7th Term - Thesis On Inventory Management

A Project Report on
“CURRENT INVENTORY PRACTICES OF REAL

ESTATE DEVELOPERS”
Submitted by:
T.SHREEDHAR Roll No. 233084

U.RAJESH KUMAR Roll No. 233085
D.RAVINDER REDDY Roll No. 233092
A Thesis submitted in partial fulfillment of academic requirements for the award of

Post-Graduate Program in Advanced Construction Management
UNDER THE ESTEEMED GUIDANCE OF
Prof Rajiv Gupta,

Head of A.C.M
NICMAR, Hyderabad.
&
B.Sudharshan Reddy
General Manager (Projects)
Radha Infra Projects Ltd
Hyderabad.
PGPACM XXIII BATCH 2009-11

NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH
HYDERABAD.
CERTIFICATE
This is to certify that the thesis titled “CURRENT INVENTORY PRACTICES OF
REAL ESTATE DEVELOPERS – A CASE STUDY” is the bonafide work of:
T SHREEDHAR (Roll No. 233084), U RAJESH KUMAR (Roll No. 233085) and
D RAVINDER REDDY (Roll No. 233092) in partial fulfillment of academic requirements for
the award of Post-Graduate Program in Advanced Construction Management. This work is
carried out by them under my guidance and supervision.
Date: Signature of the Guide

Hyderabad Prof. RAJIV GUPTA,
HEAD OF A.C.M
NICMAR, Hyderabad.
Prof. K.R.Ramana,
Dean-In-Charge
NICMAR’s-CISC
DECLARATION
We declare that the thesis titled “CURRENT INVENTORY PRACTICES OF REAL
ESTATE DEVELOPERS – A CASE STUDY” is a bonafide work carried out by us under the
guidance of Prof. Rajiv Gupta. Further, we declare that this has not formed the basis of award of
any degree, diploma, associate ship or other similar degree or diploma and has not been
submitted anywhere else.
SHREEDHAR.T Roll No.233084 Signature
RAJESH UBA Roll No.233085 Signature
RAVINDER REDDY.D Roll No.233092 Signature
Date:
Place: Hyderabad
ACKNOWLEDGEMENT
The research thesis is a team work and the satisfaction that accompanies the successful
completion of this task would be incomplete without the mention of the people who made it
possible. Though it is possible to thank them personally, we take this opportunity to express our
gratitude to them.
We are deeply indebted and highly obliged to our thesis
guide Prof. Rajiv Gupta, Head of ACM, NICMAR, Hyderabad, without whose help we
couldn’t have started the thesis and would not have got any lead for whom to approach and
the methodology to be followed and for guiding and correcting us on the right track.
We also extend our deep gratitude to N.Govardhan Reddy, Executive
Director & B.Sudharshan Reddy, GM-Projects, Radha Realty, Hyderabad, for his valuable
suggestions and support in carrying out the thesis work in the right path.
We would also thank Prof. K. R. Ramana, Dean-In-Charge, NICMAR’s-CISC,
Prof.Sri Hari, Deputy Dean, NICMAR’s-CISC for their supporting nature.
We would like to thank our friends studying in various institutes all

over the country in providing us with the relevant data and the references required for the
successful completion of the thesis
Last but not the least we would like to thank our parents for reposing so much
faith and care in us, giving us the financial and mental support to strive through and complete the
thesis.
Their constant encouragement and guidance provided us infinite motivation
throughout the thesis work.
Regards,
SHREEDHAR.T
RAJESH UBA
RAVINDER REDDY.D
ABSTRACT
We framed our project ‘Current Inventory practices of real estate developers’ with Radha
Realty's one of the ongoing project 'Maple Town' in Hyderabad. During the course of our project
we were able to study the material flow in the construction sector as per the scheduled activity
and requirement. As per our project's focus we made a positive attempt to analyze the flow of
materials throughout the project in terms of its usage as per the oncoming requirement of the
proposed activity.
Primarily Inventory management is about specifying the size and placement of stocked goods at
various stages of the project. Inventory management is required at different locations within a
facility or within multiple locations of a supply network to protect the regular and planned course
of production against the random disturbance of running out of materials or goods yielding in
profits.
The material layout also avoids confusion and risks thereby creating a safe atmosphere in the
construction site. The role of material management in various organizational functional activities
such as material purchasing decision, material forecasting, material planning and budgeting,
selection of potential information from sources are identified as key learning’s of the project.
Also, inventory management with direct linkage with other functional areas of management such
as TMQ, HRM, IT etc and application of tools & techniques of inventory classification in the
real life situation that elaborates on stock levels and rating analysis.
We also took a stand to find out the techniques to select vendors and various aspects in source
selection stressing on the local source who is in a reachable limit from the construction site, with
its positive and negative analysis since the key to successful analysis is to identify the important
characteristics of the particular purchase.
The graphical representation of our analysis is a result of the work we carried through our
project. It educates the trigger points, the point which helps the staff in charge creating an order
for the material so that the work shall not stop.
Index
S.NO CONTENTS Page. No
1.0 Chapter 1
1.1 Introduction 1
1.2 Case study objective 2
2.0 Chapter 2
2.1 Introduction 3
2.2 Leadership team 4
2.3 Current project 5
2.4 Contact address 5
3.0 Chapter 3
3.1 About maple town 6
3.2 Amenities 6
3.3 Club facilities 7
3.4 Facilities 8
3.5 Roads & landscaping 9
3.6 Specifications 10
3.7 Area statement 10
3.8 Floor plans 11
3.9 Layout map 12
3.10 Location map 13

4.0 Chapter 4
4.1 To study how inventory management practices 14
4.2 To find out the techniques for vendor selection 17
4.3 Applying tools and techniques 20
4.4 Finding inventory requirement at different stages 27
4.5 Study of reliable local material ‘utilization’ 38
4.6 Stock maintenance 44
5.0 Chapter 5
5.1 Conclusion 47
6.0 Suggestion 48
7.0 References 52
National Institute of Construction Management and Research, Hyderabad.
CHAPTER l
INTRODUCTION
Current Inventory Management Practices of Real Estate Developers
(A Case Study)
As a part of NICMAR's PGP ACM program, we had an opportunity to study an important aspect of
the construction process which is inventory management. The project encouraged us to build our
skill towards the material management and its trigger areas.
The Opportunity to visit construction site encouraged us to correlate between the book and practices,
where the required materials are placed properly in their respective yards making it feasible for the
staff in collecting them for the proposed use and educated us that the Inventory Management consists
of a series of processes on the multiple functions with reference to the tracking, handling and
managing of goods and materials that are held in stock.
Through this platform we were not only exposed to inventory management and its database, but also
able to understand that the costs can be substantial to store and move inventory. Innovative methods,
such as Just-in-Time inventory control, can save costs and move products and services to customers
with less wait time.
The experience encouraged us to learn the tricks and traits of the inventory practices of the
developer. Thus, enabling ourselves to face the relevant challenges after the completion of our PGP
program.
CASE STUDY OBJECTIVE
Current Inventory Management Practices of Real Estate Developers (A Case Study)
In the due course of the project life cycle inventory management plays a major role in
controlling the project cost. In order to carry forward the project as scheduled and keep it within the
scheduled budget, Risk management gears up in minimizing the damage that might cause in the
project life cycle.
The purpose of inventory management is to ensure availability of materials in sufficient

quantity as and when required and also to minimise investment in inventories.
Current inventory practices of Real Estate Developers – A case study 1

Inventory management is necessary for every management to give proper attention to

inventory management. A proper planning of purchasing, handling, storing and accounting should
form a part of inventory management. An efficient system of inventory management will determine
four vital factors.
1. What to Purchase?
2. How much to purchase?
3. From where to purchase?
4. Where to store and so on?
The purpose of inventory management is to keep the stocks in a manner that neither there
shall be over-stocking nor under-stocking. The investments in inventory should be kept in reasonable
limits so that he primary purpose shall be accomplished and it is „let the work shall not stop‟.
In the initial stage of the construction project, the organization has to plan, schedule and
implement for materials, machinery and resources required. When it comes to the materials for a
scheduled project, planning engineer and the project manager must derive the materials required
using the relevant techniques available. Let‟s say, the (EOQ) economic order quantity for a particular
activity can be calculated and meet the requirements.
This frame work is about the case study on the inventory and risk management in the
project‟s life cycle. The ABC analysis, vendor rating, selection criteria, financial comparisons
through procurement and other techniques used in controlling the project cost and its timely
completion in the ongoing project of Radha Realty located in Hyderabad.
The main objectives of our project study are :
1. To study how inventory management practices play an important role in supporting other
activities of an organization.
2. To find out the techniques for vendor selection.
3. Applying tools and techniques of inventory classification in real life situation.
4. Finding inventory requirement at different stages of construction project or over Project

Life Cycle (PLC).
5. Study of reliable local material „utilization‟ in a construction project.
6. Stock maintenance: Practice of A class Inventories.

