Chapter 1 Introduction 1.1 Introduction the Importance

CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION

The importance and imperative need for effectively managing and controlling all the

items of inventory in a company can be judged from the fact that generally these comprise

the largest component of the total assets of a company, second only to the items of plant

and machinery. Thus the importance of effectively managing and controlling the inventory

of a company can hardly be over-emphasized

In case of manufacturing companies, inventory comprises raw materials, work-in-

progress and finished goods. It may be pertinent to mention that the task of inventory

management and the control is the joint responsibility of the purchase department,

materials department, production department and marketing department. Further the policy

pertaining to the raw materials is to be formulated by the purchase department, in

coordination with the material and the production department, the policy in regard to the

inventory of finished goods is to be formulated by the production department in

coordination with the marketing department. The policy in regards to the work-in-

progress, however, is finalized by the production department alone.

Inventory is essential to provide flexibility in operating a system. Movement

inventories are usually referred to the inventories of finished goods, to be transferred from

the factory to the company’s godown, ware houses, or sales depots.

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1.2 SCOPE OF THE STUDY

The study is carried out in KD parts using in Assembly Phase II for i10 production

only so it is limited to particular parts only.

The study is related to the finished goods.

The study is limited to secondary data only.

The study is based on the information available in the records given by the

executives.

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1.3 STATEMENT OF PROBLEM

Hyundai Kia Automotive Group is the 5th largest automobile manufacturer in the world

with annual sales exceeding 3.9 million units across the world.

HMIL is a part of HKAG and the second largest player of automobile market in India.

Hence to survive in the market the company is following major cost reduction policy. In

order to reduce the investment in inventory and to improve the efficiency of the production,

the study on inventory control has been done.

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1.4 OBJECTIVES

To find the ABC analysis to give extra priority for A class items and to optimize the

inventory level of particular items.

By that inventory control can be reduced.

FSN study for planning the material procurement and salvage analysis.

To carry out the items to know which are vital items, essential items and desirable

items.

To find the HML XYZ analysis to give extra priority for the High value items to

control the inventory level.

To find the cost of inventories by FIFO method.

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1.5 RESEARCH METHODOLOGY

RESEARCH:

Research is a common parlance refer to a search for knowledge one can also define as

scientific and systematic search for pertinent information on a scientific topic research is an

art of scientific investigation and an academic activity

Redman and Mory define research as a “systematized effort to gain new knowledge”

According to Clifford woody, “Research comprises defining and redefining problems

formulating hypotheses or suggested solutions collecting organizing and evaluating data

making deductions and reaching conclusions and at last carefully testing the conclusions to

determine whether they fit the formulating hypothesis”

RESEARCH METHODOLOGY:

Research methodology is ways to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. In it we study the

various steps that are generally adopted by a researcher in studying his research problem

along with the logic behind them. It is necessary for the researcher to know not only the

research methods techniques but also the methodology.

Researchers not only need to know to develop certain indices or tests, how to calculate

the mean, the mode, the median, or the standard deviation or chi – square, how to apply

particular research techniques, but they also need to know which of these methods or

indicate and why. Researchers also need to understand the assumption they can decide that

certain techniques and they need to know the criteria by which they can decide the certain

techniques and they need to know the criteria by which certain problems and others will

not. All this mean that it is necessary for the researcher to design his methodology for his

problem as the same may differ from problem to problem.

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DATA SOURCES:

Data sources can be classified into two types namely

1. Primary Data

2. Secondary Data

PRIMARY DATA:

Primary data consists of original information collected for specific purpose. In this

study, primary data has not applicable

SECONDARY DATA:

Secondary data can be defined as the information already existing some where, having

been collected for some other purpose.

The data taken for the project consisted of secondary data fully, as the need of the

project was concentrated mainly on inventory control. The data was taken from the

Material Handling Department from PMT Assembly Phase II Executives from the records.

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CHAPTER 2

INDUSTRY AND COMPANY PROFILE

2.1 INDUSTRY OVERVIEW

Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the

Automobile industry of India has come a long way. During its early stages the auto

industry was overlooked by the then government and the policies was not favorable. The

liberalization policy and various tax relief by the government of India in recent years have

made remarkable impact on Indian Automobile Industry. Indian auto industry, which is

currently growing at the pace of around 18% per annum, has become a hot destination for

global auto players like Volvo, General Motors and Ford.

A well developed transportation system plays a key role in the development of an

economy, and India is no exception to it. With the growth of transportation system the

Automotive industry is also growing at rapid speed, occupying an important place on the

‘canvas’ of the Indian economy. Today Indian automotive industry is fully capable of

producing various kinds of vehicles and can be divided into 03 broad categories: Cars,

Two-wheelers and Heavy vehicles.

Facts & Figures

India, in auto sector, is turning to be a sourcing base for the global auto

majors. The passenger car and the motorcycle segment is set to grow by 8-9% in the

coming couple of years, says the ICRA report. The industry is likely to maintain the

growth momentum picked up in 2002-03.

The ICRA’s analysis points on the auto sector that the passenger car market in the

country was inching towards cars with higher displacements. The sports-utility-

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vehicle(SUV) that was getting crowded every day, would witness intense competition as

many SUVs had been competitively priced, the report said, Honda, Suzuki, General Motors

and Hyundai, the global auto makers had already launched their premium SUVs in the

market to broaden their portfolio and create product excitement in the segment estimated at

about 10,000 units annually.

AUTO COMPONENT MARKET

During the year 2006-07, the turnover of the automotive sector is estimated to exceed

Rs. 206,000 crore. In passenger car segment Maruthi still holds the number one position

followed by Hyundai and Tata motors. The industry also offers substantial scope of direct

employment of 4.5 lakhs and about one crore indirect employment.

The Indian auto parts industry is significantly fragmented with a large number of players

having a turnover of less than US$10 million per year. The industry directly

Estimated market size – US$6.7 bn

Estimated market size by 2012 – US$ 17 bn

Projected CAGR – 15%

Nearly 2/3rd of the auto component production is consumed directly by Original Equipment

Manufacturers (OEMs).

MARKET ADVANTAGE

Fast paced urbanization to rise from 28% to 40% by 2020.

Upward migration of household income levels.

Middle class expanding by 30-40 million every year.

Growing working population.

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SMALL CAR MARKET IN INDIA

The small car market in Indian is increasing by leaps and bounds. The indigenous

market for small cars now occupies a substantial share of around 70% of the annual car

production in India of about one million. The main players in the car market like Tata

motors and Maruthi Udyog are fiercely competitive and more or less all the automobile

companies in India that have forayed into the production of small cars are trying to outdo

each other in terms of design, innovation, pricing and technology, in order to gain control

of the small car market in India.

The biggest players in the small car market are engaging in a healthy competition which

has intensified since the Indian Government boosts the small car segment. In this regard, a

reduction in the excise duties has been thought of. Even the engine capacities are expected

to raise by 1500cc. the new small cars in India may even be fuelled by gasoline and diesel

in the future. With all these facilities, it has been estimated that the indigenous car market

is going to move beyond the 3.5 million mark very soon. Suzuki which is now heading the

Indian small car market has plans to invest an additional US$ 650 million for research and

development work in the manesar plant. This plant will be used for manufacturing the

diesel cars. Suzuki has decided to enter into a joint – venture with Nissan to launch a mini

car model in India.

Even Hyundai is on a similar investment spree for research work with a venture of US$

700 million in India. The two cars from the stable – santro and getz are already in the

market and have been doing exceptionally well in the past few years. It is expected that

more and more foreign companies are likely to join the healthy race in the Indian small car

market.

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One of the biggest player’s in China’s market, Volkswagen, has decided to invest in the

Indian small car market. It is supposed to invest a total amount of US$ 540 million and

manufacture nearly 100,000 cars on an annual basis.

FACTORS DRIVING THE DEMAND FOR SMALL CARS IN INDIA

The increase in the demand for small cars can be attributed to the asp rational life style

of people which makes them strive for a car early on in life. The overall age for owing a

car has also decreased in the recent years. Further, with the growing affluence of the rural

sector, owing a car, at least a small car, is a foregone conclusion in India. However, since

small cars are more affordable and utilitarian, the demand for them has sought through the

roof. The rising demand for small cars is attracting companies like General Motors which

has early production in India to 140,000 vehicles.

The Maruthi 800 which is the most preferred car among the Indian middle class can

now be bought at lower cost. Tata motors have decided to launch “NANO” which starts

from INR 100,000. This will be a night mare for many leading small car manufacturers.

Honda as also decided to increase its manufacturing capacities in India to 100,000 very

soon. Therefore, the leaders in the market for the small cars in India can be seen to engage

in a price war to make more cars available to the majority of Indian citizens.

The small car market in India is witnessing the maximum activity and is all set for more

exciting times ahead, with more players from India and abroad joining the race.

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2.2 HYUNDAI MOTORS INDIA LIMITED

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor

Company, South Korea and is the second largest car manufacturer and the largest

passenger car exporter from India. HMIL presently markets 33 variants of passenger cars

across segments. The Santro in the B segment, the Getz Prime, i10 and the Premium

hatchback i20 in the B+ segment, the Accent and the Verna in the C segment, the Sonata

Embera in the E segment and the Tucson in the SUV segment.

Hyundai Motor India Ltd, continuing with its tradition of being the fastest growing

passenger car manufacturer, registered total sales of 489,328 vehicles in the calendar year

(CY) 2008, an increase of 49.6 percent over CY 2007. In the domestic market it clocked a

growth of 22.4 percent with 245387 units in 2008, while overseas sales grew by 92.5

percent, with exports accounting for 243,931 units in 2008.

HMIL's fully integrated state-of-the-art manufacturing plant near Chennai boasts of the

most advanced production, quality and testing capabilities in the country. In continuation of

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its commitment to provide the Indian customer with global technology, HMIL

commissioned its second plant in February 2008 which produces an additional 300,000

units per annum, raising HMIL's total production capacity to 600,000 units per annum.

