CHAPTER - 5

DATA ANALYSIS AND INTERPRETATION

TABLES AND CHARTS (4.1) XYZ ANALYSIS PROCEDURE FOR XYZ ANALYSIS STEP1: The input of the following STEP 2: For each item compute total stock value in terms of rupees by multiplying its Stocks with is unit price. STEP 3: Arrange the item and their details in descending order of the total stock value computed in step 2. STEP 4: Compute cumulative values of the total stock values. STEP5: Group the items into X,Y,Z classes by dividing the items into 60% 30% 10% of the total stock values respectively from top to bottom in the sorted list. Total no of items Store code, Total stock value in terms of units and unit price of each store

GENARAL STORES OF XYZ ANALYSIS

STORE STORE CODE NAME BOF A AXLES STORE Rear axles J stores 4D engine EI stores Hino LH engine stores Production P stores Westland D stores ZFGB GB stores Fabrication F stores Engine E stores Front axle FA store Shop 7 AC H R Hardware store Rough

STOCK VALUE 168,320,623.80

CUMMULATIVE STOCK VALUE 168320623.80

CATEGO RY

112294778.20 82565969.00 57986456.00

280615402.00 363181371.00 503386579.10

55567937.00 50226744.00 46928725.00 41928725.00 40200543.00 40200543.00 36773365.00 16963428.00 15502846.00

558954516.10 609181260.10 656156331.10 696085056.10 738285599.10 738285599.10 775058964.10 792022392.10 807529241.10

Part warehouse store

8656415.00

816185656.10

pp

S K1 T HA K C

Engine dressing items Sheets Pilot production Tool warehouse Assembly store KDC store

4710971.00

8208966247.10

2593544.00 1303875.00 568358.60 115695.00 24727.82

823362404.70 824794046.10 825478099.70 825478099.70 825502827.52 825525310.12

Consumabl 22482.60 e store 825525310.12

TOTAL

SIMPLYFIED TABLE Classification of Items A B C Cumulative stock value 503,386,579.10 738,285,599.10 825,525,310.12 Percentage of total value 53.95% 35.48% 6.11%

XYZ ANALYSIS CHART FOR GENARAL STORES

XYZ ANALYSIS
6.11% 35.48% 53.95%

X Y Z

INTERPRETATION:
From above the table clearly shows the xyz analysis it can be seen that items with store code A,J,E,I,LH,&P are categorized under X because the aggregate of the values of the items amount to 60% of the total value of the inventory at 5-10% of units its categories. Hence the demand for final products using these items good inventory should be maintained. The items with store code D,GB,F,E&FA is under Y category , since it amount 30% of the total value at 10-30% of units which have moderate control over inventory. The items with store code AC,H,R,X,PP,S,K1,T,HA,K,C, are under Z category , because its amount to 10% of its total value with 60-80% of units requires lesser control.

CLASSIFICATION OF FSN ANALYSIS FSN ANAYSIS FOR REAL AXLE STORE (J)
CATEGORY NON-MOVING CRAWLING SLOW MOVING MODERATE FAST MOVING FAST MOVING NO OF COMPONENTS 103 23 30 34 195 TURNOVER RATIO 0-1 1-3 3-6 6-12 ABOVE 12 PERCENTAGE 26.75% 5.97% 7.79% 8.83% 50.65%

CHART FOR FSN ANALYSIS REAL AXLE STORE

FSN ANALYSIS
NON MOVING 26.75% 50.65% 6% 7.79% 8.83% MODERATE FAST MOVING FAST MOVING SLOW MOVING CRAWLING

INTERPRETATION:
From above table shows that in a specified j store there are 195 components are fast items at percentage of 50.65% are daily consumed items the moderate moving items are 34 components at percentage value of 8.83% the slow and crawling items are 7.79% and 5.97% the non moving items are 26.75% items which consist of 103 components.

HML ANALYSIS OF STORE A-BOF

HIGH PRICE (ABOVE 50000) COMPONENT CODE A4Z01800PR A4Z01800PR1 A4Z01800PR2 PART DESCRIPTION NO OF ITEMS ITEMS RATE STOCK VALUE 56059.8 248179 483134.3

TRIMMED FES 1 1616 142 TRIMMED FES 4 1616 115 TRIMMED FES - 8 161 142 TRIMMED FES 3123 UDS MUFFLER ASSEMBLY UREA TANK ASSEMBLY 12 3 15

56059.8 62044.75 60391.79

A5562500PH58 B7F00301 B7F00302

52290 65818.7 65530.86

627480 4197456.1 982963.9

B7F00328

15

65818.88

987283.2

MEDIUM PRICE (10000-50000)

