A

PROJECT REPORT
ON

A STUDY OF INVENTORY CONTROL AND

MANAGEMENT SYSTEMS AND ITS IMPACT ON
COST.

For

T.CHOITHRAM & SONS. (L.L.C) U.A.E

Submitted in the Partial Fulfillment of the Requirement

of Course
Master of Business Administration.
(Session 2006-2008)

Submitted by
YASH.S.GANDHI

Project Guide
Prof. Yuvraj Lahoti

Viahwakarma Institute Of Management, Pune

1
 ACKNOWLEDGEMENT

I want to extend my gratitude to all those who have helped me in the

completion of this project. First and foremost I want to thank the
Chairman of T. Choithram & Sons for his generosity, faith and superb
guidance.
I take immense pleasure in thanking Mr.Mohommad Kiyas and
Mr.Pravesh Sawlani for always being so friendly and co-operative in all
the work assigned to us. I want to thank all the staffs of T. Choithram &
Sons, especially all the shelf incharge for helping us in long hours of
work.
I also extend my gratitude to all the Store Managers, especially to
Mr. Manoj for providing us with the data required for the compilation of
our project.
My sincere thanks to Mr. Subash for helping us in the Advertisements
and Promotions related activities. Last but not the least I want to thank
Mr. Prakash, Mr. Manoj, Mr. Ghanshyam, Mr. Ashok for their
co-operation and for making these two months an unforgettable
experience.
In addition, my internal guide Prof. Yuvraj Lahoti has critically
evaluated my each step in developing this project report. I would like to
extend my gratitude toward Dr. Sharad L. Joshi, Director, Vishwakarma
Institute of Management, for his technical and moral support required for
the realization of this project report.

Thanks to all.
Yash.Subhash.Gandhi.

2
 TABLE OF CONTENTS

Chapter no. Title Page no.

Executive 4
Summary
10
Introduction
1 13
Retail Industry
2 21
Company Profile
3 24
Objective
4 Research 26
Methodology
5 31
Analysis
6 64
Findings
7 67
Recommendations
8 72
Bibliography
9 74
Annexure

3
Executive
Summary

4
 EXECUTIVE SUMMARY

This study has been done with an objective of understanding the

entire procedure of Inventory Management and Control System followed at
T.Choithram and Sons (L.L.C) UAE. The study focuses on specific areas of
Inventory Management Systems, such as Impact of Inventory on the store
and the cost that the store has to bare for storing and maintaining that
inventory, the study also throws light on the quantity of product to be
reordered & the safety stock that should be maintained.

The study involves a detailed analysis of the various procedures of

Inventory Management used at TCS, procedures such as visual checks of the
goods received, elementary documentation, to fully Computerized and
Software Based Techniques for merchandise, re-order, documentation for
preparation of Purchase Orders, for Inventory check, for maintenance of
shelf stock and overall inventory control.

Proposed Title for Research:

A Research on Inventory Management & Control System used at
T. Choithram & Sons (LLC) U.A.E and their impact on cost.

Introduction:
The Study comprises of a detailed study on the Inventory Management &
control systems that are currently being used at T. Choithram & Sons (LLC).

5
The data for this study has been collected by means of store visits (more
than 20), questionnaire, interaction with the staff of TCS, & personal
observations.
The study throws light on areas such as Inventory Management,
Product Placement, Product Reordering, Stocking- Safety stock & Necessary
Stock, & Pricing Strategies.

Objectives:
The objectives of this study are in multiple folds, the core objectives being:
1. To study the current inventory management and control techniques
used at TCS.
2. To study the maintenance and control of the in-store inventory.
3. The impact of various inventory levels on space and cost in the
store.
4. To identify the approximate difference between Ideal Inventory
and the Actual Inventory.
5. To define a exact reorder period and quantity for products taken as
population for the study.
6. To identify the problems faced while using current Inventory
Management & Control System.
7. To search for solutions and alternatives for those problems faced at
TCS.

6
Research Methodology:
To attain the above mentioned objectives the methodology would be as
follows:
1. Collection of primary data, by taking interviews of at least 20 store
managers and stock takers.
2. Collection of secondary data, with the help of different search
engines, articles, websites, books and documents provided by the store
in-charge at TCS.
3. Interpretation and analysis of the collected data
4. Representation of the data in graphical, tabular, and theoretical
manner respectively.
For the collection of primary data simple technique of Questionnaire is used
and a population of size not more than 20 is considered. This data will be
further interpreted into 100%. The sample area considered is Sharjah and
Dubai.

