PROJECT REPORT ON

INVENTORY CONTROL & MANAGEMENT

IN BOSCH CHASSIS SYSTEMS INDIA LTD.

SUBMITTED BY:

_________________

ENROLMENT NO. _____________

UNDER THE GUIDANCE OF:

_______________

_____________________

INSTITUTE OF MANAGEMENT TECHNOLOGY

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 GHAZIABAD

Bosch Chassis Systems India Ltd.

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 DECLARATION

I, _____________, certify that the Project Report entitled “Study Of Inventory Control &

Management” Bosch Chassis System India Ltd.” is an original one and has not been

submitted to any other Institution for the fulfilment of the requirement of a course of

Management Programme (MBA).

Place: ____________

Date: Regn. No. : _____________

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 CERTIFICATE

This is to certify that _____________, a student of IMT – CDL Ghaziabad has

completed project work on “Study Of Inventory Control & Management” Bosch
Chassis System India Ltd.” under my guidance and supervision.

I certify that this is an original work and has not been copied from any source.

Name of Project Guide ____________

Date: ____________

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 ACKNOWLEDGEMENT

I have great pleasure in presenting this report on “Study of Inventory Management”

which was done at “Bosch Chassis System India Ltd.”. I have derived the contents and
approach of this study paper through discussions with company executives and internet as well
as with the help of various Books, Magazines and Newspapers etc.

I would like to give my sincere thanks to a host of Company Executive, friends and the teachers
who, through their guidance, enthusiasm and counseling helped me enormously as I think there
will be always need for improvement. Apart from this, I hope this study would stimulate the need
of thinking and discussion on the topics like this one.

I am thankful to my project guide Dr. Ajay Kumar, Assistant Professor (Department of

Commerce, IMT - CDL, Ghaziabad) whose valuable suggestions and guidance help lot to
complete this project. He supported us by showing different methods of information collection
about the company. He helped all the time when we needed and gave right directions toward
completion of the project.

Mohd. Anas Khan

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 EXECUTIVE SUMMARY

Change is the only permanent feature of this dynamic world. What is true about this dynamic
world in general is also true about the business and its allied concept in particular. The
multiplicity of wants called for the original form of the business. i.e. Barter exchange.

Afterwards money was introduced & industrial revolution takes place, this has changed the
scenario to a greater extent. Initially there was a seller market but increased competition
witnessed by the Indian economy. Liberalization, Privatization & Globalization is the realities of
the today’s era, in the light of which cost consideration has an inevitable importance.

The inventory management has a very vital role to play in this competitive age. So the term
Globalization refers to a concept that has been developed recently. In general it covers all
facts of life be it political, economical, social and cultural – in particular, it is one of the
most dynamic aspects of the corporate strategy for both survival and expansion of business
opportunities. In the Indian context is “linking the Indian economy organically with world
economy”.

Thus, in a world where speed, flexibility and costs hold the key to maintain a
competitive edge, an appropriate up gradation of financial system is the crying need of
the hour.

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 TABLE OF CONTENTS
CHAPTER NO. PARTICULARS

1 PREFACE

2 INTRODUCTION

3 COMPANY PROFILE

4 RESEARCH METHODLOGY LIMITATIONS

5 THEORETICAL BACKGROUND

6 INVENTORY MANAGEMENT IN BOSCH

7 RATIO ANALYSIS

8 FINDINGS, CONCLUSION & SUGGESTIONS

9 BIBLIOGRAPHY

10 ANNEXURE

DATA ANALYSIS AND QUESTIONNAIRE

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 CHAPTER-1

PREFACE

As a part of the partial fulfillment of the PGDM at IMT – CDL Ghaziabad this project was
undertaken with the International company, Bosch Chassis Systems India Ltd.

This project is specially designed to understand the subject matter of Inventory Control &
Management of the company. This project gives us information and report about company’s
Inventory Management. Throughout the project the focus has been on presenting information
and comments in easy and intelligible manner.

The purpose of the training was to have practical experience of working in a organization and to
have exposure to the various management practices in the field of Finance. This training has also
given me an on the job experience of Financial Management.

This project is very useful for those who want to know about company and Inventory
Management of the company.

PROJECT TITLE

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 “STUDY OF INVENTORY CONTROL & MANAGEMENT.”

REASON OF CHOOSING THE COMPANY FOR THE PROJECT

In today’s fast growing world, automobile industry is playing a very important role. As Bosch
chassis Systems India Limited is one of the leading company producing brakes required by the
many automobile manufacturing companies. So, the company required a huge inventory to
produce the product.

LOCATION

Bosch Chassis Systems India Limited

Near NH-6, Bambhori,
Jalgaon-425001(India)

CHAPTER-2

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 INTRODUCTION

Inventory it is a blood of any manufacturing company. Because just like a man if a man without
blood then he will be death, so, therefore the same phenomenon is concerned for the company
point of view. The inventory management may be defined as the sum total of those activities
which are necessary for the acquisition storage, sales, and disposal or used of material.

The techniques of inventory management are very useful in determining the optimum level of
inventory and finding the economic order quantity, the re-order point and the safety stock. These
techniques are very essential to economize the use of resources by minimizing the total inventory
cost. He should introduce the policies which reduce the lead time, regulate usage and thus,
minimize safety stock.

Inventories constitute the most significant part of current assets of a large majority of companies
in India. On an average, inventories are approximately 60% of current assets in public limited
companies in India. Because of the large size of inventories maintained by firms, a considerable
amount of feuds is required to be committed to them. It is therefore, absolutely imperative to
ménage inventories efficiently and efficiently in order to avoid unnecessary investment.

In Bosch chassis systems they are generally maintain the inventory for raw material, work -in
-process and finished goods. The company is using 4 inventory control techniques i.e. ABC
Analysis, FSN Analysis, KANBAN and Just in Time technique for inventory management. The
Bosch has been maintained the 18 days inventory & it has tries to increased sales & reduced the
storage cost. In Bosch chassis the inventory management system is run in well away. The
company holds minimum stock of raw material for avoiding of wastages.

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 SELECTION OF TOPIC

To be successful in today's fast-paced, highly-competitive environment, organizations need to

have the necessary parts in stock or have reliable suppliers to meet customer demands at a
moment's notice. Either way, organizations must have a practical, efficient method for managing
inventory in order to stay in business and satisfy their customers.

Effective Inventory Management enables an organization to meet or exceed customers'

expectations of product availability while maximizing net profits or minimizing costs.

The purpose of selection of the topic of Inventory Management is because as a student of

management, I must know how to effectively manage the huge inventory and how to keep the
inventory carrying cost at the minimum level by using different techniques.

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 OBJECTIVES OF STUDY

Every study emerges to achieve certain objectives. The main objective of carrying out this
project is to know and gain practical knowledge and to know the organization working culture.

Following are the important objectives of the project:

1. To understand the practical concept of Inventory Management.

2. To understand the various kinds of inventory and also the receipt procedure of inventory.

3. To know and analyze the management technique used in managing the inventory.

4. To study the role of management in inventory management and minimization of inventory

carrying cost thereby increasing the profit of the organization.

5. To know the product profile as well as study its structure, organization etc.

SCOPE OF THE STUDY

The scope of the project was related to inventory management. In this study, I analyze the
inventory control techniques using ABC analysis, FSN analysis, KANBAN and Just in Time
technique.

As part of the study I also analyzed the balance sheet of the company. The aim of the study was
to know, how an organization manages their inventory.

Analysis of the data and interpretation of information has been done with help of table and
graph. The validity of the study of this project limited for two months.

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 CHAPTER-3

COMPANY PROFILE
 Introduction About Bosch in India:-
Bosch India is regional branch of the Bosch Group, one of the world’s biggest
private industrial corporations. Headquartered in Stuttgart, Germany, the Bosch
Group has approx. 282,000 employees worldwide. The Bosch Group is a globally
active and leading manufacturer and innovators of Automotive and Industrial
Technology, Consumer Goods and Building Technology.
In India, Bosch is represented in by its subsidiary companies - 1)  Motor
Industries Company Limited – MICO:- is the flagship of the Bosch group in India,
established in the year 1951. Mico is the largest auto component manufacturer and the largest
Indo-German company in India.
2) Robert Bosch India Limited – RBIN:- a wholly owned subsidiary of Robert Bosch
GmbH, develops software and engineering solutions for all business sectors within the Bosch
world in more than 15 nations across Europe, USA, Asia and Australia.
3) Bosch Rexroth India Limited – BRIN:- Provides a complete range of world-class
products, systems and services for drive and control technologies to various industrial and
mobile applications.
4) Bosch Chassis System India Limited- RBIC:- (formerly Kalyani Brakes) is the
leading manufacturer of hydraulic brakes in India for passenger cars, two wheelers, three
wheelers and tractors. Its plants are located in Jalgaon and Chakan in Maharashtra and Manesar
near Delhi.
Bosch Rexroth AG is an expert for all drive, control and motion technologies.
The Industrial Technology division Bosch Rexroth India provides a complete
range of excellent products, systems and services to customers in India,
Bangladesh, Nepal and Sri Lanka through its manufacturing facilities, service
centers, and service Partner Asia.