CHAPTER 2
INTRODUCTION OF THE COMPANY

Radha Realty Corp Pvt. Ltd
2.1 Overview
Founded in 1997 with more than a decade of empicable track record to its credit, Radha Realty Corp
Pvt Ltd contributed to realty boom in Hyderabad. Every customer is an inspiration to us and we
endeavor to keep that inspiration intact by creating healthier, happier communities. Truly, building
enduring relationships is much more than a slogan to us. With a passion for creating value to the
customers Radha Realty has come up with one successful real estate development after another in
Hyderabad.
Radha Realty has undertaken some of the largest projects in plotted development and gated
communities so far in Hyderabad and Bangalore. Some of the prestigious projects Oxygen City,
Maple Town and Town Homes, Dews Ville speak for what Radha Realty stands for.
Radha Realty is planning to take up signature villa developments aimed at premium segment of the
market as well as apartments for first time buyers. The affordable housing segment would be tailor-
made for the requirements of urban communities providing lifestyle amenities to make them feel
comfortable. They are built with unique contemporary living spaces utilizing the best practices in
design and construction. Radha Realty has significant investments in sister concerns focusing on
infrastructure for commercial and hospitality sectors.
Radha Realty strongly believes that the communities we live in should be vibrant spaces. Towards
that end, Radha Realty is the principal sponsor of Hyderabad 10K run and half marathon. The 10K
run represents people coming together in large numbers to raise awareness about health and fitness
related issues. Radha Realty is the principal benefactor of “Project 511” aimed at improving the
quality of instruction in the Government schools. Tens of thousands of children are benefited through
this program.
Radha Realty is a corporation found on the core values of integrity and innovation. The company is
poised to make giant waves in the real estate development sector in the years to come.
2.2 Vision
To be the first choice of the customers for all their space requirements.
2.3 Mission
To provide quality spaces where people of all ages can live, work and play.
2.4 Core Values
Customer delight, to deliver the product promised on time and with the best quality, to be sensitive
towards the environment and surrounding communities and to be the employer of first choice known
for its innovation and professional approach for real estate development.
2.5 Innovation and Creativity
Being into constructions, innovation and creativity are our core values. Delivering the magnificent
exteriors that are architecturally fabricated is our constant effort. We strive to add luxury, style and
comfort to your ambience.
2.6 Client Satisfaction
Understanding client‟s requirements and delivering solutions is what we value. We value our people
and cherish our customers in enduring relationships.
2.7 Integrity
Integrity of workforce makes the foundation of any organization. Our team is zealous and
responsible in contributing positive results. A group of professional individuals can make large
difference in escalating the organizational growth.
The team at Radha Realty consists of highly professional personnel having deep industry knowledge
and vast experience with companies, not just in India but across the globe.
2.8 Leadership Team
1. Mr. Ravindranath Reddy - Managing Director
2. Mr. K Ramakrishna Rao - Director
3. Mr. N Govardhana Reddy - Executive Director
4. Mr. D Anil Prabhu Kumar - Director, Strategic Planning Sales and Marketing
5. Mr. J Rajasekhara Reddy – Director

2.9 CURRENT PROJECTS
Gated Communities
1. Dews Ville
2. Maple Town
3. Maple Town –II
4. Mulberry Meadows
5. U31
Plotting Ventures
1. Green Lands
2. Oxygen city
3. Fortune Meadows
4. Creep Town
5. Dew Drops
6. Mukund Meadows
Apartments
Carnival
2.10 CONTACT ADDRESS:
Radha Realty Corp Pvt. Ltd.

Plot No: 824,
8-2-293/82/A/824,
Road No. 40, Jubilee Hills,
Hyderabad - 500 033.
- 91-40-23607090.

CHAPTER 3
MAPLE TOWN PROJECT

3.1 About Project “Maple Town”
Radha Realty launches Maple Town Phase II, a gated community of 198 villas located near APPA
junction with direct access from the Outer Ring Road and situated just 20 minutes drive from the
International airport & 15 mins drive from Gachibowli the hub of Hyderabad‟s globally renowned IT
Industry. Famous Educational institutions such as the Glendale Academy and Shadan Medical
College are located less than 5 mins away Maple town is designed with perfect mix of latest
international design and local requirements, best of specifications and high-end materials and
offering world class amenities at a very affordablebprice.
At this 20 acres integrated gated community with its luxury villas & Plots dotting the exquisite
landscape; you have the luxury of choosing if you want to live or invest. The message of our unique
creation is profound: Space matters. Welcome and define the edges of your space with the grand
living at Maple Town.
3.2 Amenities
An aesthetically designed swimming pool with a filtration plant will be provided with separate hinge
rooms for men and women. There will be a provision for toddler‟s pool too. An ideal location for
evening gathering of the residents to spend their leisure in style. The club house would have facilities
like the Health Club with Sauna and Jacuzzi. Maple Town is designed to sway you off our feet with
its architectural excellence. The open spaces between the Villas and within the gated community
would be covered with green landscapes making this place a Garden of Eden. The Perimeter of this
project would be protected like a fortress with an 8 feet wall with solar fencing. Professional
security personnel would mean the campus 24X7, ensuring the safety of the residents. CC TV,
intercom connection between each dwelling unit and the main gate, Wi-Fi connectivity and so on are
also a part of the security plans of the project.

3.3 CLUB FACILITIES

3.3.1. Air –conditioning Gym
3.3.2. Spa
3.3.3. Swimming Pool
3.3.4. Library
3.3.5. Party Hall
3.3.6. Café
3.3.7. Guest Rooms
3.3.8. WI-FI
3.3.9. Lounge
3.3.10. Children Recreation zone
3.3.11. Tennis
3.3.12. Squash
3.3.13. Indoor Badminton
3.4 FACILITIES
3.4.1. Landscaped Gardens
3.4.2. Tree Lined Vistas
3.4.3. Street Lighting
3.4.4. Underground Cabling
3.4.5. Underground Drainage
3.4.6. Broad Band Connectivity
3.4.7. Sewerage Treatment Plant
3.4.8. Generator Back-up
3.4.9. Black Topped Roads with side walks
3.4.10. Jogging Track
3.4.11. Water Purification Plant
3.4.12. Polyclinic/Convenience Store
3.4.13. Solar Fencing
3.4.14. Intercom Facility
3.4.15. Round the Clock Security
3.4.16. Wi-Fi Enabled
3.4.17. Centrailised Gas

3.5 ROADS & LANDSCAPING

60‟ & 40‟ wide internal roads with avenue plantation lead you to houses built on plot areas of 2,
67,355 yards with areas ranging from 2400 -3300 sft. What truly sets this residential cluster apart is
the landscaping, integration of technology at your behest, with most of the area being Wi-Fi enabled.
3.6 SPECIFICATIONS
3.6.1. R.C.C. FRAMED STRUCTURE
a) Earthquake resistant foundation with R.C.C. M20 grade concrete designed for Seismic
zone 2.
3.6.2. SUPER STRUCTURE
a) Brick masonry with good quality bricks in cement mortar.
3.6.3. PLASTERING
a) Internal Double coat cement plaster with smooth finish.
b) External Double coat sand faced cement plastering.
3.6.4. DOORS
a) Main door Best Teak Wood door-frame & shutter aesthetically designed with
melamine polishing and designer hardware of reputed make. Internal doors:
b) Frames: Best Teak Wood frame.
c) Shutters: Molded & paneled shutters with Melamine polishing & standard hardware.
3.6.5. WINDOWS
Window Frames & shutters in Best Teak Wood {polished inside and painted outside) or
uPVC, with glass panels & provision for mosquito mesh, fitted with elegantly designed
M. S. Painted grills, and standard hardware.
3.6.6. PAINTING
a) External Sandtex Mat/ Exterior emulsion paints of Asian / ICI make or

equivalent

b) Internal Smooth finish with good quality putty over a coat of primer finished
with two coats of Acrylic emulsion paint Servant Quarters & Service Areas: Two
coats of Acrylic OBD over one coat of primer.
3.6.7. FLOORING
a) Vitrified porcelain tiles of 24"x24" with 4" skirting of Johnson or equivalent.
b) Bathrooms :Ceramic non-slippery, acid resistant tile flooring of Johnson/Kajaria or

equivalent-Staircase: Polished Marble/granite with skirting.
c) Covered Terrace & Balconies: Rustic series ceramic tiles of Naveen/ J Johnson or
equivalent.
d) Parking Area: Best quality cement based parking tiles over PCC bed.
3.6.8. TILES CLADDING & DADOING
a) Elevation cladding: Granite/slate cladding.
b) Kitchen: Glazed ceramic tile dado up to 2'0" height above
c) Kitchen platform: Johnson or equivalent make
d) Bathrooms: Glazed ceramic tile dado of Johnson / Kajaria / Bell or equivalent tiles up
to full height
e) Utilities / Wash: G glazed ceramic tile dado up to 30" height.
3.6.9. KITCHEN
a) Granite platform with Stainless steel sink / Crystal sink with bath municipal provision
for bore water.
b) Provision for fixing Aqua-guard. Provision for cabinets, exhaust fan & chimney-
Modular kitchen is optional at extracost.
3.6.10. UTILITIES / WASH
Provision for washing machine, dish washer & wet area for washing utensils etc.
3.6.11. BATHROOMS
All the bathrooms consist of

a) Granite counters top wash-basin with hot and cold mixer valve.
b) E WC with flush tank of Hindustan/ Parry make.
c) Hot and cold wall mixer with shower (exposed).
d) Bath-tubfor master bedroom.
e) Provision forgeysers in all bathrooms.
f) All C.P. fittings are chrome plated of Jaquar / Mark / ESS
g) ESS or equivalent make.
3.6.12. ELECTRICAL:
a) Concealed copper wiring in PVC conduits.
b) 33KV substation to ensure quality power.
c) Power outlets for Air-conditioners In all bedrooms.
d) Power outlets for geysers in al I bathrooms.
e) Power plug for cooking range chimney, refrigerator, micro ovens, mixergrlnder In
kitchen.
f) Plug points for refrigerator, T.V. & audio systems etc, wherever necessary.
g) 3 Phase supply for each unit and Individual meter boards. Miniature Circuit Breakers
<MCB> & ELCB of MDS / Merlinger or equivalent make.
h) All electrical fittings of M l< / Northwest or equivalent make. Solar water heating system
is optional at extra cost
3.6.13. TELECOM
a) Telephone points in all bedrooms, drawing & dining areas.
b) Provision for internet connection In study room/bedrooms.
c) Intercom connectivity to security from all houses.

