CHAPTER 1 : INRTODUCTION

1.1 INTRODUCTION OF INVENTORY MANAGEMENT:

Inventories are assets of the firm and require investment and hence involve
the commitment of firms resources. The inventories need not be viewed as an idle
asset rather these are an integral part of firms operations. But if the inventories are
too big, they become a strain on the resources, or if they are too small, the firm may
lose the sales. Therefore, the firm must have an optimum level of inventories.
Inventory is actually money, which is available in the shape of materials (raw
materials, in-process and finished products), equipment, storage space, work-time
etc. Inventory is a list of goods and materials, or those goods and materials
themselves, held available in stock by a business. Inventory are held in order to
manage and hide from the customer the fact that manufacture/supply delay is longer
than delivery delay, and also to ease the effect of imperfections. In the
manufacturing process that lower production efficiencies if production capacity
stands idle for lack of materials. Any organization which is into production, trading,
sale and service of a product will necessarily hold stock of various physical
resources to aid in future consumption and sale. While inventory is a necessary evil
of any such business, it may be noted that the organizations hold inventories for
various reasons, which include speculative purposes, functional purposes, physical
necessities etc. A component of supply chain management, inventory management
supervises the flow of goods from manufacturers to warehouses and from these
facilities to point of sale. A key function of inventory management is to keep a
detailed record of each new or returned product as it enters or leaves a warehouse or
point of sale.

Inventory management is a science primarily about specifying the shape and

placement of stocked goods. It is required at different locations within a facility or

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within many locations of a supply network to precede the regular and planned
course of production and stock of materials.
Inventory control is concerned with achieving an optimum balance between two
competing objectives.
Minimizing the investment in inventory.
Maximizing the service levels to customers and its operating departments.

1.2 CONCEPT OF INVENTORY MANAGEMENT:

The dictionary meaning of "Inventory" is a detailed list-stock of goods in this". A
practical definition from the material management angle would be "Items of stores
or materials kept in stock to meet future demands of production, repairs,
maintenance, construction etc.". Since the materials held in the inventory are idle
resource, another definition of inventory would be "an idle resource of any kind
which has an economic value".
The inventory means and includes the goods and services being sold by
the firm and the raw materials or other components being used in the manufacturing
of such goods to be offered to customers whenever demanded by them. Inventory
management also means maintaining effective internal controls over inventory,
including safeguarding the inventory from damage or theft, using purchase orders to
track inventory movement, maintaining an inventory ledger, and frequently
comparing physical inventory counts with recorded amounts.

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1.3 TYPES OF INVENTORIES:

Generally the inventories are classified into three categories and they are as follows;

RAW
MATERIA
LS

WORK IN
PROGRE
SS

FINISHE
D
GOODS

1 Finished goods: These are the goods, which are either being purchased by the firm, or are
being produced or processed in the firm. These are just ready for sale to
customers. Inventories of finished goods arise because of the time involved in
production process and the need to meet customers demand promptly. If the
firms do not maintain a sufficient finished goods inventory, they run the risk of
losing sales, as the customers who are unwilling to wait may turn to
competitors.

2 Work-in-progress: It refers to the raw materials engaged in various purchase of production

schedule. The degree of completion may be varying for different units. Some
units might have been just introduced; while some others may be 40%compleete
or others may be 90%complete. The work-in-progress refers to partially
produced goods.

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3 Raw materials: The raw materials include the materials, which are used in the production
process, and every manufacturing firm has to carry certain stock of raw
materials in stores. These units of raw materials are regularly issued transferred
to production department Inventories of raw materials are held to ensure that the
production process in not interrupted by a shortage of these materials.
Inventory is very vital to every Company is that without inventory no company
would survive. Inventory is meant for protection and for economy in cost.
Keeping inventory of sufficient stocks will help to face lead times component,
demand and supply fluctuations and any unforeseen circumstances in the
procurement of materials. Though to have inventory is must, inventory is such a
thing that will pile up and creep into the area of profits to turn them as losses
and can put the company in red. It is therefore, necessary to have control over
inventory to save the company from piling up of inventories and to avoid losses.
Better said than done is the world that suits the inventory control.
Inventories

constitutes

second largest category

of all manufacturing

operation exceeded only by plant and equipment and followed by

receivables. The objectives of inventory control are:
a) To keep required stock of materials so that production and maintenance
activities do not suffer.
b) Minimum blockage of funds in inventory. Optimization can be achieved and
efforts need to be made to improve input

output ratio of materials by scientific

methods of determining.