HMIL has invested to expand capacity in line with its positioning as HMC's global export

hub for compact cars. Apart from the expansion of production capacity, HMIL currently

has 251 strong dealer network across India, which Will be further bolstered in 2009.

In 2008, HMIL also successfully completed 10 glorious years of operations in India and to

commemorate its achievements, initiated a unique trans-continental drive from Delhi to

Paris in two of its hugely popular i10 Kappa cars. The drive created automobile history by

completing a distance of 10,000km in just 17 days after which the i10s were showcased at

the Paris Motor Show in October. In fact it was at the Paris Motor Show that HMIL first

unveiled the Hyundai i20 and the car received a phenomenal response from the auto

enthusiasts across the world. Hyundai Motor India also accomplished the landmark of

producing the fastest 20th lakh cars in India in 2008

Like 2008, the year 2007 had also been a significant year for Hyundai Motor India. It

achieved a significant milestone by rolling out the fastest 400,000th export car. Hyundai

exported to over 95 countries globally; even as it plans to continue its thrust in existing

export markets, it is gearing up to step up its foray into new markets. 2007 also saw the

launch of the i10 and yet another path-breaking record in its young journey by rolling out

the fastest 1,500,000th car.

Hyundai's new model i10 made a clean sweep of all the 'Car of the Year 2008' awards from

the leading automotive magazines and TV channels like BS Motoring, CNBC-TV18 Auto

Car, NDTV Profit Car & Bike India and Overdrive magazine. The i10 was also the choice

of the discerning automotive media of the country as they conferred the prestigious 'Indian

Car of the Year' (ICOTY) award to the i10 as well.

The Santro and the Accent also received the 'TNS Voice of the Customer - 2008' award for

the Premium Compact Car (Santro) and the Entry Mid size Car (Accent). In March 2008 it

achieved yet another milestone by rolling out the fastest 500000th export car.

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In 2007, the Hyundai Verna had also bagged some of the most prestigious awards starting

with the Overdrive magazine’s ‘Car of the Year 2007’, the ‘Best Mid-size Car of the Year’

award from NDTV Profit Car & Bike India, the ‘Best Value for Money Car’ from CNBC

Auto car and 'Performance Car Of the Year’ from Business Standard Motoring.

Hyundai cars have been a favorite at all awards ceremonies and has won many awards. The

Sonata Embera won the 'Executive Car of The Year 2006' award from Business Standard

Motoring magazine and NDTV Profit Car & Bike India had declared the Tucson as the

'SUV of The Year 2006'. Not only this, HMIL has also been awarded the benchmark ISO

14001 certification for its sustainable environment management practices.

ABOUT HYUNDAI MOTOR CORPORATION

Established in 1967, Hyundai Motor Co. has grown into the Hyundai-Kia Automotive

Group which was ranked as the world’s fifth-largest automaker in 2007 and includes over

two dozen auto-related subsidiaries and affiliates. Employing over 75,000 people

worldwide, Hyundai Motor posted sales of US$74.9 billion in 2007 on a consolidated-basis

and US$32.8 billion on a non-consolidated basis (using the average currency exchange of

929 won per US dollar). Hyundai vehicles are sold in 193 countries through some 6,000

dealerships and showrooms.

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PROCESS DEPARTMENTS IN HMIL

The Press Shop

A computer controlled line that converts sheet metal to body panels of high

dimensional accuracy and consistency.

The Body Shop

A hi-tech line that builds full body shells from panels. Automated robotic arms are

used for intricate welding operations that ensure superior and consistent build

quality.

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The Paint Shop

This is one of the most modern paint shops in the country and uses the

environment friendly water based process for superior and lasting exteriors. A

unique process management system followed here helps us deliver the most

extensive colour range, independent of minimum batch requirements, helping

customers get their preferred colour anytime.

The Aluminum Foundry

Forges the engine cylinder blocks for our cars to exacting design specifications.

The Engine and Transmission Shop

One of the biggest engine shops in the country, this unit is equipped with the most

modern tooling and testing facilities to make a wide range of engines inhouse.

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The Plastic Extrusion Unit

Moulds the dashes, bumpers and other plastic components to perfect fit and finish.

The Plastic Paint Shop

One of the very few manufacturing units in India to have this facility in-house,

Hyundai's plastic paint shop delivers a high grade finish on exterior plastic

components.

The Test Track

With comprehensive performance testing

facilities like rattle testing and ABS brake

testing, this track is designed to meet pre-

delivery (PDI) certification standards to

exacting Euro specifications.

LOGO OF THE COMPANY

The logo of the company represents an image of Car Company that produces refined cars

with the cutting edge technology. Express the will of the management for harmony and

stability. The oval shape symbolizes the earth to express the global nature of HMC cars.

The ‘H’ logo stands for the first letter of the Hyundai motor company. The slanted shape

for the ‘H’ represents progress and a company that will successfully face future challenges

as it continues to raise its standard of quality

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HMIL PRODUCES THE FOLLOWING CARS FROM ITS CHENNAI PLANT

1. HYUNDAI i20

2. HYUNDAI i10

3. SANTRO

4. GETZ

5. ACCENT

6. VERNA

7. ELANTRA

8. SONATA EMBERA

COMPETITORS

The major competitors identified for HMIL in India is Maruthi India limited. They

produce the compact size cars for a lesser rate than Hyundai motors. Some other major

competitors for the HMIL in India are,

1. Suzuki

2. Tata motors

3. Ford

4. General motors

5. Honda

6. Toyota

7. Fiat

8. Mahindra Renault

9. Mahindra

10. Hindustan motors

11.Mitsubishi

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2.3 MANAGEMENT CONCEPTS IN HMIL

“Management is the process of designing and maintaining of an environment in which

individuals working together in groups efficiently accomplish selected aims.”

- Koontz and weihrich

“Management is the art of knowing what do you want to do and then seeing that it is done

in the best and the cheapest way.”

- F. W. Taylor

“MANAGEMENT INNOVATION” is the philosophy of the HMIL.

HMIL considers the following as the most contributing departments,

Administration

Production

Marketing and Sales

Procurement

Research and Development

The other departments in HMIL

Finance

Human resource

Legal relations

Audit and planning

General affairs

Fire and Safety

MANAGEMENT STRUCTURE AT HMIL

1. MANAGING DIRECTOR: The Managing Director is considered as the

head of the organization. He is the incharge of all the activities that takes

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place in HMIL. A Korean citizen is appointed as the managing director of

the organization. Currently Mr. H.S. Leem is the M.D. of HMIL.

2. PRESIDENT: A Korean is elected as the president of the organization.

3. VICE PRESIDENT: A person of Indian origin is elected as the V.P. of the

organization.

4. EXECUTIVE DIRECTOR: Each department will be headed by a Korean

executive director. They will be responsible for the activities within the

department.

5. DIRECTOR: A person of the Indian origin is appointed as the directing

head of the department to handle the subordinates

SPIRIT OF MANAGEMENT AT HMIL:

1. FOUNDATION MINDSET:

Creativity

Productivity

Tenacity

2. INNOVATION FOR HUMANITY:

Revolution and Challenge

Customer Happiness

World – Recognized Company

3. MANAGENT POLICY:

Trustworthy Management

Onsite Management

Transparent management

4. MANAGEMENT INNOVATION:

Sustainability Spirit

Global Spirit

Collective Spirit

Responsibility spirit

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2.4 PRODUCTION MANAGEMENT AT HMIL

At the beginning of every year of the business plan is given by the parent company

Hyundai KIA Automotive Group, South Korea for HMIL. According to business plan

sales target for domestic and international markets are decided by HMIL.

Then a production plan is prepared at HMIL in am meeting of Marketing and Sales

Team along with the Production Management Team. The production plan is prepared by

matching it with the production capacity of the plant and taking into consideration the

constraints for the supply of materials like KD parts ordering, vendor related constraints,

etc.

The production plan is further sub divided into monthly plan, then weekly plan which is

further subdivided into daily plan. Each of the plans mentioned above are also divided into

Domestic and Exports Segments according to Specs.

Each monthly plan is subject to revision according to market demand during that period.

The revision of the monthly plan for the coming month is being done at a meeting of

Production and Sales Department which held’s at 28th of each month.

PRODUCTION MANAGEMENT:

The Production Team is divided into three broad segments they are:

1. Production Planning and Control (PPC)

2. Material Management

3. Spec Control

PRODUCTION PLANNING AND CONTROL (PPC):

It prepares all the plans (i.e. monthly plan, weekly plan, daily plan, and sequence plan)

for the production of cars at the plant.

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MATERIAL MANAGEMENT:

This a process in which the materials which are required for the production process are

normally stored in raw material warehouse and then they are shifted to the manufacturing

the plant 1 and plant 2.

The various functions of the department are material planning, purchasing, receiving,

stores, inventory control, scrap and surplus disposal.

It is further divided into two groups:

1. Material Control

2. Material Handling

MATERIAL CONTROL:

The job of material control is ordering of the parts, system accounting of parts, receipts

and document maintenance, expecting of orders and job order processing.

The orders for local parts (LP) are placed one month prior to the requirement and order

for knock down (KD) parts which are imported from Hyundai Motors, South Korea and

other countries are placed two months prior of requirement.

For Local Vendors there is a non-line system called VAATZ (Value Added Automotive

Trade Zone) on which they can access there current ordering status.

The material control team also expedites for the orders thay have given to the vendors.

In job order processing the material control team purchases the parts on behalf of their

vendors and gives them for process and then again takes back from them after the

processing of parts. The policy of job order is discouraged by HMIL during these days.

MATERIAL HANDLING:

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1. Material Receiving: The material handling team ensures that material is being

received with the proper documents. There is a physical checking of materials for

any damages at the point of receiving of material. The KD materials which arrives

in containers from the port is being checked at the materials receipts gate for the

physical damages of the containers and documents after which only it is allowed to

proceed to container stack yard for storage.