3.6.14. CABLE TV
Provision for cable in all bedrooms & living-room.
3.6.15. INTERNET
Internet CAT 6 cable for internet connectivity.
3.6.16. GENERATOR
100% back-up for all electrical points excluding geysers and air conditioners.
Note: The developers reserve the rights for any additions in plans and elevations. All details are
subject to change and all optional amenities other than the above specifications are all extra cost.
3.7 Area Statement for EAST PLOT

East Facing-1 (40' x 80')
Plot Area 355.50 Sq.Yds.
Ground Floor Area 1712 Sft.
First Floor Area 1620 Sft.
Terrace Floor Area 100 Sft.
Total Area 3432 Sft.

Table 1: East Facing-1 Plot Dimensions
East Facing-2 (40' x 80')

Table 2: East Facing-2 Plot Dimensions

3.8 Area Statement for WEST PLOT
West Facing-1 (40' x 80')

Table 3: West Facing-1 Plot Dimensions
West Facing-2 (40' x 80')

Table 4: West Facing-2 Plot Dimensions

3.10 LOCATION MAP

CHAPTER 4
DATA ANALYSIS & INTERPRETATION
4.1 OBJECTIVE 1: To study how inventory management practices play an

important role in supporting other activities of an organization.
Connectivity of work is predominant in any form of activity and it is proved to be a backbone for the
construction process. The case study on the ongoing construction project has hooked up with various
connections with one and other activity and the one above playing an important role is the subject
„material management.
The subject is important because the project has to reap higher returns which is a challenging task yet
achievable through inventory management. Hence our primary objective is to study how inventory
management practices play an important role in supporting other activities of an organization.
Table 5: Role of Materials Management in Various Organizational Functional Activities
Role of Material Management Description
Decision on making the material or buying. Such a decision may be taken if:
i) Supplies are not adequately obtained
successfully in the past
ii) The quality of supplied goods is not of
standard

iii) The volume requirement of sales is
exceeding the possible manufacturing
capacity
iv) The material fails in the cost analysis
The materials management needs to forecast the
requirements. Some of the questions that need to

Materials Forecasting
considered for it are:
i) Is this material being needed for longtime?
ii) Will there be any requirement after 10 years
for this material? Will the supplier exist after
10 years
iii) Are there any changes or technological
break- though for this material?
iv) · Are the prices going to rise in the future?
Materials‟ planning is of the major control activity
that an organization needs to put in place. It is

Materials Planning and Budgeting
feasible because of materials management.
This will include selection of suppliers, and other
market research information such as price trends,

Selection of Potential information sources
corporate environment etc. The materials
management data may help this task.
Purchasing commits a lot of capital of an
organization. Materials management information

Purchasing with a difference allows very creative purchasing by organization as it
sees most of the trends. It also helps while
purchasing in uncertain situation.
This is most essential function thus, has been kept
separately also. A good price forecasting system

Forecasting of Price
based on material management and market research
information may bring an organization into a win-
win situation.
Materials management helps in the store functions
such as: control of material being received, proper

Store Management and inventory control with
storage, minimization of obsolescence, highlighting
a difference
of unused stocks, ensuring good housekeeping,
verification of stock, timely delivery of goods,
proper storage and presentation of materials, dealing
with scrap materials etc.
LINKAGE WITH OTHER FUNCTIONAL AREAS OF MANAGEMENT
The Materials Management can be directly connected to the functional areas of customer
satisfaction through Total Quality Management (TQM), Human Resources Management
(HRM); environmental issues in material management, cost and finance issues and IT related
issues.

4.2 OBJECTIVE 2: To select various vendors from the available techniques
Source selection encourages the company from the competitors through the quality of
materials supplied and by maintaining the required stock for the project.
Some important aspects in source selection:
4.2.1. Local Sources

Generally local sources are preferred, provided they meet the requirements of the
buyer in terms of quality, delivery, and price. A personal follow-up or a local “phone
call” is enough for effecting quicker deliveries. In fact, some organisations prefer
local suppliers even though they may not compare favorably with outside suppliers.
This local goodwill is sure to pay in the long run. It is not uncommon to find big
organisations in India encouraging ancillary suppliers in and around their plants
through technical and financial assistance.
4.2.2. Subcontracting
Selection of sources for subcontracting is another special issue. The manufacturer
may decide to „off-load‟ some products to suppliers so as to facilitate scheduling of
production in the plant. It also enables better utilisation of human resources. This
happens because subcontracting is just an extension of the plant‟s activities and since
subcontractors are generally small,they may be in need of technical assistance.
4.2.3. Choice between Small and Large Suppliers

Often in selecting suppliers, the materials manager is faced with this question. If-the
requirements are small, the small supplier is the obvious choice. A personalised
contact can be established and because he is small, he is likely to have fewer
customers, be more loyal and meet even unusual requests. Big suppliers are equipped-
to meet larger requirements. They usually have reserve facilities and may thus be able
to meet additional requirements. They may have R & D facilities which will enable
the buyer to obtain technically superior products.
4.2.4. Sole Source versus Multiple Sources

The buyer must decide whether to place all orders with one supplier, or to give them
to two or more suppliers. Using more than one supplier has several advantages,
providing there is enough business to keep all genuinely interested. Multiple sources
provide a broader technical base. Competition is kept alive as suppliers seek to
increase their share of the business. The buyer company is protected against failure at
one supplier‟s plant. However, if the policy of the buyer company to have sole
sourcing for its products and supplies wherever feasible, and this policy is
implemented successfully, there is guarantee of long-term and lasting buyer-seller
relationship.
4.2.5. Inside Source

There are occasions when the buyer company may have to decide if the needed part or
component can be manufactured within its own plant, or procure it form outside. This
is known as the make-or-buy decision. The advantages and disadvantages must be
evaluated in each case in terms of the individual company‟s situation.
4.2.6. Buyer-Seller Relations

Developing, establishing, and maintaining good buyer-seller relationships must be the
goal of any progressive purchasing function. It is essential that the seller‟s
representative is treated fairly and honestly in all transactions. When the seller has
confidence in the buyer, the buyer‟s task can be accomplished more effectively. When
goodwill exists, negotiations are shorter, terms and conditions are simpler to agree
upon, and disputes are kept at a minimum because of good communications. As an
added bonus, the buyer‟s company has a better image, not merely as a customer, but
as a good company to do business with.
The aim of source selection is to find the one most satisfactory source, or a group of
alternative sources with adequate and reasonably comparable qualifications. Thus
succeeding orders for the same item can be placed with these same suppliers with
confidence in the original selection. In other words, the decision as to a source of
supply contemplates a continuing and long-lasting mutually productive relationship.
4.2.7. Loyalty to Suppliers

A continuing buyer-seller relationship, based on mutual confidence and satisfaction,
implies a policy and, a responsibility of loyalty to suppliers. This is the antithesis of
opportunism and constant “shopping around” in purchasing. It is true that some cost
savings can be made by such methods, but it is usually at the sacrifice of uniformity
and continuity of supply. Especially, it sacrifices the assurance of supply that is the
first responsibility in purchasing. Without established and loyal sources of supply,
every recurring requirement presents a procurement problem of the first order, and the
work of the purchasing department is magnified beyond all reason and proportion.

Financial strength and stability of the supplier company may be essential to assure continuity
of supply and reliability of product quality. A competent buyer should be able to read and interpret
financial reports and make intelligent conclusions from the data.
Past performance provides an excellent insight into probable future success. The key to
successful analysis is to identify the important characteristics of the particular purchase.
Usually, three important factors are evaluated.
i) Quality Evaluation is simply reviewing the supplier‟s record in respect to meeting the
required specifications, which is measured as a percentage of acceptable shipments or
delivery. It should be the policy for the quality-control section to inform the purchasing
department of the facts concerning each shipment/delivery.
ii) Price Evaluation in its simplest form is the net price quoted in each instance for conforming
goods compared to the prices quoted by competitors. Consistency of success and integrity in
price behavior would provide a measure criterion.
iii) Service Evaluation includes prompt submission of data, response to inquiries, delivery
performance, special services rendered, and other intangibles. Most of the elements in this
factor are subjective in nature.