COMPONENT CODE A5562500 A5558703 A5558701 PART DESCRIPTION TRIMMED FES -1616 142 TRIMMED FES - 1616 115 TRIMMED FES - 161 142 TRIMMED FES 3123 UDS MUFFLER ASSEMBLY UREA TANK ASSEMBLY NO OF ITEMS ITEM RATE 6 7 1 48800 45730 43120 STOCK VALUE 292800 320110 43120

A5558701 A1W03500 A5551501

8 10 5

39164 38551 36497

313313.3 385507.3 182484.4

F1621300

141

32095

452539.5

LOW PRICE BELOW (1000-10000)

components B1V00803

Part description

No of items

Item rate 9800

Stock value 294000

SA OF RADI 30 ATOR CAC AND SHROUD RADIATOR-1616124KW RADIATOR-1616124KW 86

B6P01303

9500

817000

F4513410

94

8924

839204.9

B2167801

X3801214

PROP.SHAFTKIT- 14 GNA201CHZFGB SA OF PLASTIC 69 FUEL POWER STEERING GEAR POWER CYLINDER WHEEL RIM B8.0X20 S/A OF REAR SPRING FRONT SPRING (I VE) PUMP WITH INTEG S/A OF HYBRID FLAPAPOLLO 10R20 S/A SILENCER9 314

8568

119952.4

7660

528563.4

F8300107 F1001100

7165 6211

64488.41 1950301

F3802814

191

5110

976067.4

B3207201 B3123301

1 107

4895 4255

4895 4553378.4

B2245503 B5128502 F7G01350

148 55 2288

38693 2190 1150

572617.3 120450 2631200

B5102101

1144

1144

Interpretation: From the above table shows that H items are which includes TRIMMED FEE ASSY 3118, MUFFLIER ASSEML & UREA TANK have higher priced and there usage also high. The study shows that M items which contains STAG-BS2 TRIMMED FEES & PROPELLER SHAFT KIT FOR 12M are moderate band there consumption is also moderate. Below 10000 rs items are classified under lower price such as SA OF PLASTIC FUEL TANK AND WHEEL RIM B8. Of rear spring are material that are used for daily consumption.

RATIO ANALYSIS 1. INENTORY TURNOVER RATIO YEAR SALES AVERAGE INVENTORY 1923.57 INVENTORY TURNOVER RATIO 5.93

2010-2011

11407.15

2009-2010

72447.11

14890.77

4.87

2008-2009

59810.74

12769.64

4.68

2007-2008

77291.23

11471.17

6.74

2006-2007

71681.76

9364.41

7.27

Inventory turnover ratio = sales/average inventory

inventory turn over ratio

inventory turn over ratio 7.24

6.74 5.93 4.87 4.68

2010-11

2009-10

2008-09

2007-08

2006-07

INTERPETATION: The trend of inventory turnover ratio trend over a period of first five year (2006-2011) was analyzed and it was found that the ratio has fluctuated every year, so the company has to maintain the higher ratio , by improving the efficiency the management in moving stock.

2.INVENTORY HOLDING PERIOD

YEAR

DAYS

INVENTORY TURNOVER RATIO 5.93 4.87 4.68 6.74 7.27

INVENTORY HOLDING PERIOD 61.55 73.99 76.86 53.43 49.54

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

365 365 365 365 365

Inventory holding period = days or months/inventory turnover ratio

inventory holding period

inventory holding period 73.99 61.55 53.43 49.54 76.86

2010-11

2009-10

2008-09

2007-08

2006-07

INTERFERANCE The inventory turnover ratio was fluctuating every year and it has decreased during the financial year 2008-2009. A higher number of days indiccates that there is a lack of demand the product being sold. A lower number of days indicate the company is not keeping enough stock on hand to meet demands.

3.RAW MATERIALS INVENTORY TURNOVER RATIO

YEAR

RAW MATERIAL CONSUMED

AVERAGE STOCK OF RAW MATERIALS

RAW MATERIAL INVENTORY TURNOVER RATIO 8.51 8.05 12.60 14.66 14.09

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

52252.33 43218.57 57480.58 54081.41 40645.83

6176.05 5368.03 4563.03 3688.54 2885.18

Raw material turnover ratio= raw material/average stock

raw material turnover ratio

raw material turnover ratio 14.66 12.6 8.51 8.05 14.09

2010-11

2009-10

2008-09

2007-08

2006-07

INTEPETATION

The trend of inventory of raw material over a period of five year (20062011) reveal that the ratio was fluctuating every year and has decreased during the current year 2010-2011 at 8.51

4. WORK-IN-PRORESS INVENTORY TURNOVER RATIO Manufacturing cost Average workin-progress Work-inprogress inventory turnover ratio 29.42 52.96 61.95 51.06 40.07

Year

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

64818.71 55116.39 69251.34 64654.91 47075.87

2203.225 1040.645 1117.77 1266.185 1174.85

Work-in-progress turnover ratio= cost of production/average WIP

work in progress inventory turn over ratio

work in progress inventory turn over ratio

52.96 29.42

61.95 51.06 40.07

2010-11

2009-10

2008-09

2007-08

2006-07

INTERPRETATION: The work in progress turnover ratio over a period of five years (2006-2011) indicates that work in progress turnover ratio has fluctuation every year and has declined to 29.2 during 2010-2011.