Data Analysis:
The primary & secondary data collected by various means of data collection
is further analyzed in various forms. Initially data has been sorted in
accordance with store visit and on the basis of these store visits a
questionnaire has been designed & on the basis of questionnaire feedback
which includes various aspects of Inventory Management the data is further
analyzed. The analysis throws light on areas such as Product Placement,
Pricing Strategy, Inventory Records, Product Reorder & Managing a huge
product portfolio.

7
S.W.O.T Analysis:
The S.W.O.T analysis shows that the good reputation of TCS as a brand.
It highlights the strengths of TCS and the opportunities it has in the U.A.E
market. It also focuses on the threats that the market holds for the company.
The main competitors of the company being Spinneys, LuLu Supermarket,
& Al Madina Supermarket, S.W.O.T Analysis tries to lay a path for the
company to capitalize on their strengths and tap the opportunities to
minimize the weaknesses & threats.

Findings:
 Awareness among the Staff of TCS regarding modern Techniques of
Inventory Management & Control System needs to be updated.
 Even after not having any Scientific or Technical Base the staff at
TCS perform a fabulous job in maintaining considerable standards for
inventory management.
 In the present system there are areas where the company needs to pay
more attention.
 Every often it so happens that the products reach the store a bit too
late, i.e the supply chain management of the company needs to be
upgraded.
 The percentage of stock shrinkage due to employee theft is
considerable.

8
Recommendations:
 The staff should be trained to use new system of Inventory Control
system.
 Even after not using any scientific or technical base the staff is so
efficient in giving exact figure of reorder, then if given a good
technical & scientific support the store could reach great heights.
 The receiving section at some stores needs to be upgraded.
 The manual inspection system that is followed could be replaced with
electronic scanner system.
 For the reorder system instead of depending on staffs experience the
company should go for technical (automatic) reorder.
 More distribution of flyers in Newspapers should be there with which
the customers will be able to know the offers.

9
INTRODUCTION

10
 INTRODUCTION

The retail food industry has been undergoing major changes as a

result adoption of proper stores management is launched by supermarkets
industry in 1993. The total stores management involves all factors which
responsible for build a stores image like inventory management, space
management, category management, customer service and all other like this.

The Stores industry is changing, as like new information

technologies, new business practices and new retail strategies are
developed. The result from this the research can serve as a baseline for
future research monitoring for adoption of innovations and assessing
there impact on productivity and profitability. Choithrams Stores
appear to be a smaller but more productive than other competitors.

Retailers encounter many problems Retailers encounter many

problems as they attempt to upgrade their systems. A major obstacle is the
effort required, particularly for staff training and in developing new
procedures, as the organization prepares to switch over to the new system.
Another is the lack of awareness of the various options available to retail
organizations as they seek to improve the efficiency and effectiveness of
their inventory management and control procedures. There is a lack of
understanding of the costs and benefits of these options, and of what needs
to be done to move to the next level of sophistication.

11
 The study strongly suggests that there is a need for training retailers
on inventory management issues. Further research needs to be conducted to
understand and document the practices, problems, and needs of different
segments of the retail and wholesale sector.
Training material needs to be developed which, through case histories of
successful (and failed) implementations of inventory management and
control systems, illustrates the options available to retailers for improving
their operations. Given the size of the retail sector in the economy (third
largest sector contributing Rs. 196 billion to the national GDP and
employing 3.7 million), and the predominantly small size of retail
establishments (less than 2% of the 347,000 retail establishments in urban
Pakistan employed over 4 individuals), the impact of improved inventory
management systems can be wide-ranging and significant.

The main motive of doing this research was to get the feedback from the
Stores Manager, analyzing it and finding the weak areas in which Choithram
is and overcome the weaknesses to give a better Inventory Management
practices to maintain the existing customers & future prospects. This
company aims to target these customer groups & offer innovative &
convenient service that will fulfill their needs fast and efficiently.

The survey has been done of 7 Choithram Stores on various factors

such as variety, quality, service, promotions, offers and many more. The
sample size was 1 questionnaire (per store).

This study aims at analyzing Inventory Management & Control

System used among the all supermarkets located through out UAE. and
service offered to customers by Choithram and Sons L.L.C. Dubai

12
 RETAIL
INDUSTRY
(INDIA)

13
The Changing Face Of Retail in India:

Liberalization of the economy in the nineties and the entry of large

players in the retail business have brought the retail industry into spotlight.
Big players and national retail chains are changing the rules of the game, in
spite of their meager share in the overall retail trade. Organized retailing
though still in an embryonic stage has huge growth potential.

In organized retailing, the retailer is no longer just a last mile

distributor. He is an important source of information related to customer
behavior and also gives the customer a memorable shopping experience.
Experiential marketing is becoming the paradigm of organized retailing and
this has further raised the significance of the retailer in the business value
chain.