4.3 OBJECTIVE 3: Applying tools and techniques of inventory classification in

real life situation.
As per the inventory management theory there are various tools and techniques emerged in order
to control the material flow yet maintaining minimum stock level. In our study we witnessed the
application of tools and techniques of inventory classification in real life situation.
A record for every work shall be carried at the site and periodic reports in the form of electronic and
paper are prepared and sent to the head office of the financial affairs and database maintenance. This
process ensures transparency in the work flow and avoids bottlenecks in the due course of the
project.
4.3.0 TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT AND CONTROL
The following are the important tools and technique of inventory management and control.
4.3.1. Determination of stock levels.
4.3.2. Determination of safety stocks.
4.3.3. Selecting a proper system of ordering for inventory.
4.3.4. Determination of economic order quantity(EOQ).
4.3.5. A.B.C. Analysis.
4.3.6. V.E.D. Analysis.
4.3.7. Inventory turnover ratios.
4.3.8. Classification and codification of inventories
4.3.9. Preparation of inventory reports.
4.3.1. Determination of stock levels:
Carrying of too much and too little of inventories is detrimental to the firm. If the inventory
level is too little, the firm will face frequent stock-outs involving heavy ordering cost and if
the inventory level is too high it will be unnecessary tie-up of capital. Therefore, an affective
inventory management requires that a firm should maintain an optimum level of inventory

where inventory costs are the minimum and at the same time there is no stock-out which may
result in lost of sale or stoppage of production. Various stock levels are discussed as such.
4.3.1.1. Minimum Level: This represents the quality which must be maintained in hand at all
times. If stocks are less than the minimum level then the work will stop due to shortage of
materials.
Following factors are taken into account while fixing
i. Lead Time: The time taken in processing the order and then executing it is known as
lead time. It is essential to maintain some inventory during the period.
ii. Rate of Consumption: It is the average consumption of material in the factory.
iii. Nature of Material: If a material is required only against special orders of the customer
than minimum stock will not be required for such materials. Minimum stock level can be
calculated with the help of following formula:
Minimum stock level = Re-ordering level – (Normal consumption) ´ Normal Re-order

period)
4.3.1.2. Re-ordering Level: Re-ordering level or ordering level is fixed between minimum
level and maximum level. Re-ordering level is fixed with the following formula:
Re-ordering Level = Maximum Consumption ´ Maximum Re-order period.
4.3.1.3. Maximum Level: It is the quantity of material beyond which a firm should not
exceed its stocks. If the quantity exceeds maximum level limit then it will be overstocking. A
firm should avoid overstocking because it will result in high material costs. Overstocking will
mean blocking of more working capital, more space for storing the materials, more wastage
of materials and more chances of losses from obsolescence.
Maximum Stock Level = Re-ordering Level + Re-ordering Quantity – (Minimum

Consumption ´ Minimum Re-ordering period).
4.3.1.4. Danger Level: It is the level beyond which materials should not fall in any case. If
danger level arises then immediate steps should be taken to replenish the stocks even if more
cost is incurred in arranging the materials. If materials are not arranged immediately there is a
possibility of stoppage of work. Danger level is determined with the following formula:

Danger Level = Average Consumption ´ Maximum re-order period for emergency

purchases.
4.3.1.5. Average Stocks Level: The average stock level is calculated as such:
Average Stock Level = Minimum Stock Level + ½ of re-order quantity.
4.3.2. Determination of Safety Stocks
Safety stock is a buffer to meet some unanticipated increase in usage. The usage of inventory
cannot be perfectly forecasted. It fluctuates over a period of time. The demand for materials
may fluctuate and delivery of inventory may also be delayed and in such a situation the firm
can face a problem of stock-out. The stock-out can prove costly by affecting the smooth
working of the concern. In order to protect against the stock out arising out of usage
fluctuations, firms usually maintain some margin of safety or safety stocks. The basic
problem is to determine the level of quantity of safety stocks. Two costs are involved in the
determination of this stock i.e. opportunity cost of stock-outs and the carrying costs. The
stock outs of raw materials cause production disruption resulting into higher cost of
production. Similarly, the stock-out of finished goods result into the failure of the firm in
competition as the firm cannot provide customer service. If a firm maintain low level of
safety frequent stock-outs will occur resulting into the large opportunity costs. On the other
hand, the larger quantities of safety stocks involve higher carrying costs.
4.3.3. Ordering systems of Inventory
The basic problem of inventory is to decide the re-order point. This point indicates when an
order should be placed. The re-order point is determined with the help of these things: (a)
average consumption rate, (b) duration of lead time, (c) economic order quantity, when the
inventory is depleted to lead time consumption, the order should be placed. There are three
prevalent system of ordering and a concern can choose any one of these:
a) Fixed order quantity system generally known as economic order quantity (EOQ) system.
b) Fixed period order system or periodic re-ordering system or periodic review system.
c) Single order and schedule part delivery system.

4.3.4. Economic Order Quantity (EOQ)
Economic order quantity is the size of the lot to be purchased which is economically viable.
This is the quantity of materials which can be purchased at minimum costs. Generally,
economic order quantity is the point at which inventory carrying costs are equal to order
costs. In determining economic order quantity it is assumed that cost of managing inventory
is made up solely of two parts i.e., ordering costs and carrying costs.
4.3.4.1. Ordering costs: These are the costs which are associated with the purchasing or
ordering of materials. These costs include:
a. Costs of staff posted for ordering of goods. A purchase order is processed and then placed
with suppliers. The labour spent on this process is included in ordering costs.
b. Expenses incurred on transportation of goods purchased.
c. Inspection costs of incoming materials.
d. Cost of stationery, typing, postage, telephone charges, etc.
These costs are also known as buying costs and will arise only when some purchases are made.
When materials are manufactured in the concern then these costs will be known as set-up costs.
These costs will include costs of setting up machinery for manufacturing materials, time taken up
in setting, cost of tools, etc.
The ordering costs are totaled up for the year and then divided by the number of orders placed
each year.
4.3.4.2. Carrying Costs: These are the costs of holding the inventories. These costs will not
be incurred if inventories are not carried. These costs include:
a. The cost of capital invested in inventories. An interest will be paid on the amount of
capital locked-up in inventories.
b. Cost of storage which could have been used for other purpose.
c. The cost of materials due to deterioration and obsolescence. The materials may
deteriorate with passage of time. The loss of obsolescence arises when the materials in
stock are not usable because of change in process or product.
d. Insurance cost.
e. Cost of spoilage in handling of materials.
The longer the materials kept in stocks, the costlier it becomes by 20 percent every year. The
ordering and carrying costs have a reverse relationship. The ordering cost goes up with the
increase in number of orders placed. On with the increase in number of units, purchased and
stored..
The ordering and carrying costs of materials being high, an effort should be made to minimise
these costs. The quantity to be ordered should be large so that economy may be made in transport
costs and discounts may also be earned. On the other hand, storing facilities, capital to be locked
up, insurance costs should also be taken into account.
4.3.4.3. Assumptions of EOQ: While calculating EOQ the following assumptions are made.
a. The supply of goods is satisfactory. The goods can be purchased whenever these are
needed.
b. The quantity to be purchased by the concern is certain.
c. The prices of goods are stable. It results in stabilising carrying costs.
When above-mentioned conditions are satisfied, economic order quantity can be calculated with
the help of the following formula:
2AS
EOQ 
I
Where
A = Annual consumption in rupees.
S = Cost of placing an order.
I = Inventory carrying costs of one unit.
4.3.4.4. EOQ and Quality Discount: Customer is offered some discount for bulk purchase or
if the size of a single order is large. Thus, the price per unit of an item may decrease for buying
larger quantities. The quantity discount affects inventory cost in three ways:
a. As the price per unit is reduced, the total price for the lot is reduced.
b. The lot size is increased, the number of offers is reduced and as a result the total ordering
cost is reduced.
c. The average inventory holding increase and as a result the storage cost will increase.

Thus, to decide whether to avail the quantity discount or not, first of all EOQ is determined
and then its total cost without quantity discount and with quantity discount is determined. In
case, the total cost is less due to quantity discount the offer is accepted, other wise it is
rejected. The following example illustrates the point.
4.3.1.5. A-B-C Analysis
The materials are divided into a number of categories for adopting a selective approach for
material control. Under A-B-C analysis, the materials are divided into three categories viz, A,
B and C. Past experience has shown that almost 10 percent of the items contribute to 70
percent of value of consumption and this category is called „A‟ Category. About 20 percent
of the items contribute about 20 percent of value of consumption and this is known as
category „B‟ materials. Category „C‟ covers about 70 percent of items of materials which
contribute only 10 percent of value of consumption. There may be some variation in different
organisations and an adjustment can be made in these percentages.
Class No. of Items % Value of Items %
A 10 70
B 20 20
C 70 10
A-B-C analysis helps to concentrate more efforts on category A since greatest monetary
advantage will come by controlling these items. An intention should be paid in estimating
requirements, purchasing, maintaining safety stocks and properly storing of „A‟ category
materials. These items are kept under a constant review so that a substantial material cost
may be controlled. The control „C‟ items may be relaxed and these stocks may be purchased
for the year. A little more attention should be given towards „B‟ category items and their
purchase should be undertaken at quarterly or half-yearly intervals.