1.4 DEFINITATIONS
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Inventory control can be defined as Determining and maintaining

optimum investment in inventory given the significance of benefits and
cost association with holding inventory .
Inventory Control relates to a set of policies and procedure by which
an industries determines which materials it will hold in stock and the
quality of each that it will carry in stock . Therefore inventory control is
otherwise known as STOCK CONTROL.

1.5 FACTORS INFLUENCING INVENTORY

How much to buy at onetime and When to buy this quality . These
are two fundamental things on which inventory control depends. Many
factors govern these fundamental things. The prime factors that govern
these two fundamental things are:
1. Requirements
2. Quality in stock or on order
3. Lead time
4. Obsolesce.

1.6 CONTROL, MAINTENANCE AND MANAGEMENT

The essence of inventory control, broadly speaking consists of revolving
the following three factors:
1. Necessity for stocking an item
2. Time for reordering the items
3. Quality per order to be order.

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Continuous and periodical review is required in the evaluation of

inventory management and treats it as a continuous process as costs,
source of supply, availability of materials; consumption will vary in the
course of time making the previous assessment invalid. This process also
helps in standardization of materials for procurement by using near
equivalents

and

eliminating

material,

which

are

discontinued

as

regulation, which will remove obsolescence.

1.7 INVENTORY CONTROL TECHNIQUES
Inventory is being maintained as a cushion in supply of materials for
continuous production without causing stock out situation. This cushion
should not be suicidal to any organization. The following scientific techniques
and methods are being used in control of inventory.
1. Inventory Management Techniques
2. Standardization
3. Selective Inventory Control
4. Just In Time
5. Perpetual inventory system
6. Inventory turnover ratio
1.8 INVENTORY MANAGEMENT TECHNIQUES
1. Economic Order Quantity
If the firm is buying raw materials, it has to decide lots 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. These problems are
called order quantity problems, and the task of the firm is to determine
the optimum or economic order quantity.
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(a) Ordering cost:

The term ordering cost is used in case of raw materials and includes the
entire costs of acquiring raw materials.

(b) Carrying cost:

Cost incurred for maintaining a given level of inventory is called carrying
cost. Economic Order Quantity is given by the formula:
EOQ = 2AOC
And the total cost of inventory is given by the formula:
Total cost of inventory = (AP) + (AO)EOQ + (EOQC)2

Where A = Annual consumption (in units)

O = Ordering cost per order (in Rs)
C = Carrying cost per unit (in Rs)
P = Price per unit (in Rs)

2.

Reorder Point

The reorder point is that inventory level at which an order should be

placed to replenish the inventory. To determine reorder point:
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(a) Lead time is the time normally taken in replenishing inventory after
the order has been placed.
(b) Average usage
(c) Economic order quantity

3.

Safety stock

The demand for material may fluctuate from day to day. The actual
delivery time may be different from the normal lead time. If the actual
usage increases or the delivery of inventory is delayed the firm can face
problem of stock out, which can be costly. So, in order to guard against
the stock out the firm may maintain a safety stock.
1.9 STANDARDIZATION
Standardization

is

very

essential

to

control

the

inventory,

as

by

standardization reduction in variety of material is possible. And because

of the reduction in variety the advantages are low order cost, low
inventory, less storage stocks, conservation of materials, variety reduction,
less paper work, easy follow up with suppliers, less number of orders.
The importance of this field has been recognized since the days of F.W.
Taylor, who first drew attention to this fundamental need in any
organization. Just as work study is necessary preliminary to work
simplification, and a basic technique for production control, quality
control, materials handling, estimated cost control, etc., Standardization
are preliminary necessity to design a basic technique on build control and
standardization procedure.
1.10 SELECTIVE INVENTORY CONTROL MANAGEMENT

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Any manufacturing organization consumes few thousand items of stores. A

high degree of control on inventories of each item would, therefore
neither be practical considering the work involved, nor worthwhile since
all items are not of equal importance. Hence, it is desirable to classify or
group items to control, commensurate with importance. This is the
principle of selective control as applied to inventories and the technique
of grouping is termed as selective technique.
Selective inventory means variation in the methods of inventory control
from items to item and this differentiation should be on selective basis
by classification. A company has to stock thousands of items of raw
materials, standard parts, stores and spares, sub contract items, tools,
stationery etc. To have better control over the inventory/ stock on hand,
selective inventory control technique should be used in isolation/ or in
conjunction.
Thus selective control means selecting the area of control so that required
objective is achieved as early as possible without any lost of time due to
taking care of full area
Minimum loss of energy and efforts.
At minimum cost without loss of time.

