DAYANANDA SAGAR COLLEGE OF ENGINEERING

Shavige Malleshwara Hills, Kumaraswamy Layout, Bengaluru-560078

An Autonomous Institute Affiliated to VTU, Belagavi

THE DEPARTMENT OF MANAGEMENT STUDIES

Subject: Operations & Quality Management Sub Code:22MBA24
Faculty Name: Prof. Swati Sen

Assignment- 2
Title of the Assignment: Inventory Management

Names of the Student: Akash Debnath

Section: A

Submission Date: 13-09-2024

Faculty Remark:

Faculty Signature:
 DEPARTMENT OF MANAGEMENT STUDIES

PROGRAM OUTCOME PROGRAM EDUCATIONAL

(PO) VISION STATEMENT OBJECTIVES (PEO)

1. Management Knowledge To be a contemporary Business School of National repute. PEO1: Graduates will have the
required knowledge of management,
2. Decision Making attitude, and skills and be able to
MISSION STATEMENT apply them in their career path.
3. Leadership PEO2: Graduates will be able to
M1: To provide a quality environment for developing
functional, analytical, and critical thinking abilities to solve business problems by working
4. Business Environment enhance employability. together with other interdisciplinary
team members and demonstrate
5. Team Management
M2: To create an environment that enhances cognitive
leadership skills.
skills and team work for the holistic development.
PEO3: Graduates will be able to
6. Social sensitivity M3: To inculcate ethics, values and social sensitivity demonstrate professional
towards sustainable business practices. competence and ethical, value-
7. ContemporaryTool Usage
M4: To ignite, create and nurture entrepreneurship for the based, and socially responsible
benefit of business and society. behavior as a manager or an
8. Employability and
entrepreneur in their careers.
Entrepreneurship
PEO4: Graduates will have the
ability to pursue higher education
and research and will be engaged in
life Long Learning.

NAME OF THE STUDENT: AKASH DEBNATH

SECTION: A
USN: 1DS23BA007
COURSE: MBA-VTU
TOPIC: INVENTORY MANAGEMENT

DATE OF SUBMISSION: 13-09-2024

REMARK BY THE FACULTY:

SIGNATURE OF THE FACULTY:

3. Supply Chain Optimization

Objective:

Analyze the supply chain of a local business clothes manufacturer to identify inefficiencies and
improve overall performance.

Tasks:

1. Map the Supply Chain:

- Identify Key Components:

- Map out the entire supply chain from raw materials suppliers to the end customer.

- Identify all stakeholders involved, including suppliers, manufacturers, distributors, and

retailers.

- Understand the flow of materials, information, and finances across the supply chain.

2. Collect Data:

- Lead Times:

- Gather data on lead times at various stages of the supply chain, including procurement,
manufacturing, and distribution.

- Analyze variability in lead times and identify bottlenecks that cause delays.

- Inventory Levels:

- Record current inventory levels at different points in the supply chain.

- Evaluate inventory turnover rates, safety stock levels, and any instances of overstock or
stockouts.

- Costs:

- Analyze costs associated with each stage of the supply chain, including procurement,
production, storage, and transportation.

- Identify any areas where costs are higher than industry benchmarks or where wasteful
spending occurs.

3. Propose Improvements:
 - Lean Principles:

- Apply Lean techniques to eliminate waste (e.g., excess inventory, unnecessary

transportation, overproduction) and improve process flow.

- Suggest ways to streamline operations, reduce lead times, and minimize costs.

- Six Sigma Methodology:

- Use Six Sigma tools to identify and reduce process variability, enhance quality control,
and improve supply chain reliability.

- Propose specific process improvements based on data analysis and root cause
identification.

- Technology Integration:
- Explore opportunities to implement advanced technologies (e.g., ERP systems, real-time
tracking, AI-driven analytics) to enhance supply chain visibility and decision-making.

- Supplier Relationships:

- Evaluate supplier performance and explore opportunities to build stronger relationships or

diversify the supplier base to reduce risks.

- Consider strategic partnerships or collaborative agreements that could lead to cost

reductions or improved service levels.

4. Implementation Plan:

- Develop a step-by-step plan for implementing the proposed improvements, including

timelines, resource requirements, and key performance indicators (KPIs) to measure success.

- Engage stakeholders at all levels to ensure buy-in and smooth execution of the optimization
strategies.

5. Monitoring and Continuous Improvement:

- Establish a system for ongoing monitoring of supply chain performance.

- Implement continuous improvement processes to ensure that the supply chain remains
efficient and responsive to changes in the market or business needs.
4. Inventory Management System Evaluation

Objective:
Review the inventory management practices of a steel business to identify areas for
improvement and suggest enhancements to optimize stock levels.

Tasks:
1. Assess Current Inventory Levels:

- Inventory Data Collection:

- Gather detailed data on current inventory levels across different types of steel products.

- Classify inventory into categories such as raw materials, work-in-progress (WIP), and
finished goods.

- Inventory Classification:

- Use methods like ABC analysis to categorize inventory based on importance and usage
rate.

- Identify critical items that require close monitoring versus those with lower impact on
operations.

2. Evaluate Inventory Turnover Rates:

- Turnover Rate Calculation:

- Calculate the inventory turnover rate for each category of steel products.

- Compare turnover rates with industry benchmarks to assess performance.

- Identify Slow-Moving Inventory:

- Identify any slow-moving or obsolete inventory that ties up capital and takes up storage
space.

- Suggest strategies to reduce excess inventory, such as discounts or repurposing.

3. Analyze Stockouts and Service Levels:

- Stockout Frequency:
 - Review the frequency and impact of stockouts on production and customer satisfaction.

- Identify patterns or recurring issues leading to stockouts.

- Service Level Assessment:

- Assess current service levels and determine if they meet customer demand and industry
standards.

- Explore the balance between maintaining high service levels and minimizing inventory
costs.

4. Recommend an Inventory Management System:

- Just-In-Time (JIT):

- Evaluate the feasibility of implementing JIT to reduce inventory holding costs by receiving
goods only as they are needed in the production process.

- Consider supplier reliability and lead times to determine if JIT can be effectively applied.

- Economic Order Quantity (EOQ):

- Analyze the potential for EOQ to optimize order quantities, balancing ordering costs with
holding costs.

- Calculate the optimal order quantity for different inventory items based on demand,
ordering costs, and holding costs.

- Reorder Point (ROP):

- Suggest setting up a ROP system where orders are placed when inventory levels fall to a
predetermined point.

- Integrate safety stock calculations to account for demand variability and lead time
fluctuations.

- Technology and Automation:

- Recommend implementing inventory management software that automates tracking,

ordering, and reporting.

- Explore the benefits of real-time inventory tracking, RFID tagging, and data analytics for
more accurate inventory control.
5. Implementation Plan:

- Develop a clear plan for implementing the recommended inventory management system,
including necessary changes in processes, training for staff, and integration with existing
systems.

- Set timelines and define key performance indicators (KPIs) to track the effectiveness of the
new system.

6. Continuous Improvement:

- Establish a routine for regularly reviewing and adjusting the inventory management system
based on performance data.

- Encourage a culture of continuous improvement where inventory practices are regularly

refined to adapt to changing business needs.