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Inventory Control System-A comparative

study of Dawar & Tej footwear

Data Collection & Analysis

( Submitted for the partial fulfillment of Degree of

Bachelor of Commerce in Industrial Project)

(2011-2012)

Under the Supervision of Submitted by

Dr Pramod Kumar Nagma Khan

(Department of Acco. Law) B.com VIth SemRoll No. 092037

(Faculty of Commerce )

Dayalbagh Educational Institute

(Deemed University)

Dayalbagh Agra


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Objectives

1.To study the inventory control system in selected units.2.To analyze the valuation or techniques of inventory of

selected units.

3.To Make a comparative study in selected units.4.To corrective measures of inventory control.


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Research Methodology

The present study aims to study the Inventory control

system-A Comparative study of Dawar & Tej Footwear.

The sample of the study consists of 50 management

executives of the organisation in Agra.The period of

the study is one financial year ie- 2010-2011. Schedule

Questionnaire & Interview was used to collect the data

in the selected units. The data after being collected and

coded systematically tabulated, percentage ,simple

average & weighted average calculated.

sample area -Agra Sample size- 50 Sample Units -2 Units Dawar Footwear and Tej Period of the study 1 Financial year ie- 2010-

2011


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Collection of data & Analysis

Primary Data: The source of primary data questionnaire, interview

and observation in selected units.

secondary data: The source of secondary data is websites, literature,

newspapers, books etc.

To achive the first objective: (To study theinventory control system in selected units).

Inventory required by a manufacturing firm will be different to that trading

organization. A manufacturing firm will be require inventory from the stage of

acquiring row material for manufacturing goods. A trading firm will acquire

material only after they are manufacturer to sale or distribute them.

Raw Material

Inventory relating to raw material is very sensitive because not only

should it be bought by the right supplier and the right quantity it should also be

stored with care. Raw material should be priced correctly when sending them in

the manufacturing process. It is useful to make an aging schedule to see that raw

material are not left unused for a long time. In the stores, they should be

managed carefully through the system of dins to make it easy for the manager to

assess the minimum and the maximum quantity lying with it in the store. The

raw material should be looked after by the manager through storage system of

ABC analysis.

Raw material should also be protected by having a stores ledger and daybook to

record all the transactions of raw materials which leave the stores and newpurchases which are bought into the stores. Raw material relating to goods

return because they are defective should also be entered in the store journals.


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Work In process

Such Materials are those which are in a semifinished state every manifecturing

firm has its own cycle of production maybe very according to length of time

takking for completion of a product. The Work in process can also if timely

material is not received.

Finished Goods

These goods are ready for sale to the customers. optimum inventory

management recuires that firm have the opprtuities as soon as there is demand

for them. A large stock of finishedgood mean that stores should be efficiently

controlled it also mean that there is high investment in goods.

Inventory control system involves the balance between the benefits and

the costs of maintaining inventory. The financial manager achieves this task by

following certain important techniques like the ABC-Analyse Economic order

quantity and the correct reorderlevel of materials.


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Tools for analysis

ABC Analysis:This technique classifies into different type and then controls them. The

objective of ABC analysis is to find out those items which are most expensive

but are used in small quantity such items would be called-A class of inventory.

Those items which are less expensive and also their requirement is higher

would be given less securities than A class inventory and C.The C groups are

relatively low in investment although in number and volume it may be quit

high. This can be summarized in the following way.

Classification of ABC analysis

A-Control most expensive items--Tight securities B-Control less expensive items--Medium securities C- control least expensive items--Low securities

Economic order quantity:

After making an analysis on the basis of ABC categories, the financial

manager should focus his attention to the quantity of inventory which is to be

purchased. In particular it is important to asses the annual requirement and then

to find out the economic order quantity or the number of times materials should

be bought in one year and the which should be purchased in each lot.The

economic order quantity would help to provide a trade off between costs and

benefits.it identifies the level of inventory which minimizes the total cost of

inventory. Economic order quantity considers both ordering costs an carrying

costs The minimum level of total cost is considerd to be the EOQ.


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Reorder level and Minimum level stock:Since EOQ has many limitations the firm should maintain a safety stock so that

if supplies are not received in time, such stock can be used as a buffer.A firm

should also maintain its inventory in such a way that the reorder point is defined

and stock is immediately replenished.At least the order should be sent for

replacement of inventory.Reorder level is calculated on the basis of the daily

use of the inventory and the lead time which is nessessary between placing of

order and receiving of delivery of materials therefore reorder level can be

calculated by the following formula.Reorder level=Average daily usage if inventory x lead time.