There are following selective control techniques:

*

ABC Analysis

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FSN Analysis

XYZ Analysis

VED Analysis

HML Analysis

a.) ABC Analysis

ABC analysis is a selective control technique which is required to be
applied when we want to control value of consumption of the item in
rupees obviously when we want to control value of the consumption
of the material we must select those materials where consumption is
very high.
In any company manufacturing, there are number of items which are
consumed or traded it may run into thousands.

Value of consumption of No. Of items

Grade

items (value in Rs).

70% of consumption

10% of no. Of items

20% of consumption

15% of no. Of items

10% of consumption

75% of no. Of items

A items these are those items which are found hardly 5% 10% but their
consumption may amount 70%

75% of the total money spend on

materials.

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B items these are those items which are generally 10% 15% of he total
items and their consumption amounts to 10% 15% of the money spend
on the materials.
C items these are large number of items which are cheap and inexpensive
and hence insignificant. They are large in number s running into hardly
5% 10% of the total money spends on materials.
'A' Class Items

B Class Items

(High consumption value)

(Moderate

'C Class Items

consumption (Low consumption value)

value)

1. Very strict control

1. Moderate control

1. Loose control.

2. Low safety stocks.

2. High safety stocks

2. No safety stocks or very

Low safety stocks.
3. Maximum follow

up and

Expediting

4. Rigorous value analysis

3. Follow
3. Periodic follow

in exceptional cases

4. Moderate value analysis

5. Must be handled by senior 5.

officers

up

Can

be

management

handled

up and expediting

4. Minimum value analysis

by
5. Can be fully delegated

b.) FSN ANALYSIS

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This type of analysis is more concerned from the point of view of

movement of the item or issue of the item or issue of the item under this
type of analysis.
F items are those items, which are fast moving i.e. in a
given period of time, say a month or a year they have been issued up till
number of items. Although fast moving does not necessarily mean that
these items are consumed in large quantities.
S items are those items which are slow moving in the sense
that in the given period of time they have been issued in a very limited
number of time
N nonmoving items are those, which are not at all issued for
a considerable period of time.
Thus, stores department whose concerned with the moving of items
would like to know and classify that the items are storing in the
categories FSN. So that they can manage operate and plan stores activity
accordingly.
For example, for efficient operations it would be necessary that fast
moving items as far as possible should be stored as near as possible to
the point of issue. So that it can be issued with minimum of handling.
Also such items must be stored at the floor level avoiding storing them at
high heights.
Similarly, if the items are slow moving or issued once in a
while in a given period of time they can be stored in the interior of the
stores and even at the higher heights because handling of these items
becomes very rare.
Further it is necessary for stores in charge to know about nonmoving
items for various reasons:
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1 They mean unnecessary blockage of money and affecting the rate of

returns of the company.
Further they also occupy valuable space in the stores without any
usefulness and therefore it becomes necessary to identify these items and
go into details and find reasons for their non moving and if justified to
recommend to top management for their speedy disposal so that company
operations are performed efficiently.
Also inventory control to some extent can also be exercised on the basis
of FSN analysis.
For