India has seen a rise in the number of malls in the last few years.
Today India has 37 malls in Mumbai, 10 in Hyderabad, 15 in Bangalore.
Approximately 220 malls in the whole of India by end 2005 is what is the
estimate of various agencies involved in assessing the future of commercial
property development in India. The real estate sector is booming thanks to
the low interest regime for home loans. The other factor that is providing a
fillip to the development of real estate is the boom in commercial property
development, especially the retail property sector.

Moreover, with the convergence of the retailing, entertainment and

the tourism industries, retail property in India has taken to mega mall
development to suit the needs of all the three sectors in a single location.
Throughout the past decade, malls appeared on the retailing scene as the

14
locus of retailing activity in major Indian cities in the central business
district, which was populated by well-known department stores. But as the
suburban population grew, many local shopping areas in suburbs
transformed into regional shopping destinations.

In a few cities, specialized developers purchased large blocks of the

central city land and then offered it on a lease basis to department stores and
other stores at differential rents. The displacement of the central business
districts in major Indian cities by the suburban mall phenomenon was clearly
hastened by the increase in automobile ownership, an enhanced urban road
network, and growing suburban markets. Malls represent a set of co-located
retail outlets in a large area with lots of amenities. In the retail sector, mall
development must be a planned, as this would help in attracting the right
tenant mix. A typical mall has one or more anchor store and a diversity of
smaller stores.

The development of a mall should also be planned in anticipation of

the increased footfalls. Understanding of the retail environment becomes
crucial for mall developers as well as for the potential tenants while
investing in malls.

Retail is India's largest industry, accounting for over 10 per cent of the
country's GDP and around eight per cent of the employment. Retail industry
in India is at the crossroads. It has emerged as one of the most dynamic and
fast paced industries with several players entering the market. But because
of the heavy initial investments required, break even is difficult to achieve
and many of these players have not tasted success so far. However, the
future is promising; the market is growing, government policies are
15
becoming more favorable and emerging technologies are facilitating
operations.

Retailing in India is gradually inching its way toward becoming the

next boom industry. The whole concept of shopping has altered in terms of
format and consumer buying behavior, ushering in a revolution in shopping
in India. Modern retail has entered India as seen in sprawling shopping
centres, multi-storeyed malls and huge complexes offer shopping,
entertainment and food all under one roof. The Indian retailing sector is at an
inflexion point where the growth of organized retailing and growth in the
consumption by the Indian population is going to take a higher growth
trajectory. The Indian population is witnessing a significant change in its
demographics. A large young working population with median age of 24
years, nuclear families in urban areas, along with increasing working-women
population and emerging opportunities in the services sector are going to be
the key growth drivers of the organized retail sector in India.

16
 RETAIL
INDUSTRY
(U.A.E)

17
Retail Industry in U.A.E:

‘Dubai is already known as the shopping center of the Middle East,

and in years to come it will be known as the shopping mall of the world,'
With retail space in the city set to rise to 20 million square feet in six years
time, related industries - ranging from software management organizations
to cleaning firms - are tipped to experience a significant boost in activity.

'The expansion of retail space in Dubai is going to have a positive

impact on the emirate's overall economy. In the short-term, construction and
design companies will benefit from the boost in building activity. 'In the
future, companies specializing in everything from retail software and
mannequins to cleaning firms and interior decorators will also benefit from
the trickle-down affect.'

Additionally, new retail developments will contribute to rising

tourism numbers to the emirate. Coinciding with the 400 percent increase in
retail space in 2010, the emirate is preparing to welcome around 15 million
tourists by the end of that year. If Dubai does manage to boast more than 20
million square feet of shopping space by 2010 then there is no doubt that it
will be an even bigger tourist attraction than it already is.

As a relatively new organization in the region, I believe that the next

five years are going to be an exciting, buoyant and challenging as the
country tries to meet the demands of a constantly expanding market.

18
 Conceptualization of Retail Middle East is a direct result to meet the
needs of the market for the entire region. It will be the sourcing forum for
retailers and franchise chains looking acquire cutting-edge concepts and
store design for both new and old stores. This event will encompass
everything from lighting, hanging rails, POS, mannequins to shop fitting
equipment and services, visual merchandising, signage, P-O-P as well as
retail information technology – all in one convenient location to serve as a
fertile sourcing ground for retailers, while serving as a platform for group
showcases from the USA and other international companies. Exhibitors
would also include woodworking machinery manufacturers and franchisors
interested in international expansion.

