Kribhco Inventory

1G.Ishitha

1Center for Management Studies, NALSAR University.

Abstract

This paper deals with the inventory management of the KRIBHCO Company. It explains the theoretical background of inventory management and inventory control. It also explains how the company has increased its sales periodically and steadily but at the same time it has increased the cost of carrying inventory in the form of finished goods. This paper shows how much inventory is carried and the inventory carrying cost for the company. Some suggestion are given so as to reduce inventory and keep it within the limits to reduce additional cost.

Key Words: Inventory control, Organic fertilizers, Management, Continuous inventory, periodic inventory, Economic Order Quantity.

Introduction

Thus forecasting demand becomes vital for effective inventory management. There are mainly three costs associated with inventory costs. They are inventory carrying or holding cost, ordering costs and shortage costs. Inventory carrying costs is the cost of holding a good as inventory which depends on duration of holding, volume of goods, labor, record keeping, depreciation and so on. Ordering costs is cost of replenishing the inventory which depends on the size of order and number of orders. Shortage costs are with respect to shortage of inventory when customer wants. In a survey, 8% of customers do not find product they want which results in 3% loss of sales. Thus it become important for producer to know how much to produce, when to produce and how much to maintain as inventory. An inventory control system is necessary. There are two types of inventory systems that is, ordering a fixed quantity or ordering at fixed period of times. Each has its advantages and disadvantages.

i)Fixed Order Quantity

Fixed order quantity is also known as continuous inventory system or perpetual system. In this, an order of fixed quantity is placed whenever inventory level goes below a certain level. In modern world, information technology tools are used to keep this check. Computerized checkout system with laser scanners in super markets is an example for this. ii) Fixed time period system

Thus it has become very important tool in optimizing inventory production.

In present world, information technology has greatly changed and improved the inventory is handled. Companies can track, locate their products, inventory throughout their supply chain and deliver them when customer wants. Organic fertilizers

Krishak Bharati Cooperative Limited (KRIBHCO), is a multi-state cooperative limited registered under multi-state cooperative societies Act (MSCS), 2002. It is a fertilizer company since 1980 and started as first gas based fertilizer plant in the country. It produces both chemical and bio fertilizers. KRIBHCO is promoting use of bio fertilizers from many years and it has three plants for manufacturing bio fertilizers at Hazira (Gujarat), Varanasi (UP) and Lanjha (Maharashtra).

Bio fertilizers are low cost source of plant nutrients. They are eco-friendly and act as supplements for other fertilizers. The demand for bio-fertilizers is increasing due to their longer shelf life, survival at higher temperatures. They are also easy to apply and cost very low.

Inventory Management

As per the department of fertilizers, the inventory carry cost for cooperatives is 4630 per 200 Metric