example,

fast

moving

items

can

be

controlled

more

severely,

particularly when their value is also high. Similarly, slow moving items
may

not

be

controlled

and

reviewed

very

frequently

since

their

consumption may not be frequent and their value may not be high.
c.) XYZ Analysis
This type of analysis is carried out from the point of view of value of
balance stocks lying in the stores from time to time and classifies all the
items as given below.
X items are those items whose value of balance stocks lying in the
stock are very high.
Y items are those items whose value of balance stock is moderate.
Z items are those items whose value of balance stock lying in the
stocks is very low.
After knowing this type of classifications and their items can be taken to
control the situation as shown below:
1] From security point of view high value items must be stored and kept
under lock and key or if not possible they should be kept in such a way
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that they are always under supervision. Similarly arrangement can be made
for y and z items accordingly.
2] From inventory control point of view we must know why there is high
inventory for X items. We should review inventory control procedure for
each and every high item because stock should be maintained to take care
of lead time consumption and also to provide safety stocks. For high
value items lying in stores we should review the reasons for long lead
time as well as demand variations and see whether lead time consumption
and safety stocks can be reduced. Thus proper inventory control procedures
can be developed on the basis of XYZ analysis.
Thus proper selective control methods should be selected to control the
materials and prevent from facing loss, taking advantage and knowing
what exactly is to be done.
d.) VED analysis
VED analysis is carried out to control situation, which are critical. When
applied to material in VED analysis we try to identify material according
to their criticality to the production, which means the material, without
which the production will come to stop and so on from this point of view
material classified into three categories.
V vital,
E essential,
D desirable.
Vital categories of the items are those items for the want of which the
production will come to stop. For e.g. Power in the factory.
Essential group of items are those items because of non-availability of
which the stock out cost is very high.
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Desirable group of items are those items because of non-availability of

which there is no immediate loss of production and stock cost is very less
and it may cause minor disruption in the production for a short time.
e.) HML ANALYSIS
This analysis, analysis the material according to their prices and then
classifies them as H items or M items or L items.
H stands for high price,
L stands for low price and
M stands for medium price.
Since price is more concerned of purchase department mostly purchase
department people analyses the material according to HML analysis.
HML analysis must be carried out from any one of the following
objectives or some of the objective as the case may be.
When it is desire that purchasing responsibility should be delegated
to right level of people.
When it is desired to evolve purchasing policies then also HML
analysis is carried out i.e. whether to purchase in exact quantities as
required or to purchase in EOQ or purchase only when absolutely
necessary.
When the objective is to keep control over consumption at the
department level then authorization to draw materials from the stores
will be given to high level H item, low level for L items and
medium level for M item.

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 When it is desired to decide frequency of stock taking then very

frequently H category, very rarely L category and averagely M
category.

When it is desired to arrange security arrangements for the items,

then H item under lock and key, L items keep open on the shop
floor and under supervision for M items

1.11 JUST IN TIME INVENTORY SYSTEM

Keeping in view the enormous carrying cost of inventory in the stores
and go downs, manufacturers and merchandisers are asking for more
frequent deliveries with shorter purchase order lead times from their
suppliers. Now days organizations are becoming more and more interested
in getting potential gains from making smaller and more frequent
purchase orders. In other words, they are becoming interested in just in
time purchasing system. Just in time purchasing (JIT) purchasing is the
purchase of material or goods in such a way that delivery of purchased
items is Just in time purchasing recognizes too much carrying costs
associated with holding high inventory levels. Therefore, it advocates
developing good relations with suppliers and making timely purchases
from proven suppliers who can make ready delivery of goods available as
and when need arises. EOQ model assumes a constant order quantity
whereas JIT purchasing policy advocates a different quantity for each
order if demand fluctuates. EOQ lays emphasis on ordering and carrying
costs but inventory management extends beyond carrying and ordering
costs to include purchase costs quality costs and stock out. Just in time
purchasing takes into consideration all these costs and moveoutside the
assumptions of the EOQ model.
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Advantages of JIT purchasing

1. Investment in inventory is reduced because more frequent purchase
orders of small quantities are made.
2. Carrying cost is reduced as a result of low investment in inventory.
3. A reduction in the number of suppliers to be dealt with is possible.
Only proven suppliers who can give quick delivery of quality goods are
given purchase orders . As a result of this reduction in negotiation time
is possible. The use of longrun contracts with some suppliers with
minimal paper work involved is possible.
4. Quality costs such as inspection cost of incoming materials or goods ,
scraps and rework costs are reduced because JIT purchasing assures quick
and frequent delivers of small size orders which results in low level of
inventories causing minimum possible wastage. Therefore, JIT purchasing
is frequently applied by organizations dealing in perishable goods assured
before their use or demand.

