventory. Each type represents money tied up until the inventory leaves the company as
purchased products. Likewise, merchandise stocks in a retail store contribute to profits only
when their sale puts money into the cash register.

In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks
represent a large portion of the business investment and must be well managed in order to
maximize profits. In fact, many small businesses cannot absorb the types of losses arising from
poor inventory management. Unless inventories are controlled, they are unreliable, inefficient
and costly.

Inventory management simply means the methods you use to organize, store and replace
inventory, to keep an adequate supply of goods while minimizing costs. Each location where
goods are kept will require different methods of inventory management. Keeping an inventory,
or stock of goods, is a necessity in retail. Customers often prefer to physically touch what they
are considering purchasing, so you must have items on hand. In addition, most customers prefer
to have it now, rather than wait for something to be ordered from a distributor. Every minute that
is spent down because the supply of raw materials was interrupted costs the company unplanned
expenses

DEFINITIONS OF INVENTORY MANAGEMENT

1. Policies, procedure and techniques employed in maintaining the optimum number or

amount of each inventory item.

2. Systems and processes that identify inventory requirements, set targets, provide
replenishment techniques and report actual and projected inventory status.
 3. Handles all functions related to the tracking and management of material. This would
include the monitoring of material moved into and out of stockroom locations and the
reconciling of the inventory balances. Also may include ABC analysis, lot tracking, cycle
counting support etc.

DEFINITIONS OF INVENTORY

1. Inventory”: goods that businesses intend to sell to their customers or raw materials or in-
process items that will be converted into salable goods

2. “Inventory is the stock of idle resources which has economic value and is maintained to
fulfill the present and future needs of an organization”

3. In Manufacturing Organization : Inventory can be as raw materials, spare parts,

components and finished goods etc…

4. In Service Organization : Inventory of any Bank can be broachers, forms, pamphlets

and also can be currency notes and coins. Hospitals can have inventory as syringes,
glucose bottles, medicines etc.

IMPORTANCE OF INVENTORY

Inventory represents one of the most important assets that most businesses possess, because the
turnover of inventory represents one of the primary sources of revenue generation and
subsequent earnings for the company's shareholders/owners.

The word 'inventory' can refer to both the total amount of goods and the act of counting them.
Many companies take an inventory of their supplies on a regular basis in order to avoid running
out of popular items. Others take an inventory to insure the number of items ordered matches the
actual number of items counted physically. Shortages or overages after an inventory can indicate
a problem with theft or inaccurate accounting practices.

Possessing a high amount of inventory for long periods of time is not usually good for
a business because of inventory storage, obsolescence and spoilage costs. However,
possessing too little inventory isn't good either, because the business runs the risk of losing out
on potential sales and potential market share as well.

OBJECTIVES OF INVENTORY MANAGEMENT

 The basic managerial objectives of inventory control are two-fold; first, the avoidance
over-investment or under-investment in inventories; and second, to provide the right quantity
of standard raw material to the production department at the right time. In brief, the
objectives of inventory control may be summarized as follows:
A. Operating Objectives:

(1) Ensuring Availability of Materials: There should be a continuous availability of all

types of raw materials in the factory so that the production may not be help up wants of any
material. A minimum quantity of each material should be held in store to permit production
to move on schedule.

(2) Avoidance of Abnormal Wastage: There should be minimum possible wastage of materials
while these are being stored in the godowns or used in the factory by the workers. Wastage
should be allowed up to a certain level known as normal wastage. To avoid any abnormal
wastage, strict control over the inventory should be exercised. Leakage, theft, embezzlements
of raw material and spoilage of material due to rust, bust should be avoided.

(3) Promotion of Manufacturing Efficiency: If the right type of raw material is available to the
manufacturing departments at the right time, their manufacturing efficiency is also increased.
Their motivation level rises and morale is improved.

(4) Avoidance of Out of Stock Danger: Information about availability of materials should be
made continuously available to the management so that they can do planning for
procurement of raw material. It maintains the inventories at the optimum level keeping in
view the operational requirements. It also avoids the out of stock danger.
(5) Better Service to Customers: Sufficient stock of finished goods must be maintained to
match reasonable demand of the customers for prompt execution of their orders.
(6)Highlighting slow moving and obsolete items of materials.
(7) Designing poorer organization for inventory management: Clear cut accountability should
be fixed at various levels of organization.
B. Financial Objectives:
(1) Economy in purchasing: A proper inventory control brings certain advantages and
economies in purchasing also. Every attempt has to make to effect economy in purchasing
through quantity and taking advantage to favorable markets.

(2) Reasonable Price: While purchasing materials, it is to be seen that right quality of material
is purchased at reasonably low price. Quality is not to be sacrificed at the cost of lower price.
The material purchased should be of the quality alone which is needed.

(3)Optimum Investing and Efficient Use of capital: The basic aim of inventory control from
the financial point of view is the optimum level of investment in inventories. There should be
no excessive investment in stock, etc. Investment in inventories must not tie up funds that
could be used in other activities. The determination of maximum and minimum level of stock
attempt in this direction.
IMPORTANCE OF INVENTORY MANAGEMENT

1. COUNTING CURRENT STOCK

All businesses must know what they have on hand and evaluate stock levels with respect to
current and forecasted demands. You must know what you have in stock to ensure you can meet
the demands of customers and production and to be sure you are ordering enough stock in the
future. Counting is also important because it is the only way you will know if there is a problem
with theft occurring at some point in the supply chain. When you become aware of such
problems you can take steps to eliminate them.

2. CONTROLLING SUPPLY AND DEMAND

Whenever possible, obtain a commitment from a customer for a purchase. In this way, you
ensure that the items you order will not take space in your inventory for long. When this is not
possible, you may be able to share responsibility for the cost of carrying goods with the
salesperson, to ensure that an order placed actually results in a sale. You can also keep a list of
goods that can easily be sold to another party, should a customer cancel. Such goods can be
ordered without prior approval.

Approval procedures should be arranged around several factors. You should set minimum and
maximum quantities which your buyers can order without prior approval. This ensures that you
are maximizing any volume discounts available through your vendors and preventing over-
ordering of stock. It is also important to require pre-approval on goods with a high carrying cost.

3. KEEPING ACCURATE RECORDS

Any time items arrive at or leave a warehouse, accurate paperwork should be kept, itemizing the
goods. When inventory arrives, this is when you will find breakage or loss on the goods you
ordered. Inventory leaving your warehouse must be counted to prevent loss between the
warehouse and the point of sale. Even samples should be recorded, making the salesperson
responsible for the goods until they are returned to the storage facility. Records should be
processed quickly, at least in the same day that the withdrawal of stock occurred.

4. MANAGING EMPLOYEES

Buyers are the employees who make stock purchases for your company. Reward systems should
be set in place that encourage high levels of customer service and return on investment for the
product lines the buyer manages.

Warehouse employees should be educated on the costs of improper inventory management. Be

sure they understand that the lower your profit margin, the more sales must be generated to make
up for the lost goods. Incentive programs can help employees keep this in perspective. When
they see a difference in their paychecks from poor inventory management, they are more likely
to take precautions to prevent shrinkage.

Each stock item in your warehouse or back room should have its own procedures for
replenishing the supply. Find the best suppliers and storage location for each and record this
information in official procedures that can easily be accessed by your employees.

Inventory management should be a part of your overall strategic business plan. As the business
climate evolves towards a green economy, businesses are looking for ways to leverage this trend
as part of the “big picture”. This can mean re-evaluating your supply chain and choosing
products that are environmentally sound. It can also mean putting in place recycling procedures
for packaging or other materials. In this way, inventory management is more than a means to
control costs; it becomes a way to promote your business.

SUCCESSFUL INVENTORY MANAGEMENT

Successful inventory management involves balancing the costs of inventory with the benefits of
inventory. Many small business owners fail to appreciate fully the true costs of carrying
inventory, which include not only direct costs of storage, insurance and taxes, but also the cost of
money tied up in inventory. This fine line between keeping too much inventory and not enough
is not the manager's only concern. Others include:

• Maintaining a wide assortment of stock -- but not spreading the rapidly moving ones too
thin;
• Increasing inventory turnover -- but not sacrificing the service level;
• Keeping stock low -- but not sacrificing service or performance.
• Obtaining lower prices by making volume purchases -- but not ending up with slow-
moving inventory; and
• Having an adequate inventory on hand -- but not getting caught with obsolete items.
• The degree of success in addressing these concerns is easier to gauge for some than for
others. For example, computing
ABOUT INVENTORY CONTROL
Inventory consists of the goods and materials that a retail business holds for sale or a
manufacturer keeps in raw materials for production. Inventory control is a means for maintaining
the right level of supply and reducing loss to goods or materials before they become a finished
product or are sold to the consumer.