4.3.1.6. VED Analysis
The VED analysis is used generally for spare parts. Spare parts are classified as Vital (V),
Essential (E) and Desirable (D). The vital spares are a must for running the concern smoothly
and these must be stored adequately. The non-availability of vital spare will cause havoc in
the concern. The E types of spares are also necessary but their stocks may be kept at low
figures. The stocking of D type of spares may be avoided at times. If the lead time of these
spares is less, then stocking of these spares can be avoided. The classification of spares under
three categories is an important decision. The classification of spares should be left to the
technical staff because they know the need urgency and use of these spares.
4.3.1.7. Inventory Turnover Ratios
Inventory turnover ratios are calculated to indicate whether inventories have been used
efficiently or not. The purpose is to ensure the blocking of only required minimum funds in
inventory. The inventory turnover ratio also known as stock velocity is normally calculated as
sales/average inventory or cost of goods sold/average inventory cost. Inventory conversion
period may also be calculated to find the average time taken for clearing the stocks.
Cost of Good Sold Net Sales

Inventory Turnover Ratio  
Average Inventory at Cost ( Average) Inventory
4.3.1.8. Classification and Codification of Inventories
The inventories of a manufacturing concern may consist of raw materials, work in process,
finished goods, spares, consumable stocks, etc. All these categories may have their sub-
divisions. The raw materials used may be of 3-4 types, finished goods may also be of more
than one type, spares may be of a number of types and so on. For a proper recording and
control of inventory, a proper classification of various types of items is essential. The
inventories should first be classified and then code numbers should be assigned for their
identification.
The identification of short names are useful for inventory management not only for large
concerns but also for small concerns. Lack of proper classification may also lead to reduction
in production. Generally, material are classified according to their nature such as construction
materials, consumable stocks, spares, lubricants, etc. The coding class of materials is
assigned two digits and then two or three digits are assigned to the category of materials in
that class. The third distinction is needed for the quality of goods and decimals are used to
note this factor.

4.3.1.9. Inventory Reports
From effective control, the management should be kept informed with the latest stock
position of different items. This is usually done by preparing periodical inventory reports.
These reports should contain all information necessary for managerial action. On the basis of
these reports management takes corrective action wherever necessary. The more frequently
these reports are prepared the less will be the chances of lapse in the administration of
inventories.
4.4 OBJECTIVE 4: Determine inventory requirement at different stages of

construction project i.e. over Project Life Cycle.
In this case study, we determine the inventory requirement for one villa at different stages of
construction project. The Activity breakup is mentioned below which show the project completion
with respect to time.
Project Activity Breakup

Project Completion
S.No Description of work %
1 Footings 3.4
2 Plinth Beam 6.9
3 G.F Slab 10.3
4 F.F Slab 13.8
5 S.F Slab 17.2
6 G.F Brick Work 20.7
7 F.F Brick Work 24.1
8 Internal Plastering 27.6
9 External Plastering With Elevations 31.0
10 Elevation Cladding 34.5

11 Sloped Roof Tiles 37.9
12 Toilets cladding 41.4
13 Flooring 44.8
14 StaircaseGranite 48.3
15 Luppam Internal (2 Coats) 51.7
16 Paper Coat & Primary 55.2
17 External primary 58.6
18 Fenesta Windows 62.1
19 Main Door Shutter 65.5
20 Door Shutters Fixing 69.0
21 Grills Fixing 72.4
22 Electrical Wiring 75.9
23 Electrical Switches Fixing 79.3
24 Internal Painting (1st Coat) 82.8
25 Internal Painting (2nd Coat) 86.2
26 Doors Polishing 89.7
27 Staircase Railing With Polish and Glass Fixing 93.1
28 Plumbing Final Fittings 96.6
29 Parking Tiles 100.0

Table 6: Table showing Project Activity Breakup w.r.t time.

The following Inventory are required to construct one villa in the maple town
project.
S.No Description QTY UNITS
4.4.1.0 Footing
4.4.1.1 PCC 5.25 Cum
4.4.1.2 RCC 11.6 Cum
4.4.1.3 STEEL 301 Kgs
4.4.2.0 Plinth Beam
4.4.2.1. PCC 3.75 Cum
4.4.2.2 R.C.C 7.5 Cum
4.4.2.3 STEEL 1626 Kgs
4.4.3.0 Ground Floor
4.4.3.1 Columns RCC 3.75 Cum
4.4.3.2 Steel 655 Kgs
4.4.3.3 Slab RCC 22.5 Cum
4.4.3.4 Steel 2080 Kgs
4.4.4.0 First Floor
4.4.4.1 Column RCC 3.1 Cum
4.4.4.2 Steel 515 Kgs
4.4.4.3 Slab RCC 20.75 Cum
4.4.4.4 Steel 1939 Kgs

4.4.5.0 Staircase
4.4.5.1 GF RCC 1.0 Cum
4.4.5.2 Steel 188.0
4.4.5.3 FF RCC 1.0 Cum
4.4.5.4 Steel 198.0
4.4.6.0 Brick Work
4.4.6.1 G.F 4" 186 Cum ft
4.4.6.2 9" 1305 Cum ft
4.4.6.3 F.F. 4" 210 Cum ft
4.4.6.4 9" 1040 Cum ft
4.4.6.5 S.F 4" 25 Cum ft
4.4.6.6 9" 755 Cum ft
4.4.7.0 PLASTERING
4.4.7.1 Internal Plastering Sft
4.4.7.2 GF 4380.64 Sft
4.4.7.3 FF 3150.97 Sft
4.4.7.4 SF 1043.10 Sft
4.4.7.5 Ceiling Plastering Sft
4.4.7.6 GF 1423.00 Sft
4.4.7.7 FF 1361.83 Sft
4.4.7.8 SF 438.25 Sft
4.4.7.9 External Plastering Sft
4.4.7.10 GF 1255.16 Sft
4.4.7.11 FF 1508.75 Sft
4.4.8.PLUMBING REQUIREMENTS
S.NO DESCRIPTION OF ITEM Qty UNIT
1 European Water Closet (Floor Mounted) 5 NO's

2 Cisteran 5 NO's
3 Angle Vale 14 NO's
4 Wash Basin 4 NO's
5 Bottle Trap 4 NO's
6 Wash Basin Waste Coupling 4 NO's
7 Pillar Cock 4 NO's
8 Wall Mixer & Shower arm With Wall Flange 4 SET
9 Long Body Swinging Spout(Sink) 2 NO's
10 Sink With Drain Bord & West coupling,Bottle Trap 1 NO's
11 Bibcock With Wall Flange 5 NO's
12 CP Towel Rail of 20mm Dia 4 NO's
13 Soap Dish 5 NO's
14 Health Faucet set 5 NO's
15 Towel Ring of 150mm Dia 5 NO's
16 1520(L)X730(W)X465(W)CM Bath tub Spout with Popup waste 1 NO's
17 Mirror Of Size 650x450mm 4 NO's
19 Stone Ware Glagzed Pipes 150mm Dia 40 MTR
20 CI 100mm Anti Cock Roach Nahani trap with `P' Trap Type 11 NO's
21 Gully Trap 5 NO's
22 40mm dia(Sink Drain pipe) 2 MTR
23 32mm dIa(wash Basin Drain Pipe) 13 MTR
24 Sand Cast Iron (Balck) pipes 100mm Dia 28 MTR
25 Sand Cast Iron (Balck) pipes 75 mm Dia 50 MTR
26 PVC SWR Pipes 110mm 18 MTR
27 PVC SWR Pipes 50 mm 7 MTR
28 CPVC 3/4" Dia pipe 90 MTR
29 CPVC 1/2" Dia Pipe 30 MTR
30 CPVC 1"Dia Pipe 5 MTR

31 G.i Pipe 3/4" 5 MTR
32 G.i Pipe 1 1/4 28 MTR
33 G.i Pipe 1 1/2" 6 MTR
34 Non Return Vale 3/4" 3 NO's
35 Angular Stop Cock With Wall Flange 6 NO's
36 Geysers 25 Liters 3 NO's
37 GM Ball Vale 1" 2 NO's
GM Ball valve 3/4" 6 NO's
38 CPVC 1/2" Elbow 90° (Brass) 30 NO's
39 CPVC 1/2" Threaded End Plug 30 NO's
40 CPVC Step Over Bend 1/2" 8 NO's
41 CPVC 90° Elbow 3/4"X 1/2"(Reducer) 8 NO's
42 CPVC Reducer Tee(3/4"x1/2"x3/4) 21 NO's
43 CPVC Reducer Tee(1"x1/2"x3/4) 1 NO's
44 CPVC 1/2" Socket 6 NO's
45 CPVC 3/4"X1/2" Reducer Elbow 90° (Brass) 3 NO's
46 CPVC 3/4" Elbow 90° 10 NO's
47 CPVC 3/4" Socket 10 NO's
48 CPVC 3/4" Tee 5 NO's
49 CPVC 1" Tee 1 NO's
50 CPVC 1" Elbow 2 NO's
51 CPVC 1"Socket 2 NO's
52 CPVC 1"X 3/4" Reducer Socket 1 NO's
53 G.i 11/4" Elbow 2 NO's
54 G.i 11/4" X 1" Reducer Tee 1 NO's
55 G.i 11/4"X 3/4 " Reducer Tee 4 NO's
56 G.i 11/4" Socket 3 NO's
57 G.i 11/2"X1 1/4" Reducer Socket 1 NO's
59 G.i 11/2" Socket 2 NO's