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CHAPTER 2 : INTRODUCTION OF THE COMPANY

2.1 BIG BAZAAR
Big Bazaar is the largest hypermarket chain in India.
Big Bazaar is a chain of hypermarkets in India, with more than 100 stores in
operation. It is a subsidiary of Future Group Venture Ltd's, and follows the
business model of United States-based Wal-Mart. Facilities offered by Big
Bazaar Online shopping: Big Bazaar has an official website, FutureBazaar.com,
which is one of the most favorite sites among people of India for online
shopping. Future Bazaar is an online business venture of Future Group, which
sells an assortment of products such as fashion, which includes merchandise for
men and women, mobile accessories, mobile handsets and electronics like home
theatres, video cameras, digital camera, LCD TVs, kitchen appliances and many
more.
Discounts: Hfte ka sabse sasta din was introduced by the Big Bazaar, wherein
extra and special discounts were offered on Wednesday every week, to attract
the potential buyers into their store.
Security check: At each exit of Big Bazaar, they use alarm systems or
Electronic Article Surveillance system, which detects the products that has
attached tags or not.
1. Big Bazaar is a chain of hypermarket in India, which caters to every familys
needs and requirements.
2. Big Bazaar has released the doors for the fashion world, general merchandise
like sports goods, cutlery, crockery, utensils, and home furnishings etc. at best
economical prices.
3. Big Bazaar group offers more than 100 stores all over the country with an
amalgamation of Indian bazaars feel and touch with a convenience and choice
of the modern retail facilities
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4. The worldwide country chain, Big Bazaar, is formed by CEO of Future

Group, Mr. Kishore Biyani. Their basic attraction associated with reasonable
prices is their Unique Selling Price.
5. Big Bazaar has become a massive hit with lower middle-class and middle
class people as a major client base.
6. Reflect the look and feel of Indian bazaars at their modern outlets
GROUP VISION
To deliver Everything, Everywhere, Everytime to Every Indian Consumer in
the most profitable manner.
GROUP MISSION
1 We share the vision and belief that our customers and stakeholders shall be
served only by creating and executing future scenarios in the consumption space
leading to economic development.
2 We will be the trendsetters in evolving delivery formats, creating retail realty,
making consumption affordable for all customer segments for classes and for
masses.
3 We shall infuse Indian brands with confused and renewed ambition
4 We shall be efficient and cost-conscious and committed to quality in whatever
we do.
Board of directors
1 Managing director Mr kishore Biyani
2. Wholetime Director Mr Gopikishan Biyani Mr Rakesh Biyani
3. Director Mr Shailesh Haribhakti Mr S.Doreswamy Mr Darlie
Koshy Mr Anil Harish
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2.2 BIG BAZAAR SUPER CENTRE

Big Bazaar

Hyper mart chain in India

Outlet

140 Outlets

Parent Group

Future Group

Owner

Kishore biyani

Founded

2001

Head Quarter

Jogeshwari, Mumbai

Industry

Retail

Tagline

Is se sasta aur accha kahin nahi

2.3 SWOT Analysis

The SWOT analysis of Big Bazaar discusses the strength, weaknesses,
opportunities and threats for one of the major retailers of India Big bazaar.
Strengths in the SWOT analysis of Big Bazaar
High brand equity enjoyed by Big Bazaar
State of the art infrastructure
A vast variety of stuff available under one roof
Everyday low prices, which attract customers
Maximum percent of footfalls converted in sales
Huge investment capacity
Biggest value retail chain in India

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 It offers a family shopping experience, where entire family can visit

together.
Available facilities such as online booking and delivery of goods.
Weaknesses in the SWOT analysis of Big Bazaar
Unable to meet store opening targets on time
Falling revenue per sq. ft.
General perception: Low price = Low quality
Overcrowded during offers
Long lines at billing counters which are time consuming
Limited only to value offering low price products. A no of branded
products are still missing from Big Bazaars line of products. E.g. Jockey,
Van heusen,
Opportunities in the SWOT analysis of Big Bazaar
A lot of scope in Indian organized retail as it stands at approximately 4%.
Increasing mall culture in India.
More people these days prefer to visit big stores where they can find large
variety under one roof
Threats in the SWOT analysis of Big Bazaar
Competition from other value retail chains such as Shoprite, Reliance
(Fresh and trends), Hypercity and D mart.