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BOSCH CHASSIS SYSTEMS INDIA LTD.
BOSCH CHASSIS SYSTEMS INDIA LIMITED JALGAON PLANT
Founded in 1886 in Germany, by Robert Bosch, Bosch today is the largest automotive
technology supplier in the world. Bosch Chassis System India Ltd. Jalgaon Plant was formerly
known as Kalyani Brakes which is established in1984.Bosch Chassis Systems India Ltd. It is one
of the best brake manufacturing companies in the country. This is the best leading company for
manufacturing brakes in the world.
In Jalgaon plant, company manufacturing four wheeler brakes & Disc - brakes of any vehicle. In
this plant, company manufacturing two types of brakes i.e. Hydraulic Brake and Air Brake. For
those there is near about 2500 major raw material components are required and for that they
maintained proper inventory of raw material. In 1991 when Mr. Minoan Singh was Finance
Minister of India, on that time they were introducing open policy. Due to this open policy this
company has converted into MNC Company.

DEPARTMENTS IN JALGAON SBU

MANUFACTURING SERVICE
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BOSCH CHASSIS SYSTEMS INDIA LTD.
 FOUNDRY – 1 & 2 ENGINEERING

MACHINING – J1 & J2 PROD. ENGINEERING

BONDING &PROCESS. MGT. SERVICE DEPT.

ASSEMBLY FINANCE

QUALITY ASSURANCE MATERIALS

STANDARD ROOM H. R. D.

P. P. C. MAINTENANCE

STORES

QUALITY POLICY
Each and every member of Bosch Chassis Systems India Limited Team will put in His / Her best
endeavour in a systematic manner to optimise:

1) Quality and Reliability of product / services to reach global Standards.

2) Productivity of all resources - Human and Material.

3) Profitability to ensure growth, fair returns to Shareholders and good

living standard to our employees.

4) Utility of our operations to the community and the nation at large.

5) Sensitivity towards our customers, employees, vendors, society and Environment.

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 VISION / MISSION / VALUES OF BOSCH

Vision
Achieve global recognition as a world class brake system supplier.

Mission
Create an export-worthy Business, by adopting Lean Manufacturing Principles, continuous up-
gradation of design and manufacturing. Technology, continual improvement in quality,
competitiveness and Environmental management systems.

Values
 We strongly believe in the Leadership Capability of individuals and in
the Power of Cross Functional Teams. 
 
We will encourage innovation and decision making to achieve total
Customer satisfaction.

We will ensure the highest standards of business ethics and integrity in all
Our actions.

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 QUALITY OBJECTIVES – CY 10

1. Meet Manpower ratio of Jalgaon Operations 2.5 Lacs/man/month.

2. Reduce item wise internal rejection / rework compared to previous

Year by
 20% where ever rejection /rework more than 1.0%
 10% where ever rejection/rework up to 1.0%

3. Reduce QPCRs and PDRs by 20 % from current level.

4. Meet overall zero kilometer customer rejection, below 05 PPM.

5. Reduce overall warranty PPM rejection by 20% from current level.

6. Reduce Suppliers PPM rejection by 30% from current level.

7. Achieve overall Training ratio as 3 man-days/person/year.

8. Maintain overall Inventory level of 24 days.

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 PRODUCTS PROFILE

PRODUCTS

BOOSTER ROTOR

TMC DRUM BRAKE

DISC BRAKE

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 19
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LOCATION OF DRUM BRAKE IN A CAR

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ORGANIZATION FLOW CHART OF BOSCH LTD, JALGAON.

TECHNICAL COMMERCIAL

MANUFACTURING OF
DISC BRAKE.
PURCHASE

MANUFACTURING OF
BOOSTER, ROTOR AND
TMC.
ACCOUNTS

MANUFACTURING OF
DRUM BRAKE.

QUALITY PERSONNEL /
MANAGEMENT HUMAN
RESOURCE

ENVIRONMENTAL &
SAFETY DEPARTMENT

INFORMATION
TECHNICAL SYSTEMS
FUNCTIONS

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 CHAPTER-4

RESEARCH METHODOLOGY

Methodology is the process of collecting the information and helps to find out the solution to the
topic selected by the researcher.

Whereas Research helps to study and find out the techniques with the proper process. It is a
systematic way of presenting information.

Research methodology is the way to systematically solve the research problem.

In order to collect the required information for the project the following methods were adopted:-

Research Methodology

Primary Method Secondary Method

Primary Method Secondary Method

.
Questionnaires Schemes
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Observation Books/
BOSCH CHASSIS SYSTEMS INDIAMagazine
LTD.
Discussion Website
Primary Data

The data is collected from the concerned staff of the company from the accounts department of
the organization by interviewing them personally. The data was also collected with the purpose
of evaluation
Secondary Data

Secondary data is provided by the organization in various forms. It includes referring of the
manual of the company, from the previously recorded information in the accounts department,
local intranet facility provided by the organization and from the internet.

Research Process

A research is a process of a systematic and in depth study or research of any particular topic,
subject or area of investigation, backed by the collection, compilation, presentation and
interpretation of relevant details or data.

The process and steps of research are as follows:

Define Research Problem→ Review concepts and theories→ Formulate Hypothesis→ Research
Design→ Collect Data→ Analysis Data→ Interpret and Report→ Feedback.

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 CHAPTER-5

THEORETICAL BACKGROUND

MEANING AND DEFINITION OF INVENTORY

The term inventory is originated from the French word Inventaire and the Latin Inventariom
which implies a list of things found. The term “inventory” has a wider meaning then the term
“Materials” or “store”.

According to the “Institute of Chartered Accountant of India” inventory means

“Tangible Property” held

a) For sale in the ordinary course of business.

b) In the process of production for sale.

c) For rendering of services.

The term inventory refers to the stockpile of the products a firm is offering for sales and the
components that make up the product. Inventories are the stocks of the product of a company,
manufacturing for sale and the components that make up the product.

The various forms in which inventories exist in manufacturing company are (1) raw material (2)
work-in process, (3) finish goods and (4) store and spares. However, in commercial parlance,
inventory usually includes store, raw material, work-in process and finish goods. The term

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inventory includes – raw material, work-in process, finish goods packaging, spares and others
stocked in order to meet an unexpected demand or distribution in the future.

NATURE OF INVENTORIES

Inventories are stock of the product a company is manufacturing for sale and components that
make up the product. The various forms in which inventory exist in a manufacturing company
are raw materials, work in progress and finished goods.

RAW MATERIALS:-

Raw materials are those inputs that are converted into finished product though
the manufacturing process. Raw materials inventories are those units which have been purchased
and stored for future productions.

WORK IN PROGRESS:-

These inventories are semi manufactured products. They represent products that
need more work before they become finished products for sales.

FINISHED GOODS:-

Finished goods inventories are those completely manufactured products which

are ready for sale. Stock of raw materials and work in progress facilitate production. While stock
of finished goods is required for smooth marketing operation. Thus, inventories serve as a link
between the production and consumption of goods.

The levels of three kinds of inventories for a firm depend on the nature of its business. A
manufacturing firm will have substantially high levels of all three kinds of inventories, while a
retail or wholesale firm will have a very high and no raw material and work in progress
inventories. Within manufacturing firms, there will be differences. Large heavy engineering

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 companies produce long production cycle products, therefore they carry large inventories. On the
other hand, inventories of a consumer product company will not be large, because of short
production cycle and fast turn over. Firms also maintain a fourth kind of inventory, supplies or
stores and spares.

SUPPLIES:

It includes office and plant cleaning materials like soap, brooms, oil, fuel, light,
bulbs etc. These materials do not directly enter production, but are necessary for production
process. Usually, these supplies are small part of the total inventory and do not involve
significant investment. Therefore, a sophisticated system of inventory control may not be
maintained for them.

OBJECTIVES OF INVENTORY MANAGEMENT

The basic managerial objectives of inventory control are two-fold; first, the avoidance over-
investment or under-investment in inventories; and second, to provide the right quantity of
standard raw material to the production department at the right time. In brief, the objectives
of inventory control may be summarized as follows:
A. Operating Objectives:

(1) Ensuring Availability of Materials: There should be a continuous availability of all

types of raw materials in the factory so that the production may not be help up wants of any
material. A minimum quantity of each material should be held in store to permit production
to move on schedule.

(2) Avoidance of Abnormal Wastage: There should be minimum possible wastage of

materials while these are being stored in the godowns or used in the factory by the workers.
Wastage should be allowed up to a certain level known as normal wastage. To avoid any

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 abnormal wastage, strict control over the inventory should be exercised. Leakage, theft,
embezzlements of raw material and spoilage of material due to rust, bust should be avoided.

