MPC : Inventory control with case study of Dulux paints
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This document discusses inventory control and presents information on different types of inventories, reasons for keeping inventories, inventory control objectives and benefits, costs associated with inventory, and inventory control terminology. It provides a case study of inventory control implementation at Dulux Paints that resulted in a reduction of inventory levels and days to produce inventory. Formulas for calculating economic order quantity and number of orders are also presented.
MPC : Inventory control with case study of Dulux paints
- 1. MPC INVENTORY CONTROL PRESENTED BY AMBARISH POTE (201043) PANKAJ KUMAR (201179)
- 2. INTRODUCTION • Refers to material in stock. • It act as a buffer. • Effective control on inventory is must.
- 3. Types of inventories 1.Raw materials 2.Bought out parts 3.Work in process inventories(WIP) 4.Finished goods inventories 5.Maintenance,repair & operating stores 6.Tools inventory 7.Miscellaneous inventories
- 4. • Inventories can also be classifies as: (i)Fluctuation inventories (ii)Anticipation inventories (iii)Lot size inventories (iv)Transportation inventories
- 5. Reasons for keeping inventories 1.To stabilize production 2.To take advantage of price discounts 3.To meet the demand during replenishment period 4.To prevent loss of orders 5.To keep pace with changing market condtions 6.Other reasons
- 6. Inventory Control • Inventory control is a planned approach of determining (i)What to order (ii)When to order (iii)How much to order (iv)How much to stock So that costs associated with buying & storing are optimal without interrupting production and sales.
- 7. Objectives of Inventory Control • To ensure adequate supply & avoid shortages. • Financial investment in inventory is minimum. • To maintain stock within desired limits. • To ensure timely action for replenishment • To provide a reserve stock for variations • To provide a scientific base for planning of materials.
- 8. Benefits of Inventory Control • Improvement in customers relationship • Smooth & uninterrupted production • Efficient utilization of working capital • Helps in minimizing loss • Economy in purchasing
- 9. Costs associated with inventory 1.Capital cost 2.Ordering cost: (i)purchasing (ii)inspection (iii)accounting (iv)transportation cost
- 10. 3.Inventory carrying costs(holding cost): (i)Storage cost (ii)Handling cost (iii)depreciation, insurance (iv)Costs on record keeping (v)Product deterioration (vi)Spoilage, breakage.
- 11. 4.Shortage cost: (i)Backorder cost (ii)Loss of future sales (iii)Loss of customer goodwill (iv)Extra cost associated with urgent order
- 12. Inventory Control Terminology • Demand • Order style • Lead time • Safety stock • Inventory turnover • Re-order level(ROL) • Re-order quantity
- 14. Types of Inventory Control Models 1.Economic order quantity(EOQ) with instantaneous stock replenishment. 2.EOQ with gradual stock replenishment 3.EOQ when shortages are permitted 4.EOQ with prize discount
- 15. Case Study Dulux Paints •ICI (Dulux paints) •5 plants in India •2 types of paints Water based Solvent based
- 16. Case study • Koparkhairne plant Produces base color (white) Red & yellow Other colors met through vendors through JIT
- 17. Case Study • Packaging done entirely at Koparkharaine • Raw materials for it stored • Goal - Production never stops Inventory Control enters
- 18. Market demand • Festive season - - - > Diwali - -> Huge Inventory
- 19. Results • SAP used for inventory control Before : - 28 days After : - 13days • In 2007 : - 90 crores inventory • In 2010 : -48crores ,,
- 20. • Production per day (p) = 150 KL • Use per day (d) = 100 KL • Cost price (Cp) = 35000 • Inventory carrying cost (I) =25% • Setup cost (Co) = 400 Q* = ((2*D*Co)/(Ch*(1-d/p)))^0.5 N* = D / Q*
- 21. Conclusion Inventory control is Important in terms of • Cost • Time