61 G.i 3/4 Socket 4 NO's

62 G.i1/2 Dum Nut 3 NO's
63 G.i 3/4X1/2 Reducer Elbow 3 NO's
64 PVC 40mm 90° Elbow 1 NO's
65 PVC 40mm 45°Elbow 2 NO's
66 40mm X32mm Bush 1 NO's
69 PVC 32mm Socket 5 NO's
70 PVC 110mm Elbow 6 NO's
71 C.I 100mmTee With Door 3 NO's
72 PVC 50 Elbow 90° 2 NO's
73 C.I 100mm Bend 90° 5 NO's
74 C.I 100mm Socket 3 NO's
75 C.I 100mm 90° Bend With Door 2 NO's
76 C.I 100mm Cowl 2 NO's
77 C.I 75mm Cowl 4 NO's
78 C.I 75mm 90° Bend 4 NO's
79 C.I 75mm 90° Tee With Door 4 NO's
80 C.I 75mm 45° Bend 3 NO's
81 C.I 75mm Plain `y' 1 NO's
82 C.I 75mm With Door 3 NO's
83 Shellac(or)Hold Tight 1 KGs
84 Dori 15 NO's
85 Spunyarn 7 NO's
86 Taflone Tape 25 NO's
87 PVC Solvet Cement 1.5 Litre
88 CPVC Solvent Cemnt 3 Litre
89 Indian Water Closet 0
Set
90 Cistern 0
91 GM gate valve3/4" dia (screwed end) 1 NO's
92 GM gate valve1 1/4"mm dia(screwed end) 1 NO's

93 GM gate valve1 1/2"mm dia(screwed end) 1 NO's

94 CPVC 1"X 3/4" Bushing 1 NO's
95 40mm Pipe -6kgf/cm2 6mt length 2.5 NO's
96 PVC 110mm Socket 1 NO's
97 110mm GI Clamps 8 NO's
98 50mm GI Clamps 3 NO's
4.4.9.FLOORING QUANTITIES
S.No Description Size Qty Unit
1 Vitrified porcelain tile 2737 Sft

2 Vitrified porcelain tile Skirting 826 Rft
3 Ceramic non skid floor tiles 8"x8" 211 Sft
4 Dadoing with Glazed Tiles 4"x8" 920 Sft
5 Granite slab (For Stair Case) 12"x24" 230 Sft
6 Cement paved Tiles 60 Sft
7 Interlock tiles 540 Sft
8 Granite platform in kitchen 58 Sft
9 Roof Tiles 780 Sft
10 Banglore stone Cladding 210 Sft
4.4.10.RAILINGS
S.no Description Total Qty Unit

1 MS StairCase Railing 156 Kgs
2 Window Grills 496 Kgs
3 Elevation Railings 176 Kgs
4 Painting 624 Sft

4.4.11.DOORS AND WINDOWS
S.No Description Qty Unit

Providing and Fixing Teak Wood Frame and teak wood
1 4.88 Sqm
glazed shutter
Providing and Fixing Teak Wood Frame and Flush
2 22.28 Sqm
shutter
3 Windows with Glass Shutters 43.68 Sqm
4.4.12.PAINTING QUANTITIES
S.No Description Qty Units

1 Internal 8574.70 SFT
2 Ceiling 3223.08 SFT
3 External 4924.07 SFT

4.4.13.ELECTRICAL QUANTITIES
QUANTITY
S.No Description Unit
GF FF Total
ELECTRICAL REQURIMENTS ONLY FOR SLAB
1 Pvc Conduit Of 25Mm Dia With 2Mm Thick Ft 800 600 1400
2 Fan Hook Boxes Nos 6 7 13
3 Deep Boxes Nos 20 25 45
4 25Mm Pvc Long Bend S Nos 70 45 115
5 End Clousers Nos 50 50 100
ELECTRICAL REQURIMENTS ONLY FOR WALLS

1 Pvc Conduit Of 25Mm Dia With 1.5Mm Thick Ft 500 450 950
2 25 Mm Juntion Boxes Nos 30 30 60
3 25Mm Pvc Long Bends Nos 35 35 70
4 Pvc Conduit Of 19Mm Dia With 1.5Mm Thick Ft 150 150 300
5 19 Mm Juntion Boxes Nos 25 25 50
6 19Mm Pvc Long Bends Nos 25 25 50
ELECTRICAL ITEMS Unit QUANTITY

1 5 A Switches Nos 63
2 5 A Socket(2 in 1) Nos 20
3 15 A Socket Nos 15
4 15 A Switches Nos 15
5 Inter Comm Jack Nos 1
6 Fan Regulator Nos 11
7 TV Socket Nos 6
8 TelePhone Jack Nos 7
9 Computer Jack(Internet) Nos 1
10 5 A 2 Way Switches Nos 22
11 Angle Holders Nos 25
12 Bottom Holders Nos 10
13 Ceiling Roses Nos 26
14 Foot Lamp Nos 5

15 Round Sheet Nos 70

16 Fan Round Sheet Nos 12
17 6 Way TPN DB Nos 2
18 40 A 100 mA 4 Pole Isolation Nos 2
19 6 A SP MCB Nos 18
4.4.14. EXTERNAL WORKS
S.No Description Qty Unit

1 Roads 230246 Sft
2 KerbStones 18000 Rft
3 Landscape 160798 Sft
4 STP LS
5 WTP LS
6 Pneumatic System LS
7 External Electrification LS
8 External Sewage System LS
9 Communications LS
10 Central Gas System LS
11 ClubHouse 16115 Sft
12 Compound Wall 6400 Rft
13 Solar Fencing 6400 Rft
14 Entrance Gate LS
Table 7: Above Tables showing the Quantity required for construction of one villa at maple town project

4.5 OBJECTIVE NO.5: Study of reliable local material „utilization‟ in a

construction project.
Study of reliable local material utilization in a construction project. Here local is within the reach in
terms of transportation from the construction site. The project has the business with the source that
provides free logistics to the construction site and a reliable service.
In this case study, the company has used the following vendors in different category of “Maple
Town” Project. Based upon the analysis the organization has selected and doing business with the
listed vendors, thus giving importance to the smooth and laminar work flow in the construction site.
4.5.1 CEMENT VENDORS
4.5.1.1. Rassi Gold: Shiv Shakthi Agencies,

Raasi (Authorised) - Cement Distributor,
18-73/36/1/18,
Ambedkar Nagar,
Dammaiguda,
Hyderabad – 500076
4.5.1.2. Penna cement

SAI Krishna Agencies,
7-1-616/5/1/A,
Near R K Electronics,
Ameerpet,
4.5.1.3. Deccan Cement Ltd,

6-3-666/B, 3RD Floor,
Deccan Chambers,
Somajiguda,
4.5.1.4. Priya cements,
Opp Indian Bank,
SRI Nagar Colony,

4.5.1.5. Orient Cements

Adarsh Nagar,
4.5.1.6. Anjani cement: Anjani Portland Cement Limited

Anjani Cement Centre, Plot No. 7 & 8,
Nagarjuna Hills, Main Road, Hyderabad – 8
Phone: +91-40-23353038.
4.5.2 ELECTRICAL VENDOR:
4.5.2.1. BHARATI ENTERPRISES (INDIA)

#5-2-96/137, R.P. Road,
Secunderabad – 500003. A.P.
Tele: +91 40 27536312, 27532483
E-Mail: info@bharatienterprises.com
4.5.2.2. Polycab Wires Pvt Ltd

Mr Pradeep Chandrakanth
Asst Manager
402/A,4th Floor, Surya kiran complex
S.D.Road ,Secunderabad.
A.P-500003
4.5.2.3. Schneider Electric

Janardha Tyagi
Schneider Electric India Pvt Ltd
D.No1-8-221, Ashok Bhoopal chambers
S.P.Road, Secunderabad-500003
4.5.2.4. Yogeshwar Enterprizes

#61A, M.G.Road,
Shop No:4&5,plaza house,
Opp: Punjab National Bank,
Secunderabad-500003.
4.5.2.5. Finolex Cables Limited,

# 403, 4th Floor,
Minerva complex, S.D.Road,
Secunderabad -500003
4.5.3. STEEL VENDORS:
4.5.3.1. Tirupathi Udayog Ltd.,

Road no -12
Banjara hills,
Hyderabad-500034.
Tel no : +91 40 23310178
4.5.3.2. M/S Sujana Metal Products Limited,

18, Nagarjuna hills,Hyd – 082
Mr. Murali - 09347533494. mdn@sujana.com
4.5.3.3. Vinayak Steels Limited

#5-4-83, T.S.K Chambers
M.G.Road,
Secunderabad-500003.
4.5.3.4. GRIP TMT

Binjusaria ispat Pvt Ltd,
# C-1, Govt Industrial Estate,
Chandulai Baradari,
Bahadurpura,
Hyderabad 500064

4.5.4. PLUMBING VENDORS
4.5.4.1. Shankara Pipes India Ltd

1-1-40/1,Vasavi Towers,
2nd Floor, S.D.Road,
Secunderabad 500003
4.5.4.2. Prince Pipes System,

Plot No 19, Near Kamineni Hospital,
L.B.Nagar Ring Road, Hyderabad 500063.
4.5.4.3. Hindustan Sanitaryware & Industries Ltd.