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 Unorganized retail also appears to be a threat to Big Bazaars business. A

large population still prefers to visit local convenient stores for daily
purchases
Changing Government policies
International players looking to foray India

CHAPTER 3. RESEARCH METHODOLOGY

The methodology in this content involves the process of collection of
data from primary and secondary sources and interpreting the same by using the
analytical tools and techniques utilizing the consequent finding to put forward
liable and insightful suggestions to the company.
Generally Data collection is classified into two categories and they are
as follows;
1 Primary Data
2 Secondary Data
Primary data is the data which is collected for the very first time and
secondary data is the data which is gathered from the past data as a further
references.

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A large part of primary data was collected in the course of my

interaction with the personnel concerned departments and also developed in
consultation with costing manager, material manager and officers. The data
collected was regarding various aspects of inventory management like lead-time,
ordering cost, carrying cost and working of online computerized stores system.
3.1 TYPES OF RESEARCH DESIGN
Types of research design used in this research of inventory control
techniques are descriptive as well as analytical. It follows a descriptive
research design it is used to identify and classify the elements or
characteristics of the subject. Quantitative techniques are used to collect ,
analyze and summarize the data. In Nalco Smelter Plant, data and
information are collected to analyze the inventory control techniques.
Here analytical research is also used as descriptive approach is extended to
suggest and explain the causes of changes in inventory and factors
effecting inventory and inventory control techniques.
Applied research is also followed i.e. problem solving research is applied
in this project. The already known theories and knowledge of inventory
control techniques are studied and applied to practical situation like of
Nalcos inventory and understand the variation in inventory level and
finding out alternative methods and models for better inventory control.
3.2 LIMITATIONS OF THE STUDY

Some Information is some highly confidential so it is very difficult to get

the data from the organization.

The result realized are applicable to this firm only the major constraints on
this endeavor. Where the policy of time and information, the scope of the

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work is confined to the inventory management rather than material

management as a whole.
The management of time for project completion is also a factor that limits
extensive study of the nature of projection process and its implications on
inventory aspects.
It is based on the data supplied by the factory personnel.
The schedule information is not available.
More dependency on secondary data.
The analysis of inventory management is based on information available and if
any mistake would be reflected in the study.

Page 24 of 38

CONCLUSION

I have found that Big Bazaars inventory is well equipped and

their cost is under their control due to the short cycle time of ordering and
buffering.
Their inventory cost is very high because of their stocking of
various products.
Their product range varying from mere Rs.5 to Rs.50,000. Hence
their range satisfies one and all.
Their inventory is well equipped if it sees any fundamental changes
on the demand of the products, be it desired or undesired.
Their inventory is quickly refilled which is one of their strengths
and also they take less than a day to fully make their inventory a
wide spectrum.
The inventories maintained in the outlet, are of different product category.
Mainly Cycle inventory is maintained for FMCG product category &

Food
Category, Safety level of inventory for FMCG Products, and for Apparel,
Seasonal inventory is maintained, because of fluctuation in demand.
Most of the employees are satisfied with the uniforms provided.
Most of the employees are satisfied with there hygienic conditions
I visited big bazaar store in mulund and found great support their.
Their inventory is quickly refilled which is one of their strengths and also
they take less than a day to fully make their inventory a wide spectrum.

TABULATION AND INTERPRETATION OF DATA

Inventory control renders to The process whereby the investment in materials and
parts carried in stock is regulated within predetermined limits set in accordance with
the inventory policy established by the management.
Page 25 of 38

Inventory control refers to a planned method of purchasing and storing the

material at lowest possible cost without affecting the sales scheduled. Inventory
control therefore, is a scientific method of determining what, when and how much to
purchase and how much to have to stock for a given period of time.

INVENTORY CONTROL TECHNIQUES

Selective inventory control

Inventory management
techniques

ABC Analysis

1. EOQ (Economic Order

XYZ Analysis

A. Ordering

VED Classification.

B. Carrying

FNS Classification.

2. System of Re-

Quantity)
1.
Cost.
1.
Cost.
1.
ordering.
1.

SOS Classification.

1.

S-D-E Analysis

1.

HML Analysis

2.

