A STUDY ON INVENTORY MANAGEMENT IN KR ALLOYS LTD

CHAPTER-1

INTRODUCTION TO THE STUDY

Inventory refers to stock lying in storage. It refers to the stock that a business
firm keeps to meet its future requirements of production and sales. It is one of
the current asset and property.

The term inventory includes stock of materials, work in progress and

finished goods. Management of inventory means an optimum investment In
inventories. It should neither be too low to effect the production adversely nor
too high to block the funds unnecessarily. The important role of inventory
management is to have a proper and efficient control of materials. This so
because of quite often materials is the largest single element cost as such an
efficient system of inventory control leads to significant economy in the total
cost of production

To develop adequate inventory plan, it is necessary to have

thorough knowledge of the objectives of inventory management
and inventory management techniques. A firm neglecting the
management of inventories will be jeopardizing its long -run
profitability and may fail ultimately. It is possible for 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 inventories carries a favorable impact on company profitability.

This project titled “THE STUDY ON INVENTORY MANAGEMENT

SYSTEM WITH SPECIAL REFERENCE TO KR ALLOYS LTD PALAKKAD” is

SCHOOL OF MANAGEMENT STUDIES – PALAKKAD

A STUDY ON INVENTORY MANAGEMENT IN KR ALLOYS LTD

an attempt to analyze the inventory management performance of KR ALLOYS

LIMITED for a period of 5 years.
This study is very relevant in this company because of there is no specific
inventory management system following in company at present. The project
will aid to understand the best inventory policies and procedures for
improving the performance of the company. The project will give an added
advantage for acquiring practical know - how on purchases procedure, followed
in the company, procurement of materials, handling, inspecting, storing etc.

SCHOOL OF MANAGEMENT STUDIES – PALAKKAD

A STUDY ON INVENTORY MANAGEMENT IN KR ALLOYS LTD

TITLE OF THE STUDY

“THE STUDY ON INVENTORY SYSTEM WITH SPECIAL
REFERENCE TO KR ALLOYS LTD”

OBJECTIVES OF THE STUDY

The main objectives of this study are as follows:

PRIMARY OBJECTIVE
 To study the effectiveness of inventory management systems in KR
Alloys Ltd. Palakkad.

SECONDARY OBJECTIVES
 To analyze the present inventory control technique in practice in the
company.

 To analyze companies financial systems with different ratios.

 To suggest best inventory system best for the organization.

SCOPE OF THE STUDY

 This project helps in studying the effectiveness of inventory

management system in practice in KR Alloys Ltd. Palakkad.

 The project will aid to understand the best inventory policies and
procedures for improving the performance of the company.

SCHOOL OF MANAGEMENT STUDIES – PALAKKAD

A STUDY ON INVENTORY MANAGEMENT IN KR ALLOYS LTD

 The project will give an added advantage for acquiring practical know -
how on purchases procedure, followed in the company, procurement of
materials, handling, inspecting, storing etc.

RESEARCH METHODOLOGY
RESEARCH OBJECTIVE

The objective is to study the effectiveness of inventory management

systems in KR Alloys Ltd. Palakkad and to suggest necessary measures to
improve the same.

TYPE OF RESEARCH:

The type of research adopted for the study is the descriptive and
analytical.
METHOD OF DATA COLLECTION
The method used for data collection for measuring the effectiveness of
inventory system is both primary and secondary methods.

Primary Data

Primary data is collected by interacting with the concerned officials in

KR ALLOYS LTD Palakkad.

Secondary Data

Secondary sources includes

 Company’s balance sheet
 Profit & loss account
 Bin cards
 Material Consumption Register,
 Stock Register

SCHOOL OF MANAGEMENT STUDIES – PALAKKAD

A STUDY ON INVENTORY MANAGEMENT IN KR ALLOYS LTD

TOOLS USED FOR DATA ANALYSIS

Tools used for data analysis for the study made are
 Ratio analysis
 ABC Analysis
 HML Analysis
 Correlation
 Regression

TOOLS USED FOR DATA PRESENTATION

 Tables
 Charts

SCHOOL OF MANAGEMENT STUDIES – PALAKKAD

A STUDY ON INVENTORY MANAGEMENT IN KR ALLOYS LTD

LIMITATIONS

1. The Study is restricted to KR ALLOY Ltd so It cannot be generalized.

2. The percentage rates fixed for categorizing items in various analysis can
Vary from organization to organization.

3. Importance of materials can vary from organization to organization

The study pertains to crucial raw materials and It does not include all
The materials

4. Non availability of some quantitative data for ABC Analysis.

SCHOOL OF MANAGEMENT STUDIES – PALAKKAD