2. Storage: The storage of material which is being received is also under the material

control team. The material received from the Local vendors is stored at their

allocated places in different shops. The KD materials containers are first stacked

in the container yard. After which the containers are de stuffed according to

requirement and the material in boxes is moved to Warehouse from where they are

send to assembly shop and feeded to the line. Sometime the KD material is also

directly sent from the container yard to the assembly shop if the availability is not

in the warehouse.

3. Feeding: The feeding to the line is also under the material handling. It has been

outsourced to TVS Company. There are three types of feeding namely:

Batch Feeding: The material is feeded to the line in lots.

Sequence Feeding: The material is feeded to the line according to particular

sequence in which the cars are coming in the line. For eg. 4 export 3

domestic etc.

Direct Feeding: Material is directly feeded to the line by the vendor; no

storage of material is required.

4. Rejection (Overage Shortage and Damage); The material handling also takes

care of rejection of material. When the material is rejected at line stage, then it is

send to the rejection table with a Overage Shortage & Damage (OS&D) tag, on

which the reason of rejection is mentioned. If ‘P’ is circled then it indicates part

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problem, if ‘W’ is circled then it indicates workman problem, if ‘H’ is circled then

it indicates the handling problem, if ‘E’ is circled then it indicates Equipment

problem, if ‘O’ is circled then it indicates Other problem.

SPECIFICATION CONTROL:

It provides the specifications for the end items.

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CHAPTER 3

LITERATURE SURVEY

Introduction:

Inventories are goods help for eventual sale by a firm inventories are thus one of the

major elements which help the firm the in obtaining the desired level of the sales inventory

refer to stocks raw materials components spares or work in progress maintained in an

organization to have continues production and sales

Inventory management is one of the components of working capital management it

involves the progress of progress of providing continuous flow of raw materials to

production department more than 60% of the working capital will normally be invested in

the inventory management is primarily concerned with obtaining a correct balance between

these two extremes

Decision relating to inventory are primarily by executives in production purchasing

&marketing departments usually raw materials policies are shaped by purchasing

&production executives and finished goods inventory policy is evolved by production and

marketing executives yet, as inventory management has important financial implication the

financial implications the financial manager has the responsibility to ensure that inventories

are properly monitored and controlled

3.2 TYPES OF INVENTORY

The three main types of inventories are raw materials work-in-progress, &finished

goods.

RAW MATERIALS

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Raw materials is an unprocessed natural substance or product used in manufacturing

process and that are converted by a manufacturer into a finished product there are the

goods which have not yet been committed to production in a manufacturing firm they

consist of raw materials or finished components they may consist of raw materials or

finished components .they are the resources purchased as inputs to the transformation

process that have not yet been transformed materials suitable for manufacture or use or

finishing are raw material raw material is the original material as taken from its source,

usually the ground.

An example is bauxite ore that is used to make aluminum

WORK-IN-PROGRESS

Work-in progress also called stock-in-progress refers to goods in the intermediate stage

of production. this includes those materials which have not yet been completed it refers or

the raw materials engaged in various phases of production schedule the degree of

completion may be varying for units some units might have been just introduced and some

others may be 40% complete or others may be 90% complete the work-in-progress refers to

partially produced goods the value of work-in-progress refers to raw materials costs, direct

wages, and expenses already incurred and the overhead if any so work-in-progress

inventory contains partially produced/completed goods the purpose of work-in-progress

inventory is to uncouple the various operations in the production process so that machine

failures and stoppages in one operation will not affect other operations.

FINISHED GOODS

Inventory that is in a salable or shippable form based upon its location within the supply

chain. Finished goods are completed products awaiting for sale. They are the final output

of the production process in a manufacturing firm. An item considered a finished Good in

a supplying plant might be considered a component or raw material in a Receiving plant.

Commodities will not undergo further processing and ready for sale to the final demand

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user, either an individual consumer or business firm. In case of wholesalers and retailers,

they are generally referred to as merchandise inventory.

This includes durable goods such as automobiles, household furniture and appliances,

and Nondurable goods such as apparel and home heating oil.

INVENTORY CONTROL

“INVENTORY” generally means the material in stock. Inventory is a list of materials

which are movable such as raw materials, materials in progress, finished products, general

suppliers and equipments, etc. The list of material gives the quantity and value of each

item.

Inventory control is the systematic location storage and recording of material or goods

in such a way that desired degree of service can be made to the operating shops at

minimum ultimate cost.

Inventory control is the technique of maintaining the size of the inventory at some

desire level keeping in view the best economic interest of an organization.

The need for inventory

Modern machinery is costly and highly susceptible to obsolescence so that the cost of

machine idle time is heavy. Similarly, it is highly uneconomical to keep men waiting for

materials. As such, materials have to lie in wait for machines and men because the idle

time cost of the latter is greater than the cost of carrying inventories.

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TOOLS OF INVENTORY MANAGEMENT

Effective inventory management requires control over inventories. Inventory control

refers to a system which ensures supply of required quantity and quality of inventories at

the required time and the same time prevents unnecessary investments in inventories. The

tools of inventory control or inventory management are as follows:

1. ABC ANALYSIS

ABC analysis is a form of inventory control wherein different degrees of control are

exercised over different items of stores on the basis if the investment (value)

involved. Under this method, the materials are managed by giving importance to its

value. ABC analysis concentrates on important items and therefore, is also known

as Control by Importance and Exception (CIE). This approach is also known as

Proportional Value Analysis (PAV). It is also means Always Better Control.

Example: In the making of air craft, cryogenic engines involving high costs will be

monitored closely while cost of tyres, nuts and bolts etc., will be given lesser

attention. Under this system the items are divided into three categories according to

their importance in terms of value and frequency of replenishment during a period.

These categories are:

A Category - Highly Important

B Category - Relatively Less Important

C Category - Least Important

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TABLE 3.5.1

ANALYSIS AND CONTROL OF ABC ANALYSIS

The three categories are classified and differential control is established as under:

CATEGORY PERCENTAGE IN

TOTAL VALUE

PERCENTAGE IN

TOTAL

QUANTITY

EXTENT OF

CONTROL

A 70 10 Constant and strict control

through Budgets, Ratios,

Stock Levels, EOQ,

Procedural Checks etc.

B 20 20 Need based selective

control – periodic view –

not strict or excessive

C 10 70 Little Control – focus on

saving associated costs

Figure 3.5.1

CUMMULATIVE CURVE OF ABC ANALYSIS

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Cummulative curve of ABC analysis

0

20

40

60

80

100

120

hi 0 10 30 100

Percentage number of items

Pe

rce

nta

ge

co

ns

um

pti

on

va

lue

APPLICATION OF ABC ANALYSIS:

This approach helps the material manager to exercise selective control and focus his/her

attention only on a few items when he/she is confronted with thousands of stores items.

Any stock control system should ensure that every item gets its due attention at right time.

ABC analysis makes it possible with considerable less effort by its selective approach. The

following are the application of ABC analysis.

Degree of control:

‘A’ class items form a substantial part of total consumption in rupees. Greater

attention should be paid and accurate records maintained for these items. The

inventory should be kept at minimum by placing blanket orders, covering annual

requirements and then arranging frequent delivers from vendors.

‘B’ class items should have normal or moderate control made possible, by good

records and regular attention.

A little or no control is required for ‘C’ class items. Large inventories should be

maintained to avoid stock – outs.

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Ordering procedure:

‘A’ class items require careful and accurate determination of order quantities and

order points based on exact requirements. They should be subjected to frequent

reviews to reduce possibility of overstocking.

A reasonably good analysis for order quantities and order points is required for

‘B class items but the stock may be reviewed less frequently or only when major

changes occur.

No such consumption is required for class items. These items should be bought in

bulk, may be for a whole year.

Stock records:

Detailed records of the goods reserved, received, ordered, issued and on hand

need to be maintained for ‘A’ class items. Tight and accurate controls are required

for such items.

No such detailed records are necessary for the ‘C’ class items.

Any routine method that ensures good and accurate records is enough for ‘B’

class items.

Priority treatment:

Top priority may be accorded to ‘A’ class items in all activities such ass

processing of purchase orders, receiving, inspection, movement on the shop floor, etc.,

with an object to reduce lead time and average inventory.

30

No such stock priority is necessary for ‘B’ class items. Normal plant procedures

should take care of inward and outward flow of these items.

No priority is assigned to ‘C’ class items at all.

Safety Stock:

Shortage may occur even when accurate and realistic order points have been

computed. Safety stock is provided to safeguard against such shortages.

Safety stock should be less for ‘A’ class items. The possibilities of stock – outs

can be cut down considerably by closer forecasting, frequent reviewing and more

processing.

A moderate policy is required for ‘B’ class items. Safety stock should neither be

too high or too low.

‘C’ class items on the contrary, should have sufficient safety stock to eliminate

stock outs.

Value analysis:

To secure maximum benefits, it is essential to select those items for value

analysis which offer the highest scope of cost reduction.

ADVANTAGES

It ensures closer control on costly items in which a larger amount of capital has

been invested.

31

It helps in developing a scientific method of controlling inventories. Clerical

costs are reduced and stock is maintained at optimum level.

It helps in achieving the main objectives of inventory control at minimum cost.

The stock turnover rate can be maintained at comparatively higher level through

scientific control of inventories.

LIMITATIONS:

The system is analysis is based on the items according to their value and not according

to their importance in production process. It may therefore sometimes create difficult

problems. Hence, the system of ABC analysis should not be followed blindly.

Inventory control should preceded by a value analysis. A very effective tool for this

purpose is ABC analysis. Control, to be effective as well as economical, should be based

on the ABC analysis.

Profits are made only at the time of final sale, and that the management should put in

greater effort for furnished goods inventories. If investment therein is proportionately great

and it is in the standard items manufactured for stock and industrial or consumer type

goods.

TABLE 3.5.2

SELECTIVE CONTROL

The following order for selective control is recommended.

Details A items B items C items

Control Tight Moderate Loose

Requirement Exact Exact Estimated

Postings Individual Individual Group or None

Check Close Some Little

Control Exact Exact Approximate

Expediting Regular Some None

Safety stocks Low Medium Large

32

2. VED ANALYSIS:

It is most suitable for automobile industries specially to maintain parts. All the

parts are classified into vital, essential, and desirable components.