(3) Promotion of Manufacturing Efficiency: If the right type of raw material is available to
the manufacturing departments at the right time, their manufacturing efficiency is also
increased. Their motivation level rises and morale is improved.

(4) Avoidance of Out of Stock Danger: Information about availability of materials should
be made continuously available to the management so that they can do planning for
procurement of raw material. It maintains the inventories at the optimum level keeping in
view the operational requirements. It also avoids the out of stock danger.

(5) Better Service to Customers: Sufficient stock of finished goods must be maintained to
match reasonable demand of the customers for prompt execution of their orders.
(6)Highlighting slow moving and obsolete items of materials.

(7) Designing poorer organization for inventory management: Clear cut accountability should
be fixed at various levels of organization.

B. Financial Objectives:

(1) Economy in purchasing: A proper inventory control brings certain advantages and
economies in purchasing also. Every attempt has to make to effect economy in purchasing
through quantity and taking advantage to favorable markets.

(2) Reasonable Price: While purchasing materials, it is to be seen that right quality of material
is purchased at reasonably low price. Quality is not to be sacrificed at the cost of lower price.
The material purchased should be of the quality alone which is needed.

(3) Optimum Investing and Efficient Use of capital: The basic aim of inventory control from
the financial point of view is the optimum level of investment in inventories. There should be

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no excessive investment in stock, etc. Investment in inventories must not tie up funds that
could be used in other activities. The determination of maximum and minimum level of stock
attempt in this direction.

CONTROL OF MATERIALS:

Rigid control over materials are necessary not only to guard against theft, but also to minimize
waste and misuse from causes such as excessive inventories, over issue, deterioration, spoilage,
and obsolescence. There are certain prerequisites to an effective control system for materials:

1. Materials of the desired quantity will be available when needed;

2. Materials will be purchased only when a need exists and in economical qualities;

3. Purchases of materials will be made at most favorable prices;

4. Vouchers for the payments of materials purchased will be approved only if the materials have
been received in good condition;

5. Materials will be protected against loss by proper physical control;

6. Issue of materials will be properly authorized and accounted for; and

7. All materials, at all times, will be charged, as the responsibility of some individual.

The control of materials, as an element of cost of production, is illustrated with reference to the
purchase and issues procedures, inventory systems, and inventory control techniques.

IMPORTANCE OF INVENTORY CONTROL:

The importance or necessity of inventory control is well explained in the terms of the
objects of inventory control, which are obtained through it. A proper inventory control
lowers down the cost of production and improves profitability of enterprise.

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 ADVANTAGES OF INVENTORY CONTROL:

(1) Reduction in investment in inventory.

(2) Proper and efficient use of raw materials.

(3) No bottleneck in production.

(4) Improvement in production and sales.

(5) Efficient and optimum use of physical as well as financial resources.

(6) Ordering cost can be reduced if a firm places a few large orders in place of numerous
small orders.

(7) Maintenance of adequate inventories reduces the set-up cost associated with each
production run.

Risk and cost Associated with Inventories:

Holding of Inventories expose the firm to a number of risks and costs.
Major risks are:
(a) Price decline: They may be due to increase in market supply of the product, introduction of a
new competitive product, price-cut by the competitors etc.
(b) Product deterioration: This may due to holding a product for too long a period or improper
storage conditions.
(c) Obsolescence: This may due to change in customer’s taste, new production technique,
improvements in product design, specifications etc.

The Costs of holding inventories are as follows:

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(a) Material Cost: This include the cost of purchasing the goods, transportation and handling
charges less any discount allowed by the supplier of goods.

(b) Ordering Cost: This includes the variables cost associated with placing an order for the
goods. The fewer the orders, the lower will be the ordering costs for the firm.

(c) Carrying Cost: This includes the expenses for storing and handling the goods. It comprises
storage costs, insurance costs, spoilage costs, cost of funds tied up in inventories etc.

ESSENTIALS OF INVENTORY CONTROL SYSTEM

For an efficient and successful inventory control there are certain important conditions
that are as follows:
(1) Classification and Identification of inventories: The usual inventory of
manufacturing firm includes raw-material, stores, work-in-progress and
component etc. To facilitate prompt recording the dealing, each item of the
inventory must be assigned a particular code number and it must be classified in
suitable group or sub-divisions. ABC analysis of material is very helpful in this
context.
(2) Standardization and simplification of inventories: In order to facilitate
inventory control, the inventory line should be simplified. It refers to the
elimination of excess types and sizes of items. Simplification leads to reduction
in classification of inventories and its carrying costs. Standardization, on the
other hand, refers to the fixation of standards of raw material to be purchased
and specification of the components and tools to be used.
(3) Setting the Maximum and Minimum limits for each part of inventory: The
third step in this process is to set the maximum and minimum limits of each
item of the inventory. It avoids the chances of over-investment as well as
running a short of any item during the cost of producing. Reordering point
should also be fixed beforehand.

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(4) Economic Order Quantity: It is also a basic inventory problem to determine
the quantity as how much to order at a time. In determining the EOQ, the
problem is one to set a balance between two opposite costs, namely, ordering
costs and carrying costs. This quantity should be fixed beforehand.

(5) Adequate storage Facilities: To make the system of inventory control

successful and efficient one, it is also essential to provide the adequate
storage facilities. Sufficient storage area and proper handling facilities should
be organized.

(6) Adequate Reports and Records: Inventory control requires the

maintenance of adequate inventory record and reports. Various inventory
records must contain information to meet the needs of purchasing,
production, sales and financial staff. The typical information required about
any class of inventory may be relating to quantity on hand, location,
quantities in transit, unit cost, code for each item of inventory, reorder point,
safety level etc. Statements forms and inventory records should be so
designed that the clerical cost of maintaining these records must be kept a
minimum.

(7) Intelligent and Experienced Personnel: An important requirement of

successful inventory control system is the appointment of qualified and
experienced staff in purchase and stores department. Mere establishment of
procedures and the maintenance of records would not give the desired results
as there is no substitute for sincere and devoted as well as experienced hands.
Hence, the whole inventory control structure should be manned with trained,
qualified, experienced and devoted employees.

(8) Coordination: There must be proper coordination of all departments

involved in the process of inventory control, such as purchase, finance,
receiving, approving, storage and accounting departments. These all

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 departments have different outlook and objects in inventory management but
financial manager has to coordinate them all.

(9) Budgeting: An efficient budgeting system is also required. Preparation of

budgets concerning materials, supplies and equipment to ensure economy in
purchasing and use of material is also necessary.

(10) Internal Check: Operating of a system of internal check is also vital in

inventory management so that all transactions involving material supplies and
equipment purchase are properly approved and automatically checked.

CLASSIFICATION OF INVENTORIES
Classification of Inventory

Production Inventory Work in Progress Finished Goods MRO Inventory

1. Production Inventory
In production inventory there are two types of production inventory that are as follows:

2. a) Material, which are purchases from the market like raw material and
3. readymade Parts & components require for manufacturing of
4. equipment.
5. b) Special part or component manufactured in once own company & kept
6. in stock for uses in manufacturing.

2. Maintenance Repair Operating supplies (MRO Inventory)

There are material purchase from vendor & require for Maintenance or production process.

3. Work in progress
There are semi-finished products in various stages of production on the factory floor.

4. Finished goods inventory

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These consist of manufactured kept in warehouses or retail outlets & are meet for sale.

RISKS & COST ASSOCIATED WITH INVENTORIES

Holding of inventories exposes the firm to a number of risks & costs. Risk of holding inventories
can be put as follows:
i) Price decline
This may be due to increase in the market supply of the product,
introduction of a new competitive product price-cutting by the competitors etc.
ii) Product deterioration
This may be due to holding a product for too long a period for too long a period or improper
storages condition.
iii) Obsolescence
This may be due to change in customers taste, new production technique improvements in the
product design, specifications etc.

THE COSTS OF HOLDING INVENTORY

i) Material costs
This includes the cost of purchasing the goods, transportation and handling charges less any
discount allowed by the supplier of goods.

ii) Ordering costs

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This includes the variable cost associated with placing an order for the goods. The fewer the
orders lower will be the ordering costs for the firm.
iii) Carrying cost
This includes the exposes for storing the goods. It comprises storage costs, insurance costs,
spoilage costs, cost of funds tied up in inventory.

INVENTORY MANAGEMENT IS A NECESSARY EVIL

Inventory is usually considered the “necessary evil” affecting your business cash
flow. It is ‘necessary’ because supply & demand never coincide precisely; it is an
‘evil’ because it ties up cash. So here are some considerations that businesses are
taking to minimize its necessity:

Reduce inventory: - Be careful though, inventory is a bigger problem For some

businesses than for others. Service firms may not have much inventory apart from
stationary. Manufacturers, on the other hand, have raw materials, work in progress,
and finished goods. The key is to maintain adequate but not excessive inventory.