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To achieve the second objective (To analyzethe valuation or techniques of inventory of

selected units.)

Schedule Questionnaire :

1.Are you aware about Inventory Control System?

Company Names

Response Dawar Footwear (%) Tej Footwear(%)

Yes 80 88

No 16 12

Do not know/Cannot say 0 4

Interpretation- I used table for analysis the question in which first column

shows response second & third column shows executive response of their

company. Here Tej is better than Dawar because the employees of Dawar

doesnt know about the system.

00.10.20.30.40.50.60.70.80.9

1

AxisTitle

Axis Title

Company Names


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2. Do you know that your company has an Inventory Control System?

Company Names


Yes 64 88

No 24 12

Do not know/Cannot say 12 -



company. Here Tej is better than Dawar because the employees of Dawar

comparatable less follow the system.

0

10

20

30

40

5060

70

80

90

100

Company Names Tej


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3. Do you agree that there should be an Inventory Control System in anorganization/company?

Company Names


Agree 72 96

Disagree 20 4

Do not know/Cannot say 8 -



company. Here Tej is better than Dawar because the employees of Tej are

agree that the system should be exist as compare with Dawar.

0102030405060708090

100

Company Names


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4. For what reasons do you feel that there should be an Inventory ControlSystem?(please give rank for highest.)

Company Names

Response Dawar Footwear (%) Tej Footwear (%)

Rank Rank

I II III I II III

To smoothen operational

requirement

64 12 24 44 28 28

To Save Time 52 32 16 28 56 16

To maintain accountability and

transparency

48 36 16 12 8 80


shows response second column shows executive response inform of rank

& % of their company. Here Tej is better than Dawar because the

employees of Tej are agree that the system must have the priority as

given in the statement.

0

10

20

30

40

50

60

70

80

Company Names

Response

To smoothen operational

requirement


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5. Do you agree that the Inventory Control System in your company hasfulfilled the need for which it was evolved?

Company NamesResponse Dawar Footwear (%) Tej Footwear(%)

Strongly Agree 24 48

Agree 76 16

Disagree - 28

Strongly Disagree - 8

Do not know/Cannot say - -



company.Here Tej is better than Dawar because the employees of Tej are

agree that the system fulfils their requirements.

0

10

20

30

40

50

60

7080

Company Names


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6. What according to you is the major benefit of going for an inventory controlsystem by your organisation/ company?(Please give rank for highest.)

Company Names


Rank Rank

I II III I II III

It has made storage retrieval of

material easier

12 4 9 16 7 2

Improvement effectiveness 8 9 8 5 1 19

Reduced operational cost 9 8 8 - - 25

Interpretation- I used table for analysis the question in which first

column shows response second & third column shows executive

response of their company. Here both (Tej & Dawar) gives almost

equal preference to statements altranatives.

0

5

10

15

20

25

Company Names

Response

It has made storage

retrieval of material

easier

Improvement

effectiveness


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7. Do you know skilled professionals are employed in yourorganisation/company for Inventory control?

Company Names


Yes 80 64

No 16 24




company. Here Dawar is better than Tej because the employees of

Dawar are highly agree that there must be skilled professionals are

employed in the organisation.

0

20

40

60

80

100

120

140

160

Response Yes No Do not

know/Cannot

say

Company Names


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8. What category of professional is managing inventory in your organisation/company ?

Company NamesResponse Dawar Footwear (%) Tej Footwear(%)

Skilled trained 60 52

Only skilled but not

trained

28 16

Non skilled but trained

professional

8 32

Non skilled and non

trained professional

4 -

others - -





0

20

40

60

0

60

28

84

0

0

52

1632

0 0

Company Names


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9. Do you agree that your company gives more emphasis on software thanskilled manpower with regard to inventory control ?

Company Names


Strongly Agree 28 36

Agree 60 24

Disagree 12 24

Strongly Disagree - 16

Do not know/Cannot say - -

Interpretation- I used table for analysis the question in which first

column shows response second & third column shows executive

response of their company. Here Tej is better than Dawar because the

employees of Tej are stongly agree that org. more emphasis on software

than skilled manpower with regard to inventory control .

01020304050607080

90

Company Names


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10.Do you think that the software used by your company is according to thedesign and needs of the system ?

Company Names


Yes 78 80

No 12 12





highly agree than dawar.

0%

10%

20%

30%

40%

50%

60%70%

80%

90%

100%

Company Names


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11. What is the prime challenge before your company regardinginventory control? (Please give rank for highest.)