To cater to the fast changing needs of the retailers, Retail Middle

East is planned to become an annual event. There is no doubt that the local
retail industry needs a platform that occurs on a frequent enough basis to
keep up with the momentum of evolving trends as well as remain connected
with developments in the industry in international markets..

Retailers and shoppers alike are yearning for new concepts in the
retail scene. To become successful in this region watchwords to a new
market entrant would be time, effort and resources starting with a personal
relationship.

Retail Middle East (RME) has the support of US associations – Point

of Purchase Advertising International (POPAI), and the National
Association of Store Fixture Manufacturers (NASFM) as well as by EHI-
EuroHandelsinstitut (The International Retail Network) from Germany.

19
Companies from Italy, UK, Australia, Malaysia, Jordan, Lebanon etc., have
already signed on to participate at RME.

DUBAI is the business hub of Middle East, is throbbing with

multidimensional activities and is undergoing thanks to the vision and
foresightedness of the country´s leadership, tremendous growth, which is
evidenced by the fact that a country until 3 years ago with a population of
2,5 – 3 million in now accommodating and catering for 5 million people.

CHOITHRAM take the pride of being among such Supermarkets with

highest degree of popularity with the local Arabs,Asians and the Western
Expats offering it’s long range of quality products at very competitive
prices. Fruit sourced from any where in the world by important importers
such as Fresh Fruits, Abbar O Zainy, Sharbatly, Iffco are always available
with us. In fact, we are in process of commencing our own import program
and in doing so we will be more than happy to source Argentinian Oranges,
Lemons, Pears, Apples and Stone fruit.

20
COMPANY
PROFILE

21
 COMPANY PROFILE

The Company was founded in 1944 in Sierra Leone and arrived

in the United Arab Emirates in 1974. Since then thecompany
T. Choithram and Sons is deep-rooted & focused on one remarkable
vision, the aggressive diversification and geographical expansion,
which led the company to UAE.

Within a short period, the company is acknowledge today as the

largest chain of the Supermarket group in the Emirates. With twenty
four Supermarkets and five Department Stores at prime locations
spread over the seven Emirates of the UAE.

The company has grown to become one of the most popular

chain in the UAE and today represents over sixty multinational
companies in the Emirates, which are handled by several specialized
divisions.

With the experience of over 60 years of marketing branded

consumer products, the Company´s infraestructure, extensive
knowledge of the market and the support of dedicated employees
numbering over 1500, all come together in a very effective
marketing-mix to offer their principals the best distribution network
and support in the UAE.

22
 The Company´s popular chain of Supermarkets & Department
Stores, conveniently located, leend important and significant support
for brands and agancy lines, through prime products displayss,
facilities for below-the-line marketing activities, test launching of
promotional offers and even to conduct valuable consumer surveys
to help formulating sound and effective brand development
strategies.

The Company´s well established Catering Division, services,

apart from the regularly awarded government tenders, over two
hundred major institutional clients:

\
– AIRLINES
– RESTAURANTS
– CLUBS
– SCHOOLS
– PETROL STATIONS
– KIOSKS AND SO ON ….

The novelty division handles agency lines from over twenty-one

countries, supplying to the wholesale and retail outlets in the UAE,
with new products innovations in novelties, fashionwear, children
´sgarments,toys, household appliances, domestic products, etc.

23
OBJECTIVES

24
Objectives:
The objectives of this study are in multiple folds, the core objectives being:
1. To study the current inventory management and control techniques
used at TCS.
2. To study the maintenance and control of the in-store inventory.
3. The impact of various inventory levels on space and cost in the store.
4. To identify the approximate difference between Ideal Inventory and
the actual inventory.
5. To define a exact reorder period and quantity for products taken as
population for the study.
6. To identify the problems faced while using current Inventory
Management & Control System.
7. To search for solutions and alternatives for those problems faced at
TCS.

25
 RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY
26
 Research methodology is a way to systematically solve a research
problem. It may be understood as a science of studying how research is done
scientifically. In it we study various steps that are generally adopted by a
researcher in studying his research problem along with logic behind them.

Before we understand the research methodology used for this rearch

let us first understand what a research means:
Research in common parlance refers to a search for knowledge. One can also
define research as a scientific and systematic search for pertinent
information on a specific topic. In fact, research is an art of scientific
investigation. The advanced learner’s dictionary of current English lays
down the meaning of research as “a careful investigation or inquiry specially
through search for new facts in any branch of knowledge”.