V => stands for vital items when go out of stock or when not readily available,

completely bring the production to halt.

E => stands for essential items without which temporarily losses of production or

dislocation of production work occurs.

D => stands for desirable items for all other items which are necessary but do not

cause an immediate effect on production.

3 FSN ANALYSIS:

Under this method, materials are grouped according to movements. They are fast

moving, slow moving, and non – moving items.

F => stands for fast moving items which are stored in large quantity and close watch on

the movement of such items are kept.

S => stands for slow moving items which are frequently needed by the production

department, accordingly moderate quantity with moderate supervision will be

maintained.

N => stands for non – moving items which are rarely required by the production

departments. These non moving items should have to be reduced in production.

33

FSN analysis ensures the following:

1. Periodic review of categorization under F.S.N.

2. Take appropriate action to increase number of orders (frequency) or quantity per

order against fast moving items.

3. Close watch of slow moving items.

4. Find alternate use (substation) of slow moving items so that their usage rate can be

increased.

5. Take appropriate actions, in time, to dispose of dead stock and prevent their stock

piling.

3. HML ANALYSIS:

This analysis is similar to ABC analysis but here the criterion is “price” instead of usage

value. The items in this analysis are classified into three groups, i.e. High, Low and

Medium. The management decides the cut off lines or prices for the three categories. This

analysis helps to keep control over consumption as per the price and helps to assess storage

and security requirements. It helps to outline the buying policies and to delegate

authorities to buyers.

4. XYZ ANALYSIS:

This analysis is based on the value of the stocks on hand (i.e. capital employed to

procure inventory). Items whose inventory values are high are called X category and

whose values are low are called as Z items. Usually XYZ analysis is used in analysis with

ABC analysis.

INVENTORY VALUATION

34

The accounting method that a company decides to use to determine the costs of

inventory can directly impact the balance sheet, income statement and statement of cash

flow. There are three inventory-costing methods that are widely used by both public and

private companies:

First- In, First- Out (FIFO)

The FIFO method of valuation of inventory is based on the assumption that

the inventory is consumed in chronological order, that is, those received first

are issued/consumed first and value fixed accordingly.

Last – In, First – Out (LIFO)

LIFO method assumes valuation of inventory on the basis of inverse

sequence of receipts. Under LIFO method, the cost of goods sold and the

value of closing inventory can be determined only after the final lot of the

year has been received. This is because of the underlying the valuation of

inventory, according to this method.

Average Cost Method

This method is quite straight forward, it takes the weighted average of all

units available for sale during the accounting period and then uses that

average cost to determine the value of COGS and ending inventory.

35

CHAPTER 4

ANALYSIS AND INTERPRETATION

4.1 ABC ANALYSIS

ABC analysis is the technique of exercising selective control over inventory

items. Under this method, the materials are managed by giving importance to its value.

It means Always Better Control. The ABC technique enables an enterprise to keep its

investment low and avoid stock – outs of critical items. Its objective is to reduce the

minimum stock as well as the working capital.

For this study I have considered the KD parts which are used in assembly phase

II for the i10 production.

PROCEDURE FOR MAKING ABC ANALYSIS

1. Calculate the total inventory value for each item held in inventory by multiplying

the number of units used in a year by its unit price

2. Tabulating these items in descending order of their values placing first the item

having the highest total value and so on.

3. Preparing a table showing Item Number, Unit Cost, Annual Unit Consumed and

Annual Rupee value of units used.

4. Compute the cumulative percentage for the item count and cumulative annual usage

value.

5. Classify the items as per the norms for ABC items.

36

TABLE 4.1.1

ABC ANALYSIS OF KD PARTS

Following table shows the ABC analysis of KD Parts which are used in Assembly

Shop Phase II for the production of i10

Part

No

Part name Unit

price

Avg

annual

consumpt

ion

Annual usage

value

Cumulative

percentage

Cumulative

unit

percentage

ABC

58900-

ox300

ABS & BRKT

ASSY

7007.66 87,702 314,585,797.32 25.15 0.56 A

56900-

0X000

CH

DRIVER AIR

BAG MODULE

3760.97 98,808 371,613,923.76 40.36 1.12 A

98100-

OX900

MOTOR & LINK

ASSY-W/WPR

RHD

1704.35 85,836 146,294,586.60 46.35 1.68 A

52933-

31300

VALVE-TIRE 54.05 1,425,792 77,064,057.60 49.50 2.23 A

52950-

17000

NUT ASSY-HUB 12.74 4,958,172 63,167,111.28 52.09 2.79 A

98700-

0X100

MOTOR &

LINKAGE ASSY

RR WIPER

1012.76 52,452 53,121,287.52 54.26 3.35 A

96300-

0X200

SPEAKER

ASSY- DR FR

546.78 96,246 52,625,387.88 56.41 3.91 A

96300-

0X210

SPEAKER

ASSY- DR FR

545.18 96,240 52,468,123.20 58.56 4.47 A

85340-

0X000

DU

HDL ASSY-

ROOF

ASSIST,FR

102.39 483,354 49,490,616.06 60.59 5.03 A

96420-

4A600

VEHICLE

SPPED-SENSOR

174.12 283,344 49,335,857.28 62.60 5.59 A

37

ASSY

98301-

0X900

ARM & BLADE

ASSY-W/WPR

D/SIDE

413.71 98,808 40,877,857.68 64.28 6.15 A

93490-

0X210

CONTACT

ASSY- CLOCK

SPRING

408.27 98,838 40,352,590.26 65.93 6.70 A

98302-

0X900

ARM & BLADE

ASSY-W/WPR

P/SIDE

383.17 98,808 37,860,261.36 67.48 7.26 A

98801-

0X000

ARM & BLADE

ASSY-RR

WIPER

233.9 151,410 35,414,799.00 68.93 7.82 A

93560-

25100

SWITCH ASSY-

DR

24.24 1,422,870 34,490,368.80 70.34 8.38 A

96300-

0X110

SPEAKER

ASSY- DR RR

304.3 112,116 34,116,898.80 71.74 8.94 A

96300-

0X100

SPEAKER

ASSY- DR RR

303.89 112,116 34,070,931.24 73.13 9.50 A

81723-

0X020

DECOLATION

BAND T/GATE

HANDLE

102.19 263,634 26,940,758.46 74.23 10.06 A

43920-

02510

BRKT ASSY

SHIFT CABLE

137.28 187,614 25,755,649.92 75.29 10.61 A

82210-

0X000

W/STRIP ASSY-

FR DR BELT

O/S, LH

127.35 199,662 25,426,955.70 76.33 11.17 B

82220-

0X000

W/STRIP ASSY-

FR DR BELT

O/S, RH

127.17 199,584 25,381,097.28 77.37 11.73 B

83220-

0X000

W/STRIP ASSY-

RR DR BELT

O/S, RH

125.63 199,710 25,089,567.30 78.39 12.29 B

83210-

0X000

W/STRIP ASSY-

RR DR BELT

125.46 199,644 25,047,366.24 79.24 12.85 B

38

O/S, LH

98610-

0X100

RESERVOIR &

PUMP ASSY –

W/WASHER

500.42 47,394 23,716,905.48 80.39 13.41 B

95910-

0X150

UNIT ASSY-AIR

BAG D.A.B

2723.37 8,580 23,366,514.60 81.34 13.97 B

96220-

07500

POLE-ROOF

ANTENNA

111.68 198,732 22,194,389.76 82.25 14.53 B

96210-

07010

ANTENNA

ASSY ROOF

106.61 198,768 21,190,656.48 83.12 15.08 B

95431-

0X400

TRANSMITTER 876.72 17,004 14,907,746.88 83.73 15.64 B

86341-

0X000

SYMBOL MARK 74.38 199,092 14,808,462.96 84.34 16.20 B

11254-

06206

B

BOLT-WASHER

ASSY

2.44 4,712,418 11,498,299.92 84.81 16.76 B

54627-

07000

CAP-

INSULATOR

DUST

26.47 397,464 10,520,827.08 85.24 17.32 B

84134-

22000

PLUG-DRAIN 2.45 3,956,520 9,693,474.00 85.63 17.88 B

96620-

0X500

BURLULAR

ALARM HORN

225.55 40,656 9,169,960.80 86.01 18.44 B

10188-

05163

T/SCREW-

FLANGE

0.58 15,404,47

2

8,934,593.76 86.37 18.99 B

11254-

08306

B

BOLT-WASHER

ASSY

3.8 2,234,448 8,525,102.40 86.72 19.55 B

94472-

07000

COVER-FUEL

PUMP A/S

39.82 198,750 7,914,225.00 87.05 20.11 B

11251-

06166

B

BOLT WASHER

ASSY

1.66 4,722,366 7,839,127.56 87.37 20.67 B

97313- GROMMET 32.85 228,558 7,508,130.30 87.68 21.23 B

39

34100 ASSY-HEATER

PIPE

81477-

4A000

M/SCREW SEMS

TORX OVAL

HEAD

2.28 3,256,992 7,425,941.76 87.98 21.79 B

31010-

24000

CAP ASSY-

F/FILTER

63.01 114,012 7,183,896.12 88.27 22.35 B

97650-

38950

SEAL ASSY-

EVAPORATOR

PIPE

33.4 208,206 6,954,080.40 88.56 22.91 B

92620-

0X000

LAMP ASSY-

LUGGAGE &

GLOVE

39.01 165,342 6,449,991.42 88.82 23.46 B

98950-

0X000

HOSE ASSY-RR

WASHER

42.22 151,374 6,391,010.28 89.08 24.02 B

86590-

0X000

RETN ASSY-

BPR COVER

MTG

5.19 1,192,392 6,188,514.48 89.34 24.58 B

12441-

06207

B

T/SCREW-

HEXAGON

HEAD

2.68 2,226,024 5,965,744.32 89.58 25.14 B

98930-

0X000

NOZZLE ASSY-

RR WASHER

38.8 151,374 5,873,311.20 89.82 25.70 B

28767-

36000

NUT-SELF

LOCK

4.53 1,287,312 5,831,523.36 90.06 26.26 B

13395-

06001

NUT FLANGE 0.52 11,161,62

0

5,804,042.40 90.30 26.82 C

11254-

06256

B

BOLT- WASHER

ASSY

3.02 1,837,584 5,549,503.68 90.52 27.37 C

86590-

280004

X

RETN ASSY-

BPR COVER

MTG

1.75 3,088,170 5,404,297.50 90.75 27.93 C

98650-

0X000

HOSE ASSY-

WINDSHIELD

27.13 198,732 5,391,599.16 90.97 28.49 C

40

WASHER

82317-

29000

GROMMET-DR

TRIM MTG

2.45 2,124,288 5,204,505.60 91.18 29.05 C

11251-

06206

B

BOLT WASHER

ASSY

2.6 1,973,994 5,132,384.40 91.39 29.61 C

92408-

3E580

RETAINER-

BOSS MTG

12.55 397,464 4,988,173.20 91.59 30.17 C

89160-

22000

GROMMET &

SPRG ASSY-RR

S/CUSH

13 368,760 4,793,880.00 91.79 30.73 C

11415-

06143

BOLT-

FLANGE(F.T

THREAD)