#398 , Ashoka Bhoopal chambers
S.P.Road, Secunderabad-500003.
4.5.4.4. H & R JOHNSON

House of Johnson,
1-10-73/2,
1st Floor Lumbini Arcade,Begumpet,
Hyderabad 500016.
Contact : K.Harikrishna
# 9949588192.
4.5.4.5. Asian Granito (India) Ltd,

Tiles in Toilet & Flooring
# 8-2-82/678,
Sony International Dhaba,
Old Bowenpally,
Secunderabad 500011.
4.5.4.6. Parryware Roca Pvt Ltd

Coromandel House 2nd Floor,
Sardar Patel Road,
Secunderabad 500003.
4.5.4.7. Supreme Industries Ltd

# 3-5-907/2, & 908,3rd Floor,
Mahavir Lok, Himayathnagar,
Hyderabad 500029.
Contact : S.Krishna Kumar Reddy,
# 98480 45659.
4.5.5. PAINTS
4.5.5.1. Asian Paints Ltd,

Plot # 104,
S.Malla Reddy Estate,
Jayanagar, R.T.C colony,
Tirumalghery,
Secunderabad- 500015.
4.5.5.2. Lewis Berger Home Painting

Survey No. 133,,
Plassy Lines,
Bowenpally,
4.5.5.3. Dulux Paints : Sri Bhagyalaxmi Hardwares

Shop 1 &2, G8,
Hydershakote(V)
Rajendernagar,
Hyderabad .
4.5.5.4. Nippon Paints India Ltd

# 133, B.N.Reddy
Mallareddy gardens,
Plassy Lines, New Bowenpally, Hyderabad -500021.

4.5.6. COMPARISON OF VENDORS
From this comparison we can easily find out the multiple sources of inventory available with
vendors. In this comparison table the lead time, transportation cost, credit limit and various items are
compared to know which vendor can be select priority wise.
The Following the Category of Vendors has different specifications & supplies of materials:
4.5.6.1. CEMENT VENDORS

43 55
Lead Transport Credit PBFS PP
S.No Vendors grad grad
time ation cost Limit C C
e e
Rassi Gold: Shiv Shakthi   
4 Days Free 15 Days 
1 Agencies
Penna cement 4 Days Free 15Days    
2
Deccan Cement Ltd 4 Days Free 16 Days    
3
Priya cements 4 Days Free 15Days    
4
Orient Cements 4 Days Free 20 Days    
5
Anjani Portland Cement Limited 4 Days Free 15Days i   
6
Table 8: Comparison of Cement Vendors
4.5.6.2. STEEL VENDORS:

Lead Transport Credit Smart Structur
S.No Vendors TMT
time ation cost Limit Steel al Steel
1 Tirupathi Udayog Ltd 5 Days Free 10 Days   

Sujana Metal Products   
2 7 Days Free 15 Days
Limited
3 Vinayak Steels Limited 7 Days Free 15 Days   
4 GRIP TMT 7 Days Free 15 Days   
Table 9: Comparison of Steel Vendors

4.6. OBJECTIVE 6: Stock maintenance & Analysis of „A‟ class Inventories.
The main objective of this project is to overcome the work load and time consumption which
makes the maintenance of the stock in an organization as a tedious process.
In this Case study we have taken the Cement Item as „A‟ class inventory and did the Stock
Maintenance analysis from 01/01/2008 to 31/12/2008.
Cement Consumption and Re-order Date From 01/01/2008 to 31/12/2008

Total Consu Min. Total
S.N
From To Order Date order mption Stock Balanc
o
qty Qty Level e
Opening Balance as on 01-01-08 1389
1 1-Jan-2008 15-Jan-2008 4-Jan-2008 3590 3689 1290 4979
2 16-Jan-2008 30-Jan-2008 17-Jan-2008 2520 2498 1312 3810
3 1-Feb-2008 14-Feb-2008 2-Feb-2008 5400 5100 1612 6712
4 15-Feb-2008 29-Feb-2008 19-Feb-2008 3600 4005 1207 5212
5 1-Mar-2008 15-Mar-2008 3-Mar-2008 5726 5800 1133 6933
6 16-Mar-2008 31-Mar-2008 15-Mar-2008 4320 4300 1153 5453
7 1-Apr-2008 14-Apr-2008 4-Apr-2008 6,840 6608 1,385 7993
8 15-Apr-2008 30-Apr-2008 22-Apr-2008 3600 4054 931 4985
9 1-May-2008 14-May-2008 5-May-2008 5400 5562 769 6331
10 15-May-2008 31-May-2008 19-May-2008 5760 5506 1023 6529
11 1-Jun-2008 14-Jun-2008 6-Jun-2008 3600 3595 1028 4623
12 15-Jun-2008 30-Jun-2008 18-Jun-2008 6470 6343 1155 7498
13 1-Jul-2008 15-Jul-2008 7-Jul-2008 3597 3097 1655 4752
14 16-Jul-2008 31-Jul-2008 17-Jul-2008 4120 5000 775 5775
15 1-Aug-2008 15-Aug-3008 8-Aug-2008 2880 2088 1567 3655
16 16-Aug-2008 30-Aug-2008 22-Aug-2008 2160 2560 1167 3727
17 1-Sep-2008 15-Sep-2008 9-Sep-2008 3240 3200 1207 4407
18 16-Sep-2008 30-Sep-2008 23-Sep-2008 2880 3406 681 4087
19 1-Oct-2008 15-Oct-2008 10-Oct-2008 3240 3040 881 3921
20 16-Oct-2008 31-Oct-2008 24-Oct-2008 3959 4090 750 4840
21 1-Nov-2008 15-Nov-2008 9-Nov-2008 5680 5800 630 6430
22 16-Nov-2008 30-Nov-2008 19-Nov-2008 4500 3890 1240 5130
23 1-Dec-2008 15-Dec-2008 12-Dec-2008 3600 3801 1039 4840
24 16-Dec-2008 31-Dec-2008 24-Dec-2008 3600 3540 1099 4639

Table 13: showing the Cement consumption & Order Qty from 01/2008 to 12/2008.
The graphical representation of our analysis is a result of the work we carried through our project. It
emphasizes the trigger points, the points which help the staff in charge to create an order for the
material so that the work shall not stop.
7000
6500
6000
5500
ORDERED QUANTITY
5000
4500
4000
3500
3000
2500
2000
1500
RE-ORDER LEVEL
1000
SAFETY STOCK LEVEL
500
000
10 20 30 10 20 28 10 20 31 10 20 30 10 20 31 10 20 30
january Febuary March April May June
Figure 1 : showing the Consumption from 01/01/2008 to 30/06/2008

7000
6500
6000
5500
ORDERED QUANTITY
5000
4500
4000
3500
3000
2500
2000
1500
RE-ORDER LEVEL
1000
SAFETY STOCK LEVEL
500
000
10 20 30 10 20 28 10 20 31 10 20 30 10 20 31 10 20 30
July August September October November December
Figure 2: showing the Consumption from 01/07/2008 to 31/12/2008
In this Case study, Re-order Level is set to 1200 bags and Safety Stock level is set to 800
bags, Daily consumption in this project is appx. 200 bags per day, so they have taken 4 days
required quantity in hands to avoid the work delay.
Henceforth, the company is ordering the Cement on an average for every fortnight.
The quantity of cement is ordered on an average is about 4000 bags for every fortnight.
Safety stock can be utilized as a strategic tool until the company can judge how accurate their
forecast is after the first few years.
The amount of safety stock an organization chooses to keep on hand can dramatically affect
their business. Too much safety stock can result in high holding costs of inventory. In
addition, products which are stored for too long a time can spoil, expire, or break during the
warehousing process. Too little safety stock can result in lost sales and, thus, a higher rate of
customer turnover. As a result, finding the right balance between too much and too little
safety stock is essential.

CHAPTER 5
CONCLUSION
Inventory management is important for keeping costs down, while meeting regulations. Supply and
demand is a delicate balance, and inventory management hopes to ensure that the balance is
undisturbed. Highly trained inventory managers and high-quality software will help make inventory
management a success. The ROI (return of investment) of inventory management will be seen in the
forms of increased revenue and profits, positive employee atmosphere, and an overall increase of
customer satisfaction.
As per the case study on the construction firm on a particular segment, it is clear that developer must
adopt all the available and known technologies and quantitative analysis in association with various
software‟s in order to achieve higher profits. Also, the materials flow throughout the activities has a
controlled behavior and there is a very significant usage of the local source and reliable firms. Every
move towards the inventory management clearly educates that the „work shall go on‟.
It has been concluded that the developer shall emphasize on single vendor who is empowered with
multiple quality materials, this has to be practice at the construction project in order to bring down
Material Cost, Transportation Cost. It enhances Company profits and minimizes the project duration.