Monitor inventory more often:- Don’t let items sit idle! Consider automated
inventory management software for inventory identification and control.

PURPOSE OF INVENTORY MANAGEMENT

1. To maintain independence of operations
 Provide “optimal” amount of cushion between work centers

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Ensure smooth work flow
2. To allow flexibility in production scheduling
3. To meet variation in product demand
4. To provide a safeguard for variation in raw material or parts delivery
time
 Protect against supply delivery problems (strikes, weather, natural
disasters, war, etc.)
5. To take advantage of economic purchase-order size

BENEFITS OF INVENTORY MANAGEMENT

1. Reduced stocking costs resulting from efficient matching of
requirements to stock.
2. Re-order recommendations highlight urgent needs. Help prevent
Stock-outs.
3. Instant access to 24 month usage pattern aids decision making reveals
trends. Old data easily purged.
4. Automatic capture on audit trail of all stock movement details helps
resolve.
5. Instant month-end valuation of receipt, issues adjustment etc.

6. Rapid stock and work-in progress evaluation.

7. True multi-location without constraints.

8. Easy monitoring of slow moving stocks.

9. Automation of inventory checking cycles ensures that items are not

forgotten. Improves accuracy.
10. Automatic tracking of scrap rates and recalculation of safety levels
reduces effort, improves control.
11. ABC analysis system focused attention on high value stock holdings.

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 INVENTORY CONTROL SYSTEM
An inventory lays a very important role in the determination of the profile of the Business. The
management should make a decision to when the quantities to order according to the
requirement & the number of units to be kept in hands. There are three types of inventories
that are raw material, work in process, & finished goods.
In order to establish and develop a sound inventory, inventory control system it is necessary to
consider the following factors:
. Type of the business
. The results to be achieved by the system.
. The relevant system to be implemented.

ESSENTIALS OF INVENTORY CONTROL SYSTEM

If the inventory control system is to be effective the following consideration are to be taken:
1. Maintenance of proper record with regard to the units and the value of Various Items of the
Inventories.
2. To ensure proper control over the receipt and of issue of the materials.
3. Materials should be properly identified and proper storage of facilities
Should be made available for the location of the same.
4. There should be well-trained & capable person who should be
entrusted with the responsibility of the implementation of the system to enable to perform
their duties effectively.
6. There should be proper co-ordination of the inventory control system with the other
department of business such as sales, purchases, & production department.

PRICING OF RAW MATERIAL

Pricing of Raw Material:

Several methods are used for pricing inventories used in production.
The important ones are:

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BOSCH CHASSIS SYSTEMS INDIA LTD.
FIFO Method:
This method assumes that the order in which materials are received in the Stores is the order in
which they are issued from the store. Hence, the material which is issued first is priced on the
basis of the cost of material received earliest and so on.
LIFO Method:
This method is the opposite of the FIFO method. It assumes that the
Material, which is purchased, last is issued first. Hence, material issues are priced on the basis
of the cost of most recent purchases.
Weighted Average Method:
Under this method, materials issued are priced at the weighted average
Cost of materials in the stock.

VALUATION OF STOCK

There are three important types of inventories carried by a manufacturing

Organization.

. Raw Material Inventory.

. Work in Process inventory.

. Finished goods inventory.

The valuation of work in process & finished goods inventory depends on

i) The method used for pricing materials

ii) The manner in which fixed manufacturing overhead costs are treated.

Since, the methods for pricing materials have been discussed earlier. It us

look at how fixed manufacturing overhead cost are treated. For, this

Purpose two systems of costing viz., direct costing & absorption Costing are used.

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 Under direct costing, fixed manufacturing overhead costs are treated as period costs and
not as product costs. Put differently, they are charged directly to the income statement and hence,
not reflected in the valuation of inventories under absorption costing, on the other hand, fixed
manufacturing overhead costs are treated as product (inventor able) costs and not period costs.

Hence, inventory valuation reflects on allocated shares of fixed manufacturing overhead

cost. Further, when the inventory level increases, the reported profit under direct costing is lower
than the reported profit under absorption costing. By the Same token, when the inventory level
decreases, the reported profit under direct Costing is higher than what it is under absorption
costing.

INVENTORY CONTROL TECHNIQUES

Inventory control techniques are employed by the inventory control organization within the
framework of one of the basic inventory models, viz. Fixed order quantity systems or fixed
order period system. Inventory control techniques represent the operational aspect of inventory
management and help realize the objectives inventory management and control.

Several techniques of inventory control are in use and it depends on the convenience of
the firm to adopt of the techniques. What should be stressed, however, is the need to cover all
items of inventory and all stages, i.e. from the stage of receipt from supplies to the stage of their
use.

The techniques are most commonly used are the following,

. Always better control (ABC) analysis

. Fast moving, slow moving and Non-moving (FSN) analysis

. Economic Order Quantity (EOQ)

. Maximum - Minimum technique

. Bin card system (KAN – BAN)

. Materials Requirement Planning (MRP)

. Just In time (JIT)

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. VED Analysis

ABC ANALYSIS

A firm may use different types of inventories. Some items may be very costly and/or slow
moving whereas others are inexpensive. For effective inventory management it is desirable to
exercise rigorous control over those items whose Value is the highest and/ or slowest moving &
pay little attention to relatively less costly items. This approach of selective control is
popularly known as ‘ABC’ Analysis or ‘Always Better Control’ Analysis.
The following procedure is suggested for developing an ABC analysis:-
1. List each item carried in inventory by number or some other
designation.
2. Determine the annual volume of usage & rupee value of each item.
3. Multiply each item’s annual volume of usage by its rupee value.
4. Compute each items percentage of the total inventory in terms of
annual usage in rupees.
5. Select the top 10 percent of all items, which have the highest rupee
Percentage and classify them as ‘A’ item.
6. Select the next 20 percent of all items with the next highest rupee
Percentage and designate them ‘B’ items.
7. The next 70 percent of all items with the lowest rupee percent age are
‘C’items.

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 ABC ANALYSIS OF RAW MATERIAL

CATEGORY NO. OF ITEM (%) ITEM VALUE (%)

A 10 70
B 20 20
C 70 10
TOTAL 100 100

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 80

70

60

50

40 NO. OF ITEMS(%)
ITEM VALUE(%)
30

20

10

0
A B C

Interpretation:-As per the ABC analysis of Raw Material, in the A category 10 % materials,
approximately value 70 %. In the B category item of 20%, approximately value 20 %, and in
the C category 70 % no. of items, value approximately 10 %.

FAST MOVING, SLOW MOVING AND NON-MOVING (FSN) ANALYSIS

FSN stands for fast moving, slow moving and non-moving. Here classification is based on the
pattern of issue from stores & is useful in controlling obsolescence.
To carry out an FSN analysis the data of receipts or the last date of issue, whichever is
later, is taken to determine the number of months, which have lapped since the last
transaction, the terms are usually grouped in periods of 12 months.

MINIMUM --MAXIMUM TECHNIQUE

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The minimum – maximum system is often used in connection with manual inventory
control systems. The minimum quantity is established in the same way as any re – order the
point, the maximum is the minimum quantity plus the optimum lot - size. In practice, a
requisition is initiated, when a withdrawal it reduces the inventory below the minimum
level, & the order quantity is the maximum minus the inventory below the minimum level,
and the order quantity is the maximum minus the inventory status after the withdrawal. If
the final withdrawal reduces the stock level substantially below the minimum level, the order
quantity will be higher than the calculated EOQ.

BIN CARD SYSTEM (KAN-BAN)

For each kind of material a bin card is a maintained and attached to bins or racks on which
material is stored. It gives a running record of receipts, issuers and balance of stock. An
entry will be made or passed from a basic voucher or a document at the time of each
receipt and issue and final balance is arrived at (Calculated). These cards should tally with
relevant accounts in the stores ledger.

ECONOMIC ORDER QUANTITY (EOQ)

How much to order –

Major decision area where focus on decision regarding how much Quantity to order at a time is
important case of inventory management. Number of techniques has been developed to help
managers in this decision. Most widely used technique is “Economic order Quantity”. which
represents the size of an order for which the total cost is minimum economy in purchasing.

Total cost for this purpose consist 2 major costs –

a) Ordering cost or procurement cost.

b) Carrying / Holding cost. Where,

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 These two types of cost are opposed to one another. The ordering cost decrease while
carrying cost increases with every increase in Qty of purchase order. So the management has to
take decision that there will be balance between 2 opposing cost to have EOQ with minimum
total cost.

How to calculate EOQ:-

1) Mathematical approach – calculate by formula.