1.58 2,883,558 4,556,021.64 91.98 31.28 C

12492-

05163

T/SCREW-

FLANGE HEAD

.35 11,872,08

0

4,155,228.00 92.15 31.84 C

81919-

31000

BOLT SAFETY

LOCK

4.61 882,948 4,070,390.28 92.31 32.40 C

11251-

08256

B

BOLT-WASHER

ASSY

3.63 1,114,368 4,045,155.84 92.48 32.96 C

81163-

38000

JOINT- BALL 14.37 274,704 3,947,496.48 92.64 33.52 C

92800-

0X000

LAMP ASSY –

MAP

553.22 7,128 3,943,352.16 92.80 34.08 C

91791-

38000

COUNTER

M/SCREW –

EARTH BOLT

3.72 993,276 3,694,986.72 92.95 34.64 C

82290-

H1000

T/SCREW ASSY-

NYLON

WASHER

3.79 973,884 3,691,020.36 93.10 35.20 C

54559-

28000

FLANGE NUT

SELF LOCKING

3.94 929,442 3,662,001.48 93.25 35.75 C

81456-

17000

M/SCREW 1.82 1,911,396 3,478,740.72 93.40 36.31 C

41

69561-

0X000

PLATE ASSSY-

SPRING LIFT

17.32 198,750 3,442,350.00 93.54 36.87 C

86155-

22000

RETAINER

ASSY-C/TOP

COVER MTG

2.35 1,375,908 3,223,383.80 93.67 37.43 C

98960-

0X000

GROMMET &

HOSE ASSY-RR

WASHER

21.00 151,374 3,178,854.00 93.80 37.99 C

12493-

06207

B

T/SCREW-

FLANGE HEAD

2.02 1,557,840 3,146,836.80 93.93 38.55 C

13271-

06001

NUT WASHER

ASSY

1.04 2,957,346 3,075,639.84 94.05 39.11 C

52921-

17035

WEIGHT–

WHEEL

BALANCE

8.01 383,472 3,071,610.72 94.18 39.66 C

84145-

26000

NUT – PLUG 2.23 1,358,256 3,028,910.88 94.30 40.22 C

98136-

2B000

NUT – WASHER

ASSY

7.53 397,560 2,993,626.80 94.43 40.78 C

14711-

48006

B

CLAMP- HOSE 9 328,626 2,957,634.00 94.55 41.34 C

13396-

10007

K

NUT FLANGE 2.81 1,050,864 2,952,927.84 94.67 41.90 C

13396-

08007

K

NUT- FLANGE 1.71 1,714,968 2,932,595.28 94.79 42.46 C

81456-

1H000

M/SCREW-

TORX

1.79 1,590,240 2,846,529.60 94.90 43.02 C

13270-

10007

K

NUT-WASHER

ASSY

5.36 516,960 2,770,905.60 95.02 43.58 C

13271- NUT-WASHER 2.24 1,203,516 2,695,875.84 95.13 44.13 C

42

06007

B

ASSY

28171-

1C000

BOLT-WASHER

ASSY

2.46 1,087,524 2,675,309.04 95.24 44.69 C

86848-

22000

RETAINER 1.5 1,765,788 2,648,682.00 95.35 45.25 C

52921-

17040

WEIGHT-

WHEEL

BALANCE

7.68 334,326 2,567,623.68 95.45 45.81 C

55267-

07000

FLNAGE NUT 6.45 397,512 2,563,952.40 95.56 46.37 C

97519-

22000

RETAINER

ASSY

1.52 1,654,968 2,515,551.36 95.66 46.93 C

37160-

22000

BRKT-

BATTERY MTG

9.72 257,448 2,502,394.56 95.76 47.49 C

11233-

08206

B

BOLT-WASHER

ASSY

2.8 891,882 2,497,269.60 95.86 48.04 C

11415-

06147

B

BOLT-

FLANGE(F.T.

THREAD)

