A live project report

on inventory problem

Of

Big bazaar

Submitted to:- submitted by :-

B.K SOam rahul saha(TL)

(Sr. Lecturer) lokesh sharma(atl)

Accman institute of management Niranjan Kumar

Nupur Sinha

Naveen kumar

Sambeet Sahoo

Shalini Kumari

Varun Grover

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PREFACE

An organizational system consists of various subsystems. The

most ideal approach to optimize the performance of a system is to

consider different subsystems as an integrated single unit. In some

reality, integrating all the subsystems as a single unit will make the

problem-solving process more complex, because of its size and

different constraints. Under such situations, it is inevitable to optimize

the performance of each subsystem. Management Science for Decision

Making consists of topics to achieve each of these objectives

depending on the reality.

Under inventory control, the following topics are intrinsic to the

process:

Multiple-item model with storage limitation

Purchase model of inventory for multi-item with inventory

carrying cost constraints.

EOQ model for multi-item joint replenishment without shortages

for purchase model of inventory as well as for manufacturing

model of inventory.

EOQ for the purchase model of inventory for multi-item joint

replenishment with space constraint.

In this line we had an opportunity to undergo practical project of BIG

BAZAAR inventory management.

Through this study we would get valuable information and this

project will help us to have a valuable experience of real market which

would be fruitful in our career.

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ACKNOWLEDGEMENT Through this acknowledgement, we express our sincere gratitude towards

all those people who have helped us in the preparation of this project, which has

been a learning experience.

Our sincere thanks to Mr. Hiten Bansal (Store manager, Big Bazaar),Mr.

Sudhir Ganguly (Asst. Merchandising officer, Big Bazaar)and Mr. P Prasad (Floor

Manager,Big Bazaar) under whose able guidance and kind cooperation We are

able to complete the project work titled "Analysis of Inventory Management of

Big Bazaar”.

We sincerely thank help provided by my institute “Accman Institute of

Management” which provided us the necessary material for completion of this

project. We are also thankful to our sincere MSDM faculty Mr. B.K. Soam.

We also appreciate the whole BIG BAZAAR for their ample co-operation and

help in the collection of necessary and relevant information regarding this project.

Also, we thank all respondents who supported us without their help project

completion was not possible.

Date - 10 March Names of students:

Rahul Saha (TL)

Lokesh Sharma (ATL)

Naveen Kumar

Niranjan Kumar

Nupur Sinha

Sambeet Sahoo

Shalini Kumari

Varun Grover

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Executive Summary

Our live project is based on the inventory of Big Bazaar, Sector

18, Noida. We, a team of 8 dedicated individual, made the project a

worthwhile experience for all of us as a part of partial fulfilment of

our PGDM degree. 3 of our team mates went to “The Great Indian

Place” on the 8th March, 2010 to collect the necessary information

regarding the inventory of the retail giant.

We collected some necessary information from 3 Big Bazaar

officials. They were highly co-operative and friendly. By gathering

the information we made some calculations regarding the project

to find out the maximum inventory, cycle time etc.

Hopefully our study will make this observation worthwhile

and with the continuous effort we can make our team

cohesiveness greater than it was ever before.

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Introduction

You are in trouble if you have to keep telling customers, "I'm sorry

we're out of that size. May we order it for you?" Even though the

shirts are selling briskly, you will lose customers if you don't

have an item in stock.When the customer spends, you have got

to be ready with the goods. This is what inventory management is

all about.

In many retail and wholesale operations, the single largest

asset is inventory. Control of this investment is vital. It will

eliminate a number of the problems associated with capital

shortages and will also provide capital to permit expansion of

operations for increased sales and profit.

Literature review

Inventory management can be briefly described as:

· Acquiring an adequate supply and assortment of merchandise

from whichcustomers can buy.

· Providing safety stocks to meet unexpected demand or delays in

inventoryreplenishment.

· Maintaining clear, correct, and current records.

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· Purchasing the proper assortment of goods in quantities that will

maintaininventory levels consistent with business requirements,

while providingadequate safety stocks.

· Reducing excessive inventories promptly, so that the dollars

realized fromclearing overstocks can be invested in merchandise

with a greater marketpotential.

Inventory Investment Control

Inventory investment control is accomplished in two ways:

· Prompt elimination of overstocked items.

· Inventory replenishment in anticipation of customer demand.