 2 AB

EOQ = -------- (in units)

CxS

Where,

A = Annual usage in units

B = Cost of placing an order

C = cost per unit

S = Carrying cost as a percentage of Aug inventory.

If EOQ determined in terms of rupees where annual usage expressed in rupees by formula

Annual usage = annual usage unit X unit cost.

MATERIAL REQUIREMENT PLANNING (MRP)

The discussion in inventory we had till now may be called a classical approach to inventory
management and control, a somewhat a more elaborate and improved approach, called
Materials Requirement Planning (MRP), has been developed in recent years and is gaining
popularity in industry.MRP is a new solution to an old problem: having stock of materials
always on hand when needed without carrying excess in entry.
Highly dependent upon computer technology. The technique separates the various
components and co-ordinates purchasing and delivery with production and. At the same time
reduces the length of time when materials will be needed to meet the previously planned
production schedule.

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JUST IN TIME

Popularly known in its acronym JIT. Just in time is highly discussed in materials management
circles these days. The concept is alternatively known as ZIPS (Zero Inventory Production
System), MAN (Material as Needed), NOT (nick of time), or ZIN (Zero Inventory).As a
concept, JIT means that virtually no inventories are held at any stage of production and
that exact number of units achieved. The plant has a long line of racks waiting outside with full
loads of automotive parts and components for the assembly line. As soon as one truck comes out
at one end of the plant, another gets inside. There is no warehouse for the parts for
example, are fed to the production line directly from the back of the truck.

VED ANALYSIS

In this technique, inventory items are divided into three categories in the descending order
of their critically. Thus ‘V’ item includes vital items which need more attention because stock
out of such items will result in halt age of production. These items must be stored
adequately so as to ensure uninterrupted functioning of the plant. In ‘E’ items are included those
which are essential for efficient functioning of the operating system. Care has to be taken to
ensure that they are always in stock. ‘D’ stands for desirable items which do not have bearing on
the production immediately but availability of such items will lead to more efficiency and less
fatigue. VED Analysis can be very useful to capital intensive process industries.

CHAPTER-6

INVENTORY MANAGEMENT IN BOSCH

TYPES OF STOCK DEPARTMENT IN BOSCH
In Bosch they are formulated the four types of stock department for store the material they
are as follows:-
1. Receiving goods store Department
2. Direct Material Department
3. Indirect Material Department
4. Maintenance Department

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 Now the functions of each department are as follows:
1. Receiving Goods Store Department
In this type of store department after receiving the goods as per concern with the order of
customer or various types of goods send by a supplier arranging properly in this department.
Firstly, when the material come on a gate then by the gatekeeper or security are check the
quantity and the gate no. as per as p.o. i.e. purchase order. And after they are sending to the
quality assurance & then for the store they are send into the Receiving store. And those are the
manager of the store then he checks it in his under observation, and divides as per requirement of
the production department.

2. Direct Material Department

In the direct Material department mainly two types of stores.
i) Finished goods stores
Whatever raw material are in warded in receiving stores (as per given above) are checked by
quality control department and accepted material are stores in finished goods stores.
ii) Semi finished goods Stores
If material sent by vendor is required, after as per vendor requirement Some process on it then
these material are store in semi-finished stores for further process. It may goes in machine
shop, plating shop, bonding shop, process shop for blacodising, phospeting, power coating etc. In
direct material stores BOSCH apply Kan-Ban System.

3. Indirect Material Department

It includes materials which are indirectly used for making brakes. It means supportive material
like – Methanol, Ethanol, oil, cotton waste, thinner, adhesive warnish, tools , cutting oil , brake
oil, drills , Allen key, diesel, gases, etc. there are certain material which required special care
and for that Bosch also maintain cold storage. Raw materials are like thinner, warnish, araldite,
required control temperature from 6c0 to 26c0. Here Bosch apply 5 S system & which keep
material away from dirt, dust & eliminate search, arrange in sequence, neat & clean.

4. Maintenance department
It includes material required for maintenance of machinery for making

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BOSCH CHASSIS SYSTEMS INDIA LTD.
brakes. It includes electrical goods, electronic goods, rubber belts, etc. there are some self-life
item like rubber belts & for that Bosch apply FIFO method. All rejected materials are return to
the vendor by making rejection delivery challan.

PROCESS OF RECEIPT OF MATERIALS

Goods are received

By the security

Entry is made in the

Gate Inward Register

Stores informs QC about Daily Process

the receipt of goods and samples

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 Physical verification is conducted

by contractual labour

Stores Executive prepares

the GRN against

GI Register is manually reconciled with

the GRN prepared by Stores to ensure Monthly

Process

INVENTORY SYSTEM IN BOSCH

1. Perpectual Inventory System

2. Periodic Inventory System

This are two important inventory systems follow by the Bosch are as follows:-

1. Perpetual Inventory System

This is a system of maintaining records of physical movement of stock its correct

balance and regular checking of stock. Perpetual means continuous Inventory system. In this
company the store manager are keep records of all raw materials inventory daily and also
maintain a value of stock of each individual item of stores at all times when demanded.

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BOSCH CHASSIS SYSTEMS INDIA LTD.
2. Periodic Inventory System

In the company P.P.C. i.e. Production Planning Control department and Marketing
department are decide the time of the production and maintain the Scheduling like 18, 20, 30
days and start the production activities & according to this period they are maintain the 18
days inventory in the Bosch. For raw Materials & maintain the inventory in the periodic
system the quality and value Inventory are reviewed as a fixed time intervals i.e. weekly,
monthly, or quarterly.

The stock position in 2019, month wise in Bosch as follows

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 Stores Stock-15
7

0
JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC

BOSCH TECHNIQUES FOR INVENTORY MANAGEMENT

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Bosch is used following techniques for control the inventory:-
1. ABC Analysis
2. JIT Technique
3. KanBan Technique
4. FSN & Re-Order Level.
They are explaining as follows:-

1. ABC ANALYSIS
ABC analysis is a basic analytical material management technique which
enables top management to gear the efforts. So that, output will be maximized this technique is
popularly known as “always better control”.
In Bosch Company ABC it is based on the value based technique. The ABC categorization of
raw material it is a depends upon the value of raw material.
As per the policy of BOSCH Ltd., The top 70% of the total stock value is considered to be the
“A Class” items, e.g. - Aluminum, Ferro, liners, back spares etc. The next 20% of the total stock
Value of the items is the “B Class” items e.g. spring, stickers, rubber components, plastics
etc.Whereas, the remaining 10% of the items are considered to be the “C Class” Items.E.g.
washer, nut bolt, springs etc.
ABC ANALYSIS IN BOSCH
Item Stock Code Annual Value in Rs. Material category
P1500306 3,056 C
P1500570 85,075 B
P1509173 2,475 C
P1550974 13,998 C
P1551514 7,889 C
P6022916 4,92,920 A
P6022935 16,443 C
P6023011 12,335 C
P6023030 17,885 C
P6201209P 5,57,080 A

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BOSCH CHASSIS SYSTEMS INDIA LTD.
P6306087P 8,065 C
P6306816P 4,876 C
P6306820P 40,050 B
P6306912P 13,734 C
P6306927P 95,220 B
P6306931P 79,655 B
P6401012P 7,440 C
P6503318P 19,348 C
P7431107 16,789 C
P7431536 5,667 C
Rs.15,00,000

A B C
P6022916 P1500570 All 14 remaining items
P6201209P P6306820P 70% Of 20 items
10% of 20 items P6306931P 10%of Rs.15,00,000
70% of Rs.15,00,000 P6306931P
20% of 20 items
20% of Rs.15,00,000

No. of Items
16
14
12
10 No. of Items
8
6
4
2
0
A B C
.

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 Items Value(In Rs.)
1200000

1000000

800000
Items Valu(In Rs.)
600000

400000

200000

0
A B C

2. JIT (JUST IN TIME)TECHNIQUE

The just-in-time it is an newly developed technique for inventory mgt. The inventory it is
an dead money of the every company. So, therefore they are today used JIT Technique for to
minimize their dead money. The major benefit of JIT is the co. can purchased the raw materials
in the few hours. In the JIT technique three parties are involved. i.e.

Company ← Logistics ← Vendor

The vendor supplies the material to the logistics not directly to the company. & then co. has
picked up the material as per their requirement and start the production activities. JIT it is saved
the time as well as minimize the space of the raw material for the store. It’s a major benefit of
JIT to the Bosch Company.

3. KAN-BAN TECHNIQUE

Kan-ban it is a Japanese technique for maintain the inventory of raw material. it is

newly developed technique in the modern companies. It is also called as “two-bin system”. In
the Kan-Ban system the store keeper has been checked the racks regularly and refilling the raw
material in that racks regularly. If the any rack boxes is empty then the production line is disturb.
So therefore, there is need to refilling the all racks regularly by the store keeper.