Inventory control is one of the greatest factors in a company’s success or failure. This part of the
supply chain has a great impact on the company’s ability to manufacture goods for sale or to
deliver customer satisfaction on orders of finished products. Proper inventory control will
balance the customer’s need to secure products quickly with the business need to control
warehousing costs. To manage inventory effectively, a business must have a firm understanding
of demand, and cost of inventory.

ADVANTAGES OF INVENTORY CONTROL:

(1) Reduction in investment in inventory.
(2) Proper and efficient use of raw materials.
(3)No bottleneck in production.
(4) Improvement in production and sales.
(5) Efficient and optimum use of physical as well as financial resources.
(6)Ordering cost can be reduced if a firm places a few large orders in place of numerous small
orders.
(7)Maintenance of adequate inventories reduces the set-up cost associated with each production
Run.

INVENTORY COSTS

There are three main types of cost in inventory. There are the costs to carry standard inventories
and safety stock. Ordering and setup costs come into play as well. Finally, there are shortfall
costs. A good inventory control system will balance carrying costs against shortfall costs.

SAFETY STOCK

Safety stock is comprised of the goods needed to be kept on hand to satisfy consumer demand.
Because demand is constantly in flux, optimizing the Safety Stock levels is a challenge.
However, demand fluctuations do not wholly dictate a company’s ability to keep the right supply
on hand most of the time. Companies can use statistical calculations to determine probabilities in
demand.

ORDERING COSTS

Ordering costs have to do with placing orders, receiving and stowage. Transportation and invoice
processing are also included. Information technology has proven itself useful in reducing these
costs in many industries. If the business is in manufacturing, then to production setup costs are
considered instead.

THE COST OF SHORTFALLS

Stock out or shortfall costs represent lost sales due to lack of supply for consumers. Sales
departments prefer these numbers be kept low so that an ample stock will always be kept.
Logistics managers prefer to err on the side of caution to reduce warehousing costs.

Shortfall costs are avoided by keeping an ample safety stock on hand. This practice also
increases customer satisfaction. However, this must be balanced with the cost to carry goods.
The best way to manage stockout is to determine the acceptable level of customer service for the
business. One can then balance the need for high satisfaction with the need to reduce inventory
costs. Customer satisfaction must always be considered ahead of storage costs.

CYCLICAL COUNTING

Many companies prefer to count inventory on a cyclical basis to avoid the need for shutting
down operations while stock is counted. This means that a particular section of the warehouse or
plant is counted physically at particular times, rather than counting all inventory at once. While
this method may be less accurate than counting the whole, it is much more cost effective.

Cyclical counting is preferred because it allows for operations to continue while inventory is
taken. If not for this practice, a business would have to shut down while counts were taken, often
requiring the hire of a third party or use of overtime employees. Cyclical counting usually
utilizes the ABC rule, but there are other variations of this method that can be used. The ABC
rule specifies that tracking 20 percent of inventory will control 80 percent of the cost to store the
goods. Therefore, businesses concentrate more on the top 20 percent and counter other goods
less frequently. Items are categorized based on three levels:

• A Category: Top valued 20 percent of goods, whether by economic or demand value

• B Category: Midrange value items

• C Category: Cheaper items, rarely in demand

Warehouse staff can now schedule counting of inventories based on these categories. The “A”
category is counted on a regular basis while “B” and “C” categories are counted only once a
month or once a quarter.

COMMON INVENTORY VALUATION METHODS

The methods a company uses to value the costs of inventory have a direct effect on the business
balance sheets, income statements and cash flows. Three methods are widely used to value such
costs. They are First-In, First-Out (FIFO), Last-In First-Out (LIFO) and Average Cost. Inventory
can be calculated based on the lesser of cost or market value. It can be applied to each item, each
category or on a total basis.

FIFO

FIFO operates under the assumption that the first product that is put into inventory is also the
first sold. An example of this in action can be made when we assume that a widget seller
acquires 200 units on Monday for Rs.1.00 per unit. The next day, he spots a good deal and gets
500 more for Rs.75 per unit. When valuing inventory under the FIFO method, the sale of 300
units on Wednesday would create a cost of goods sold of Rs.275. That is, 200 units at Rs1.00
each and 100 units at Rs.75 each. In this way, the first 200 units on the income statement were
valued higher. The remaining 400 widgets would be valued at Rs.75 each on the balance sheet in
ending inventory.

LIFO

LIFO assumes instead that the last unit to reach inventory is the first sold. Using the same
example, the income statement and balance sheet would instead show a cost of goods sold of
Rs.225 for the 300 units sold. The ending inventory on the balance sheet would be valued at
Rs.350 in assets. When this method is used on older inventories, the company’s balance sheet
can be greatly skewed. Consider the company that carries a large quantity of merchandise over a
period of 10 years. This accounting method is now using 10-year-old information to value its
assets.

WEIGHTED AVERAGE

Average Cost works out a weighted average for the cost of goods sold. It takes an average cost
for all units available for sale during the accounting period and uses that as a basis for the cost of
goods sold. To site our example again, we would calculate the cost of goods sold at [(200 x Rs.1)
+ (500 x Rs.75)]/700, or Rs.821 each. The remaining 400 units would also be valued at this rate
on the balance sheet in ending inventory.
 SPECIFIC IDENTIFICATION

A less commonly used, but important method to valuation is called specific identification. This
method is used for high-end items that are more easily tracked. In some cases, this method can
be used for more common items, but less value is realized from this accounting method is such
cases. This is because powerful and detailed tracking software is required to employ specific
identification on large numbers of goods.

INFLATIONARY EFFECTS ON VALUATION

No matter how you look at it, you are still coming up with 700 widgets that cost you a total of
Rs.575. This would all be well and good if the value of money remained static. However, market
conditions change causing inflationary changes. When this happens, your accounting method can
have a strong impact on how healthy the business looks on income statements and balance
sheets. The affects cash flow when businesses seek credit to pay for ongoing operations.

RISING PRICES

When prices are rising, using FIFO will show a greater value on the balance sheet, thereby
increasing tax liabilities but also improving credit scores and the ability to borrow cash for
ongoing operations. Older inventory is being used to determine the cost of goods sold and newer
inventory is being used to report assets. LIFO decreases the value on the income statement, but
can reduce the level of depreciation you are able to take on assets. This is good for taxes but bad
for borrowing. Industries most likely to adopt LIFO are department stores and food retailers. The
method is rarely used in defences.

NEED OF THE STUDY:-

Inventories are equivalent to cash and they make up an important of the total cost.
It is essential that inventory should be properly safeguarded and correctly accounted.
Proper control of inventory can make a substantial contribution to the efficiency of a
bussiness. The success of a business concern largely depends upon efficient purchasing,
storage, consumption and accounting.
Inventory plays a vital role in study of inventory
management in bulk so I selected the SFP Sons pvt.ltd.
STATEMENT OF PROBLEM

The current system in the company under inventory management system which doesn’t
specify the safety stock which leads to scare for stocks at emergency.
The data are not properly updated at the end of each day’s work. Proper data
security system is not provided. Annual maintenance contract is not provided.
Records are not maintained properly.
 INDUSTRY PROFILE

The perfume industry in India has come of age. From a cottage industry it has become full-
fledged industry in the last two decades. The industry is growing at 125 percent annually. The
growth is attributed to an increase in disposable income.

WITH GLOBALIZATION, liberalization and the IT revolution, living standards of the Indians
have increased manifold. The demand for fashionable products has increased too. That is why;
all global players are eyeing the subcontinent for business purpose. The illegal flow of lifestyle
products confirm the great demand for these products in India. The affinity of the Indians for
foreign goods also compels the indigenous manufacturers to tie-up with international brands to
tap this segment of people.