Whenever aparticular item is overstocked, the overstock should be

reduced as promptlyas possible. Naturally, the most effective and

profitable way is to sell it tocustomers, even at a discount.

However, there are other possibilities. Theremay be a wholesale

market available for certain kinds of inventory.

Excessive consumer goods inventories are often sold to "bargain

basements"or warehouse outlets. Perhaps you can even arrange

wholesale sales to acompetitor. Frequently, it is wiser to scrap

inventory that shows no salesactivity for an extended period of

time. In this way, you reduce a misleadingoverstatement of

inventory on your company's books. At the same time, youmake

space available for inventory that can be sold at a profit.

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Variables in an Inventory Problem:

An inventory can be defined as a stock of goods which is held for the purpose of future production or sales. The stock of goods may be kept in the following forms:

1. Raw Materials 2. Partly finished goods 3. Finished goods 4. Spare parts etc.

The objective of an inventory problem is to minimize the total (actual or expected) cost or to maximize (actual or expected) profit. The variables associated with the inventory problems are classified into two categories.

a. The Controlled variables b. The uncontrolled variables

The controlled variables–The variables that may be controlled, separately or incombination are following: 1. The quantity acquired – By purchase, production, or some other

means. The decision maker may have a control over the

production or purchase level.

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2. The frequency of timing of acquisition – The decision maker

may have control over how often or when the inventory should

be replenished.

3. The stage of completion of stocked items – The decision maker

may have a control over the stage which the unfinished items

are held so that there is no delay in supplying customers.

The uncontrolled variables – The variable that may not be

controlled in an inventory problem are divisible into cost variables

and others.

Cost Variables (or the costs) involved in Inventory Problems:

The main cost variables involved in inventory problems are as

follows:

Holding or storage cost – The costs associated with the storage of

the inventory until it is or used are known as the holding or storage

costs. This cost is directly proportional to the various components

of the holding costs are as follows:

1. Handling costs– Which includes the cost of labour,

transportation charges etc.

2. Rent of the space or interest and the cost of depreciation on

owned space.

3. Cost of the staff to keep records.

4. Insurance and taxes.

5. Interest on the money locked for inventory.

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6. Deterioration cost etc. Which arises in the case of fashion

items or items that changes chemically during storage such as

medicines, foods etc.

Set up (or replacement or ordering) costs – This is the cost

associated with the placing of an order for purchasing goods, or it is

the cost of setting a machine before it starts production. This cost

may depend on the quantity of goods purchased because of price

breaks or quantity discounts.

Besides these cost variables there are other variables that may

not be controlled in an inventory problem

1. Demand – Demand is the number of items required per

period which is not necessarily equal to the amount sold as some

demand may go unfulfilled because of storage or delays.

The demand may be of two types:

Deterministic Demands– If the number of items required (i.e.

demand) in a subsequent period of time is known exactly then

such demand are called deterministic demands

Non deterministic Demands – If the demands over a

subsequent period of time is not known with certainty then

such demands are called non – deterministic or probabilistic

demands

2. Lead Time – The time gap between the time of placing an

order or the starting of the production and the time of arrival or

delivery of goods to the inventory is called Lead Time. Also the time

gap between the time of demand and the time of filling the

demand from the inventory is called lead time. If this time is known

(constant) and not zero then one may order in advance by an

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amount of time equal to the lead time. If it is a variable i.e., known

only probabilistically than the question of when to order is difficult.

3. Amount Delivered – The supply of goods may be

instantaneous or spread over a period of time.

Need ofInventory:

The inventory in any business is maintained to decrease the set up

costs and the shortage costs. If the demands of the customers are

not fulfilled then in then it may result in the loss of their good wills.

If the orders are cancelled then it results in the loss of the business.

Thus, there is always a need of inventory for the smooth running of

any business.

Inventory Problems

An inventoryproblem exists if the amount of the goods in stock (i.e.

inventory) is subject to control and if there is at - least one cost

that decreases as inventory increases.

Advantages and Disadvantages of Inventory:

Advantages:

(i) The economics of production with the large run sizes.

(ii) The smooth and efficient running of the business.

(iii) The economics in transportation.

(iv) The advantage of price discounts by bulk purchasing.

(v) Faster and adequate service to the customers and,

(vi) Profit from speculation in the market where price are

expected to rise.

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Disadvantages:

(i) Ware house rent.

(ii) Interest on invested capital.

(iii) Physical handling.

(iv) Accounting.

(v) Depreciation and determination.