CHAPTER 6
SUGGESTIONS
1. Developers has to concentrate on the renewable source of energy at the construction phase as in
the „solar panels‟ around the structure would replace the Hydel source. The renewable source
reduces the cost of materials such as steel, bricks and concrete. Thus, reducing their usage in the
process. To elaborate, there shall be majority of space for solar panels instead of walls and ceiling
area. The space shall be replaced by the solar walls and solar ceiling therefore molding the structure
to meet green building norms.
2. There shall be continuous improvements in the construction process in terms of its materials usage
or others. Let‟s consider steel for the matter of fact, it is now available in the customized form.
Vendors are now focusing on the customers requirement in order to enhance their sales and to
overcome competition in the market, the apparent change lead to the customized cut of steel as per
the drawings, because the facility would cut the reconciliation process and rolling margin.
Positive stroke
The solar concept would enhance the aesthetic appearance of the building and the facility encourages
green building concept.
The customized steel minimizes wastages and increases profits.
MATERIALS MANAGEMENT AND ITS FUNCTIONS
Materials can be put in three categories. First category is purchased materials like the raw materials,
components, spare parts and items that are used and do not appear in the end product. The second
category is of in-process materials or the materials in the semi-finished stages and lastly the finished
goods that are ready for customers. One has to manage these materials. The aim of this management
is to obtain the materials at the minimum possible price while maintaining quality also and to
maintain the inventories in such a way that minimum cost is incurred while maintaining adequate
materials for the production process.

The functions of the materials management are materials planning and control, purchasing, inventory
control, store keeping, material handling, warehousing, standardization & simplification and
organization & appraisal of materials. This course has been designed in such a manner so that you
get a feel of these functions in the subsequent blocks.
1. Materials planning and control: Material requirement lies at the core of successful material
management. This function is at the core of all the material requirements in any
manufacturing process.
2. Purchasing: This function identifies the sources of supply, does market research, call tenders
and select suppliers, negotiate with them and thus make available the raw materials.
3. Inventory control: This function is responsible for the location and storage of materials so
that they remain available at the minimum cost and quickest time.
4. Store keeping: This function is responsible for the receipt and issue of the materials. The
materials
5. Material handling: This function aims at minimizing handling and provision of equipments
for handling materials. This function is crucial for minimizing space requirements, effective
distribution and for providing better working space.
6. Warehousing: This function is responsible for the storage facilities for the materials,
weighing facilities, materials handling equipments, material distribution facilities, fire
fighting instruments etc.
7. Standardization and simplification: This function selects items of great demand and sets
the standards for quality, raw material, sizes and performance of any product.
8. Organization & appraisal of materials: This function helps in effective functioning by
proving smooth flow. It provides coordination and avoid delays and wastages
MATERIALS MANAGEMENT & MANAGEMENT OF FLOW OF

MATERIALS
In any organization, the responsibility for maintaining the quality of the product and incurring less
cost on its production is the responsibility of the production/ operation, deciding the price of the
product and finding the customers that will buy it comes under marketing. The question arises that if
it is so, what do the materials management function does? The answer is that from the time the
materials enter the warehouse of the organization from the suppliers, the role of materials
management starts and gets going till the final product is obtained. The interrelated activities that are
carried out to achieve this are sequenced after each other in a systematic manner. Management of
this flow of materials is called materials management. This flow of materials is met through a set of
activities presented in Table 1.2 given below

Table 14: Set of activities for flow of materials

S.No Activity Function
Planning Setting the goals, indicating the sources of finance
1
Scheduling Requirements specification, quantum and delivery

2
schedules
Purchasing and Vendor selection, vendor contracts
3
Procurement
Inspection and Conforming quality
4
Quality control
Stores and Inventory Determining inventories, maintenance and upkeep
5
control
Materials handling Controlling flows, distribution, shipments
6 and distribution
logistics
The table above highlights the importance of integrated systems and dependence of function models
for decision-making. The organizations have now become multidimensional in nature. Total
materials management concept evolved to address this dimension and avoid conflicting objectives.
Total material management helps in establishing accountability so that response to a problem is
quick and appropriate.
The material functions are accomplished in more coordinated ways with the help of this integrated
approach. When this happens there is increased communication for the need of materials and hence
one gets lower costs, better inventory turnover, reduce stock outs and other significant benefits. Data
processing systems are designed on the basis of the integrated material function.

Bibliography/References:
1) Radha Realty „Maple Town‟ Staff members.
2) Sujana TMT
3) www.google.com
4) www.ignou.ac.in/edusat
5) The National Building Code of India 2005(NBC).
6) www.scribd.com/shree0605
Contact :
1. T.Shreedhar
+91 9052445996
er.shreedhar@gmail.com
2. Rajesh Kumar UBA

+91 9010349474
Rajeshkumar.uba@gmail.com
3. D.Ravinder Reddy
+91 998555996
ravinderreddy022@gmail.com

4.5.6.3. ELECTRICAL VENDOR:
cables Circuit Home Boxes,Ca Digital
Transport Credit Motor M.V.Tran fuses &
S.No Vendors Lead time (3core & Breakers/ Automati bles& Power
ation cost Limit Starter sformers Switches
4 core) MCB on Interfaces Meters
Pay on
1 BHARATI ENTERPRISES (INDIA)7 Days Free i i p p p p p p
Delivery
2 Polycab Wires Pvt Ltd 7 Days Charges 10 Days p p i p p i i i
3 Schneider Electric 7 Days Free 15 Days p p i p p p p p

Pay on
4 Yogeshwar Enterprizes 7 Days Charges i i i p p p p p
Delivery
5 Finolex Cables Limited 7 Days Free 10 Days p p i i p i p i
Table 10: Comparison of Electrical Vendors
4.5.6.4. Plumbing Vendors
Transport Credit S.W.R PPR CPVC Bath Kitchen
S.No Vendors Lead time G.I Pipes Closets Urinals Taps
ation cost Limit Pipes Pipes Pipes tubes sinks
1 Shankara Pipes India Ltd 7 Days Charge 10 Days p p p p p p p p i
2 Prince Pipes System 7 Days Free 10 Days p p p p i i i i i
3 Hindustan Sanitaryware & Industries Ltd

7 Days Free 10 Days i i i i p p p p p
4 H & R JOHNSON 7 Days Free 10 Days i i i p p p p p p
5 Parryware Roca Pvt Ltd 7 Days Free 10 Days i i i p p p p p p
6 Supreme Industries Ltd 7 Days Free 10 Days p p p p p p p p p

Table 11: Comparison of Plumbing Vendors
4.5.6.5. Paints Vendors
Transport Credit Wall Wall Wood Enamel Metal color
S.No Vendors Lead time Distemper Emulsions
ation cost Limit Primer Putty Primer paint coating creation
1 Asian Paints Ltd 4 Days Free 7 Days p p p p p p p p

2 Lewis Berger Home Painting 4 Days Free 7 Days p p p p p p p p
3 Dulux Paints 4 Days Free 7 Days p p p p p p p p
4 Nippon Paints 4 Days Free 7 Days p p p p p p p p
Table 12: Comparison of Paint Vendors

7th Term - Thesis On Inventory Management

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A Project Report on

“CURRENT INVENTORY PRACTICES OF REAL

T.SHREEDHAR Roll No. 233084

A Thesis submitted in partial fulfillment of academic requirements for the award of

UNDER THE ESTEEMED GUIDANCE OF

Prof Rajiv Gupta,

PGPACM XXIII BATCH 2009-11

This is to certify that the thesis titled “CURRENT INVENTORY PRACTICES OF

REAL ESTATE DEVELOPERS – A CASE STUDY” is the bonafide work of:

the award of Post-Graduate Program in Advanced Construction Management. This work is

carried out by them under my guidance and supervision.

Date: Signature of the Guide

We declare that the thesis titled “CURRENT INVENTORY PRACTICES OF REAL

submitted anywhere else.

SHREEDHAR.T Roll No.233084 Signature

RAJESH UBA Roll No.233085 Signature

RAVINDER REDDY.D Roll No.233092 Signature

We would like to thank our friends studying in various institutes all

S.NO CONTENTS Page. No

1.2 Case study objective 2

2.2 Leadership team 4

2.3 Current project 5

2.4 Contact address 5

3.1 About maple town 6

3.3 Club facilities 7

3.5 Roads & landscaping 9

3.7 Area statement 10

3.8 Floor plans 11

3.9 Layout map 12

3.10 Location map 13

4.1 To study how inventory management practices 14

4.2 To find out the techniques for vendor selection 17

4.3 Applying tools and techniques 20

4.4 Finding inventory requirement at different stages 27

4.5 Study of reliable local material ‘utilization’ 38

4.6 Stock maintenance 44

Current Inventory Management Practices of Real Estate Developers

CASE STUDY OBJECTIVE

Current Inventory Management Practices of Real Estate Developers (A Case Study)

The purpose of inventory management is to ensure availability of materials in sufficient

Current inventory practices of Real Estate Developers – A case study 1

Inventory management is necessary for every management to give proper attention to

2. How much to purchase?

3. From where to purchase?

4. Where to store and so on?

The main objectives of our project study are :

2. To find out the techniques for vendor selection.

3. Applying tools and techniques of inventory classification in real life situation.

4. Finding inventory requirement at different stages of construction project or over Project

5. Study of reliable local material „utilization‟ in a construction project.

6. Stock maintenance: Practice of A class Inventories.

INTRODUCTION OF THE COMPANY

2.4 Core Values

2.5 Innovation and Creativity

2.6 Client Satisfaction

2.8 Leadership Team

1. Mr. Ravindranath Reddy - Managing Director

2. Mr. K Ramakrishna Rao - Director

3. Mr. N Govardhana Reddy - Executive Director

5. Mr. J Rajasekhara Reddy – Director

Current inventory practices of Real Estate Developers – A case study 4

2.9 CURRENT PROJECTS