A Project Report on Inventory Control at Big Bazaar Essay Example

known as Total Stocking Cost (TTS). A graph that plots order quantity against TTS will demonstrate a gradual decline until a specific point beyond which TTS increases proportionately with each increase in quantity. This analysis and its associated costs serve as the basis for determining inventory procurement decisions, addressing how much and when to order. Determining the quantity to order involves calculating the Economic Order Quantity (EOQ). Carrying costs encompass various expenses related to storing and maintaining inventory, including inventory storage costs, capital costs, and expenses associated with managing in-house storage facilities or utilizing external warehouses operated by third-party vendors.The process of managing inventory involves using buildings, material handling equipment, IT software applications, and hardware equipment. This process is overseen by operations and management staff resources. Inventory storage costs include expenses such as building rental fees, facility maintenance expenses, and related costs. It also includes the cost of material handling equipment, IT hardware and applications (including purchasing, depreciation, renting or leasing), operational costs, consumables, communication costs, utilities bills as well as human resources and management expenses.

In addition to these expenses incurred during inventory storage are the capital costs that involve investments made in inventory management. This includes interest on working capital invested in inventory along with taxes paid on stored goods and insurance premiums. There are also other legal liabilities involved.

The determination of both the inventory storage costs and the cost of capital depends on whether a company chooses to manage their own inventory internally or outsource it to third-party service providers. Currently there is a growing trend towards outsourcing inventory management to such third-party service providers because organizations believe that managing inventory operations requires

competencies that may not align with their core business competencies.Outsourcing tasks to a skilled supplier is more advantageous than investing in developing skills in-house. This is particularly true for Big Bazaar, the largest hypermarket chain in India, with 214 stores across 90 cities and towns. Building and equipping large-scale warehouses can be costly, resulting in longer project durations and tying up company capital. By outsourcing inventory management to Big Bazaar, organizations can address supply chain time lags and uncertainties while taking advantage of economies of scale and streamlined logistics costs. This also provides a localized shopping experience for customers.The text discusses the advantages of bulk buying and efficient movement/storage practices for achieving economies of scale and maintaining an effective inventory system. It also addresses the practice of holding buffer stock in individual workstations to account for potential delays. Different departments within the organization have varying inventory expectations - top management aims for higher turnover and lower costs, marketing prioritizes quick delivery and avoiding stockouts, and logistics focuses on minimizing damages/cancellations. Despite acknowledging potential negative impacts on cash flow/working capital, holding inventory is crucial for good customer service/sales turnover targets. The text mentions that Big Bazaar deals with national/private label brands in apparel/electronics. It then describes various types of inventories maintained across product categories such as FMC products, food items, apparel, and seasonal goods. Store managers determine inventory levels through regular inspections/customer demands, based on records of stock-in/out activities.Orders for apparel are placed every 45 days, with a backup supply of 10 pieces for each sample item. If more items are needed, other Big Bazaar locations are contacted. If customer demands cannot be met, a "Transfer

of Interest" is considered as an alternative solution.