Company Names


Rank Rank

I II III I II III

Lack of trained professional 19 3 3 17 6 2Maintenance cost 18 2 5 5 16 4Changing requirement of

customers

15 5 5 5 20 3



company.

0

10

20

30

40

50

60

Company Names

Changing requirement of

customers

Maintenance cost

Lack of trained

professional

Response


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12. What is the future of inventory control system in your company?Company Names


Will continue as a successful

mechanism

44 40

May continue as successful

mechanism

40 24

may chance according to

time shall collapse

16 36





0%10%20%30%40%50%60%70%80%

90%100%

Company Names


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12.What is the future of Inventory Control System in your company?

Company Names


Will continue as asuccessful mechanism 44 48

May continue as

successful mechanism

40 24

May change according to

time shall collapse

16 28





0

10

20

30

40

50

60

Response Will continue

as a

successful

mechanism

May continue

as successful

mechanism

May change

according to

time shall

collapse

Company Names


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To achieve the third objective(To Make acomparative study in selected units.)

Schedule Interview

Q:-Do you maintain the inventory in your company?

An:-Dawar footwear- yes, we maintain all types of

inventory ,

Tejfootwear- Same as above.

Interpretation - Here both (Tej & Dawar) maintain the inventory in thier

company.

Q:-Do you purchase the raw material either through Centralised purchase or

Decentralised purchase method?

An:-Dawar footwear- Centralised purchase.

Tejfootwear- Centralised purchase.

Interpretation - Here both (Tej & Dawar) maintain the inventory in thier

company.

Q:-Which method do you applied for searching the supplier?

An:-Dawar footwear- we search the supplier through websites.

Tej footwear- we search the supplier by adopting the just in time technique

Interpretation- Here Tej is better than Dawar because Tej follows JIT.

Q:--which method do you follow for material issued?

An:-Dawar footwear-We follow first in first out and average method.

Tej footwear-We follow last in first out method.

Interpretation- Here both (Tej & Dawar) are use the material issued

method as per their priority.

Que- From which year, you are following these method?

Ans-Dawar footwear- From 1992 till now.

Tej footwear- From 1989 till now.

Interpretation- Here Tej is more oldest company than Dawar.


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Que- What is your minimum and maximum level of stock?

Ans- Dawar footwear-

Minimum level- 50,000 units.

Maximum level-1 lac units.

Tej footwear-

Minimum level- 10-15% of order comes.

Maximum level- 20-25% of order comes.

Interpretation-Tej has the higher minimum and maximum level of

stock than Dawar.

Que- What is your Economic Order Quantity?

Ans-Dawar Footwear- 1 lac units.

Tej footwear-1.5 lac units.

Interpretation-Tej has the higher Economic Order Quantity than

Dawar.

Que- What is your carrying cost & ordering cost incurred?

Ans-Dawar footwear-carrying cost- 10% of material used.

Ordering cost-2% of material used.

Tej footwear-

carrying cost- 9.5% of material used.

Ordering cost- 1% of material used.

Interpretation-The carrying cost & ordering cost of tej is lesser than

Dawar Which is good for Tej.

Que- What is your lead time for placing order?

Ans-Dawar footwear- 45 days.

Tej footwear- 32-45 days.

Interpretation - Here both (Tej & Dawar)has almost same lead

time.


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Que- which method do you follow for keeping the goods?

Ans- Dawar footwear- We do not follow any method.

Tej footwear- We follow always better control (ABC) method.

Interpretation-TheTej keeps the goods by using the is always better

control (ABC) lesser than Dawar Which is good for Tej.

Que- what is your input-output ratio?

Ans-Dawar footwear-40-60% of order comes.

Tej footwear-60-80% of order comes.

Interpretation-The Tej has the better input-output ratio than Dawar

Which is good for Tej.

Que- What is your Inventory turnover?

Ans-Dawar footwear-10 crore.

Tej footwear-75 crore.

Interpretation-The Tej has the better Inventory turnover

than Dawar Which is good for Tej.


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Findings

The Tej Footwear is better than Dawar Footwear Because-

T ej has a good Inventory Control System. Tej is more oldest company than Dawar. Tej follows just in time technique for search the supplier.

Tej has the higher minimum and maximum level of stock .

Tej has the higher Economic Order Quantity . Tej keeps the goods by using the is always better control (ABC) Tej has the better input-output ratio. Tej has the better Inventory turnover.


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Reference-

www.dawar.comwww.tej.com

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