For every research there is a certain objective, towards which the

research is directed, following are the objectives towards which the research
methodology has been designed. The purpose of research is to discover
answers to questions through the application of scientific procedures.
Though each research study has its own scientific purpose, we may think of
research objectives as falling into a number of following groups:

1. To gain familiarity with a phenomenon or to achieve new insights.

2. To portray accurately the characteristics of a particular individual,
situation or a group.
3. To determine the frequency with which something occurs or with
which it is associated with something else.
4. To test a hypothesis of a casual relationship between variables.
27
Research process

Research process consists of series of actions or steps necessary to

effectively carry out research and the desired sequencing of these steps.

 Formulating the research problem

 Extensive literature survey

 Development of working hypothesis
 Preparing the research design
 Determining the research design
• Deliberate sampling
• Simple random sampling
• Systematic sampling
• Stratified sampling
 Collecting the data
• By observation
• Through personal interview
• Through telephone interviews
• By questionnaires

 Execution of the project

 Analysis of data
 Hypothesis-testing
 Generalization and interpretation
Preparation of the report
28
Research Methodology:

A)Primary Data Source:-

Questionnaire, Interviews
B)Secondary Data Source:-
Books, Journals etc.

Collected data will be analyzed with simple statistical tools and will
be interpreted with graphical explorations.

The project was to check feasibility of the methodologies used at

T. Choithram & Sons using primary data. For the collection of the primary
data a regular format of store visit has been followed. The primary data was
also obtained through observation, direct communication with the staff and
filling up of questionnaires, also enormous help was obtained from
T. Choithram & Sons branch members, crew, staff and colleagues working
there.

FIELD WORK PLAN

The field work was carried according to the sampling plan formed, by
visiting various branches of T. Choithram & Sons under some limitations
and time constraints. The main motive for these visits was to identify the
system that is being followed in the company & to find out solutions to the
problems that the company faces at this moment in handling the present
Inventory Control & Management System. A two-way discussion was done
with the staff at the stores and s questionnaire was filled by the respective

29
personals. The questionnaires are either directly filled up or indirectly filed
up by the people and through the prospect of the respective people.

DATA ANALYSIS:
The data has been analyzed under certain conditions, which have been
mentioned in the later part of this research. The data analysis part constitutes
of analyzing the collected data and interpreting it for the convenience of the
researcher and for better understanding of the data analyzed.

The data analysis comprises of 4 parts:

1. Data analysis for the Product Reorder Section.
2. Explanation of the concept of Safety Stock, & its Implementations.
3. Analysis of the Inventory Management & Control System used at
TCS.
4. Data analysis for the Customer Service Section.

30
ANALYSIS

31
 ANALYSIS FOR REORDER SECTION

CANNED FRUITES
PINEAPPLE:
Total Stock: 50 pieces Weekly Sales: 84 pieces
Weekly Reorder: 24 pieces Ideal Reorder: 72 pieces
Ideal Reorder Day: Wednesday

Pineapple

90 84
80 72
70
60 50
50
40
30 24
20
10
0
Total Stock Weekly Weekly Ideal Reorder
Sales Reorder

Pineapple

RAMBUTAN:
Total Stock: 46 pieces Weekly Sales: 42 pieces
Weekly Reorder: 24 pieces Ideal Reorder: 24 pieces
Ideal Reorder Day: Every Alternate Saturday.

Rambutan

50 46
45 42
40
35
30 24 24
25
20
15
10
5
0
Total Stock Weekly Weekly Ideal Reorder
Sales Reorder

Rambutan

32
PEAR:
Total Stock: 24 pieces Weekly Sales: 28 pieces
Weekly Reorder: 24 pieces Ideal Reorder: 24 pieces
Ideal Reorder Day: Friday

Pear

29
28
28
27
26
25
24 24 24
24
23
22
Total Stock Weekly Weekly Ideal Reorder
Sales Reorder

Pear

CHERRY:
Total Stock: 30 pieces Weekly Sales: 56 pieces
Weekly Reorder: 48 pieces Ideal Reorder: 72 pieces
Ideal Reorder Day: Wednesday

Cherry

80 72
70
60 56
48
50
40 30
30
20
10
0
Total Stock Weekly Weekly Ideal Reorder
Sales Reorder

Cherry

33
FRUITE COCTAIL:
Total Stock: 36 pieces Weekly Sales: 84 pieces
Weekly Reorder: 24 pieces Ideal Reorder: 72 pieces
Ideal Reorder Day: Monday

Fruite Coctail

90 84
80 72
70
60
50
36
40
30 24
20
10
0
Total Stock Weekly Weekly Ideal Reorder
Sales Reorder

Fruite Coctail

34
 CANNED VEGETABLES

TOMOTA:
Total Stock: 288pieces Weekly Sales: 336 pieces
Weekly Reorder: 144 pieces Ideal Reorder: 336 pieces
Ideal Reorder Day: Thursday

