11DCP008&11DCP029&11DCP032&11DCP037&11DCP049

8/3/2019 11DCP008&11DCP029&11DCP032&11DCP037&11DCP049

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OPERATIONS MANAGEMENT

1

A

PROJECT REPORT

ON

INVENTORY AND FORECASTINGAT

JHADAO ICONS IN AMRAVATI

Amratanshu Mehra 11DCP008Nishant Puri 11DCP029

Parth Moondhra 11DCP032Rajath Ravikumar 11DCP037

Taranpreet Chhabra 11DCP049


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Table of Contents

COMPANY PROFILE ................................................................................................ 3

JADHAO ICONS .................................................................................................... 3Facilities: ................................................................................................................. 3

Material handling Facilities ..................................................................................... 3Profile Of Industry ................................................................................................... 3

Plant layout:- ........................................................................................................... 4Departments of the company: .................................................................................. 4

PROJECT OBJECTIVE .............................................................................................. 5Objective Of The Project ......................................................................................... 5

DATA ANALYSIS & INTERPRETATION ................................................................ 5

Economic Order Quantity (EOQ) ............................................................................. 6

Sales For The Year 2009 & 2010 ............................................................................. 8Forecasting for 2011 ................................................................................................ 9

APPENDIX ............................................................................................................... 12

FORMULAE USED .............................................................................................. 12REFERENCES ...................................................................................................... 13


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COMPANYPROFILEJADHAO ICONS

Facilities:

The company provides various facilities such as Milling, Boring, Drilling, and Turning,Facing on fully automated and computerized machines. Below is the list of all machines.01) VMC (Vertical Machine Center) = 05 nos

02) HMC (Horizontal Machine Center) = 01 nos03) CNC Turning Center = 04 nos

04) CNC Universal Milling Machine = 02 nos05) Plano Miller Machine = 02 nos06) Horizontal Boring Machine = 02 nos

07) Radial Drilling Machine = 12 nos08) Tapping Machine = 01 nos

09) Key Way Machine = 01 nos10) Band Saw machine (PLC Operated) = 01 nos

11) Thread Rolling Machine = 01 nos

Material handling Facilities

1) EOT Crane 5 Tons = 1 Nos2) EOT Crane 3 Tons = 3 Nos

3) JIB Crane 1 Tons = 3 Nos4) Hydraulic Pallet Trolley 2.5 Tons = 2 Nos

Profile Of Industry

Jadhao Icon is a manufacturer of all types of ginning machine which is located in

M.I.D.C. Amravati. They produce following products on demand1) Gear Box

2) Front Cover


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3) Frame4) Swing leaver

5) Connecting rod6) Beater arm

7) Clutch

8) Rail9) Eccentric shaft10) Con. Housing

11) Gear Blanks etc.

Apart from above mentioned products there are regular production of orderly basisproducts like parts of Gun, parts of bomb ordered by ordnance factory.

A company which believes in thought we have no arguments with competitors whocharge less. But use redies what their product and service is worth.

In this company about 100 workers work with quality consciousness production. Theyproduce quality products to provide best service to the customers.

Plant layout:-Plant layout is a very important feature in todays industries. It is arrangement of the

desired machine and equipment of the plant established in a way which will permit theeasiest flow of material at lowest cost and with the minimum handling in processing

product from the receive of raw material to the dispatch of the finished product.

Departments of the company:

1) CNC Machine shop

2) Quality control departments3) Account section4) Production departments

5) Purchasing departments6) Store departments

The turnover of the company is 13 crores.


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PROJECT OBJECTIVE

Objective Of The Project

To calculate the yearly EOQ and total minimum inventory cost.

To analyze the yearly economic order quantity in order to reduce the inventory cost.To forecast the monthly sales data of the year 2011.

To calculate the forecasting accuracy.

DATA ANALYSIS & INTERPRETATION

Economic order quantity is the level of inventory that minimizes total inventory holdingcosts and ordering costs. It is one of the oldest classical production scheduling models.

The framework used to determine this order quantity is also known as Wilson EOQModel or Wilson Formula.

EOQ applies only when demand for a product is constant over the year and each neworder is delivered in full when inventory reaches zero. There is a fixed cost for each order

placed, regardless of the number of units ordered. There is also a cost for each unit heldin storage, sometimes expressed as a percentage of the purchase cost of the item.

We want to determine the optimal number of units to order so that we minimize the totalcost associated with the purchase, delivery and storage of the product.

The required parameters to the solution are the total demand for the year, the purchasecost for each item, the fixed cost to place the order and the storage cost for each item per

year. Note that the number of times an order is placed will also affect the total cost,though this number can be determined from the other parameters.

Underlying assumptions

The ordering cost is constant. The rate of demand is known, and spread evenly throughout the year. The lead time is fixed. The purchase price of the item is constant i.e. no discount is available The replenishment is made instantaneously; the whole batch is delivered at once.

EOQ is the quantity to order, so that ordering cost + carrying cost finds its minimum. (Acommon misunderstanding is that the formula tries to find when these are equal.)


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Economic Order Quantity (EOQ)

It is also called as re-ordering quantity or economic lot size. It is the most economical

quantity to be ordered under normal conditions.EOQ is the order size for some particular inventory item that results in lowest total

inventory cost for the period consisting of inventory ordering cost & investment carryingcost.