(vi) Classification and Categories of Inventory Models:

(vii) The inventory problems (models) may be defined in to two

categories.

1. Deterministic Models – These are inventory models in which

demand is assumed to be fixed for a subsequent period of time,

and

2. Probabilistic Models – These are the inventory models in

which the demand is a random variable having a known

probabilistic distribution. Here the future demand is determined by

collecting data from the past experience.

Some general notations used in inventory models:

We shall use the following general notations in inventory models:

I = the cost of carrying one rupee in inventory for a unit time.

C1 = Holding cost per unit time.

C2 = Storage cost per unit time.

C3 = Set up cost per production run.

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q = Lot size per production run. (I.e. The quantity produced per

production run)

r = Demand rate.

K = Production rate.

C = Average total cost per unit time.

t = Time interval between two consecutive replenishments of

inventory.

z = Order level or stock level.

L = lead time.

q*, t*, z* = Optimal values of q, t, z respectively for which the cost

C is minimum.

Deterministic models:

Economic Lot size Model: The most common inventory problem

faced by industry concerns the situation where stock levels are

deplenished with time and then are replenished by the arrival of

new item. The situation is given in the following economic lot size

models. The inventory problems in which the demand is assumed

to be fixed and completely predetermined are known as the

Economic Lot Size Problem or Economic Order Quantity (EOQ)

Problem.

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Model I: Economic Lot Size Model with Uniform Rate of Demand

Infinite Production Rate and having no Shortages

To determine an economic lot size formula and the minimum

average costs under the following assumptions.

(i) Demand is uniform at the rate of r units per unit time.

(ii) Production is instantaneous. (I.e. Production rate is infinite).

(iii) Lead time is zero.

(iv) C1 = Holding cost per unit time.

(v) C3 = Set up cost per production run.

(vi) Shortage costs are not allowed.

Solution: Let q be the units of quantity produced (or ordered) per

production run at interval of time t.

The situation in inventory can be illustrated as under

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Model II: Economic Lot Size Model with Different Rate of Demand

in Different Production Cycles, Infinite Production Rate and

having no Shortages.

To derive Economic Lot Size formula and the minimum

average cost under the same assumptions as in mode I except that

the demand rates are different in different production cycles.

Solution: Let q be the units of quantity produced per

production run.

Model III: Economic Lot Size Model with Uniform Rate of

Demand, Finite Rate of Replenishment and having no Shortages.

To derive Economic Lot Size formula and the minimum

average cost under the same assumptions as in mode I except that

the replenishment rate (i.e., the production rate is finite).

Solution:

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Let K > r is the number of items produced per unit time.

If q is the number of items produced per production run then the

production will continue for a time t1 = q/K.

And the time of one complete production run (i.e. the interval

between runs) t = q/r

(Since r is demand rate and no shortage is allowed).

The situation can be illustrated as follows:

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Company Profile

Pantaloons Retail (India) Limited, is India’s leading retailer

that operates multiple retail formatsin both the value and lifestyle

segment of the Indian consumer market. Headquartered inMumbai

(Bombay), the company operates over 10 million square feet of

retail space, has over1000 stores across 61 cities in India and

employs over 30,000 people.

The company’s leading formats include Pantaloons, a chain of

fashion outlets, Big Bazaar, auniquely Indian hypermarket chain,

Food Bazaar, a supermarket chain, blends the look, touchand feel

of Indian bazaars with aspects of modern retail like choice,

convenience and qualityand Central, a chain of seamless

destination malls. Some of its other formats include, Depot,Shoe

Factory, Brand Factory, Blue Sky, Fashion Station, aLL, Top 10,

mBazaar and Star andSitara. The company also operates an online

portal, futurebazaar.com. A subsidiary company,Home Solutions

Retail (India) Limited, operates Home Town, a large-format home

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solutionsstore, Collection i, selling home furniture products and E-

Zone focused on catering to theconsumer electronics segment.

Pantaloons Retail was recently awarded the International

Retailer of the Year 2007 by the USbasedNational Retail

Federation(NRF) and the Emerging Market Retailer of the Year

2007 atthe World Retail Congress held in Barcelona.

Pantaloons Retail is the flagship company of Future Group, a

business group catering to theentire Indian consumption space.

Pantaloons is not just an organization - it is an institution,

acentre of learning & development. We believe that knowledge is

the only weapon at ourdisposal and our quest for it is focused,

systematic and unwavering.