Tomato

400
336 336
350
288
300
250
200 144
150
100
50
0
Total Stock Weekly Weekly Ideal Reorder
Sales Reorder

Tomato

SWEETCORN:
Total Stock: 48pieces Weekly Sales: 84 pieces
Weekly Reorder: 72 pieces Ideal Reorder: 72 pieces
Ideal Reorder Day: Wednesday
Sweetcorn

80 72 72
70
60
48
50
40
30 24
20
10
0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Sweetcorn

35
MUSHROOM:
Total Stock: 24 pieces Weekly Sales: 42 pieces
Weekly Reorder: 96 pieces Ideal Reorder: 48 pieces
Ideal Reorder Day: Wednesday

Mushroom

120
96
100

80

60 48
42
40
24
20

0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Mushroom

KIDNEY BEANS:
Total Stock: 60 pieces Weekly Sales: 84 pieces
Weekly Reorder: 72 pieces Ideal Reorder: 72 pieces
Ideal Reorder Day: Thursday

Kidney Beans

90 84
80 72 72
70 60
60
50
40
30
20
10
0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Kidney Beans

36
BACKED BANES:
Total Stock: 160 pieces Weekly Sales: 224 pieces
Weekly Reorder: 48 pieces Ideal Reorder: 192 pieces
Ideal Reorder Day: Thursday

Backed Beans

250 224
192
200
160
150

100
48
50

0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Backed Beans

37
 SAUSE

RICOTTA:
Total Stock: 14 pieces Weekly Sales: 14 pieces
Weekly Reorder: 12 pieces Ideal Reorder: 12 pieces
Ideal Reorder Day: Friday

Ricotta

14.5
14 14
14
13.5
13
12.5
12 12
12
11.5
11
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Ricotta

ARABBIATA:
Total Stock: 10 pieces Weekly Sales: 21 pieces
Weekly Reorder: 12 pieces Ideal Reorder: 24 pieces
Ideal Reorder Day: Tuesday

Arabbiata

30
24
25
21
20

15 12
10
10

0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Arabbiata

38
SPAGNETTI:
Total Stock: 22 pieces Weekly Sales: 28 pieces
Weekly Reorder: 24 pieces Ideal Reorder: 24 pieces
Ideal Reorder Day: Friday

Spagnetti

30 28
24 24
25 22
20

15

10

0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Spagnetti

PIZZA SAUSE:
Total Stock: 56 pieces Weekly Sales: 49 pieces
Weekly Reorder: 36 pieces Ideal Reorder: 36 pieces
Ideal Reorder Day: Saturday

Pizza Sause

60 56
49
50

40 36 36

30

20

10

0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Pizza Sause

39
TOMATO:
Total Stock: 18 pieces Weekly Sales: 42 pieces
Weekly Reorder: 36 pieces Ideal Reorder: 36 pieces
Ideal Reorder Day: Monday

Tomato

45 42
40 36 36
35
30
25
18
20
15
10
5
0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Tomato

40
 PASTA

PENNE RIGATE:
Total Stock: 20 pieces Weekly Sales: 42 pieces
Weekly Reorder: 36 pieces Ideal Reorder: 36 pieces
Ideal Reorder Day: Tuesday

Penne Rigate

45 42
40 36 36
35
30
25 20
20
15
10
5
0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Penne Rigate

LACOLLEZIONE:
Total Stock: 17 pieces Weekly Sales: 21 pieces
Weekly Reorder: 12 pieces Ideal Reorder: 24 pieces
Ideal Reorder Day: Thursday

Lacollezione

30
24
25
21
20 17
15 12
10

0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Lacollezione

41
LASAGNE:
Total Stock: 29pieces Weekly Sales: 42 pieces
Weekly Reorder: 12 pieces Ideal Reorder: 24 pieces
Ideal Reorder Day: Wednesday

Lasagne

45 42
40
35
29
30
24
25
20
15 12
10
5
0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Lasagne

SEDANINI:
Total Stock: 18 pieces Weekly Sales: 42 pieces
Weekly Reorder: 12 pieces Ideal Reorder: 36 pieces
Ideal Reorder Day: Tuesday

Sedanini

45 42
40 36
35
30
25
18
20
15 12
10
5
0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Sedanini

42
FUSILLI:
Total Stock: 19 pieces Weekly Sales: 42 pieces
Weekly Reorder: 48 pieces Ideal Reorder: 36 pieces
Ideal Reorder Day: Tuesday

Fusilli

60
48
50
42
40 36

30
19
20

10

0
Total Stock Weekly Sales Weekly Reorder Ideal Reorder

Fusilli

43
 STORE REORDER STRUCTURE

Excess
Reorder
10%
Perfect Reorder
45%

Short Reorder
45%

Excess Reorder Short Reorder Perfect Reorder

44
 CAPITAL UTILIZATION FOR REORDER

2500
1984.8
2000
Capital (in Dhirams)