JIT Analysis

ECONOMIC ORDER QUANTITY: Page 26 of 38

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 lots in which it has to be purchased on cash
replenishment.
The economic order quantity is that inventory level, which minimizes the total of
ordering and carrying costs.
EOQ (economic order quantity) =2AO /C
EOQ=Economic Order Quantity
A=Total annual requirement for the item
O=ordering cost per order of that item
C=carrying cost

INVENTORY TURNOVER RATIO:

This ratio indicates the efficiency of the firm of selling its products. It is
calculated by dividing the cost of goods sold by the average inventory.
If the cost goods sold is known then inventory turnover ratio can be
computed by dividing sales by average inventory of the year-end inventory.

COST OF GOODS SOLD

INVENTORY TURNOVER
RATIO

= ---------------------------------AVERAGE INVENTORY

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In accounting, the Inventory turnover is a measure of the number of times inventory is

sold or used in a time period such as a year. The equation for inventory turnover
equals the cost of goods sold or net sales divided by the average inventory.
RAW MATERIAL INVENTORY TURNOVER TATIO:
The ratio indicates the efficiency of firms raw material consumed. It is
calculated by material consumed dividing by average material inventory.

MATERIAL CONSUMED
RAW MATERIAL INVENTORY TURNOVER TATIO = --------------------------------INVENTORY

WORK IN PROGRESS TURNOVER RATIO:

Work in progress turnover ratio unable to company in establishing the time
gape between different stages in a production cycle and the efficiency with the
production cycle gets completed.
It is calculated from cost of production divided by average work in progress
inventory.

COST OF PRODUCTION
WORK IN PROGRESS TURNOVER RATIO

-------------------------------------AVG WORK IN PROGRESS

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Range of Products Available at Big Bazaar

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Places at which Big Bazaar is Located

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Future Strategies of Big Bazaar

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Life Cycle of Big Bazaar

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Supply Chain Process

Supplier

Procurement cycle

Manufacturer

Manufacturing Cycle

Distributor

Replenishment cycle

Retailer
Customer order cycle

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What is ERP?
ERP is an acronym for Enterprise Resource Planning which is software used for
business process management that allows any organization to use an information
system of integrated applications to do many back office functions related to
information technology and manages the business.
Function of Enterprise Resource Planning in Big Bazaar

Product ordering
Merchandising buying
Inventory Management
Stock Transfer

Process of MIS in Big Bazaar

a SOD (Start of the Day)
Procedure:
Start the web Portal
Enter provided login ID and password
Open webapp basics
Click SOD status
Click Start SOD
b EOD (End of the Day)
Procedure:
Start the web Portal
Enter provided login ID and password
Open webapp basics
Click EOD status
Enter Login ID and Password again
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Press Enter
Management Information System (MIS) in Big Bazaar

Big Bazaar has strong MIS capability that helps them to improve their operations, as
well as enhancing their speed of execution in response to what the customer want.
They are thus able to monitor their speed of response on daily basis across stores,
departments and also for category of products. This really helps them to take correct
action on a timely basis and optimize their stock accordingly.
Big Bazaar uses JDA ERP and SAP ERP software. JDA ERP is an enterprise
resource planning software developed by an American software and consultancy
company while SAP ERP is an enterprise resource planning software developed
by a German company SAP (System, Application and products) SE to manage
the inventory system of different business and improve customer relationship
Functioning of Management Information System (MIS) in Big Bazaar

Main
Server
Backup

Transactio
n Counter

Transactio
n Counter

SOD/EO
D

SOD/EO
D

Transactio
n Counter

SOD/EO
D

Transactio
n Counter

SOD/EO
D

---at least 15

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 There are 2 servers used by the MIS: Main Server and Backup Survey
Each of the servers has its own storage system (15 hard disks to store the
same information)
The information is backed up daily at the EOD (End of Day).
There are generally 15 counters for transaction in Big Bazaar. The
recording at the transaction at each of these counters is done.
The average no. of transactions made per day varies from 3500-4500 and
all transaction data is recorded at each terminal and stored at the database.

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 Age group that visit Big Bazaar Everyday are:-

Age

Total

Below 18

30

18-40

45

40-60

15

60 above

10

Total

100

Gender of respondents in Big Bazaar

Gender

Total

Male

65

Female

35

Total

100

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