The fragrances industry is big business, very big business. It includes much more than retail sales
of fragrances. Related industries such as chemical companies supply the chemicals and the
fragrances are made from it. Most fragrances chemicals are synthesized from petroleum
products. Some companies formulate fragrances and flavours for other companies. Marketing
and advertising are used to create and promote the image of a fragrance.

The perfume industry, basically, was just a cottage industry some two decades ago. But now, due
to the huge demand among the people, it has blossomed into a full-fledged industry. Recently,
‘Alcome Perfumes and Cosmetics’, declared a plan to set up a Rs. 100 crore green field perfume
plant in and around Noida Special Economic Zone.
The domestic perfume market is estimated to be worth Rs.300 crore and is growing at around
125 percent annually. The forecast is that it may grow at a rate of 200 percent in the coming
years, with fast changing consumer behaviour and habits.

Geneva-base International Fragrance association has estimated that the global perfume market is
worth $ 40 billion, out of which the mass market has a 70 percent share. In this, India, China has
a considerable share.

With the growing demand for fragrance, the Indian perfume companies are planning to change
their strategies by utilizing their resources mainly for the domestic market and a meager portion
for exports. Apart from that these that these companies are also planning a multiple marketing
and distribution strategy to foray into a market with huge potential. The potential is immense as
the middle class is growing rapidly and disposable incomes are increasing.

(History of perfume industry)

1.1760
1760 - In 1760, in London, James Henry Creed founded the House of Creed. filtered, all by
hand in the highest tradition of the founder, James Henry Creed. Creed,cologne,designer
perfume, Olivier Creed,Perfume,womens perfume,James Henry Creed,Empress
Eugénie,discounted perfume,fragrance,Country,French perfume, perfume
industry,Jasmine,womens fragrances,shopping cart,originality,scents,Master Perfumer,the
French.

2.1921

1921 - Coco Chanel revolutionised the perfume industry by being the first to make a mass
market scent for every woman when she launched Chanel No5 in 1921. You can still spritz on
some of that vintage glamour today with your own bottle, £46 for 50ml EDT at House of Fraser

3.1987

Feb 28, 1987 - When perfumed gloves came into fashion in the 16th century, the town
gradually developed a separate perfume industry. ... The Provencal Art and History Museum,
originally the 18th century home of Louise de Mirabeau, houses a fine collection of Provencal
art. The 17th century Fragonard.

4.1988

Nov 25, 1988 - It is one of the 200 fragrance-related art objects currently on view in the
"Scents of Time" exhibit at the Museum of Science and Industry. The exhibit traces the history
and evolution of fragrance, connecting each phase with the social, political and cultural trends of
the time. ...

5. 1991

Feb 17, 1991 - Written in collaboration with Patricia Bayer, the book includes chapters on
Rene Lalique's life, the development of the perfume industry, the history of the Lalique
company, and collecting tips. An appendix provides information on dating bottles by the
signature .

6. 1999

Dec 9, 1999 - of newly fragrances remain on the shelf after a year of launching," says
international director for Antonio PUIG perfumes, Eugeni Majo. cosmetics industry is a dynamic
one. it's competitive and only companies that manage to create an product that differs from the
rest will remain"

7. 2000

Jun 20, 2000 - Halifax's eight-year-old "No Scents" policy is creating a big stink in the
perfume industry. Representatives from the American and Canadian perfume industry were in
Halifax Tuesday to launch a counter attack ad campaign as a way of stopping the campaign from
spreading.

8.2001

Nov 23, 2001 - hitherto unknown insights into the use of perfumes through the ages and
learn that "the history of perfume is often intertwined with the history ... But, it was the Arabs
who linked "the past and present of the perfume industry", says the portal. "The process of
extracting oils from flowers.

9.2002

Apr 11, 2002 - Scented oils and perfumes were stored in elaborate and beautiful pots and
jars throughout Egyptian history. ... "Never before has a series of exhibitions in Egypt and
abroad been devoted to a single industry, which has resulted in such a wide range of artistic and
utilitarian objects,"

10.2004

Sep 22, 2004 - It was a scent that changed the American position in the perfume
industry. Women across this nation began to forsake all of the costly and well- ... She offered her
vast store of perfume knowledge and its history with great generosity.
 COMPANY PROFILE

SOMABHAI FULABHAI PATEL (SFP)

SFP Sons (India) Pvt. Ltd established in 1992 is one of the leading manufacturers of

Perfumes and cosmetics in India. SFP is located in Special Economic Zone, Chennai and was

Formerly known as S. F. Patel & Sons (India).SFP manufactures wide range of over 1000+

products under its own brands 'Ahsan', 'Tara', 'Taibah', 'Malaki', 'Salaam', 'Silent Valley' and

'Crazy Moments'. These products are widely available in more than 20 countries. Product

range includes Attars (concentrated perfume oils), Spray Perfumes (EDT, EDP, colognes and

body mists), Perfume Gels, Creams and Gels for Hair and body, Cleansing lotion, Shower

Gels, Shampoos, Hair Oil and Talcum powders.

SFP is a ISO 9001 certified company and is committed to manufacture quality products.

All products manufactured are skin friendly and abide by all international standards laid

down by governing bodies like IFRA, FDA et al.

SFP factory is spread over 100,000 sq. ft area and

employees over 400+ people. It houses a well equipped R & D laboratory and highly

qualified team to develop and manufacture high quality products. It has a sound

infrastructure and modern facilities which helps every activity and product of SFP fulfill its

brand promise and mantra –

“BRINGING FRANGRANCE TO LIFE”

SFP processes are managed and controlled through SAP. The SFP team is skilled, trained and

equipped to meet and deliver all customer expectations.

VISION AND MISSION

Company vision becomes a globally leading company in perfumes and cosmetics

industry.

Company mission, delivers the quality product with protection of environment and protect

The health of customer.

SFP aims at attaining, commanding market position in supply of perfumery and

cosmetic product by meeting the needs and expectation of customers and enhancing their

satisfaction.
MANAGEMENT
SFP was started by its present Managing Director Mr. Dinesh S. Patel an entrepreneur with
dream and vision to make SFP a globally leading Company in perfumes and Cosmetics industry.
He believes hard work, commitment and passion combined can enrich every individual's life.

R & D Lab
SFP has well equipped laboratory and research section, equipped to carry out in-house
development and testing required as per laid down standards. Latest GC, refract meters, SG
meter, Ph meters, Viscometers and other Instruments are manned by trained personnel.SFP is
committed to quality through its strict quality control methods. Using latest technology every
component and product are tested as per international standards at all stages of manufacturing to
ensure high quality perfumes and cosmetics.
BLENDING
SFP also blends some of its

Own fragrances. It has 8 nos

of blending tanks of capacity

1 ton with cooling lines.

It has DM Water plant and a

RO water plant. SFP has two

tanks for alcohol storage which can hold 50000 liters.

COSMETIC MANUFACTURING

Cosmetic products manufacturing is done is well

equipped modern facilities. This plant has oil phase

vessel, water phase vessel and a main homogenizing

vessel of capacity 1 ton. SFP also has

50 liter plant to cater to smaller needs

DISTILLATION
SFP also houses a unique and traditional perfume oil

extraction unit from natural

ingredients. Here by distillation oils are extracted

which are used in fragrance blends.

FILLING AND PACKING

Production facilities are well laid down with

separate buildings for Attars, Sprays, Creams and
Gels, Hair oils and Talcum powder. A total of 12
production lines have a capacity to fill and pack
120,000 units every day per shift.

WAREHOUSE

The newly constructed ware house has area of over

20000 sq. ft and is well arranged to monitor and

move material with ease. All products are bar-coded

for efficient identification. SFP is well connected by

road, sea and air to have excellent supply chain.

TRAINING
SFP Training Centre provides trainings to all its employees on regular basis. The training is
totally based on skill and personality development to drive individuals and the company forward.

SHOWROOM

The showroom within the factory premises

displays a range of products. It also displays
packaging material components. Here customers
can select items of their choice for their markets.

QUALITY OBJECTIVES OF SFP

• On-time delivery of final product to customer.
 • Zero level of non-conformity at In-process and final stage of the product.

• Zero level of customer complaint to enhance customer satisfaction.

QUALITY POLICY OF SFP

SFP committed to the aim and objectives of the company to manufacture products that are
satisfy customer’s needs and expectations.
SFP shall implement the quality management system to meet agreed requirements to enhance
customer satisfaction and improve its effectiveness continually.
SFP commit to highest levels of integrity and professionalism in all aspect of our business.

