A COMPARATIVE STUDY on INVENTORY MANAGEMENT SYSTEM (A Case Study of Kantipur Publication Pvt
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A COMPARATIVE STUDY ON INVENTORY MANAGEMENT SYSTEM (A Case Study of Kantipur Publication Pvt. Ltd. and Kamana Prakashan Samuha Pvt. Ltd.) A Thesis Submitted By: Gyanendra Lal Karna T.U. Regd. No: - 7- 1- 25 - 105 - 97 Campus Roll No. 344 /062 Exam Roll No. 1768/064 Nepal Commerce Campus Submitted To: Office of the Dean Faculty of Management Tribhuvan University In partial fulfillment of the Requirements for the Masters Degree of Business Studies (MBS) New Baneshwar, Kathmandu March 2010 VIVA – VOCE SHEET The Thesis Report Presented By Gyanendra Lal Karna Entitled A Comparative Study on Inventory Management System (A Case Study of Kantipur Publication Pvt. Ltd. and Kamana Prakashan Samuha Pvt. Ltd.) Has been accepted as partial fulfillment of the requirements for the Masters Degree of Business Studies (MBS) Viva - Voce Committee Chairperson (Research Committee) -------------------------------------------- Member (Thesis Supervisor) ---------------------------------------------- Member (Thesis Supervisor) ---------------------------------------------- Member (External Expert) --------------------------------------------- Date: ---------------------- 2 RECOMMENDATION This is to Certify that the Thesis Report Submitted By: Gyanendra Lal Karna Entitled: A Comparative Study on Inventory management system (A Case Study of Kantipur Publication Pvt. Ltd. And Kamana Prakashan Samuha Pvt. Ltd.) Has been prepared as approved by this department in the prescribed format of Faculty of Management. This thesis is forwarded for examination. ------------------ --------------- (Prof. Dr. Bihari Binod Pokharel) (Diwakar Pokhrel) Head of Research Department Campus Chief --------------------- ------------------- (Rajeshwar Neupane) (Pitambar Shrestha) Thesis Supervisor Thesis Supervisor 3 DECLARATION I hereby declare that the work reported in this thesis entitled A Comparative Study on Inventory Management System (A Case of Kantipur Publication Pvt. Ltd. and Kamana Prakashan Samuha Pvt. Ltd.) Submitted to Nepal Commerce Campus, New Baneshwar, Kathmandu, Faculty of Management, Tribhuvan University, is my original Work done in the form of partial fulfillment of the requirement for the Master of Business Studies (MBS) under the supervision of Rajeshwar Neupane and Pitambar Shrestha of Nepal Commerce campus. ------------------------------ Gyanendra Lal Karna Date ----------------- Nepal Commerce Campus New Baneshwar, Kathmandu 4 ACKNOWLEDGEMENTS This thesis has been prepared to fulfill the partial requirements for the MBS Degree. During the course, I worked with sincerity, honesty and diligently, as far as possible. But beside my continual efforts, I also get an unforgettable support from different people and overwhelmed by their support while completing my work. First of all, I would like to express my profound gratitude to my Supervisor Rajeshwar Neupane for his valuable guidance throughout the work and my respected teacher Pitambar Shrestha for his expert guidelines. I also would like to express deep gratitude to my respected teacher Thaman Adhikari (Dilli Bazaar Kanya Campus) and to all my teachers who inspired me to do this study. I express my deep gratitude to the officials of Kantipur Publication Pvt. Ltd. And Kamana Prakashan Samuha Pvt. Ltd. for providing necessary information and related data that helps to write this thesis and my big-brother Dipendra Kumar Karna, my friends Sudhir Kumar Jha, Guddu Karna who helped and spent their valuable time and efforts while completing this thesis. I also would like to express my special thanks to Nitesh Karna for helping the typing this thesis and Rakesh Kumar Karna for printing this thesis. At last but not least, I would like to dedicate this thesis to my respected father Late Ramprit Lal karna. Gyanendra Lal Karna Nepal Commerce Campus Roll No. 344/2062/064 Kathmandu ------March, 2010 5 TABLE OF CONTENTS Front Page Viva-Voce Sheet Recommendation Declaration Acknowledgements Table of Contents List of Tables List of Figures Abbreviations CHAPTER - 1 Page No. INTRODUCTION 1 - 12 1.1 Background of the Study 1 1.1.1 Functions of Inventory Management 4 1.1.2 Background of the Company under Study 5 1.2 Statement of Problem 8 1.3 Objective of the Study 10 1.4 Significant of the Study 10 1.5 Limitation of Study 10 1.6 Chapter Scheme 11 CHAPTER - 2 REVIEW OF LITERATURE 13 - 54 2.1 Review of Books 13 2.1.1 Conceptual Review 13 2.1.2 Types of Inventory 14 2.1.3 Need of Holding Inventories 15 2.1.4 Objective 0f Inventory Management 16 2.1.5 Need and Importance of Inventory Management 17 2.1.6 Inventory Cost 18 2.1.7 Inventory Techniques 24 2.1.8 Inventory System 34 2.1.9 Types of Inventory System 36 2.1.10 Inventory Control Procedure 