At Pantaloons, we take pride in challenging conventions and

thinking out of the box, in travellingon the road less travelled. Our

corporate doctrine ‘Rewrite Rules, Retain Values’ isderived from

this spirit.

Over the years, the company has accelerated growth through

its ability to lead change. Anumber of its pioneering concepts have

now emerged as industry standards. For instance, thecompany

integrated backwards into garment manufacturing even as it

expanded its retailpresence at the front end, well before any other

Indian retail company attempted this. It was thefirst to introduce

the concept of the retail departmental store for the entire family

throughPantaloons in 1997. The company was the first to launch a

hypermarket in India with BigBazaar, a large discount store that it

commissioned in Kolkata in October 2001. And thecompany

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introduced the country to the Food Bazaar, a unique 'bazaar' within

a hypermarket,which was launched in July 2002 in Mumbai.

Embracing our leadership value, the companylaunched aLL in July

2005 in Mumbai, making us the first retailer in India to open a

fashionstore for plus size men and women.

In 2006-2007, more Indians discovered the value of shopping

in Big Bazaar. And with thelaunch of each store, we discovered

more value in terms of operational efficiency. Big Bazaarlaunched

27 new stores in 22 cities, covering over 1.40 million square feet.

As of June 2007,there were 56 Big Bazaar stores across 43 cities.

While Big Bazaar continued to expand in thelarge cities, it also

tapped consumption potential in smaller cities like Agra,

Allahabad,Coimbatore, Surat, Panipat, Palakkad, Kanpur and

Kolhapur.The year under review also witnessed realigning of

business teams with sharedexperience in category management,

sourcing, front-end operations and business planning. Inaddition,

separate teams have been formed to look into all aspects of new

store launches and tomanage mature stores. This provides more

flexibility and focus in expansion plans.The increase in SKUs in

existing categories and the introduction of new categories

encouragedthe opening of larger stores or Super Centres,

measuring 100,000 square feet or more. There arenow 5 Big Bazaar

Super Centres. Considering this scale of expansion, technologyplays

a significant facilitating role. The introduction of SAP in 2005-06

and its rollout during the year positively impacted the business.

Big Bazaar has initiated the process of Auto Replenishments

Systems, thus improvingoperational efficiencies and productivity.

The company has also rationalized nearly 250 vendorsthrough

better vendor management in terms of potential to expand, and

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for inclusion andup gradation to the online B2B platform. The

company plans to open over 60 stores across Indiain FY 2008, and

the opening of the 100th Big Bazaar store will mark the fastestever

expansionby a hypermarket format.

Today it is the fastest growing retail company in India. The

number of stores is going toincrease many folds year on year along

with the new formats coming up. The way we work isdistinctly

"Pantaloons". Our courage to dream and to turn our dreams into

reality – that changepeople’s lives, is our biggest advantage.

Pantaloons is an invitation to join a place where thereare no

boundaries to what you can achieve. It means neverhaving to stop

asking questions; itmeans never having to stop raising the bar. It is

an opportunity to take risks, and it is thispassion that makes our

dreams a reality. Come enter a world where we promise you good

daysand bad days, but never a dull moment!

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Future Group:

Future Group is one of the country’s leading business groups

present in retail, asset management, consumer finance, insurance,

retail media, retail spaces and logistics. The group’s flagship

company, Pantaloons Retail (India) Limited operates over 10 million

square feet of retail space, has over 1,000 stores and employs over

30,000 people. Future Group is present in 61 cities and 65 rural

locations in India. Some of its leading retail formats include,

Pantaloons, Big Bazaar, Central, Food Bazaar, Home Town, eZone,

Depot, Future Money and online retail format, futurebazaar.com.

Future Group companies includes, Future Capital Holdings,

Future Generali India Indus League Clothing and Galaxy

Entertainment that manages Sports Bar, Brew Bar and Bowling Co.

Future Capital Holdings, the group’s financial arm, focuses on asset

management and consumer credit.

It manages assets worth over $1 billion that are being

invested in developing retail real estate and consumer-related

brands and hotels. The group’s joint venture partners include

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Italian insurance major, Generali, French retailer ETAM group, US-

based stationary products retailer, Staples Inc. and UK-based Lee

Cooper and India-based Talwalkar’s, Blue Foods and Liberty Shoes.

Future Group’s vision is to, “deliver Everything, Everywhere, Every

time to Every Indian Consumer in the most profitable manner.” The

group considers ‘Indian-ness’ as a core value and its corporate

credo is- Rewrite rules, Retain values.