Credentials of SFP
➢ Raad voor accreditatie, Netherland has licensed SFP Sons (India) Pvt. Ltd and listed
 in the bureau’s register of licensees of Quality management system certification in

respect of the products and services in accordance with ISO 9001:2008 and also ISO

14001: 2004 for Environment management system.

➢ SFP is a member of export promotion council.

➢ SFP has been recognized as one star export house having the certificate issued by the

ministry of commerce & industry, government of India.

➢ In 2007 RAJIV GANDHI national quality award panel has awarded SFP with a

➢ Commendation certificate for quality standard of the company at all India level.

➢ SFP is a member with Essential oil association of India.

➢ SFP is register with IFRA and FDA.

FACILITIES AND TECHNOLOGY OF SFP

ℵ Well planned perfume blending set up with the required vessels, tanks and all relevant

accessories.
 ℵ Traditional fragrance extraction set up for manufacturing special attars.
ℵ Well-equipped cosmetics manufacturing unit with boiler etc.
ℵ D.M. water plant
ℵ R.O. water plant.
ℵ Well-equipped packaging section having bottles and tubes filing and wrapping machines.
ℵ Well-equipped talc manufacturing unit.
ℵ Hair oil unit with automatic filling, capping machines, shrink wrapping and labeling
machine.
ℵ Alcohol(perfumery grade) storage tanks
ℵ Quality control laboratory with advanced GC machine and relevant testing
apparatuses.
ℵ Well-equipped in built R&D centre.
ℵ Design and development department which consistently create packaging design
which customers’ purpose and also innovates new designs and present to them.
ℵ The company has warehouse having a large space and materials handling equipments
and forklift.
ℵ The plant has 12 filling lines and a capacity of 1, 20,000 bottles per shift.
ℵ All the activities of company are done in the world class software SAP business 1.

.HUMAN RESOURCE
Competence, awareness, training
Available competence level of each employee on the basis of his education skill and
experience is assessed and accordingly training needs are identified and provided competence
map is done for all those who are directly connected to the performance of conformity to
product required directly (or) indirectly.
Beside training communication system is established providing relevant information
to enhance the awareness level of personnel in relation to SFP performance required.
Effectiveness of the action taken is evaluated organist requirement and corrective
actions/ further improvement oriented actions are taken as on-going exercise.
While implementing the above activities it is ensured that personnel are made aware
of the relevance and important of their activities considering this an integral requirement for
their contribution towards achievement of quality objectives.
Records of education, training, skill & experience are maintained as long as the
employee is in service roll in SFP.

Manpower in SFP
Every department has a highly experienced and qualified team. Company has around 250
skilled workers. The company has 120 experienced hands in the line of sales and marketing
team. The company has a fully equipped training hall which accommodates 50 persons at a
time and regular training programs are held at different levels. The training is totally based on
skill and personality development to drive individuals and the company forward

ORGANISATIONAL CHART
 DESCRIPTION OF PRODUCTION PROCESS
PERFUMERY AND COSMETIC PRODUCTS:
Material used:

Perfumery compounds, aroma chemical solvents. Cosmetics ingredients, coloring

materials procured are the raw materials,

Stage 1

Procured material as above is subjected to inspection and testing to confirm their meeting
specified equipment.

Stage 2

Compounds either as they are with colouring material or a formulated combined of more
than one compound with or without colouring material after subjected to process. Inspection and
testing are send for filling & packaging.

Stage 3

Product are then filling in convenient sizes and packaging i9n cartons as per customer’s
requirements.

During filling operation the containers and the associated accessories are subjected to in
process inspection to ensure state of conformance to specified requirements.

Stage 4

Packaged products undergo final inspection before effecting delivery.

 MARKETING
➢ SFP has organized tie-up in Dubai to fee the market in U.A.E. and distribution of the
premium attars to African countries like, Sudan, Egypt,
Somalia, Nigeria, Ghana, Uganda, Zambia, South Africa, Libya, Algeria, Mauritania,
morocco, Chad, and Cameroon.
➢ In Saudi Arabia the company is having distribution tie-ups in Jeddah, Riyadh, Mecca,
Medina, etc.
➢ Also the company is having distribution outlets in Kuwait, Muscat, Bahrain, Doha-Qatar,
Lebanon, Jordan, Syria, Iran, Iraq, and Afghanistan.
➢ The company is also having export market in Sri Lanka, Singapore, Malaysia, Indonesia,
Thailand, Myanmar and Bangladesh.
➢ In the west the company is having market in Atlanta, New York, New Jersey, Chicago,
Las Angeles, London, Spain, and France.
➢ In India there are 750 distributors throughout the country.
PRODUCT PROFILE

Different Brands Manufactured by SFP :

OBJECTIVE OF STUDY:-

Primary objective:-

To analyze that the existing inventory management system in SFP

SONS India pvt.ltd.

Secondary objective:-

1. To verify the mismatch between the order and receipt of mate

2. To find out the impact of inventory on working capital.

3. To find out minimum stock level, how much stock should be order.
LITERATURE REVIEW

Success of any industrial undertaking depends upon the 6 m’s 1) Money

2) Manpower 3) Machine 4) Market 5) Material 6) Management
Materials are pivotal importance not less than any
other M’s. Problems have their root in material affects the efficiency of all men, machine,
money & marketing decisions of the firms and thus become the grave concern of
management at all levels. If there were too much of material problems like ideal funds
lied up in excessive inventory storage and obsolesces difficulties market pressure would
arise. Thus the importance of inventory management is realized.
A number of studies have been done in the
field of inventory management by various researchers. Some of them are given below;
1. Author:- Bern at de William year 2008

This study tells that the main focus of inventory management is on

transportation and warehousing. The decision taken by management depend s on the
traditional method of inventory control models. The traditional method of inventory
management is how much useful in these days the author tell about it. He is also saying
that the traditional method is not a cost reducing, it is so much expensive. But the
managing the inventory is most important work for any manufacturing unit.
2. Author: - Jon Schreibfeder 1992
He said that it is easy to turn cash into inventory, the challenge is to
turn inventory back into cash. In early 1990’s many distributor recognize that they
needed help controlling and managing their largest asset inventory. In response to this
need several companies developed comprehensive inventory management modules and
systems. These new package include many new features designed to help distributors
effectively managed warehouse stock. But after implementing this many distributors do
not feel that they have gained control of their inventory.
3. Author:-Wolf Bagby, Managing inventory
In this study Mr. W.Bagby explains that by managing the inventory it
becomes easier for the organization to meet the profit goals, shorter the cash cycle, avoid
inventory shortage, avoid excessive carrying costs for unused inventory, and improve
profitability by decreasing cash conversion and adopt JIT system. According to this study
companies need to get smart about inventory.
Boosting financial performance is another benefit that comes from
better inventory management. Infect large number of manufacturers enjoy savings and
better performance by choosing the approach of inventory reduction.
For this company needs to maximize the cash flow and profitability
and this includes keeping a watchful discerning eye on charge in supply and demand
4. Author: - Asfaque Ahmed October 12, 2004
(Article from master requirement planning and master production scheduling)
He said that most of the manufacturing company vendors have planning
and scheduling product which assume either infinite production capacity for calculating
quantities of row material and work in progress (WIP) requirements or infinite
quantities of raw material and WIP materials for calculating production capacity. There
are many problems with this approach and how to avoid these by making sure that the
product you are buying indeed takes into account finite quantities of required materials as
well as finite capacities of work centers in your manufacturing facilities.
5. Author:- D.Hoopman April 7, 2003
(Article from inventory planning and optimization)
In this article he said that inventory optimization recognize that
different industry have different inventory profiles and requirements. Research has
indicated that solutions are priced in a large range from tens of thousands of dollars to
millions of dollars. In this niche market sector price is definitely not an indicator of
 the quality of solution, ROI and usability are paramount.