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4. FSN & RE-ORDER LEVEL FSN
FSN means Fast Moving, Slow Moving & Non Moving components (raw
Material) in the Bosch Chassis Ltd. They are divided the 3 categories product i.e. A,
B, & C and they are follows fixed slab for the FSN levels.
i) F: - The Fast moving raw materials are continuously moving from stock
dept. to Production dept.
ii) S: -In the Slow Moving Material they are issues less than 10% of stock
for the Production process.
iii) N:-In the nonmoving product the dividation is made on the basis of A,
B, & C Now the method for nonmoving in Bosch as follows:
→ A: - The ‘A’ category raw materials are not moving before the 4 months.
→ B: - The ‘B’ category raw materials are not moving before the 6 months.
→ C: - The ‘C’ category raw materials are not moving before the 12 months.

RE-ORDER LEVEL
In the Bosch Ltd. Re-order level is followed for only indirect material. When the quantity
reaches to certain burden then fresh order is place again for new lot of materials, such level is
done as per order level.

2. JIT (JUST IN TIME)TECHNIQUE

The just-in-time it is an newly developed technique for inventory mgt. The inventory it is
an dead money of the every company. So, therefore they are today used JIT Technique for to
minimize their dead money. The major benefit of JIT is the co. can purchased the raw materials
in the few hours. In the JIT technique three parties are involved. i.e.

Company ← Logistics ← Vendors

The vendor supplies the material to the logistics not directly to the company. & then co. has
picked up the material as per their requirement and start the production activities. JIT it is saved
the time as well as minimize the space of the raw material for the store. It’s a major benefit of
JIT to the Bosch Company.

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BOSCH CHASSIS SYSTEMS INDIA LTD.
3. KAN-BAN TECHNIQUE

Kan-ban it is a Japanese technique for maintain the inventory of raw material. it is

newly developed technique in the modern companies. It is also called as “two-bin system”. In
the Kan-Ban system the store keeper has been checked the racks regularly and refilling the raw
material in that racks regularly. If the any rack boxes is empty then the production line is disturb.
So therefore, there is need to refilling the all racks regularly by the store keeper.

4. FSN & RE-ORDER LEVEL

FSN
FSN means Fast Moving, Slow Moving & Non Moving components (raw
Material) in the Bosch Chassis Ltd. They are divided the 3 categories product i.e. A,
B, & C and they are follows fixed slab for the FSN levels.
i) F: - The Fast moving raw materials are continuously moving from stock
dept. to Production dept.
ii) S: -In the Slow Moving Material they are issues less than 10% of stock
for the Production process.
iii) N:-In the nonmoving product the dividation is made on the basis of A,
B, & C Now the method for nonmoving in Bosch as follows:
→ A: - The ‘A’ category raw materials are not moving before the 4 months.
→ B: - The ‘B’ category raw materials are not moving before the 6 months.
→ C: - The ‘C’ category raw materials are not moving before the 12 months.

RE-ORDER LEVEL
In the Bosch Ltd. Re-order level is followed for only indirect material. When the quantity
reaches to certain burden then fresh order is place again for new lot of materials, such level is
done as per order level.

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 CHAPTER- 7

RATIO ANALYSIS

INVENTORY TURNOVER RATIO

Inventory turnover ratios are calculated to indicate whether inventories have been used
efficiently or not.

For 2017

Sales

Avg. Inventory

5,30,67,62,000

44,34,50,000

= 11.97 times.

For 2018

Sales

Avg. Inventory

5,31,16,92,000

56,39,00,000 For 2019

55
= 9.48 times. BOSCH CHASSIS SYSTEMS INDIA LTD.
 Sales

Avg. Inventory

5,92,32,04,000

61,14,44,000

= 9.69 times.
Interpretation
This ratio shows how rapidly the inventory is turning into
receivable through sales. The inventory turnover ratio is
11.97 in 2017. It is decreased up to 9.48 in 2018. And it is
9.69 in 2019. The above analysis shows that the inventory management is very efficient
throughout the period of study.

INVENTORY HOLDING PERIOD

For 2017

365

Inventory Turnover Ratio

365

11.97

= 30.49

= 30 Days.

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BOSCH CHASSIS SYSTEMS INDIA LTD.
For 2018

365

Inventory Turnover Ratio

365

9.48

= 38.50

= 39 Days.

For 2019

365

Inventory Turnover Ratio

365

9.69

= 37.67

= 38 Days.

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 Inventory Holding Period
45

40

35

30

25

20

15

10

0
2017 2018 2019

RAW MATERIAL INVENTORY TURNOVER RATIO

For 2017

Annual consumption of raw

material

Avg. raw material inventory

3,30,12,19,000

25,07,20,000

= 13.17

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BOSCH CHASSIS SYSTEMS INDIA LTD.
For 2018

Annual consumption of raw

material

Avg. raw material inventory

3,56,19,13,000

33,91,15,000

= 10.50

For 2019

Annual consumption of raw material

Avg. raw material inventory

3,89,52,11,000

32,12,74,000

= 12.12

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 Raw Material Inventory Turnover Ratio
14

12

10

0
2017 2018 2019
FINISHED GOODS INVENTORY TURNOVER RATIO

For 2017

Cost of goods sold

Avg. inventory of finished goods at cost

5,30,67,62,000
6, 99, 32,000

=75.88

For 2018

Cost of goods sold

Avg. inventory of finished goods at cost

5,31,16,92,000
11, 49, 46,000

=46.21

For 2019

Cost of goods sold

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 Avg. inventory of finished goods at cost

5,92,32,04,000
13, 77, 54,000.5

= 42.99

Finished Goods Inventory Turnover Ratio

80

70

60

50

40

30

20

10

0
2017 2018 2019

INVENTORIES (Rs. In Thousands)

Current Assets 31-12-2018 31-12-2019

Raw Materials and 4,12,357 2,54,286
Components

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 Stores & spares 42,217 34,320
Work-In-Progress 52,493 1,51,705
Finished Goods 1,35,841 1,39,668
TOTAL 6,42,908 5,79,979

INTERPRETATION
The above table shows that the total inventory in the year 2019 is at Rs.5, 79,979 as against of
Rs. 6, 42,908 in the year 2018, which reflects that liquidity position is good.
The above table shows that there has been decrease in stocks in the current year as against to
last year, which indicates that sales have taken place significantly in the current year that is
2019.

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 CHAPTER-8
FINDINGS, CONCLUSIONS
&
SUGGESTIONS
FINDINGS AND CONCLUSIONS

Observation: In 2017 the company has low inventory turnover ratio i.e.

9.48 times but in 2019 it is 9.69 times.

Conclusion: The above analysis shows that the inventory management

is efficient throughout the period of study.

Observation: The inventory holding period is 39 days in 2017, and in

the year 2019 it is 38 days.

Conclusion: It shows that there is not much difference between the

holding period ratio but it is good for company’s point of
view that the company is holding inventory for minimum
days.

Observation: The total inventory in the year 2019 is at Rs.5, 79,979 as

against Of Rs. 6, 42,908 in the year 2018.

Conclusion: It reflects that the liquidity position of the company is

good. The Above figure shows that there has been decrease in stocks in the Current year as

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 against to last year, which indicates that sales have
taken place significantly in the current year that is 2019.

In Bosch chassis the inventory management system is run in well away. The company holds
minimum stock of raw material for avoiding of wastages.
The company uses just-in-time [JIT] inventory system. The company also uses the ABC
Analysis, FSN Analysis, KANBAN techniques for inventory management.
The Bosch has been maintained the 18 days inventory & it has tries to increased sales &
reduced the storage cost. In Bosch chassis systems they are generally maintain the inventory
for raw material, work -in -process and finished goods.

SUGGESTIONS

1. Inventory is major part of company. So, the company should have better Management of
inventory.

2. Proper training & guidance to the workers should gives for handling the material & operation
process with due care.

3. The company should have maintained the maintenance department of machines. Because it’s
avoids interruption in production system.

4. The company should maintain the appropriate the stock of raw material & avoided the
maximum level of inventory.

LIMITATIONS OF THE STUDY

1. Inventory management is the continuous process & it may study over a year. But field work
for 60 days only, and it is a vast topic also, so study and analysis on this topic within this
limited period was not sufficient.

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BOSCH CHASSIS SYSTEMS INDIA LTD.
2. Due to the busy schedule, some of the staff members were not in a position to spare time for
guiding the topic or giving any information.

3. All the programs are going under SAP System so there are the limitations regarding the
analysis of the data without user of that company only.

4. Maximum secondary data is used.

CHAPTER-9
BIBLIOGRAPHY

BIBLIOGRAPHY

INVENTORY MANAGEMENT

- Bhagirath Singh.