Corporate Information

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Major Milestones

1987 Company incorporated as Manz Wear Private Limited.

Launch of Pantaloons trouser, India’s first formal trouser

brand.

1991 Launch of BARE, the Indian jeans brand.

1992 Initial public offer (IPO) was made in the month of May.

1994 The Pantaloons Shoppe – exclusive menswear store in

franchisee format launched across the nation. The

company starts the distribution of branded garments

through multi-brand retail outlets across the nation.

1995 John Miller – Formal shirt brand launched.

1997 Pantaloons – India’s family store launched in Kolkata.

2001 Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s first

Hypermarket chain launched.

2002 Food Bazaar, the supermarket chain is launched.

2004 Central – ‘Shop, Eat, Celebrate In The Heart Of Our City’

– India’s first seamless mall is launched in Bangalore.

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2005 Fashion Station - the popular fashion chain is launched

aLL – ‘a little larger’ - exclusive stores for plus-size

individuals is launched

2006 Future Capital Holdings, the company’s financial arm

launches real estate funds Kshitij and Horizon and

private equity fund Indivision. Plans foraysinto insurance

and consumer credit.

Multiple retail formats including Collection i, Furniture

Bazaar, Shoe actory, EZone, Depot and futurebazaar.com

are launched across the nation.

Group enters into joint venture agreements with ETAM

Group and Generali.

Notables

Product categories in Big Bazaar

Big Bazaar generally deals in national level brands like Lee, Levis

etc., Otherthan this it also deals in some Private label brands DJ&C

in apparel, KORIAin electronics etc. Then we asked about the

product categories , that are:FMCG, FOOD & NON- FOOD junction ,

Staple items , fruits &vegetables , fashion & apparels ,chill section ,

home decorator , footwear ,book zone, CDs etc.

Location of Big Bazaar

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Considering all the facts which we have studied, and seeing the

strategiclocation of Big Bazaar, we can say, that the location is the

best, it could havein Noida. Firstly it is in the heart of the Atta

market. Secondly it is in the shoppingmall (The Great Indian Place),

which has all types of customers coming in and their, footfalls,

beingeasily converted into sale, by the efficient employees of big

bazaar.Moreover it is at the place where traffic inception is always

high. It is nearstation, which gives it another competitive

advantage over its competitors.Transportation is also good, as one

can easily reach big bazaar through auto,private vehicles etc.

Types of inventories maintained.

The inventories maintained in the outlet, are of different product

category.Mainly Cycle inventory is maintained for FMCG product

category & FoodCategory, Safety level of inventory for FMCG

Products, and for Apparel,Seasonal inventory is maintained,

because of fluctuation in demand.

Decision of how inventories are maintained

Then coming to how the store manager decides the level of

inventory, thestore manager inspects the stocks time to time and

also the demands ofcustomers. Manager maintains the Stock – in &

Stock – out, so that he candecide the level of inventory. He also has

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seen the trends in the requirementof inventories, as for e.g. he told

that apparels are ordered approximatelyafter 45 days. For every

sample of clothes they have a back up of 10 pieces.However in

case, if more number of pieces are required, they first ask otherbig

bazaar location such as that of Patia etc. but if, even then they fail

tomeet the demands of customers, they go for “Transfer of

Interest”. In thisthey prefer sending the customers to pantaloons,

as it is also of FutureGroup, instead of losing them.He also told that

recently big bazaar has undergone tremendoustechnological

advancement, as its supply chain has become

completelycomputerized. Once the product is sold, automatically,

the computer sendsthe request for back up.

Reorder points of inventories

The manager in charge told us that there is no such reorder points.

Ordersare placed as and when required. However he told that

there are no suchmeasures, except in a few items. Previously

apparels were ordered oncethere stock fell below 4 per item piece.

For general merchandise, whichincludes, food and non-food items,

it was 7 days. However they always keepin mind the transit time of

2 days. Vegetables are taken on a daily basis,form local vendors.

Uncertain demands of customers

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As discussed earlier, the uncertain demands are met by either by

getting itthrough other outlets of big bazaar or through transfer of

interest, to otheroutlets of future group, like Pantaloons.

Supply chain of perishable and imperishable goods

Perishable goods like vegetables are maintained with great care.