6. Author:-Silver, Edward A Dec22, 2002

(Article from production and inventory management journal)
This article considers the context of a population of items for
which the assumption underlying the EOQ derivation holds reasonably well.
However as is frequently the cash in practices there is an aggregate constraint that
applies to the population as a whole. Two common forms of constraints are:
1) the existence of budget to be allocated among the stocks of the items and
2) a purchasing production facility having the capability to process at most a certain
number of replenishment per year. Because of the constraint the individual
replenishment quantities cannot be selected independently.
5. Author:- Charles Atkinson
(A study on inventory management)
In the study by Mr. Charles Atkinson, he explained the inventory
management and assessment of inventory levels. As per this study inventory management
need to address two issue
Part I. How to optimize average inventory levels.
Part II. How to assess (evaluate) inventory levels.
This study tells about what the manager should do and not to do, and
how much amount should be order in one placed orders. Average inventory can be
calculated by simplistic method.
Average inventory = beginning inventory +end inv./2
8. Author:-Delaunay C , Sahin E, 2007.
A lots of work has been done but now if we want to go ahead we
must have good visibility upon this field of research. That is why we are focused on
frame work for an exhaustive review on the problem of supply chain management with
inventory inaccuracies . The author said that their aim in this work is also to present the
most important criterion that allow a distinction between the different type of
managing the inventory.

RESEARCH METHODOGY
 Research methodology is the way to systematically solve the research problem.
Objective of research study is to analysis of inventory of SFP Sons and analyzing of
inventory, we determining following inventories-

1. Raw materials inventory,

2. Work in progress inventory,
3. Packaging material inventory &
4. Finished goods inventory
In this section of inventories, we should analyze the annual investment in inventories,
Valuation of inventory after closing balance of items in inventory. In this manner, we
calculate reorder point, safety stock levels, minimum & maximum levels of inventory.

Working hypothesis of the objective is that inventories are the stock piles of goods in an
organization. SFP invests about 40% of total assets inventory should be analyzed their
records.

The analysis of inventory according to their data is available in the company. The data
collection of inventory for analysis is by the direct store department. I went to the all inventories
as raw material, work in progress inventory, finished goods inventory by the proper observation
of data’s of the company.

The particular method for data collection used direct interview with assistants and
telephone interview with friends to known about annual investment of inventories and other
important data.

PERIOD OF STUDY:

The study was conducted in a period between January 2010 to April 2010 during which
the researcher studied the company’s relationship with dealers and distributors and obtained their
view.
Method of data collection:

In analysis of inventory of SFP, We collect the data by the different sources. We collect the
primary and secondary data.

SECONDARY DATA –

The secondary data are those data that are already in presence for specific
purpose, we use the secondary data about inventory to look old records of the company .For
the daily information about the items are show the MRN, ledger register and daily issue slip
of materials, the purchase register and other documentary evidence used for the findings.

In the analysis of inventory, the secondary data provided is not sufficient then we collected
primary data.

PRIMARY DATA –

Primary data or fresh data are those data that are originated very first time
with the help of primary data we formulated the research objectives. Primary data are the
accurate, attainable, reliable and useful data.

1. Inventory control techniques used by the company

2. Inventory systems as perpetual and periodic systems.
3. Stock levels etc.
4. Company’s website

INVENTORY MANAGEMENT TECHNIQUES

In managing inventories, the firm’s objective should be in consonance with the wealth
maximization principle. To achieve this, the firm should determine the optimum level of
 investment in inventory. To deal with the problems of inventory management effectively, it
becomes necessary to be conversant with the different techniques of inventory control.
Although the concepts involved in inventory management are production-oriented and are
not strictly financial it is important that the financial manager understand them since they
have certain built-in financial costs. The different techniques of inventory control may be
summarized as follows:

(1) Inventory level Technique

The main objective of stock control is to determine and maintain the optimum level of stock
so that there is neither shortage of any material nor unnecessary investment in inventory. For
this purpose, determination of maximum and minimum limits of inventory and ordering level
is necessary.

(2) Maximum stock Limit: This represents the quantity of inventory above which it should not
be allowed to be kept. The main object of fixing this limit is to ensure that unnecessary
working capital is not blocked in stores. The quantity is fixed keeping in view the
disadvantages of overstocking.

RE-ORDERING LEVEL (ORDERING LEVEL)

It is the point at which if the stock of the material in stores reaches, the storekeeper should
initiate the purchase requisition for fresh supply of material. This level is fixed somewhere
between maximum and minimum level is such a way that the difference of quantity of the
material between the reordering level and the minimum level will be sufficient to meet
requirements of production up to the time of fresh supply of the material. It is fixed after
taking into consideration the following factors:

ABC ANALYSIS:
ABC Analysis is a basic analytical management tool which enables top
management to place the effort where the result will be greatest. This technique,
popularly known as always better control or the alphabetical approach, has universal
applications in many areas of managing the inventory.
The technique tries to analyze the distribution of any characteristic by
money value of importance in order to determine its priority.
The annual consumption analysis of any organization would indicate that a handful of
top high value items less than 10% of total number will account for a substantial portion
of about 75% of the total consumption value and these few vital item are called A class items
which need careful attention of the materials manager. Similarly a large number of bottom
items over 70% of total number called the trival many account only for about 10% of the
consumption value and are known as the ‘C’ class. The items that lie between the top and
bottom are called the ‘B’ category item.
The following facts need to be noted with regard to ABC Analysis:
1. Through usually the inventory items are classified into three categories viz AB andC only,
but nothing prohihibits a firm to undertake the analysis on the basis of a larger
catagorisization.
2.It is necessary for an effective ABC analysis that all the items should be included for the
Classification.
3.Through according to ABC Analysis category C gets only a simple attention, the
management should nevertheless have to be vigilant in its approach. For example an items
may be of small value but may be critical in the sense that its non-availability hampers the
production process and its supply is irregular. The management has to be extra careful about
its inventory, even though the items figures in the category C. Thus the ABC analysis not the
ultimate exercise in inventory management, it needs supplementing with detailed knowledge
and monitoring.
4.Price of the items and their physical quantities shouldn’t be made the basis of ABC
analysis. It is rather the usage value of the items which must be used for the purpose of
classification.
 ECONOMIC ORDER QUANTITY TECHNIQUE

One of the major inventory management problems to be resolved is how much inventory should be
added when inventory is replenished. If the firm is buying raw materials, it has to decide lost in
which it has to be purchased on replenishment. If the firm is planning a production run, the issue is
how much production to schedule (or how much to make). These problems are called order
quantity problems, and the task of the firm is to determine the optimum or economic order quantity
(or economic lot size). Determining an optimum inventory level involves two type of costs: (a)
ordering costs and (b) carrying costs: The economic order quantity is that inventory level that
minimize the total of ordering and carrying costs.

EOQ = √2(annual usage in unit)(order cost)

Annual carrying cost per unit

VED ANALYSIS:

The VED analysis is used generally for spare parts. The requirement and urgency of spare parts is
different from that of materials. A-B-C analysis may not be properly used for spare parts. The
demand for spares depends upon the performance of the plant and machinery. Spare parts are
classified as: Vital (V), Essential (E) and Desirable (D). The vital spares are a must for running the
concern smoothly and these must be stored adequately. The non-availability of vital spares will
cause havoc in the concern. The E types of spares are also necessary but their stocks may be kept at
low figures. The stocking of D types of spares may be avoided at times. If the lead time of these
spares is less, then stocking of these spares can be avoided.

The classification of spares under three categories is an important decision. A wrong classification of
any spare will create difficulties for production department. The classification of spares should be
left to the technical staff because they know the need, urgency and use of these spares.
 JUST-IN-TIME (JIT) SYSTEM:

Japanese firms popularized the just-in-time (JIT) system in the

world. In a JIT system material or the manufactured components and part arrive to the
manufacturing sites or stores just few hours before they are put to use. The delivery of material is
synchronized with the manufacturing cycle and speed. JIT system eliminates the necessity of
carrying large inventories, and thus, saves carrying and other related costs of manufacturer. The
system requires perfect understanding and coordination between the manufacturer and supplier
in terms of the timing of delivery and quality of the material. Poor quality material or
complements could halt the production. The JIT inventory system complements the total quality
management (TQM). The success of the system depends on how well a company manages its
suppliers. The system puts tremendous pressure on suppliers. They will have to develop adequate
system and procedures to satisfactory meet the needs of manufacturers

INVENTORY TURNOVER RATIO: (ITR)

In accounting, the Inventory turnover is an equation that measures the number of times
inventory is sold or used over in a period such as a year. The equation equals the cost of
goods sold divided by the average inventory. Inventory turnover is also known as
inventory turns, stock turn, stock turns, turns, and stock turnover.