1480.8
1500

1000

500 195

0
Shortage of reorder Excess of Reorder Reorder Perfect Worth
worth worth
Captal Utilization

Capital Utilization

45
 ANALYSIS FOR SAFETY STOCK

The analysis that has been done in the earlier part is based on the
concept of “Safety Stock”. The concept emerges from the fact that from the
time of reorder there is a time gap between ‘Product Order & Product
Delivery’, during this time period there is a requirement for the product at
the sales counter, to manage the sales effectively between this time gap a
certain amount of products need to be there in the store which is called as
“Safety Stock”

There is a specific way, a specific manner which is used to calculate

this Safety Stock. In the above data analysis for Reorder section the fact of
Safety Stock has been considered and accordingly the Reorder for each
product has been scheduled.
Example:
Canned Fruits: Pineapple:
Total Stock: 50 pieces. Daily Sales: 12 pieces.
Time lag: 1 day Reorder Quantity: 36 pieces.
Thus the safety stock for Pineapple would be 12 pieces.

Theoretically, it should be easy to determine when to reorder a

stocked item from a supplier. If we know that customers will order ten
pieces of the product each day, and you know that it will take seven days to
get the shipment from the vendor, you should reorder the product when there
are seventy pieces on the shelf:

46
 Demand per Day Lead Time Usage During Lead Time

10 pieces 7 days 70 pieces

This quantity is appropriately called the "order point." But the order point
formula contains one more element: safety stock. Safety stock provides
protection against running out of stock during the time it takes to replenish
inventory. Why is this protection necessary?

• Demand is a prediction based on past history, trend factor(s), and/or

known future usage of a product. The item's actual usage will
probably be more or less than this quantity. Safety stock is needed for
those occasions when actual usage exceeds forecasted demand. It is
"insurance" to help ensure that you can fulfill customer requests for a
product during the time necessary to replenish inventory.
• The anticipated lead time is also a prediction, usually based on the
lead times from the last several stock receipts. Sometimes the actual
lead time will be greater than what was projected. Safety stock
provides protection from stock outs when the time it takes to receive a
replenishment shipment exceeds the projected lead time.

The following diagrams illustrate how safety stock is used:

47
 Projected Lead Time = 8 Days
Demand = 1 piece/day
On Order with Vendor = 0

The dotted line in the graph represents the available quantity (On-Hand –
Committed) of the item. A replenishment order is placed on the first of the
month as the available quantity available reaches the order point ("A" in the
graph). In this example, there is none of the product currently on incoming
replenishment orders. Therefore, at point "A," the item's available quantity
equals its replenishment position.

The actual usage of eight pieces during the lead time is consistent with
projected demand. The shipment arrives on the 9th of the month. As the
stock receipt is processed, the available quantity on the shelf is equal to the
safety stock quantity. The protection provided by the safety stock was not
needed.

48
The product again reaches the order point on the 11th of the following
month ("B" in the following graph):

Projected Lead Time = 8 Days

Demand = 1 piece/day
On Order with Vendor = 0

Another order is placed with the supplier. But the vendor is temporarily
experiencing manufacturing problems and the shipment arrives two days late
("C" in the graph). If it weren't for the safety stock, we would have run out
of the product.

Shortly after the shipment arrives, a customer orders 10 pieces of the

product. You experience more than a week's usage in just one day. The
available quantity falls to "D" in the following graph. A replenishment order
is issued that day, but the available quantity is already below the order point.

49
The safety stock quantity allows you to satisfy customer demand for the
product until the replenishment shipment arrives from the supplier on the
29th of the month ("E" in the graph). Again, safety stock prevented a stock
out.

Thus after understanding what Safety Stock is, and how do we

calculate Safety Stock, the next question arises that “How much safety stock
do we need?” The answer to this question could be better understood by the
following Diagram & the corresponding explanation overleaf.

50
When a replenishment shipment arrives, the available quantity is usually
somewhere in the shaded area of the graph. Notice that the safety stock
quantity is in the middle of the shaded area. Half the time you will use some
or all of the safety stock before the replenishment shipment arrives. The
other 50% of stock receipts will arrive before you use any of the safety
stock. On average, the full safety stock quantity is always on the shelf when
the replenishment shipment arrives. It is, on average, "non-moving"
inventory.

A distributor puts inventory in her warehouse to sell it to customers. Profits

from these sales are necessary to pay the distributor's expenses and provide a
return on her investment. With this thought in mind, it seems as though it
would not be a good idea for a distributor to intentionally have non-moving
inventory in stock.