5. FINISHED GOODS INVENTIRY TURNOVER RATIO Average finished goods Finished goods inventory turnover ratio

YEAR

Net sales

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

11407.15 72447.11 59810.74 77291.23 71681.76

6461.68 6360.11 5790.38 4909.69 3293.18

11.21 9.40 13.35 14.60 15.93

Finished goods turnover ratio=cost of goods sold/average finished goods

finished goods inventory turnover ratio

finished goods inventory turnover ratio 15.93

11.21

13.35 9.4

14.6

2010-11

2009-10

2008-09

2007-08

2006-07

INTERPRETATION: The inventory turnover ratio for finished goods tend over a period of five years was analysed and it was found that inventory turnover ratio was year Fluctuation every year compared to previous yea it has been increased to 11.21% in year 2010-2011. The company has to maintain higher the ratio.

INVENTORY TO CURRENT ASSETS RATIO

Year

Inventory

Current asset

Inventory to current asset ratio 0.40 0.42 0.43 0.40 0.40

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

16382.40 13300.14 12239.14 10703.21 9025.61

41396.84 31656.16 28752.56 26977.14 22324.14

Inventory to current asset= inventory/current asset

inventory turover ratio to current assets

inventory turover ratio to current assets 0.43 0.42 0.4 0.4 0.4

2010-11

2009-10

2008-09

2007-08

2006-07

INTERPRETATION: INVENTORY TO CURRENT RATIO WAS ANALZED AND IT WAS FOUND THAT INVENTORY TO CURRENT ASSET RATIO FLUCTUATING EVEY YEAR AND HAS DECREASED DURING THE CURRENT YEAR 2010-2011 0.40.

CURRENT RATIO

year

Current asset

Current liabilities 29607.65 21369.46 22719.14 17558.55 14085.16

Current ratio

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

41396.84 31656.16 28752.56 26977.14 22324.14

1.40 1.48 1.27 1.54 1.58

Current ratio= current asset / current liabilities

current ratio
current ratio

1.4

1.48 1.27

1.54

1.58

2010-11

2009-10

2008-09

2007-08

2006-07

INTERPETATION: Current ratio trend over period of five years has analyzed and that the ratio was fluctuated every year and has slightly from previous ratio

DEBTORS TURNOVER RATIO years 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 Net sales 11407.15 72447.11 59810.74 77291.23 71681.76 Average debtors 9900.18 6669.05 4493.55 4736.06 4415.52 Debtor turnover ratio 7.32 8.97 17.20 15.14 11.88

Debtor turnover ratio = net sales / average debtors

debtor turnover ratio

debtor turnover ratio

17.2 15.14 11.88 7.32 8.97

2010-11

2009-10

2008-09

2007-08

2006-07

INTERPETATION: The trend of debtors turnover ratio trend over a period of five years (2006-2011) reveals that the ratio has fluctuating every year and has decreased during the current year 2010-2011 at 7.32.

WORKING CAPITAL TURNOVER RATIO

Year 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

sales 11407.15 72447.11 59810.74 77291.23 71681.76

Working capital 11789.27 10286.7 6033.16 9418.59 8238.97

Working capital turnover ratio 6.15 5.81 12.81 7.61 6.37

Working capital turnover ratio = sales/working capital

working capital ratio

working capital ratio 12.81

7.61 6.15 5.81

6.37

2010-11

2009-10

2008-09

2007-08

2006-07

INTEPRETATION: Working capital turnover ratio was analyzed foe a five year and its was found the ratio was fluctuated every year and has decreased in 2010-2011 at 6.15

FIXED ASSETS TURN OVER RATIO Year Sales Fixed assets Fixed asset turnover ratio

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

11407.15 72447.11 59810.74 77291.23 71681.76

48110.29 43794.06 20547.95 15445.24 10846.88

1.51 1.36 3.76 4.64 4.84

Fixed asset turnover ratio= sales / fixed asset

5 3.76 4 3 2 1 0 2010-11 2009-10 2008-09 1.51 1.36

4.64

4.84

2007-08

2006-07

fixed assets ratio

INTERPRETATION: The fixed asset turnover was analyzed for five year and it was found that the ratio is low as compared to for a past five years of data firm it means that sales are low o the investment in plant and equipment is too much. This may not be a serious problem if the company has just made an investment in fixed asset to modernize.