ITR = Cost of goods sold

Average inventory

INVENTORY MANAGEMENT SYSTEM IN SFP SONS INDIA PVT.LTD.

The procurement of inventory is totally depends on order/demand. In first step they get
the order from customer then they write a form that form called indent form by hand writing.

After getting order they will send the order to purchase department for buying of Raw
Material and Packaging material. Every time that causes the delay of delivery of goods to the
customer. After receiving the raw materials from supplier they check the quality, because quality
is more important for them. In whole production process 4-5 times they will check the quality
and after that quality check seal on product.

They are using FIFO method for delivery of good to the customers. First In First Out
(FIFO) means first order should deliver first and after that continue process. It is good way of
delivery that make the customer satisfied. Every inspection about available stock is on SAP
every one can know how much stock is available, and how much order should be placed. For
every order they keep the numbers for identification.

Warehouse arrangement
There is separate warehouse for keeping the different types of inventory like
Raw material, packaging material, semi finished good and finished good. Raw materials
includes the perfumery liquid, arranging of these things they have rack and rack numbers, and
unique code number for each and every liquid for identification. For talcum powder raw material
are the talc powder which they kept in plastic bags in production unit itself.

Packaging material include box, cap color, neck etc. which require after
filling the product in bottles. Finished goods and packaging material they are keeping in same
warehouse left side finished good and right side packaging material. Finished good order wise
and packaging material how to find easily.

Each and every data maintained in systems so it is very easy to get the information.

SCOPE OF STUDY

The scope is to drive meaningful application of theory for actual implementation. As

the study is focusing on identifying the present potential of the company’s inventory methods
and aims, we identify best set of inventory method to be carried to improve the company’s policy
to determine their inventory.

This study provides insight to the management of high value item and
low value items. This study also gives the idea about industrial focus and addressal towards
maintaining inventory.

LIMITATION OF STUDY

 It consumes more time and requires lots of expenditure. More time is needed to do
this study.

 Study is based on secondary data only.

 The quality of inventory is not compared in analysis.
 The analysis is based on figures present in the internal records only.
 The study is based on two year reports given by marketing and finance
 department that has its own limitation.

 Working environment didn’t permit more involved way of collecting data.

 Table 5.1 Economic order quantity

Year EOQ(in units)

2010 320.76

2009 109.53

Interpretation:

It is infer that the Economic order quantity for the year2009 is 109.53 and 2010 is
320.76. Year 2010 EOQ is 2.9 times more than 2009 EOQ.
Chart no.5.1
 INVENTORY TURNOVER RATIO

Year Sales (X) Inventory(Y) Ratio (X/Y)

2010 63130829.65 26297835.5 2.40
2009 81132216 26336975 3.08

TABLE NO.5.2

Interpretation:

It shows that the ratio of sales and inventory for the year 2009 is 2.4 and for the
year 2010 3.08. It shows that the inventory sales ratio of year 2009 is higher than year 2010.
Chart no. 5.2
Year Raw material Semi finished Packaging Finished good Total inventory
good material

2010 7403(in kg) 51026 458522 342912 859863

2009 8406(in kg) 43467 549409 301860 903142

Table 5.3 total inventory in quantity

Table 5.4 Total inventory in value(in lacks)

Year Raw material Semi finished Packaging Finished good Total inventory
good material

2010 5182325 1275634 9170450 10630287 26258696

2009 6305141 1086692 9889368 9055774 26336975
 Chart no.5.3

Table no.5.5 Percentage of inventory from total inventory

Year RM PM SM FG Total
inventory

2009 23.94% 37.54% 4.13% 34.38% 100%

2010 19.73% 34.92% 4.86% 40.48% 100%

Chart no.5.4
Year Raw material Total inventory Percentage
2009 63,05,141 2,63,36,975 23.94%

2010 51,82,325 2,62,58,696 19.73%

Table no.5.6 percentage of raw material from total inventory

Chart no.5.6
 Table no.5.7 percentage of semi finished good from total inventory

Year Semi finished good Total inventory Percentage

2009 1086692 26336978 4.13%
2010 1275634 26258696 4.86%
 Chart no.5.7

Table no.5.8 Percentage of Packaging material from total Inventory.

Year Packaging material Total inventory Percentage

2009 988936 26336978 37.54%

8
2010 9170450 26258696 34.92%
 Chart no.5.8

Table no.5.9 Percentage of Finished goods from total inventory

Year Finished good Total inventory Percentage

2009 9055774 26336978 34.38%

2010 10630287 26258696 40.48%

 Chart no. 5.9

Table no.5.10 ABC classification

Grade No. of items Percentage
A 57 31.66%
B 65 36.12%
C 58 32.22%
Total 180 100%
 Chart no.5.10

ABC Analysis 2008-2009

April 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Apr-2008 - Quantity Apr-2008 - Amount
AHSAN

Perfume Oils 1,02,024 1377038.87 C

Eau De Perfume 59,544 2301839.13 A
Eau De Toilette 10,176 362407.12 B
Total 1,71,744 4041285.12
TARA

Item Group
Eau De Perfume 2,080 51452.12 B
Hair Oil 59,370 366167.65 C
Talcum Powder 3,24,528 2219257.5 A
Eau De Toilette
Total 3,85,978 2636877.27
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 2,664 130340.94 B
Hair Cream
Shampoo
Lotions 192 9403.66 B
Total 2856 139744.6

May 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

May-2008- Quantity May-2008- Amount
AHSAN

Perfume Oils 1,57,224 1588658.94 C

Eau De Perfume 19,524 956069.47 B
Eau De Toilette 4,320 157183.01 A
Total 1,81,068 2701911.42
TARA

Item Group
Eau De Perfume 3,200 79157.11 C
Hair Oil 8,856 149517.32 B
Talcum Powder 1,60,344 781462.82 A
Eau De Toilette
Total 1,72,400 1010137.25
SILENT VELLY

Item Group
Hair Oil 480 30100.41 B
Shower Gel 144 10593.68 A
Hair Gel 144 5535.82 C
Body Splash 504 24659.1 C
Hair Cream
Shampoo 336 26603.93 A
Lotions 240 13576.62 B
Total 1848 111069.56

June 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

June-2008- Quantity June-2008- Amount
AHSAN

Perfume Oils 1,17,576 1318419.85 B

Eau De Perfume 27,464 1130428.47 A
Eau De Toilette 2,784 104890.69 C
Total 1,47,824 2553739.01
TARA
Item Group
Eau De Perfume 480 11873.57 B
Hair Oil 5,496 154637.41 A
Talcum Powder 47,232 497530.23 C
Eau De Toilette 72 6098.84 B
Total 53280 670140.05
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel 432 16607.46 C
Body Splash 3,600 176136.4 C
Hair Cream
Shampoo 144 11401.69 A
Lotions 840 62980.09 B
Total 5016 267125.64

July 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

July-2008- Quantity July-2008 -Amount
AHSAN

Perfume Oils 97,488 1136365.16 C

Eau De Perfume 17,448 789353.05 A
Eau De Toilette 2,208 104389.2 B
Total 1,17,144 2030107.41
TARA

Item Group
Eau De Perfume 800 19789.28 B
Hair Oil 180 6860.69 B
Talcum Powder 32,736 384288.54 C
Eau De Toilette 144 12197.68 A
Total 33860 423136.19
SILENT VELLY

Item Group
Hair Oil 96 6020.08 B
Shower Gel
Hair Gel
Body Splash
Hair Cream 144 13190.38 A
Shampoo
Lotions 72 2582.85 C
Total 312 21793.31

August 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Aug-2008- Quantity Aug2008-Amt
AHSAN

Perfume Oils 1,87,056 2232981 C

Eau De Perfume 30,752 1351294.97 A
Eau De Toilette 192 10781.02 B
Total 2,18,000 3595056.99
TARA
Item Group
Eau De Perfume 1,600 39578.56 A
Hair Oil 1,416 31693.94 B
Talcum Powder 64,032 898033.68 C
Eau De Toilette 72 6098.84 B
Total 67,120 975405.02
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 1,296 63409.11 A
Hair Cream
Shampoo
Lotions 360 16284.34 C
Total 1656 79693.45