FINANCIAL MANAGEMENT

- Mr. Ravi M. Kishore

.
PRODUCTION & OPERATION MANAGEMENT
- Dr. B.S.Goel

WEBSITE
www.boschindia.com

MANAGEMENT ACCOUNTING
Third Edition
- M Y Khan
- P K Jain
Tata Mc-Graw Hill Publishing Company Ltd

65
BOSCH CHASSIS SYSTEMS INDIA LTD.
ADVANCED ACCOUNTING
Ninth Edition
- S N Maheshwari
- SK Maheshwari
Vikas Publishing House Pvt. Ltd.

CHAPTER-10

ANNEXURE

Balance sheet as on December 31, 2017

Rs. In Thousands [TINR]
Particulars Schedule Amt. Amt.
Sources of funds
Shareholders fund
Capital 1. 207930
Reserve & Surplus 2. 1795253 2003183
Loan Funds
Secured Loans 3. 12184
Unsecured Loans 4. 425109 437293
Deferred Tax Liability(Net) 44500
TOTAL 2484976
Application Of Funds
Fixed Assets
Gross Block 5. 2556930
Less-Depreciation 1293359
Net Block 1263571
Capital Work- in –Progress 256746 1520317

Investments 6. 360796
Current assets, Loans & Advances
Interest accrued on invest.
Inventories 10321
Sundry debtors 7. 482085
Cash & Bank Balances 8. 1019716
Loans & Advances 9. 146786
10. 341954

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BOSCH CHASSIS SYSTEMS INDIA LTD.
Less-current Liabilities and 2000862
Provisions
Liabilities 11.
Provisions 1140979
Net Current Assets 256020
1396999 603863
TOTAL 2484976

Balance sheet as on December 31, 2018

67
BOSCH CHASSIS SYSTEMS INDIA LTD.
 Rs. In Thousands [TINR]

Particulars Schedule Amt. Amt.

Sources of funds
Shareholders fund
Capital 1. 207930
Reserve & Surplus 2. 2459495 2667425
Loan Funds
Unsecured Loans 3. 411421
Deferred Tax Liability(Net) 31944
TOTAL 3110790
Application Of Funds
Fixed Assets
Gross Block 4. 2689828
Less-Depreciation 1355803
Net Block 1334025
Capital Work- in –Progress 531409
1865434
Investments 5. 755443
Current assets, Loans &
Advances
Interest accrued on invest. 15822
Inventories 6. 642908
Sundry debtors 7. 701656
Cash & Bank Balances 8. 597091
Loans & Advances 9. 334989
2292466
Less-current Liabilities and
Provisions 10.
Liabilities 1587456
Provisions 215097
Net Current Assets 1802553 489913
TOTAL 3110790

Balance sheet as on December 31, 2019

Rs. In Thousands [TINR]

68
BOSCH CHASSIS SYSTEMS INDIA LTD.
 Particulars Schedule Amt. Amt.
Sources of funds
Shareholders fund
Capital 1. 207930
Reserve & Surplus 2. 2911632 3119562
Loan Funds
Unsecured Loans 3. 397990
Deferred Tax Liability(Net) 142721
TOTAL 3660273
Application Of Funds
Fixed Assets
Gross Block 4. 3420018
Less-Depreciation 1575590
Net Block 1844428
Capital Work- in –Progress 134224 1978652

Investments 5. 560067
Current assets, Loans &
Advances:-
Interest accrued on invest. 25371
Inventories 6. 579979
Sundry debtors 7. 814046
Cash & Bank Balances 8. 687554
Loans & Advances 9. 582762
2689712
Less:-current Liabilities and
Provisions:- 10.
Liabilities 1426257
Provisions 141901
1568158
Net Current Assets 1121554
TOTAL 3110790

GOODS RECEIPT NOTE

69
BOSCH CHASSIS SYSTEMS INDIA LTD.
 Name & Address Of Mfg. NO.:
Bosch Chassis Systems India Ltd.
N.H.6, Bambhori, Jalgaon-425001.
DATE:
CHALLAN-ANNEXURE-2 VAT TIN:
For movement of inputs of partially CST TIN:
processed goods under rule 4(5) (a) of REGN. NO.:
cenvat credit Rules, 2002 from one VENDOR CODE: MTL SENT THRO:ROAD
factory to another Factory for further CATEGORY:RETURNABL
processing/operation. E
Sr.N ITEM CODE UNI QUANTIT RATE/UNI AMOUN REMARKS
o & T Y T T
DESCRIPTIO
N OF
GOODS

Date: Nature of processing/Mfg. Expected duration of

Time of Issue: Required to be done: processing/fgr.:180 days
Factory /Place of processing/Mfg.:
Place:
Date:
1 Date and time of dispatch of finished goods to parent
factory/another Manufacturer and entry No and date
of receipt in the account in processing factory.
2 Quantity dispatched (No’s, /weight/liter/meter) and
entered in account.
3 Nature of processing /Manufacturing Done
4 Quantity of waste material returned to the parent
factory or cleared for home consumption Invoice No.
and date. Quantum of duty paid(Both figure and
words)
Place:
Date: Name of the factory and Address.
Signature Of Processor
PART 3
(To be filled by parent factory inPRIMARY
duplicate ofDATA
challanANALYSIS
or receipt of goods from processing
factory )
(Bio – Profile of the Respondents):-
For
1 30 Chassis
Bosch percent Systems
of the officials belong to the age group of 35 and 50
India Ltd.
2 58 percent of the officials belong to the age group of 25 to 34
Authorized Signatory
3Certified
12percent of thehave
that I/We officials belong
received thetogoods
the age group ofunder
removed abovethe
50above challan No.
FOOT NOTE/REMARKS:
70
BOSCH CHASSIS SYSTEMS INDIA LTD.
ACKNOWLEDGEMENT: Please acknowledge receipt of returning acknowledgement Copy
RECEIVED ABOVE MATERIAL IN GOOD CONDITION: Duty signed within seven days of
receipt at your end. No complaint will be entertained after seven days.
4 69 percent are male officials
5 31 percent are female officials
6 72 percent are graduates and above
7 12 percent are those who are having technical and professional qualifications
8 16 percent are undergraduates.
9 55 percent are those who are associated with the field
10 25 percent are those who are in the managerial and administrative posts.
11 20 percent belongs to the others category

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 DATA ANALYSIS

1 Are you aware about Inventory Management System?

 Yes ------------------------------------------ 75 per cent

 No ------------------------------------------- 17 per cent

 Do not know/ Can not say ---------------- 08 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
80%

70%

60%

50%

40% Yes
No
30%
Do not know/Can Not
20% say

10%

0%

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 Interpretation: The awareness level among the company officials regarding the existence,

functioning and applicability of inventory management system is high that is 75 per cent, as

per the result of the study

2 Do you know that your company has an inventory management system?

 Yes ---------------------------------------------- 72 per cent

 No ------------------------------------------------ 20 per cent

 Do not know/ Cannot say -------------------- 08 per cent

80%

70%

60%

50%

Yes
40%
No
30%
Do not know/Can Not say
20%

10%

0%

74
BOSCH CHASSIS SYSTEMS INDIA LTD.
Interpretation: The company officials are aware about their company having an inventory

management system. 72 per cent of the respondents do have this awareness as against 20 per

cent+08 per cent of the respondents who are either not aware or not able to provide any

information in this regard.

3 Do you agree that there should be an inventory management system in place in any

organization / company?

 Agree ------------------------------------------------ 68 per cent

 Disagree --------------------------------------------- 12 per cent

 Do not know/ Cannot say ------------------------- 20 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 76
BOSCH CHASSIS SYSTEMS INDIA LTD.
 70%

60%

50%

40%
Agree

30% Disagree

Do not know/Can Not say

20%

10%

0%

Interpretation: According to the response to the above question, it appears that every

company/organization should have a system or mechanism in place for managing their

inventory.

4 For what reasons do you feel that there should be an inventory management

system?

 To smoothen operational requirement --------------------- 27 per cent

 To save time ---------------------------------------------------- 22 per cent

 To maintain accountability and transparency ----------------30 per cent

 Other reasons --------------------------------------------------- 15 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Do not know/ Cannot say ------------------------------------ 06 per cent

30%
25% To smoothen operational
requirement
20%
To save time
15%
To maintain
10% accountability and
transparency
5%
Other reasons
0%
Do not know/ Can not say

Interpretation:

To everyone’s surprise, 30 per cent of the respondents feel that it is for accountability and

transparency purpose that inventory records are maintained and hence the need for an inventory

management system. This is followed by the need for saving time and the requirement of

operational smoothness.

5 Do you agree that the inventory management system in your company has fulfilled

the needs for which it was evolved?