CHAPTER 5

5.1FINDINGS
From the xyz analysis it can be seen that items with store codeA,J,E1,LH&P are categorized under X, because the aggregate of the values of the items amounts to 60% of the total value of inventory at 510% of units its categorized. Hence the demand for final products using these items good inventory should be maintained. The items with store code D,GB,F,E&FA is under Y category, since it amounts 30% of the total value at 10- 30% of units which have moderate control over inventory. The items with store code AC,H,,R,N,PP,S,K1,NE,HA,K,C are under Z category , because it amounts to 10% of its total value with 60-80% of units which requires lesser control. The study shows that H items are which include TRIMMED FEE ASSY 3118 MUFFLIER ASSEML & UREA TANK have higher priced and there usage also high The study shows that M items which contains STAG-BS2 TRIMMED FEES & PROPELLER SHAFT KIT FOR 12Mare moderate and there consumption is also moderate. Below 10000 rupees items are classified under lower price such as SA OF PLASTIC FUEL TANK AND WHEEL RIM B8.0X20 S/A OF REAR SPRING are materials that are used for daily consumption. The study shows in FSNanalysis that in the specified J store there are totally 385 components in that195 components are fast moving items at percentage of 50.65%. Which are daily consumed items the moderate moving items are 34 components at percentage value of 8.83% the slow and crawling items are 7.79% and 5.97% the non moving items are 26.75% items which consist of 103 components.

The trend of Inventory turnover ratio over a period of five year s(2005-10) was analyzed and it was found that it has been fluctuating ever y years. The company has to maintain higher ratio, by improving the efficiency of the management. The trend of inventory turnover for raw material over a period of five years(2005-10) reveals that the ratio was fluctuating every years and has decreased during the cur rent year 2009-10 at 8.51. The WIP turnover ratio over a period of five years (2005-10) indicates that WIP turnover ratio has fluctuating ever y year and has declined to 29.42 during 2009-10. The trend of finished goods inventory over a period of five years (200510)was indicates that the ratio fluctuating ever y year , compared to previous year and it has been increased to 11.21in the year 2009-10 Inventory to current assets ratio was analyzed and it was found that inventory to current assets ratio fluctuating ever y year and has decreased during the current year 2009- 10 0.40. The Current ratio was analyzed and it was found that the ratio was fluctuating ever y years and has slightly decreased from the previous year ratio. The trend of Debtors turnover ratio trend over a period of five years (200510) reveals that the ratio has fluctuating ever y year and has decreased during the current year 2009-10 at 7.32. Working capital turnover ratio was analyzed for a period of five years and it was found that the ratio was fluctuated ever y year and has decreased in 2009-10 at 6.15. The fixed assets turnover ratio was analyzed for five years(2005-10) and it was found that the ratio2009-10 is low when compared to the previous years.

5.2 SUGGESTIONS: The company has to maintain higher inventory turnover ratio, by improving efficiency of the management in moving stock The inventory holding period consist that a higher number of days indicate that there is a lack of demand for no items product being sold. A lower number of days indicate that the company is not keeping enough stock on hand to meet demands. The company has to improve the raw materials turnover ratio for the specific demand of sale. The fluctuating working capital turnover ratio should be minimized by improving efficiency of the employee in the production The company has to maintain better inventory to current asset turnover ratio to minimize cost and improve production. Ever y employee of the stores as well as production department should be mandatorily told to report about the damaged material. More attention should be paid on fixing of the data delivery of the good. Dumping of waste materials should be avoided and they should be totally recycled. The stores department should take regular feedback from the production department so that they can improve their supply. Obsolete inventory should be disposed off transfer red to other units at least one year. When fresh orders are received it should be ensured that adequate materials for manufacture are procure well in advance so adhered to the production. Optimal level of A category items shall be maintained for uninterrupted product.

5.3 CONCLUSION: Inventories constitute the most significant part of current asset of a large majority of companies. The organization faces a situation of excess in level of inventory resulting in increasing cost. The objectives of organization are to minimize the cost of inventory. Therefore the size at appoint of time and various factors contributing towards it are assuming lots of importance. It is in this contest A study on inventory management and its efficiency level in Ashok Leyland (AL) is undertaken as it is a known fact that inventory management is the least gold mine for managers. The study on inventory management in Ashok Leyland (AL) has helped in measuring the efficiency level of the concern of inventory management system. The recommendation and suggestion given, if implemented will improve the position of The inventories in AL. Its true fact that inventory management is the least gold mine for managers.