September 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Sep-2008-Quantity Sep2008-Amt.
AHSAN

Perfume Oils 2,80,656 3643082.56 C

Eau De Perfume 57,548 2586300.76 A
Eau De Toilette 5,376 184313.35 B
Total 3,43,580 6413696.67
TARA
Item Group
Eau De Perfume 3,520 87072.86 B
Hair Oil 2,232 77912.2 A
Talcum Powder 50,472 359785.22 C
Eau De Toilette
Total 56,224 524770.28
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 504 24659.07 A
Hair Cream
Shampoo
Lotions
Total 504 24659.07

October 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Oct2008-Quantity Oct-2008-Amt
AHSAN

Perfume Oils 1,09,836 1225240.16 C

Eau De Perfume 31,020 1152276.45 A
Eau De Toilette 672 24671.89 B
Total 1,41,528 2402188.5
TARA

Item Group
Eau De Perfume
Hair Oil 4,200 96434.71 A
Talcum Powder 1,16,088 562889.2 C
Eau De Toilette
Total 120288 659323.91
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 1,224 59886.38 A
Hair Cream
Shampoo
Lotions
Total 1224 59886.38

November 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Nov-2008-Quantity Nov-2008-Amount
AHSAN

Perfume Oils 65,520 759450.53 C

Eau De Perfume 40,324 1509870.84 A
Eau De Toilette 4,752 191725.56 B
Total 1,10,596 2461046.93
TARA

Item Group
Eau De Perfume 800 19789.28 A
Hair Oil 1,200 25847.91 B
Talcum Powder 56,976 261544.28 C
Eau De Toilette
Total 58976 307181.47
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash
Hair Cream
Shampoo
Lotions
Total

December 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Dec-2008-Quantity Dec-2008-Amt
AHSAN

Perfume Oils 1,44,264 1843142.24 C

Eau De Perfume 29,584 1231266.38 A
Eau De Toilette 6,672 236237.42 B
Total 1,80,520 3310646.04
TARA

Item Group
Eau De Perfume 960 22950.16 B
Hair Oil 2,856 75511.28 A
Talcum Powder 1,35,480 692142.97 C
Eau De Toilette
Total 139296 790604.41
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 360 17025.11 A
Hair Cream
Shampoo
Lotions
Total 360 17025.11

January 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Jan2009-Quantity Jan-2009-Amount
AHSAN

Perfume Oils 1,01,376 1115789.03 C

Eau De Perfume 22,288 865498.76 A
Eau De Toilette 5,904 224110.99 B
Total 1,29,568 2205398.78
TARA

Item Group
Eau De Perfume 960 22105.37 B
Hair Oil 1,800 42702.46 A
Talcum Powder 1,12,656 539000.02 C
Eau De Toilette 72 5530.54 B
Total 115488 609338.39
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 144 6439.27 A
Hair Cream
Shampoo
Lotions
Total 144 6439.27

Feb 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Feb-2009-Quantity Feb-2009-Amount
AHSAN

Perfume Oils 60,408 727184.84 C

Eau De Perfume 25,176 1003806.8 B
Eau De Toilette 2,064 121175.39 A
Total 87,648 1852167.03
TARA

Item Group
Eau De Perfume
Hair Oil 2,400 49233.18 A
Talcum Powder 74,928 673110.8 C
Eau De Toilette 72 5530.54 B
Total 77400 727874.52
SILENT VELLY

Item Group
Hair Oil 240 14229.32 A
Shower Gel
Hair Gel
Body Splash 432 19317.8 C
Hair Cream
Shampoo
Lotions
Total 672 33547.12

March 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Mar-2009-Quantity Mar-2009-Amount
AHSAN

Perfume Oils 84,624 955170.08 C

Eau De Perfume 19,708 719760.18 A
Eau De Toilette 480 27802.96 B
Total 1,04,812 1702733.22
TARA

Item Group
Eau De Perfume
Hair Oil 4,320 95732.99 A
Talcum Powder 20,112 233482.55 C
Eau De Toilette
Total 24432 329215.54
SILENT VELLY
 Item Group
Hair Oil 120 6909.44 B
Shower Gel
Hair Gel
Body Splash 216 9204.26 C
Hair Cream
Shampoo 96 6748.67 A
Lotions 48 3669.66 A
Total 480 26532.03

Financial year 2009-2010

April 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Apr-2009-Quantity Apr-2009-Amt
AHSAN

Perfume Oils 2,02,992 2388126.24 C

Eau De Perfume 55,416 2451502.23 A
Eau De Toilette 11,328 385100.27 B
Total 2,69,736 5224728.74
TARA

Item Group
Eau De Perfume 480 10642.24 C
Hair Oil 3,600 96400.8 B
Talcum Powder 1,18,968 791687.35 A
Eau De Toilette
Total 123048 898730.39
SILENT VELLY
Item Group
Hair Oil 96 5527.68 B
Shower Gel
Hair Gel
Body Splash 2,664 113513.37 C
Hair Cream
Shampoo 192 13497.6 A
Lotions 288 20644.29 B
Total 3240 153182.94

May 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

May (2009) - Quantity May-2009-Amount
AHSAN

Perfume Oils 1,47,312 1876017.9 A

Eau De Perfume 39,480 1511140.04 B
Eau De Toilette 1,536 49854.72 C
Total 1,88,328 3437012.66
TARA

Item Group
Eau De Perfume 960 21283.2 C
Hair Oil 7,620 170453.77 B
Talcum Powder 71,628 418572.12 A
Eau De Toilette
Total 80208 610309.09
SILENT VELLY
Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash
Hair Cream
Shampoo
Lotions
Total

June 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

June-2009-Qnty June2009-Amt
AHSAN

Perfume Oils 1,28,928 1338309.12 C

Eau De Parfum 6,456 269641.68 A
Eau De Toilette 1,488 53310.24 B
Total 1,36,872 1661261.04
TARA

Item Group
Eau De Parfum
Hair Oil 8,880 143501.2 A
Talcum Powder 70,320 518095.78 C
Eau De Toilette
Total 79200 661596.98
SILENT VELLY
Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 1,944 82812.7 A
Hair Cream
Shampoo
Lotions
Total 1944 82812.7

July 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

July-2009-Qnty July-2009-Amt
AHSAN

Perfume Oils 3,44,772 4730478.96 C

Eau De Perfume 39,816 1629457.42 A
Eau De Toilette 5,376 197208.48 B
Total 3,89,964 6557144.86
TARA

Item Group
Eau De Perfume 4,800 107232 A
Hair Oil 9,972 215067.96 B
Talcum Powder 1,71,120 1370713.79 C
Eau De Toilette
Total 1,85,892 1693013.75
SILENT VELLY
Item Group
Hair Oil 96 5559.36 B
Shower Gel
Hair Gel
Body Splash 1,440 61948.8 C
Hair Cream
Shampoo 96 6803.52 B
Lotions 144 10444.32 A
Total 1776 84756

August 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Aug-2009-Qnty Aug-2009-Amt
AHSAN

Perfume Oils 3,08,381 3675631.15 C

Eau De Perfume 46,008 1924019.52 A
Eau De Toilette 8,352 280743.36 B
Total 3,62,741 5880394.03
TARA

Item Group
Eau De Perfume 1,920 42892.8 B
Hair Oil 3,300 82202.92 A
Talcum Powder 83,064 751192.91 C
Eau De Toilette
Total 88,284 876288.63
SILENT VELLY

Item Group
Hair Oil 144 8339.04 B
Shower Gel
Hair Gel
Body Splash 3,240 139384.8 C
Hair Cream
Shampoo 96 6803.52 A
Lotions
Total 3480 154527.36

September 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Sept-2009-Qnty Sept-2009-Amt
AHSAN

Perfume Oils 1,81,512 2257750.08 C

Eau De Perfume 38,064 1300500.57 A
Eau De Toilette 5,424 180467.52 B
Total 2,25,000 3738718.17
TARA

Item Group
Eau De Perfume
Hair Oil 948 29043.51 A
Talcum Powder 57,600 321958.58 C
Eau De Toilette
Total 58548 351002.09
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 3,672 157969.44 A
Hair Cream
Shampoo
Lotions
Total 3672 157969.44

October2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Oct-2009-Qnty Oct-2009-Amt
AHSAN