 Strongly Agree -------------------------------------- 20 per cent

 Agree ------------------------------------------------- 47 per cent

 Disagree ----------------------------------------------- 15 per cent

 Strongly Disagree ------------------------------------- 07 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Do not know/ Cannot say ---------------------------- 11 per cent

50%
45%
Interpretation:
40% From the above
35% Strongly Agree
30% Agree response, it
25% Disagree
20% Strongly Disagree appears that the
15% Do not know/ Can not say
inventory
10%
5% management
0%
system has more

or less achieved

its objectives for

which it was in

place. This is

evident from the 67 per cent of the respondents’ opinion who have either agreed or strongly

agreed in favor of this proposition. However the response of 22 per cent of the respondents who

think otherwise also speaks something.

6 What according to you is the major benefit of going for an inventory management

system by your company?

 It has made storage and retrieval of material easier --------- 37 per cent

 Improved Sales Effectiveness ---------------------------------- 26 per cent

 Reduced Operational Cost ----------------------------------- 18 per cent

 Other Benefits -------------------------------------------------- 10 per cent

 Do not know/ Cannot say ------------------------------------ 09 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
40%
35% It has made storage and
30% retrieval of material easier

25% Improved Sales

20% Effectiveness
15% Reduced Operational Cost
10%
Other Benifits
5%
0% Do not know/ Can not say

Interpretation: As regards the benefits of having an inventory management system by the

company, the respondents are of the opinion that the major benefit lies in relaxation in terms of

storage and retrieval of material. This is followed by increasing sales effectiveness and reduction

in operational cost. However, all these benefits are interlinked and the spearing between them is

more analytical than anything else.

7 Do you have skilled professionals in your company for inventory management?

 Yes ----------------------------------------------- 48 per cent

 No ------------------------------------------------- 30 per cent

 Do not know/ Cannot say ---------------------- 22 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 50%

45%

40%

35%

30%
Yes
25%

20% No

15% Do not know/Can Not say

10%

5%

0%

Interpretation: Recruitment of skilled professionals well vesed with latest inventory

management technology, particularly in chemicals and paint industry is a concern for the

company as it appears that it lacks in this domain.

8. Do you agree that your company gives more emphasis on software than skilled

manpower with regard to inventory management?

 Strongly Agree -------------------------------------- 18 per cent

 Agree ------------------------------------------------- 52 per cent

 Disagree ----------------------------------------------- 15 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Strongly Disagree ------------------------------------- 07 per cent

 Do not know/ Cannot say ---------------------------- 08 per cent

60%

50%

40%
Strongly Agree

30%
Agree

20% Disagree

Strongly Disagree
10%
Do not know/ Can not say
0%

Interpretation: The above response gives an impression that the company puts greater

emphasis on software than skilled manpower for inventory details management.

9. Do you think that the software used by your company is according to the design and

needs of the system?

 Yes -------------------------------------------------- 86 per cent

 No ---------------------------------------------------- 10 per cent

 Do not know/ Cannot say ------------------------- 04 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
 90%

80%

70%

60%

50%
Yes

40%
No

30%
Do not know/Can Not say
20%

10%

0%

Interpretation: The company appears to be using the software according to the system

requirement and design and according to the customers’ needs.

10 What is the prime challenge before your Company with regard to inventory

management?

 Lack of trained professionals ------------------------------- 42 per cent

 Maintenance cost --------------------------------------------- 21 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Changing requirements of customers ------------------------- 27 per cent

 Other problems -------------------------------------------------- 06 per cent

 Do not know/ Cannot say ------------------------------------- 04 per cent

45% Lack of trained

professionls
40%
35% Maintenance cost
30%
Changing requirements of
25% customers
20%
Other problems
15%
10% Do not know/ Can not say
5%
0%

Interpretation: Lack of availability of trained professionals coupled with maintenance cost and

changing needs of the customers are perceived to be the inventory challenges before the

company.

11. What is the future of inventory management system in your company?

 Will continue as a successful mechanism --------------------- 43 per cent

 May change according to time ----------------------------------- 33 per cent

 Shall collapse ------------------------------------------------------- 12 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Do not know/ Cannot say ----------------------------------------- 12 per cent

45%
40%
35%
30%
25% Will continue as a
20% successful mechanism
May change accoeding
15%
to time
10% Shall collapse
5% Do not know/ Can not
0% say

Interpretation: The future of inventory management system at Johnson & Johnson Ltd. appear

to pretty good, going by the response of our study.

12. What category of professionals is managing your company inventory?

 Skilled and trained --------------------------------- 32 per cent

 Only skilled but not trained ----------------------- 16 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Non skilled but trained professionals -------------- 20 per cent

 Non skilled and non trained professionals --------- 25 per cent

 Others --------------------------------------------------- 07 per cent

40% Skilled and trained

30%
Only skilled but not trained
20%
Non skilled but trained
10% professionals
0%
Non skilled and non trained
professionals

Others

Interpretation: As already stated above in the earlier question, availability of trained and

skilled professionals for inventory management needs serious attention of the company.

QUESTIONNAIRE

I would like to introduce myself as a PGDM student Mohd. Anas Khan of IMT - CDL,
Ghaziabad. I am doing a project on topic “Inventory Control & Management.” This project is

86
BOSCH CHASSIS SYSTEMS INDIA LTD.
to be submitted to the IMT – CDL, Ghaziabad for the award of PGDM. Hence, I request you to
kindly spend a few minutes in answering this:-

Name :
Age :
Sex :
Ph. No :
Address :
E-mail

1 Are you aware about Inventory Management System?

 Yes ------------------------------------------ 75 per cent
 No ------------------------------------------- 17 per cent
 Do not know/ Cannot say ---------------- 08 per cent
2 Do you know that your company has an inventory management system?
 Yes ---------------------------------------------- 72 per cent
 No ------------------------------------------------ 20 per cent
 Do not know/ Cannot say -------------------- 08 per cent

3 Do you agree that there should be an inventory management system in place in any
organization / company?
 Agree ------------------------------------------------ 68 per cent
 Disagree --------------------------------------------- 12 per cent
 Do not know/ Cannot say ------------------------- 20 per cent

4 For what reasons do you feel that there should be an inventory management system?
 To smoothen operational requirement --------------------- 27 per cent
 To save time ---------------------------------------------------- 22 per cent
 To maintain accountability and transparency ----------------30 per cent
 Other reasons --------------------------------------------------- 15 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Do not know/ Cannot say ------------------------------------ 06 per cent

5 Do you agree that the inventory management system in your company has fulfilled the
needs for which it was evolved?
 Strongly Agree -------------------------------------- 20 per cent
 Agree ------------------------------------------------- 47 per cent
 Disagree ----------------------------------------------- 15 per cent
 Strongly Disagree ------------------------------------- 07 per cent
 Do not know/ Cannot say ---------------------------- 11 per cent

6 What according to you is the major benefit of going for an inventory management
system by your company?
 It has made storage and retrieval of material easier --------- 37 per cent
 Improved Sales Effectiveness ---------------------------------- 26 per cent
 Reduced Operational Cost ----------------------------------- 18 per cent
 Other Benefits -------------------------------------------------- 10 per cent
 Do not know/ Cannot say ------------------------------------ 09 per cent

7 Do you have skilled professionals in your company for inventory management?

 Yes ----------------------------------------------- 48 per cent
 No ------------------------------------------------- 30 per cent
 Do not know/ Cannot say ---------------------- 22 per cent

8 Do you agree that your company gives more emphasis on software than skilled
manpower with regard to inventory management?

 Strongly Agree -------------------------------------- 18 per cent

 Agree ------------------------------------------------- 52 per cent
 Disagree ----------------------------------------------- 15 per cent
 Strongly Disagree ------------------------------------- 07 per cent

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BOSCH CHASSIS SYSTEMS INDIA LTD.
  Do not know/ Cannot say ---------------------------- 08 per cent

9 Do you think that the software used by your company is according to the design and
needs of the system?

 Yes -------------------------------------------------- 86 per cent

 No ---------------------------------------------------- 10 per cent
 Do not know/ Cannot say ------------------------- 04 per cent

10 What is the prime challenge before your company with regard to inventory
management?

 Lack of trained professionals ------------------------------- 42 per cent

 Maintenance cost --------------------------------------------- 21 per cent
 Changing requirements of customers ------------------------- 27 per cent
 Other problems -------------------------------------------------- 06 per cent
 Do not know/ Cannot say ------------------------------------- 04 per cent

11 What is the future of inventory management system in your company?

 Will continue as a successful mechanism --------------------- 43 per cent

 May change according to time ----------------------------------- 33 per cent
 Shall collapse ------------------------------------------------------- 12 per cent
 Do not know/ Cannot say ----------------------------------------- 12 per cent

12 What category of professionals are managing your company inventory?

 Skilled and trained --------------------------------- 32 per cent

 Only skilled but not trained ----------------------- 16 per cent
 Non skilled but trained professionals -------------- 20 per cent
 Non skilled and non-trained professionals --------- 25 per cent
 Others --------------------------------------------------- 07 per cent

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 90
BOSCH CHASSIS SYSTEMS INDIA LTD.