38 6 2.1.11 ABC Inventory Planning System 40 2.1.12 Inventory Turnover 42 2.1.13 Inventory Valuation 43 2.2 Review of Articles and Journals 47 2.3 Review of Previous Studies on Inventory Management 48 CHAPTER - 3 RESEARCH METHODOLOGY 55 - 65 3.1 Introduction 55 3.2 Research Design 55 3.3 Population and Sample 55 3.4 Nature and Source of Data 57 3.5 Data Gathering Procedure 59 3.6 Analytical Tools Used 59 3.6.1 Financial Tools 59 3.6.2 Statistical Tools 63 CHAPTER - 4 PRESENTATION AND ANALYSIS OF DATA 66 - 89 4.1 Introduction 66 4.2 EOQ Analysis 66 4.3 ABC Analysis 75 4.4 Trend Analysis 76 4.5 Ratio Analysis 83 4.6 Correlation Analysis 86 4.7 Major Findings of Studies 88 CHAPTER - 5 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 90 - 94 5.1 Summary 90 5.2 Conclusion 91 5.3 Recommendations 92 BIBLIOGRAPHY APPENDICES 7 LIST OF TABLES Table No. Title Page No. 1.1 Product Name and Production Units of Kantipur Publication Pvt. Ltd. 7 1.2 Product Name and Production Units of Kamana Prakashan Samuha Pvt. Ltd. 8 2.1 Tabular Determination of EOQ 26 2.2 Graphic Presentation of EOQ 27 2.3 ABC Inventory Planning System 41 2.4 The Comparison of A, B and C Items 41 4.1 EOQ Analysis of Newsprint 67 4.2 EOQ Analysis of Ink 69 4.3 EOQ Analysis of Film sheet 71 4.4 EOQ Analysis of Aluminum Sheet 73 4.5 ABC Analysis of Inventory 76 4.6 Annual Usage of Newsprint 76 4.7 Annual Usage of Ink 78 4.8 Annual Usage of Film Sheet 79 4.9 Annual Usage of Aluminum Sheet 80 4.10 Annual Aggregate Sales 82 4.11 Inventory Turnover 83 4.12 Inventory Holding Days 84 8 4.13 Inventory to Sales Ratio 85 4.14 Inventory to Profit Ratio 86 4.15 Correlation Analysis between Inventory and Sales 87 4.16 Correlation Analysis between Inventory and Profit 88 9 LIST OF FIGURES Figure No. Title Page No. 2.1 Graphic Determination of EOQ 28 2.2 Re- Order Point under certainty 31 2.3 Re - Order Point under uncertainty 32 2.4 Multi - stage Inventory System Concept 35 2.5 Multi Level Inventories 36 2.6 Continuous Inventory System 37 2.8 ABC Classification of Inventory Items 42 4.1 Annual Usage of Newsprint 77 4.2 Annual Usage of Ink 78 4.3 Annual Usage of Film Sheet 80 4.4 Annual Usage of Aluminum Sheet 81 4.5 Annual Aggregate Sales 82 10 ABBREVIATIONS ABC Always Better Control A/C Account B.S. Bikram Sambat C.V. Co-efficient of Variation F/Y Fiscal Year GDP Gross Domestic Product GPC Gorkhapatra Corporation i.e. That is JCF Janakpur Cigarette Factory KG Kilogram KP Pvt. Ltd. Kantipur Publication Private Limited KPS Pvt. Ltd. Kamana Prakashan Samuha Private Limited L/C Letter of Credit MT Metric Ton NOCL Nepal Oil Corporation Limited RDL Royal Drug Limited ROL Re-Order Level ROP Re-Order Point Rs. Rupees S.D. Standard Deviation 11 T.U. Tribhuvan University Sq. k.m. Square Kilometer DNPL Dabur Nepal Private Limited NLL Nepal Lever Limited P.E. Probable Error 12 CHAPTER – 1 INTRODUCTION 1.1 Background of the Study An Asian small country Nepal is one of the least developed with poorest economic condition of the world. Nepal is said to be sand-witched in between two giant and most popular countries of the world, China in the North and India in the East, West and South. Nepal is land-locked country beside this it is the country of Himalayas and Mountains. It covers an area of 147,181 Sq. Km and runs all along 885 Kilometers from the East to the West and 145 Kilometer to 241 Kilometer from the North to the South. It has more the 38% people living below poverty line. The per capita income of Nepalese people only about $275. The development of the country which is reflected by the annual Gross Domestic Product (GDP) growth is around 3.7% and it has also fluctuating trend. The sound economic development of any nation depends upon the higher rate of growth of production activities in the different sector of the country's economy. The evaluation of public enterprises in the world has a long history. During the 18th Century, a concept was developed like problems of poverty and unemployment may be solved by government intervention in economy. During the period, most of the developed countries had adopted the Laissez fair policy in the economy. During the 19th Century, the application of Laissez fair policy evolved the capitalism that increased the poverty, corruption, worker exploitation, unbalanced distribution of wealth etc. Therefore, to avoid these serious situation intervention by the government was started the economy. The government intervention in the economy was rapidly increased during 20th Century. All the countries in the world either developed or under developed have accepted the existence of public and private enterprise for the economic and social development. It plays a strategic and crucial role in our mixed economy. They have been established in many sectors for overall development of the country with different goals and objectives.