Perfume Oils 1,74,588 2064442.37 C

Eau De Parfum 52,320 1842301.85 A
Eau De Toilette 6,192 184397.76 B
Total 2,33,100 4091141.98
TARA

Item Group
Eau De Parfum
Hair Oil 3,888 96082.56 B
Talcum Powder 1,09,200 622351.11 C
Eau De Toilette 288 21205.44 A
Total 113376 739639.11
SILENT VELLY

Item Group
Hair Oil 240 13898.4 C
Shower Gel 192 12706.56 A
Hair Gel
Body Splash
Hair Cream
Shampoo
Lotions
Total 432 26604.96

November 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Nov-2009-Qnty Nov-2009-Amt
AHSAN

Perfume Oils 1,15,104 1394237.39 C

Eau De Parfum 26,496 1147129.2 A
Eau De Toilette 1,872 55748.16 B
Total 1,43,472 2597114.75
TARA

Item Group
Eau De Parfum 500 13160 B
Hair Oil 1,680 45901.54 A
Talcum Powder 29,184 310958.79 C
Eau De Toilette
Total 31364 370020.33
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel 360 12110.4 C
Body Splash 144 6194.88 B
Hair Cream
Shampoo 192 13607.04 A
Lotions 144 4368.96 C
Total 840 36281.28

December 2009

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Dec-2009-Qnty Dec-2009-Amt
AHSAN

Perfume Oils 1,72,064 1907591.01 C

Eau De Perfume 55,660 2106838.02 A
Eau De Toilette 6,864 237369.6 B
Total 2,34,588 4251798.63
TARA

Item Group
Eau De Perfume 5,040 234864 A
Hair Oil 5,184 147699.05 B
Talcum Powder 18,000 280614.5 C
Eau De Toilette
Total 28,224 663177.55
SILENT VELLY
Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 2,592 111442.03 A
Hair Cream
Shampoo
Lotions
Total 2592 111442.03

January 2010

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Jan-2010-Qnty Jan-2010-Amt
AHSAN

Perfume Oils 1,08,288 1063524.96 C

Eau De Perfume 27,044 1055093.44 A
Eau De Toilette 3,552 115244.16 B
Total 1,38,884 2233862.56
TARA

Item Group
Eau De Parfum 6,240 290784 A
Hair Oil 4,560 107697.73 B
Talcum Powder 78,600 787035.53 C
Eau De Toilette
Total 89,400 1185517.26
SILENT VELLY

Item Group
Hair Oil
Shower Gel
Hair Gel
Body Splash 1,944 83671.21 A
Hair Cream
Shampoo
Lotions 2,160 68673.41 C
Total 4104 152344.62
FINDINGS

Company is maintaining zero safety stock it cause production loss.

The inventory turnover is in decreasing order in 2008-09 it is 3, but in 2009-2010 it is
2.4.
By ABC Analysis we can say that there is a little difference between A B & C class items
so every product is important for company.
There is positive correlation between sales to inventory.
The percentage of raw material from total inventory is 23.94% in 2009 and 19.73% at
2010.
The percentage of finished goods, semi finished good, packaging material from total
inventory is 34% ,5%,37% in 2009 but in 2010 40%, 4%, 34%.
Company’s aim to achieve more sale it may require huge amount of inventory in future.
Company is concentrating on domestic market and first time they achieve the target of 10
crore, that is good sign of establishment of domestic market.
Economic order quantity (EOQ) in year 2009 is 109.526 units EOQ for year 2010 is
320.76 units, it shows that company can place more orders at one time.

There is good relationship between company and their distributors, vendors and sales
executives.
 SUGGESTIONS

• There can be a system where in periodical review (twice in a month) of inventory could
be carried out so that the inventory can be kept under control.
• There should be periodical review of movement of items so that any non moving
items can be identified and suitable action can be done.

• At present the company is maintaining zero safety stock for all items, if the safety
stock is maintained for important items, delay in production can be eliminated and orders

can be supplied in time which will result in a better credibility in both international and

domestic market.

• It has been predicted that if company is planning to achieve more sale it may require huge
amount of inventory in future. So the company has to arrange capital to meet future
requirement.
• It is suggested that they can have close monitoring of receipts and issue for A
class items in order to have control of inventory.

• To increase the inventory turnover ratio by increasing the sales level and maintaining
the required level of inventory.

• To maintain the Re-order level, Min-stock level and Economic order quantity
company should consider the demand of the product.

• There should be proper communication between purchase and production

department.

• There is no communication from dispatch section to store department, about

quantity wasted. Feedback about the quantity wasted will help the store department to
forecast future requirements and to focus on minimum possible waste.
• Improve the minimum value of product C up to 5%-8% in total sale value by
increasing market level of these products. It helps to get min return on investment in
these products as soon as possible.

• There is one warehouse for keeping the finished good and packaging material and
packaging material are not arranged in good manner so it should be in order wise.
 CONCLUSION

“Inventory control is exercise when you order an item. If you do a poor job then everything after
is inventory correction”

GORDON GRAHAM

Inventory is the physical asset of a company that can create problem if there is shortage, while in
production and also if it’s in excess even after production. Inventory is constantly changing as
quantities are sold and replenished.

Hence it can be understood that efficient inventory management can take the company to new
heights and inefficient inventory management can ruin the company.

Company is highly concentrated on domestic market, it increase the market level of company
because trend of domestic market is changing.

The study on Inventory management in SFP Sons (India) Pvt. Ltd about A BC analysis for items
is predicting future inventory requirements etc.
From the study it is predicted that future sales have to be achieved and inventory level have to be
maintained.
ABC Analysis was carried out to identify the fast moving and important items.
The company has to periodically review the inventory to avoid production loss.
The results of the study can be further extended for future research.

BIBLIOGRAPHY
 ϕ Financial Management- Theory And Practice- Prasanna Chandra

ϕ Management Accounting- R.K. Sharma and Sashi. K. Gupta

ϕ Financial Management – I. M. Pandey Ninths Edition
ϕ Financial Management –S.C.Kuchhal
ϕ MATERIAL MANAGEMENT BOOK – BY RAJENDRA MISHRA
ϕ OPERATION AND PRODUCTION PLANNING BOOK
ϕ LOGISTICS MANAGEMENT – BY K. SHRIDHARA BHAT
ϕ MATERIAL MANAGEMENT – BY S. D. APHALE
ϕ PRODUCTION AND MATERIAL MANAGEMENT- P. SARVANAVEL ,S. SUMATHI

• WWW.INVENTORY .COM

• WWW.INVESTOPEDIA.COM

• WWW.WISEGEEK.COM

• www.mbaguys.net

Rajeev Gandhi quality award

Product Profile
Different Brands Manufactured by SFP :
• Pour Homme
• Pour Femme • Creams
• Magic ○ Antidandruff
Night ○ Coconut
• Body Mist ○ Herbal
○ Clean Effect ○ Dazzling
○ In Control • Hair Gels
○ Podium ○ Extra Hold
○ Urban Colours ○ Mega Hold
○ Stressed Out ○ Regular Hold
○ Wake Up ○ Styling
○ Fresh Up ○ Wet Look
○ Dazzling • Shower Gels
○ Nutritious ○ Aleo Vera
• Lotion ○ Lemon
○ Energizing Rose ○ Rose
○ Firming Olive ○ Herbal
○ Relaxing Aloe Vera • Shampoos
○ Revitalizing Almond ○ Aloe Vera
○ Slimming Multi Vitamin ○ Anti Dandruff
Toning Musk ○ Herbal
Almond ○ Lemon
Rose • Hair Oils
• Cleansing Lotion ○ Jasmine
 ○ Amla
○ Herbal
○ Coconut

•
• 20ml Spray
○ Blossom Cool
○ Blossom Love
○ Blossom Nature
○ Blossom Pleasure
○ Blossom Romance
• 30ml Spray
 Golden Magnet ○ Only Ahsan
○ Pearl for Women
○ Pleasures for Men
• 60 ml Spray
○ Pleasures for Women
○ New Man
○ Romantic for Men
○ New Women
○ Romantic for Women
○ Attraction
○ Sandal
○ Freedom
○ White Flower
○ Ajooba
• 50ml Spray
○ Ahsan for Men ○ Perpetuity

○ Charm 16 ○ Fresh