1.82 1,339,758 2,438,359.56 95.96 48.60 C

12294-

06254

M/SCREW-

OVAL

COUNTER

SUNK HEA

1.76 1,367,568 2,406,919.68 96.06 49.16 C

52921-

17030

WEIGHT-

WHEEL

BALANCE

6.22 383,472 2,385,195.84 96.16 49.72 C

87551-

3K000

BPR-F/FILLER

DR O/SLAM

5.95 397,464 2,364,910.80 96.26 50.28 C

92162-

0X000

BOLT ASSY

HEAD LAMP

MTG

1.95 1,192,392 2,325,164.40 96.35 50.84 C

52921-

17025

WEIGHT-

WHEEL

5.95 383,472 2,281,658.40 96.44 51.40 C

43

BALANCE

86910-

22000

REAINER &

WASHER ASSY

1.09 2,052,528 2,237,255.52 96.54 51.96 C

28755-

3K000

NUT-WASHER

ASSY

2.11 1,047,876 2,211,018.36 96.63 52.51 C

12442-

05207

B

T/SCREW-

HEXAGON

HEAD

1.73 1,259,844 2,179,530.12 96.72 53.07 C

89142-

IC000

T/SCREW-

FLANGE HEAD

1.14 1,880,904 2,144,230.56 96.80 53.63 C

11251-

08206

B

BOLT-WASHER

ASSY

3.13 663,972 2,078,232.36 96.89 54.19 C

98131-

07000

BOLT-WASHER

ASSY

3.46 596,196 2,062,838.16 96.97 54.75 C

12441-

05207

B

T/SCREW-

HEXAGON

HEAD

2.36 872,340 2,058,722.40 97.06 55.31 C

52921-

17020

WEIGHT-

WHEEL

BALANCE

5.31 383,472 2,036,236.32 97.14 55.87 C

84136-

2B000

PLUG-WAX

INJECTION

HOLE

3.49 576,708 2,012,710.92 97.22 56.42 C

12492-

06187

B

T/SCREW

FLANGE HEAD

1.33 1,506,168 2,003,203.44 97.31 56.98 C

82313-

3F000

GA

GROMMET

ASSY TAPPING

SCREW

2.21 889,056 1,964,813.76 97.39 57.54 C

13270-

08001

NUT-WASHER

ASSY

2.45 796,572 1,951,601.40 97.47 58.10 C

81233-

1C000

BOLT-WASHER

ASSY

2.58 728,418 1,879,318.44 97.54 58.66 C

11252- BOLT-WASHER 2.24 794,976 1,780,746.24 97.62 59.22 C

44

06206

B

ASSY

43779-

37010

PIN-SNAP 3.06 575,832 1,762,045.92 97.69 59.78 C

12492-

06181

T/SCREW-

FLANGE HEAD

1.15 1,531,344 1,761,045.60 97.76 60.34 C

98390-

0X000

CAP-W/S ARM 4.26 398,304 1,696,775.04 97.83 60.89 C

87221-

25500

NUT-CAP RR

SPOILER MTG

9.71 172,800 1,677,888.00 97.90 61.45 C

13396-

06007

B

NUT-FLANGE 1.31 1,260,726 1,651,551.06 97.96 62.01 C

52921-

17015

WEIGHT-

WHEEL

BALANCE

4.28 383,472 1,641,260.16 98.03 62.57 C

52921-

17010

WEIGHT-

WHEEL

BALANCE

4.12 383,472 1,579,904.64 98.10 63.13 C

85746-

06000

DU

PLUG 1.5 993,660 1,490,490.00 98.16 63.69 C

13396-

08007

B

BOLT-

WA64.80SHER

ASSY

2.06 719,190 1,481,531.40 98.22 64.25 C

13385-

06001

NUT-FLANGE 1.15 1,227,174 1,411,250.10 98.28 64.80 C

84136-

1D100

PLUG-WAX

INJECTION

3.53 397,464 1,403,047.92 98.33 65.36 C

43777-

25000

PIN-SNAP 2.96 466,740 1,381,550.40 98.39 65.92 C

81683-

0X000

HOSE ASSY-

SUNROOF

DRAIN FR,RH

94.61 14,220 1,345,354,.20 98.45 66.48 C

13385- NUT-FLANGE 0.81 1,531,518 1,240,529.58 98.50 67.04 C

45

06003

81375-

38000

CLIP DR ROD

HOLDING

1.92 645,480 1,239,321.60 98.55 67.60 C

92435-

3B000

GROMMET

ASSY STUD-PIN

2.28 539,712 1,230,543.36 98.60 68.16 C

82734-

3A000

4X

CAP-DR PULL

HDL

1.92 638,904 1,226,695.68 98.65 68.72 C

43777-

37710

PIN-SNAP 2.73 445,284 1,215,625.32 98.70 69.27 C

11230-

08166

B

BOLT WASHER

ASSY

2.12 555,402 1,177,452.24 98.75 69.83 C

81199-

33000

CLIP HOOD

LATCH

RELEASE

CABLE

1.41 818,898 1,154,646.18 98.79 70.39 C

81755-

17000

HDL-T/GATE

PULL

4.8 234,312 1,124,697.60 98.84 70.95 C

98713-

0X000

GROMMET-RR

WIPER

7.13 151,374 1,079,296.62 98.88 71.51 C

92155-

22110

BOLT ASSY

HEAD LAMP

MTG

2.26 468,540 1,058,900.40 98.93 72.07 C

11254-

08206

B

BOLT WASHER

ASSY

3.54 287,892 1,019,137.68 98.97 72.63 C

43750-

25000

WASHER-PLAIN 3.42 296,106 1,012,682.52 99.01 73.18 C

13396-

06007

K

NUT-FLANGE 1.43 699,060 999,655.80 99.05 73.74 C

13270-

06007

K

NUT-WASHER

ASSY

1.61 615,360 990,729.60 99.09 74.30 C

46

11254-

06166

B

BOLT-WASHER

ASSY

2.56 380,826 974,914.56 99.13 74.86 C

11403-

06457

K

BOLT-FLANGE 2.66 356,748 948,949.68 99.17 75.42 C

11250-

06166

B

BOLT-WASHER

ASSY

1.22 777,510 948,562.20 99.21 75.98 C

43711-

0X100

CH

KNOB 122.15 7,440 908,796.00 99.25 76.54 C

12493-

04123

T/SCREW-

FLANGE HEAD

0.4 2,205,900 882,360.00 99.28 77.09 C

11251-

06256

B

BOLT WASHER

ASSY

1.93 451,086 870,595,.98 99.32 77.65 C

83412-

3F000

T/SCREW-

COUNTER

SUNK HEAD

2 397,464 794,928.00 99.35 78.21 C

85325-

21000

GA

PLUG-TRIM

MTG

1.6 477,216 763,545.60 99.38 78.77 C

13504-

12307

K

WASHER PLAIN 1.92 397,560 763,315.20 99.41 79.33 C

13396-

08001

NUT-FLANGE 0.91 829,104 754,484.64 99.44 79.89 C

59145-

02000

SEAL 2.25 335,322 754,474.50 99.47 80.45 C

82314-

3B000

GA

CAP-TAPPING

SCREW

0.77 889,056 684,573.12 99.50 81.01 C

81684-

0X000

HOSE ASSY-

SUNROOF

94.59 7,110 672,534.90 99.53 81.56 C

47

DRAIN RR, RH

81173-

1C000

GROMMET –

HOOD STAY

ROD MTG

2.87 234,318 672,492.66 99.56 82.12 C

12441-

06206

B

T/SCREW-

HEXAGON

HEAD

1.68 397,464 667,739.52 99.58 82.68 C

11403-

08127

B

BOLT FLANGE 2.52 260,508 656,480.16 99.61 83.24 C

81176-

1C000

CLIP-HOOD

STAY ROD

2.8 234,318 656,090,.40 99.64 83.80 C

13602-

14001

WASHER-

SPRING

1.46 444,270 648,634.20 99.66 84.36 C

62452-

0X000

BOLT-ASSY

BODY

9.07 71,076 644,659.32 99.69 84.92 C

13270-

08007

K

NUT-WASHER

ASSY

4.1 151,506 621,174.60 99.72 85.47 C

13396-

06001

NUT FLANGE 1.22 498,750 608,475.00 99.74 86.03 C

13270-

06001

NUT-WASHER

ASSY

0.83 726,786 603,232.38 99.77 86.59 C

43750-

36000

WASHER-PLAIN 2.01 296,106 595,173.06 99.79 87.15 C

82135-

3A000

CAP-DR SIDE

W/STRIP

1.45 398,820 578,289.00 99.81 87.71 C

11404-

10406

K

BOLT-FLANGE 4.74 116,160 550,598.40 99.84 88.27 C

96210-

0X350

FEEDER

CABLE-RADIO

EXTENSION

118.58 4,338 514,400.04 99.86 88.83 C

13111-

14004

NUT(CLASS3) 1.14 443,592 505,694.88 99.88 89.39 C

48

84148-

21000

PLUG-RR FLR

SIDE WATER

DRAIN

1.2 397,464 476,956.80 99.90 89.94 C

13385-

08007

B

NUT FLANGE 2.07 199,554 413,076.78 99.91 90.50 C

81692-

0X000

HOSE ASSY-

SUNROOF

DRAIN RR,LH

57.5 7,110 408,825.00 99.93 91.06 C

84712-

22000

PAD ANTI

NOISE

1.98 200,652 397,290.96 99.95 91.62 C

13395-

08003

NUT-FLANGE 0.7 400,632 280,442.40 99.96 92.18 C

11254-

06146

B

BOLT-WASHER

ASSY

2.3 88,530 203,619.00 99.97 92.74 C

92759-

1C000

4X

COVER-H.M.S.

LAMP

3.33 48,480 161,438.40 99.97 93.30 C

13395-

06007

B

NUT-FLANGE 0.88 149,202 131,297.76 99.98 93.85 C

81639-

3K000

CLIP-SUNROOF

DRAINHOSE

2.6 42,660 110,916.00 99.98 94.41 C

39180-

03000

SENSOR

CRANK SHAFT

POSITION

258.29 402 103,832.58 99.99 94.97 C

14711-

62006

B

CLAMP-HOSE 9.34 9,000 84,060.00 99.99 95.53 C

14300-

03251

PIN-SPLIT 0.21 322,134 67,648.14 99.99 96.09 C

43927-

3220

BOLT ASSY

WASHER

0.16 385,926 61,748.16 100.00 96.65 C

43712- BOLT-FLANGE 0.14 407,970 57,115.80 100.00 97.21 C

49

02500

81686-

38000

GROMMET-

SUNROOF

DRAIN HOSE

1.08 14,256 15,396.48 100.00 97.77 C

11253-

06256

B

BOLT-WASHER

ASSY

1.28 2,358 3,018.24 100.00 98.32 C

97714-

29100

BOLT-

COMPRESSOR

MTG

6.49 144 934.56 100.00 98.88 C

98980-

0X001

HOSEASSY-RR

WASHER

0 151,374 - 100.00 99.44 C

85235-

0X000

DU

RETAINER-

SUNVISORASSY

19.5 - - 100.00 100.00 C

Figure 4.1.1

ABC ANALYSIS OF KD PARTS

ABC ANALYSIS

0

50

100

150

0.56

9.5

18.4

27.4

36.3

45.3

54.2

63.1

72.1 81

89.9

98.9

PERCENTAGE OF UNITS(cummaulative)

PE

RC

EN

TA

GE

V

AL

UE

(cu

mm

ula

tiv

e)

50

TABLE 4.1.2 ABC Analysis of KD parts

Frequency Percent Cumulative Percent

Valid A B

C

19

28

132

10.6

15.6

73.7

10.6

26.3

100TOTAL 179 100

FIGURE 4.1.2

ABC ANALYSIS OF i10 KD PARTS

INTERPERTATION:

It is found that out of 179 items only 10.6% of items (19 items) consume 75% of

total consumption value. Hence, it is called ‘A’ category items.

Out of 179 items, 15.6% of items (28 items) consume 15%of total consumption

value. They are called ‘B’ category items.

51

In the last case 73.3% of items (132) consume 10% of total consumption value.

Hence they are called ‘C’ category items.