There are two type of cost:

a) ordering costb) inventory carrying cost

Ordering cost are the costs of getting an item into the stores & are incurred each timewhen order is placed. Such cost consist of cost of processing a purchase order, inspection

cost & general administrative overhead cost comprising salaries, stationary, rent, etc.Inventory carrying cost are the costs which are incurred on the maintenance of materials

in the stores & include interest on capital invested in materials, obsolescence & storagecosts including rent, insurance, heating, refrigeration, lighting, salaries of store keeper,

depreciation cost etc.

I) Calculation Of EOQ On Yearly Basis

Years 2009 2010 2011

1 Co 295 320 335

2 Cc 1.1 1.25 1.4

3 D 17500 21000 24500

4 2*Co*D 10325000.00 13440000.00 16415000.00

5 d 291.67 350.00 408.33

6 p 400.00 500.00 600.00

7 (1-d/p) 0.27 0.30 0.32

8 (4)/{(2)*(7)} 34657342.66 35840000.00 36704347.83

9 EOQ (Qopt) 5887 5987 6058

Total Ordering Cost 877 1122 1355

Total Carrying Cost 877 1122 1355

Total Inventory Cost(min) 1754 2245 2709

Production run length 14.72 11.97 10.10

No of orders per yr 2.97 3.51 4.04

Maximum Inventory Level 1594.41 1796.00 1935.33


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Interpretation

1. EOQ is increasing year on year due to increase in demand and order carrying cost.


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Sales For The Year 2009 & 2010

(Rupees in Crores)

MONTHS 2009 2010

January 1,40,407 1,90,543

February 2.53.467 2.30,513

March 1,56,789 1,85,563

April 1,97,890 2,30,569

May 2,34,798 2,95,645

June 3,56,234 3,01,566

July 1,20,000 2,56,123

August 3,95,623 3,85,261

September 3,65,655 3,90,265

October 2,99,899 3,05,623

November 1,78,980 2,56,456

December 1,30,258 2,21,873


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Forecasting for 2011

Period

MONTHS 2009

2010 Total

1 January 140407 190543 330950

2February

253467 2305134839803 March 156789 185563 342352

4 April 197890 230569 428459

5 May 234798 295645 530443

6 June 356234 301566 657800

7 July 120000 256123 376123

8 August 395623 385261 780884

9 September 365655 390265 755920

10 October 299899 305623 605522

11 November 178980 256456 435436

12 December 130258 221873 352131

Total 2830000 3250000 6080000

2011

( Seasonal )

2011

( Linear Trend Line )

| Dt-Ft|

(Seasonal)|Dt-Ft|

(Linear Trend Line)

199768 240679 9225 50136

292139 207559 61626 22954

206650 214337 21087 28774

258626 263248 28057 32679

320185 356492 24540 60847397060 246898 95494 54668

227035 392246 29088 136123

471356 374899 86095 10362

456287 414875 66022 24610

365504 311347 59881 5724

262837 333932 6381 77476

212553 313488 9320 91615

3670000 496817 595968

Forecast For Entire Year Column1

Slope 420000

Intercept 2410000

Y=A+Bx 3670000


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Linear Trend Line Monthly Forecasting

Period Slope Intercept

Monthly

Forecast 2011

1 50136 90271 240679

2 -22954 276421 207559

3 28774 128015 214337

4 32679 165211 263248

5 60847 173951 356492

6 -54668 410902 246898

7 136123 -16123 392246

8 -10362 405985 374899

9 24610 341045 414875

10 5724 294175 311347

11 77476 101504 33393212 91615 38643 313488

Seasonal Factors

Column1 Column2 Column3

January S1 0.054432566

February S2 0.079601974

March S3 0.056307895

April S4 0.07047023

May S5 0.087243914

June S6 0.108190789

July S7 0.061862336

August S8 0.128434868

September S9 0.124328947

October S10 0.099592434

November S11 0.071617763

December S12 0.057916283

Method MAD MAPD

Linear Trend Line 41401.41173 15.29%Seasonal

Adjustment 49664 18.34%


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Interpretation- Based upon the values of MAD and MAPD we can say that LinearTrend Line technique is more accurate than Seasonal Adjusting Technique


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APPENDIX

FORMULAE USED

cC

DoCopt

Q2

2(min) QcCQ

DoCTC

QoptDordersofNo

2QoptCcCostCarrying

Qopt

DCoCostOrdering

)/1(

2

pdcC

DoCopt

Q

pdQ

cCQDoCTC 12

xperiodfor

demandforforecast

periodtimethe

linetheofslope

0)period(atintercept:where

y

x

b

a

bxay

ny

y

nx

n

xbya

xnx

yxnxyb

x

periodsofnumber:where

2 2


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REFERENCES

1) Operations Management: Processes and Supply Chains by Lee J. Krajewski andLarry P. Ritzman, and Manoj K. Malhotra, Ninth Edition, 2010, Pearson GlobalEdition.

2) Operations Management, William J. Stevenson, McGrawHill, 9th Edition,2007.

3) Operations Management: Producing Goods and services by Donald Waters,Prentice Hall,2002

Websites:

1) www.google.com2) www.jadhaogroups.com

periodsofnumbertotalthen

tperiodforforecastthet

F

tperiodindemandt

Dnumberperiodthet

:where

n

tF

tD

MAD

tD

tF

tD

MAPD
http://www.google.com/http://www.jadhaogroups.com/http://www.jadhaogroups.com/http://www.google.com/

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11DCP008&11DCP029&11DCP032&11DCP037&11DCP049