This document discusses inventory management of steel. It begins by defining inventory and outlining the benefits of holding inventory, including benefits for production, purchasing, and sales. It then discusses objectives of inventory management like providing adequate inventory and minimizing costs. It also covers costs and benefits of inventory and the economic order quantity (EOQ) method of inventory management. The document provides an example calculation of EOQ and notes some limitations. It also briefly mentions other inventory management methods and analyzes the inventory management of Tata Steel based on provided data.

1. Inventory Management Of

2. Inventory Management Of
Steel

3. Inventory Management Of
Group 3
PGDBM- II Sem Section ‘A’
Abhishek Bose Anirudh Tiwari
Gautam Raj Prasad E. Prabhu
SteelShashank M.A.

4. Introduction
 Inventory consists of
 Raw materials
 Work in progress
 Finished goods
 Inventory in transit
Benefits of holding inventory
a) Benefits in production
b) Benefits in purchase
c) Benefits in sales

5. Objectives of inventory management
 To provide adequate inventory for the firm’s requirement in
the process of work
 To minimize firm’s investment in inventory
 To ensure smooth flow of materials in production & sales
operations

6. Costs & Benefits of Inventory

7. Methods of Inventory Management
 Economic Order Quantity

8. Assumptions in EOQ method
 The firm can forecast accurately its annual requirement
 Usage of inventory is steady
 There is no time gap between ordering & the supply of
inventory
 Only two types of costs are considered: ordering cost &
inventory carrying cost
 Both costs are constant for the given inventory level

9. Calculation of EOQ
TC = P*D + (D*S)/Q + (H*Q)/2
Q = √(2*D*S)/H
where,
TC = total cost
P = purchase cost per unit
D = annual demand of the raw material
S = fixed cost per order
H = annual holding cost

10. Limitations
a) Accurate forecast of annual requirement difficult.
b) No time gap between ordering & supplying of raw materials
assumed, which may not be the case.
c) Demand for a product may not be uniform throughout the year.
d) EOQ of manufacturing firm may not be economical for the
supplier.
e) Better discounts may be offered by the supplier for placing
orders higher than EOQ.

11. Other methods of Inventory Management
 Just In Time (JIT)
 ABC analysis
 High, Medium, Low (HML) classifications
 Vital, Essential, Desirable (VED) Classifications
 Scarce, Difficulty, Easy (SDE) Classifications
 Fast moving, Slow moving, Non moving (FSN) Analysis
 Seasonal & Off Seasonal (SOS) Analysis
 XYZ Analysis
 Government, Open market, Local & Foreign source
(GOLF) Analysis

12. Inventory Management of Tata Steel
Amount : Rs. In Lakhs

13. Graph Showing Consumption & Stock of
Raw Materials
Amount : Rs. In Lakhs

14. Work In Progress (WIP)

16.  Product line of TATA STEEL includes long tubes,semis,hot
rods, cold rods and galvanized tubes.
 Tubes division uses Just –In-Time purchase system .
 A look at the chart indicates though in the last four years
sales has remained same or decreased , the stock of raw
material has increased. This is due to the fact that price of
raw material has increased but company is not able to
increase the price due to stiff competition. Increase in
inventory may also be due to wrong estimation of orders.
 The chart of WIP shows that both cost of goods produced
and WIP have increased during the period. work in
progress holding period also has gone up which the
company must look into.

17. THANK YOU