Vegetables are bought on daily basis on the basis of demand, and

seasonal item. It is also ascertained that damaged vegetables are

sold at a low cost to some other channels. Whereas imperishable

goods like utensils and staple goods and electronic items are

brought from Jamshedpur. The distribution channel used in supply

chain process is operated by Central Distribution Channel, which is

located in New Delhi From there goods are supplied to every Big

Bazaar Store. The modes of transportation which are used in supply

chain process are Truck & Rails, but in case of emergency, flights

are also being used. The transportation is outsourced. Mainly the

carriers for Big Bazaar are Quick & Safe, Gati, Deluxe Roadways,

and TNT.

Operational strategies followed by retail outlet to

attract morecustomers

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When we raised the question of strategy for attracting customers,

themanager was not willing to answer us. However after

convincing him a lot,he gave us some generalized strategies. He

told us that mostly they givediscount offers. Discount offers are

basically given by manufacturers tothem, and after keeping a safe

margin of profit, they release the items ondiscounts. They also give

ads in television, go for promotional activities andput banners on

road sides.However once the customers is inside the store, then

also strategieskeep changing. They keep thing in places where they

see for longer duration,for e.g. near corners of turning, on cash

counters etc.

Area of Maintenance

Since the store is fully computerized, in the sense, like billing, inventorymanagement, electronic equipments near the gates, to check thieves, it has totake proper care of machines. Food items are to be regularly checked.Inventory room has to be checked regularly for any sort of leakages. Air-conditionershave to be regularly checked. Electrical wirings have to beclosely monitored. Short circuit cameras have to be checked regularly as it isa major factor in security arrangement.

Quality of Food-items Food items are kept in a separate place, both in inventory and at store. Fooditems which are required to be kept at cold places, like cold-drinks, cheese,milk products, milk, fruits, etc. are kept in

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refrigerators, whereas thosewhich can be kept anyway, are kept on proper shelves.

Questionnaire Q1) What is the store capacity of your warehouse? >15000 >25000 >35000 >45000 Q2) What is the annual demand? >100000 units>200000 units>300000 units>400000 units Q3) What is the average carrying cost to carry the inventory? >10%>20%>30%>40% Q4) What is the setup cost of the inventory? >1000 >2000 >3000 >4000 Q5) What is the average lead time? >3 days >5days>7days >9days Q6) What is the ordering cost to place an order of 1 unit? >2 >3 >4 >5

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After communicating with the respondents we

found the following average results:

Q1) What is the store capacity of your warehouse? 45000 units

Q2) What is the annual demand? 400000

Q3) What is the average carrying cost to carry the inventory? >10%

Q4) What is the setup cost of the inventory? 4000

Q5) What is the average lead time? 3days

Q6) What is the ordering cost to place an order of 1 unit? 4

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Some important formulas to solve

Optimal Lot Size,𝑄∗ = 2𝐷𝐶𝑜

𝐶ℎ

The optimal order cycle time, 𝑡∗ =𝑄∗

𝐷

The minimum yearly variable inventory cost,TVC = 2𝐷𝐶𝑜𝐶ℎ

The minimum yearly total inventory cost,𝑇𝐶∗ = 𝑇𝑉𝐶∗ + 𝐷𝐶

Solution The average price of commodity in Big Bazaar is 200

𝑄∗ = 2𝐷𝐶𝑜

𝐶ℎ =

2∗400000∗4

10%𝑜𝑓200=

2∗400000∗4

20= 400unit/year

𝑡∗ =𝑄∗

𝐷 =

400

400000= 0.001 year

TVC = 2𝐷𝐶𝑜𝐶ℎ= 2 ∗ 400000 ∗ 20 = 𝑅𝑠. 4000/year

𝑇𝐶∗ = 𝑇𝑉𝐶∗ + 𝐷𝐶 = 4000 + 400000*200 = Rs. 800004000 / year

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Conclusion

It has been a great experience focussing on the live project of Management Science for Decision Making (MSDN). Our place of interest was the retail giant Big Bazaar. We found great support in the shop in Great india place (Noida). We have found that Big Bazaar’s inventory is well equipped and their cost is under their control due to the short cycle time of ordering and buffering. Their inventory cost is very high because of their stocking of various products. Their product range varying from mere Rs.5 to Rs.50,000. Hence their range satisfies one and all. In future their inventory is well equipped if it sees any fundamental changes on the demand of the products, be it desired or undesired. Their inventory is quickly refilled which is one of their strengths and also they take less than a day to fully make their inventory a wide spectrum.