TABLE 4.1.3

COMPONENTS FOR THE ANALYSIS

Following tables shows the VED, HML, FSN, and XYZ Analysis of KD parts which are

used in Assembly Shop Phase II for the production of i10

Part No Part Name

ABC

VED

HML

FSN XYZ

58900-0X300 ABS&BRKT ASSY A V H S X

96210-07010 ANTENNA ASSY-ROOF B V M S X

98801-0X000 ARM & BLADE ASSY-RR WIPER A E M S X

98301-0X900 ARM & BLADE ASSY-W/WPR D/SIDE A E M S X

98302-0X900 ARM & BLADE ASSY-W/WPR P/SIDE A E M S X

92162-0X000 BOLT ASSY HEAD LAMP MTG C V L S Y

92155-22110 BOLT ASSY HEAD LAMP MTG C V L S X

43927-32200 BOLT ASSY WASHER C E L S Z

62452-0X000 BOLT – ASSY BODY C V L S Y

11403-08127B BOLT FLANGE C D L S Y

81919-31000 BOLT SAFETY LOCK C V L S X

11251-06166B BOLT WASHER ASSY B V L S Y

11230-08166B BOLT WASHER ASSY C V L S Y

11254-08206B BOLT WASHER ASSY C V L S Y

11251-06256B BOLT WASHER ASSY C D L F X

97714-29100 BOLT-COMPRESSOR MTG C D L N Y

11403-06457K BOLT FLANGE C V L S X

11404-10406K BOLT FLANGE C D L S Y

43172-02500 BOLT FLANGE C E L S Z

11415-06143 BOLT FLANGE(F.T THREAD) C D L F X

11415-06147B BOLT FLANGE(F.T THREAD) C V L F X

11254-06206B BOLT – WASHER ASSY B V L F X

11254-08306B BOLT – WASHER ASSY B D L S X

11254-06256B BOLT – WASHER ASSY C V L S X


11251-08256B BOLT – WASHER ASSY C V L F X

28171-1C000 BOLT – WASHER ASSY C D L S X

11233-08206B BOLT – WASHER ASSY C V L F X


98131-07000 BOLT – WASHER ASSY C V L S X

81233-1C000 BOLT – WASHER ASSY C V L S X

52

11252-06206B BOLT – WASHER ASSY C D L F X



11250-06166B BOLT – WASHER ASSY C E L S Y

11254-06146B BOLT – WASHER ASSY C V L N Z

11253-06256B BOLT – WASHER ASSY C D L S Y

87551-3K000 BPR-F/FILLER DR O/SLAM C V L S X

43920-02510 BRKT ASSY SHIFT CABLE A E M S X

37160-22000 BRKT – BATTERY MTG C V L S X

96620-0X500 BURULAR ALARM HORN B D M S X

31010-24000 CAP ASSY – F/FILTER B E L S X

82734-3A0004X CAP – DR PULL HDL C V L S X

82135-3A000 CAP – DR SIDE W/STRIP C V L S Y

54627-07000 CAP – INSULATOR DUST B V L S X

82314-3B000GA CAP – TAPPING SCREW C V L S Y

98390-0X000 CAP – W/S ARM C V L S Y

14711-48006B CLAMP - HOSE C V L N Y

14711-62006B CLAMP – HOSE C V L S X

81375-38000 CLIP DR ROD HOLDING C E L S Y

81199-33000 CLIP – HOOD LATCHE RELEASE CABLE C V L S Y

81176-1C000 CLIP- HOLD STAY ROD C V L S Y

81693-3K000 CLIP – SUNROOF DRAIN HOSE C D L S Z

93490-0X210 CONTACT ASSY – CLOCK SPRING A D M S X

91791-38000 COUNTER M/S SCREW – EARTH BOLT C V L S X

94472-07000 COVER FUEL PUMP A/S B V L S X

92759-1C0004X COVER – H.M.S. LAMP C E L S Y

81723-0X020 DECOLATION BAND T/GATE HANDLE A V M S X

56900-0X000CH DRIVER AIR BAG MODULE ASSY A V H S X

96210-0X350 FEEDER CABLE – RADIO EXTENSION C D M N Y

55267-07000 FLANGE UNIT C V L S X

54559-28000 FLANGE NUT SELF LOCKING C V L S X

98960-0X000 GROMMET & HOSE ASSY- RR WASHER C V L S X

89160-22000 GROMMET & SPRG ASSY-RR S/CUSH C V L S X

97313-34100 GROMMET ASSY HEATER PIPE B D L S X

92435-3B000 GROMMET ASSY – STUD PIN C V L S Y

82313-3F000GA GROMMET ASSY – TAPPING SCREW C V L S X

82313-29000 GROMMET- DR TRIM MTG C V L F X

81173-1C000 GROMMET- HOOD STAY ROD MTG C V L S Y

98713-0X000 GROMMET- RR WIPER C E L S Y

81686-38000 GROMMET – SUN ROOF DRAIN HOSE C D L N Z

85340X000DU HDL ASSY ROOF ASSIST, FR A V M S X

53

81755-17000 HDL-T/GATE PULL C V L S Y

98950-0X000 HOSE ASSY-RR WASHER B E L S X

98980-0X000 HOSE ASSY-RR WASHER C E L S Z

81683-0X000 HOSE ASSY – SUNROOF DRAIN FR,LH C D L N Y

81692-0X000 HOSE ASSY – SUNROOF DRAIN RR,RH C D L N Y

81684-0X000 HOSE ASSY – SUNROOF DRAIN RR,RH C D L N Y

98650-0X000 HOSE ASSY-WIND SHIELD WASHER C V L S X

81163-38000 JOINT BALL C V L S X

43711-0X100CH KNOB C D M N Y

92620-.0X000 LAMP ASSY-LUGGAGE & GLOVE B V L S X

92800-0X000 LAMP ASSY – MAP C D H N X

81456-17000 M/SCREW C V L F X

81477-4A000 M/SCREW SEMS – TORX OVAL HEAD B V L F X

12294-06254 M/SCREW-OVAL COUNTER SUNK HEA C V L F X

81456-1H000 M/SCREW-TORX C V L F X

98100-0X900 MOTOR & LINK ASSY-W/WPR RHD A V H S X

98700-0X100 MOTOR & LINKAGE ASSY – RR WIPER A V H S X

98930-0X000 NOZZLE ASSSY-RR WASHER B E L S X

52950-17000 NUT ASSY – RR WASHER A E L F X

13395-06001 NUT ASSY – HUB C D L S Z

13385-06001 NUT FLANGE C D L F Y

13396-06001 NUT FLANGE C D L F X

13111-14001 NUT FLANGE(CLASS 3) C V L S Y

87221-25500 NUT-CAP RR SPOILER MTG C E L S X

13396-10007K NUT FLANGE C V L S X

13396-08007K NUT FLANGE C D L S Y

13396-06007B NUT FLANGE C V L F X

13385-06003 NUT FLANGE C D L S Y

13396-06007K NUT FLANGE C V L F Y

13396-08001 NUT FLANGE C V L S Y

13385-08007B NUT FLANGE C D L S Z

13395-08003 NUT FLANGE C V L F Y

13395-06007B NUT FLANGE C E L S Y

84145-26000 NUT-PLUG C V L F X

28767-36000 NUT-SELF LOCK B V L F X

54

13271-06001 NUT-WASHER ASSY C V L S X

98136-2B000 NUT-WASHER ASSY C V L S X

13270-10007K NUT-WASHER ASSY C V L S Y

13271-060007B NUT-WASHER ASSY C D L S X

28755-3K000 NUT-WASHER ASSY C V L F X

13270-08001 NUT-WASHER ASSY C V L S X

13270-06007K NUT-WASHER ASSY C V L S Y

13270-08007K NUT-WASHER ASSY C E L F X

13270-06001 NUT-WASHER ASSY C V L S Y

84172-22000 PAD ANTI NOISE C E L S Y

43779-37010 PIN-SNAP C E L S X

43777-25000 PIN-SNAP C D L S Y

43777-37710 PIN-SNAP C E L S Y

14300-03251 PIN-SPLIT C E L S Z

69561-0X000 PLATE ASSY – SPRING LIFT C V L S X

85746-06000DU PLUG C V L S Y

84134-22000 PLUG DRAIN B V L F X

84145-21000 PLUG-RR FLR SIDE WATER DRAIN C V L S Y

85325-21000GA PLUG TRIM MTG C V L S Y

84136-1D100 PLUG WAX INJECTION C V L S Y

84136-2B000 PLUG WAX INJECTION HOLE C V L S X

96220-07500 POLE- ROOF ANTENNA B V M S X

98610-0X100 RESERVOIR & PUMP ASSY-W/WASHER B E H S X

86848-22000 RETAINER C V L F X

86910-22000 RETAINER & WASHER ASSY C V L F X

97519-22000 RETAINER ASSY C V L F X

86155-22000 RETAINER ASSY-C/TOP COVER MTG C V L F X

92408-3E580 RETAINER-BOSS MTG C V L S X

85235-0X000DU RETAINER –SUNVISOR ASSY C V L N X

86590-0X000 RETN ASSY-BPR COVER MTG B V L S X

86590-280004X RETN ASSY-BPR COVER MTG C V L F X

59145-02000 SEAL C V L S Y

97650-38950 SEAL ASSY- EVAPORATOR PIPE B V L S X

39180-03000 SENSOR CRANK SHAFT POSITION C E M N X

96300-0X200 SPEAKER ASSY-DR FR A E H S X

55

96300-0X210 SPEAKER ASSY-DR FR A E H S X

96300-0X110 SPEAKER ASSY-DR RR A E M S X

96300-0X100 SPEAKER ASSY-DR RR A E M S X

93560-25100 SWITCH ASSY-DR A V L F X

86341-0X000 SYMBOL MARK B V L S X

82290-H1000 T/SCREW ASSY-NYLON WASHER C V L S X

83421-3F000 T/SCREW – COUNTERSUNK HEAD C V L S Y

10188-05163 T/SCREW - FLANGE B V L F X

12492-05163 T/SCREW – FLANGE HEAD C V L F X

12493-06207B T/SCREW – FLANGE HEAD C V L F X

86142-1C000 T/SCREW – FLANGE HEAD C V L F X

12492-06187B T/SCREW – FLANGE HEAD C V L F X

12492-06181 T/SCREW – FLANGE HEAD C V L F Y

12493-04123 T/SCREW – FLANGE HEAD C V L F X

12441-06207B T/SCREW – HEXAGONHEAD B V L F X

12442-05207B T/SCREW – HEXAGON HEAD C V L S X

12441-05207B T/SCREW - HEXAGON HEAD C V L F X

12441-06206B T/SCREW – HEXAGON HEAD C V L S Y

95431-0X400 TRANSMITTER B D H N X

95910-0X150 UNIT ASSY- AIR BAG D.A.B B D H N X

52933-31300 VALVE - TIRE A V L F X

96420-4A600 VEHICLE SPEED SENSOR ASSY A E M S X

82210-0X000 W/STRIP ASSY-FR DR BELT O/S,LH B V M S X

82220-0X000 W/STRIP ASSY-FR DR BELT O/S,RH B V M S X

83210-0X000 W/STRIP ASSY-FR DR BELT O/S,LH B V M S X

83220-0X000 W/STRIP ASSY-FR DR BELT O/S,RH B V M S X

43750-25000 WASHER - PLAIN C V L S Y

13504-12307K WASHER – PLAIN C E L S Y

43750-36000 WASHER – PLAIN C E L S Y

13602-14001 WASHER – SPRING C V L S Y

52921-17035 WEIGHT – WHEEL BALANCE C E L S Y



52921-17025 WEIGHT – WHEEL BALANCE C E L S X


56



4.2 VED ANALYSIS:

TABLE 4.2.1

57

VED ANALYSIS OF i10 KD PARTS


D

E

V

30

38

111

16.8

21.2

62

16.8

38

100

Total 179 100

FIGURE

4.2.1

0

20

4060

80

100120

FREQUENCY

D E V

VED

VED ANALYSIS OF i 10 KD PARTS

58

INTERPRETATION:

It is concerned that out of 179 items 62% of 111 items are vital items.

In the second case of the essential items it consumes 21.2% of 38 items out of 179

items to be more essential parts.

In the last case it is found that 30 items out of 179 items consumes 16.8% are desirable one.

4.3 HML ANALYSIS:

TABLE 4.3.1

HML ANALYSIS OF i10 KD PARTSFrequency Percent Cumulative Percent

H

M

L

10

149

20

5.6

83.2

11.2

5.6

88.8

100

Total 179 100

Figure 4.3.1

HML ANALYSIS OF i10 KD PARTS

INTERPRETATION:

59

It is concerned that out of 179 items 5.6% of 10 items are high value items, i.e., unit

price of these items are more than or equal to Rs.500

In the second case of essential items it consumes 11.2% of 20 items out of 179

items are Medium Value Items, i.e., unit price of these items are less than Rs.500

and more than Rs.100.

In the last case it is found that 149 items consumes83.2% is low value items. These

items unit price are less than Rs.100

4.4 FSN ANALYSIS:

TABLE 4.4.1

FSN ANALYSIS


F

N

S

39

14

126

21.8

7.8

70.4

21.8

29.6

100

Total 179 100

FIGURE 4.4.1

60

INTERPRETATION

It is concerned that out of 179 items 21.8% of 39 items are fast moving items.

In the second case of slow moving items it consumes 21.2% of 126 items out of 179

items are slow moving items.

In the last case it is found that 14 items out of 179 items consumes 7.8% are Non-

moving items.

4.5 XYZ ANALYSIS:

TABLE 4.5.1

XYZ ANALYSIS OF i10 KD PARTS


X

Y

Z

114

56

9

63.7

31.3

5

63.7

95

100

Total 179 100

INTERPRETATION

61

It is concerned that out of 179 items 63.7% of 114 items are X class items. These

items are the highest stocks in hand (i.e., > Rs.10,00,000)

In the second case of Y class items it consumes 31.3% of 56 items out of 179 items

are Y class items.(i.e. Rs. 1,00,000 <YClass< 10,00,000).

In the last case it is found that 9 items out of 179 items consumes 5% are Z class

items.

4.6 FIFO ANALYSIS

INVENTORY COSTING METHODS

Since many inventory items can change their values rapidly, there are various methods

for assigning the values to the inventory items when they are cost out in a cost accounting

system. The three most common methods of valuing your inventory items for costing

purposes are FIFO, LIFO and Averaging.

FIFO

This simply stands for First In – First Out and means that the first item purchased

( oldest on the shelf) will be the first item used and will be cost at the rate at which it was

actually purchased. Thus it is crucial under this system that an item by item history log is

kept up, showing exactly when items where purchased and what their values are. Each

item could be on file with a completely different rate and must be cost at the appropriate

rate whenever it is used.

LIFO

This simply stands for Last In – First Out and means that the last item purchased

( newest on the shelf) will be the first item used and will be cost at the rate at which it

actually purchased. Thus, similar to the FIFO method, it is crucial under this system that

an item by item history log is kept up, showing exactly when items were purchased and

62

what their values are. Each could be on file with a completely different rate and must be

cost at appropriate rate whenever it is used.

AVERAGING

This is a simpler form of costing inventory, which simply costs all items out according

to the current average value of all inventory items (of that type) on-hand at the current time

( or over a designated time period).

FIFO METHOD:

FIFO method is followed in HMIL. That is first come inventory is distributed first. For

that I have chosen four parts from the above analysis that is parts which are in A class as well

as vital parts.

TABLE 4.6.1

FIFO METHOD OF ABS & BRKT ASSY

Part No 58900-0X300Part Name ABS & BRKT ASSY

MonthReceipts Issues Inventory

quantity cost value quantity cost valuequantity

cost value

January

82 7007.66

574628.12

1187 6629.48 7869193 1269 8443820.88415 5976.67 2480318 854 5963502.83

February854 5963502.83

805 6648.84 5352316 1659 11315819.03747 6629.63 4952334 912 6363485.42

March

912 6363485.422100 7177.39 15072519 3012 21436004.432

719 6662.8 4790553 2293 16645451.22

April

2293 16645451.221675 7229 12108575 3968 28754026.22

717 6589.52 4724686 3251 24029340.38

May3251 24029340.38

0 0 3251 24029340.38

63

677 7228.99 4894026 2574 19135314.15

June

2574 19135314.150 0 2574 19135314.15

659 7229 4763911 1915 14371403.15

TABLE 4.6.2

Part No 81723-0X020Part Name DECOLATION BAND T/GATE HANDLE


quantity cost value quantity cost value quantity

cost value

January 23388 102.19 2390019.7218745 96.38 1806643 42133 4196662.82

25735 94.42 2429899 16398 1766764.12February 16398 1766764.12

12570 96.67 1215142 28968 2981906.0223323 95.96 2238075 5645 743830.94

March 5645 743830.9433886 103.2 3497035 39531 4240866.14

20972 96.67 2027363 18559 2213502.9April 18559 2213502.9

27825 106.72 2969484 46384 5182986.917629 103.2 1819313 28755 3363674.1

May 28755 3363674.142365 106.65 4518227 71120 7881901.35

26310 104.83 2758077 44810 5123824.05June 44810 5123824.05

29525 112.25 3314181 74335 8438005.3119858 105.96 2104154 54477 6333815.62

FIFO METHOD OF DELOCATION BAND T/GATE HANDLE

64

TABLE 4.6.3

Part No 56900-0X000CHPart Name DRIVER AIR BAG MODULE ASSY


quantity cost value quantity cost value quantity

cost value

January 7004 3760.97

26341833.88

8769 3585.2 31438619 15773 57780452.686655 3512.18 2337355

89118 34406894.78

February 9118 34406894.786901 3595.84 24814892 16019 59221786.62

6286 3578.02 22491434

9733 36730352.9

March 9733 36730352.912001 3775.23 45306535 21734 82036888.13

8526 3615.13 30822598

13208 51214289.75

April 13208 51214289.7512535 3857.5 48353763 25743 99568052.25

8202 3775.23 30964436

17541 68603615.79

May 17541 68603615.798165 3976.34 32466816 25706 101070431.9

8266 3823.43 31604472

17440 69465959.51

June 17440 69465959.5111825 4058.2 47988215 29265 117454174.5

7873 3856.53 30362461

21392 87091713.82

Table showing the FIFO method of DRIVER AIR BAG MODULE ASSY

65

TABLE 4.6.4

TABLE SHOWING THE FIFO METHOD OF HDL ASSY-ROOF ASSIST, FR

Part No 85340-0X000DUPart Name HDL ASSY-ROOF ASSIST,FR


quantity cost value quantity cost value quantity cost value

January 16688 102.39 1708684.3266031 70.35 4645281 82719 6353965.17

38811 70.35 2730354 43908 3623611.32February 43908 3623611.32

50790 96.48 4900219 94698 8523830.5248214 70.34 3391373 46484 5132457.76

March 46484 5132457.7667106 97.15 6519348 113590 11651805.66

51677 96.47 4985280 61913 6666525.47April 61913 6666525.47

53810 98.48 5299209 115723 11965734.2742164 97.15 4096233 73559 7869501.67

May 73559 7869501.6735450 104.18 3693181 109009 11562682.67

38395 97.15 3730074 70614 7832608.42June 70614 7832608.42

57308 111.98 6417350 127922 14249958.2649941 102.39 5113459 77981 9136499.27

66

5.1 FINDINGS

The total end items are 179 items. These items are using in assembly phase II for the

production of i10.

The results of the ABC Analysis are as follow:

Category A stands with 19 items out of 179 items.

Category B stands with 18 items out of 179 items.

Category C stands with 132 items out of 179 items.

The results of FSN Analysis are as follows:

Fast moving items -39

Slow moving items-126

Non moving items-14

The results of VED Analysis are as follows:

Vital items -111

Essential items -38

Desirable items -30

The results of HML Analysis are as follow:

High value items - 10

Medium value items - 20

Low value items - 149

The results of XYZ Analysis are as follow:

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X class items -114

Y class items -56

Z class items -9

ABC vs. VED analysis

Category I comprises (AV,AE,AD,BV and CV)- 122 items,

Category II (BE,CE,BD)- 33 items

Category III (CD) -24 items

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5.2 LIMITATIONS OF THE STUDY

The study has the following limitations:

The study was carried out only in KD parts using in Assembly phase II of the Plant

II.

The study is for only i10 production only so it is limited to certain parts only.

The study is limited to secondary data only.

The study is based on the information available in the records given by the

executives

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5.2 CONCLUSION

Inventory is used to control the overall cost of the company. This management is very

useful to the company. In HMIL raw materials plays a major role, to maintain the quality of

products, the techniques like ABC, FSN, VED, and FIFO is used and controlled. The

avoidance of slow moving and non moving parts are appreciable. If there is line stoppage

there is also a claim made with both vendors and manpower working. This may be a

penalty to them. Hence they can avoid doing it. On the other hand there are number of

production done with different models so that inventory cause will be higher.

Hence this project will be useful for them to analysis the inventory control on i10 car.

Hence this study makes me to know how the HMIL is maintain & control the inventory

control.

70

5.3 SUGGESTION AND RECOMMENDATION

Concentrate on the A class items for the below issues

Maintain optimum level of inventory level

Try for cost reduction so that total car price can be reduced and it will increase sales

of the car

During engineering order change proper stock to declared to avoid non-moving

We can implement RFID to track the inventory level and to check the exact stock

Fast moving parts inventory level can increase.

We can follow JIT fully then the outcome will be carrying cost reduction.

We can increase the inventory level of the vital parts, so that we can avoid the line

stop.

The ABC – VED matrix shows that management of class I (122 vital items) by the

top level management. The middle level management by office-in-charge of stores

of class II (33 items) and lower level management for class III drugs is desirable.

Practically following FIFO is a difficult thing so management should implement bar

coding system in all ware house and container yard.

71

BIBILOGRAPHY

Slack, N., Stuart, C., Christine, H., Alan and Robert, J., “Operations

Management”, Pitman Publishing, London, 1998.

Jessop, D., and Morrison, A., “Storage and Supply of Materials”, sixth Ed.,

Falmoutii, Cornwall, London, 1994

R. Pannerselvam., “Production and Operations Management”, second edition,

prentice Hall of India Private Limited, New Delhi.

www.hmil.com

www.automobiles.com

72

http://www.automobiles.com/

http://www.hmil.com/

Documents

Chapter 1 Introduction 1.1 Introduction the Importance