51
On the other hand, keep in mind the goal of effective inventory
management:

"Effective inventory management allows a distributor to meet or

exceed his (or her) customers' expectations of product availability
with the amount of each item that will maximize the distributor's net
profits."

Safety stock is, in reality, an expense of doing business. But it is necessary

to ensure good customer service. To maximize profits, we must carefully
control all expenses, including safety stock. Therefore, we want to achieve
our customer service goals with the least possible amount of safety stock.

Thus the analysis shows that at TCS to prevent a product from being
out of stock or being in excess inventory Safety Stock system is needed at a
really high alert rate.

52
 ANALYSIS FOR THE INVENTORY MANAGEMENT &
CONTROL SYSTEM

“Inventory Management & Control System”, for this part of analysis a

simple procedure of Questionnaire for the staff at TCS was formulated and
on that basis the analysis has been done.

During the analysis there was an observation as to the procedure that

is followed in the company for Inventory Control. The observation was that
there is no scientific or technically formulated system that is followed for
inventory management & control, rather a simple technique is followed in
which the Shelf Incharge makes a LPO (Local Purchase Order), or a Invoice
for the warehouse totally based on his experience and his calculation.
There are 5 steps in Inventory Management & Control:
1. Identification of need to make a Purchase Order.
2. Issuing of a Purchase Order.
3. Delivery of the Purchase Order.
4. Stocking of the product in shelf & in the back office.
5. And making the product available for sale.

STEP 1:
Identification of need to make a Purchase Order (PO):
This is the most basic and the most crucial part of Inventory Control,
because if we are not able to identify the basic need to make a Purchase
Order then it would be really very difficult rather impossible to manage
Inventory and run a store in a appropriate manner.

53
 At TCS the need to make a Purchase Order is identified by a shelf in-
charge (a person who looks after the products in a certain number of shelves)
totally based on his experience. i.e he calculates in his mind the average
number of products that are sold in a week and checks the number of
products available in the store and if he find a need to make PO then
accordingly he would make a PO.

STEP 2:
Issuing of a Purchase Order:
Once the need to make a PO is identified then comes the procedure to
make a PO. Now in this case there are two conditions:
1. That the product is to be ordered from the Local Supplier.
2. The product is to be ordered from the Companies Warehouse.
In both the cases the procedure for making a PO would differ. Let us
consider both the cases one by one.

1. PO for Local Supplier:

In this case the representative from the Local Supplier comes into the
store on a certain day, and he asks the shelf in-charge the products that are
required for that particular week. The shelf in-charge according to his
calculation and experience gives the representative a list of products to be
delivered. Then the representative shows the list to the IT section and there a
LPO (Local Purchase Order) in the name of the respective vendor is
produced. From here the LPO is taken to the Store Manager for
confirmation, and once the Store manager confirms the LPO then the LPO is
dispatched to the respective vendor for delivery.

54
2. PO for Warehouse:
In this case the product to be ordered is not available in the local
market the product needs to be Imported or it is purchased by the company
and then distributed into the stores, for this type of products there is a
separate method of making PO.

Here the shelf in-charge identifies the need to issue a PO and then
makes an invoice and sends it to the Central Warehouse of the company.
Before sending the invoice it has to be verified by the Store Manger, and
once the verification & confirmation is done then the invoice is delivered to
the warehouse, and after a specific period the goods are dispatched.
In this case there is no representative of the supplier, the shelf in-charge
himself has to issue a PO.

At the end of every week the store receives a invoice from the
company containing all the details of the LPO’s made & another list
containing products ordered from the warehouse, thus at end of every week
there is a check on the LPO’s & Invoices.

STEP 3:
Delivery of the Purchase Order:
On receiving the LPO or Invoice from the store, the supplier or the
warehouse dispatches the list of products to the store. On the arrival of these
products at the store the person at the receiving area checks the products,
this checking is done by simple technique of Visual Examination or by the
method of Random Sampling. The in-charge person signs on the invoice and
only then the products can enter the store. In case during examination

55
products are found missing or damaged those respective products are
rejected and sent back to the supplier or ware house and this is marked on
the invoice that the representative of the supplier brings.

STEP 4:
Stocking of the product in shelf & in the back office:
After entering the store the products are brought into the storing
section where in the products are stored in the respective conditions in which
they are to be stored;
example: Fish would go into the Cold Storage Section, Toiletries would go
into the Dry section, Vegetables & fruits would go into the Fresh Section,
etc. Once the products are placed at their respective places then the products
can be brought to the shelf as and when required.

STEP 5:
Making the Product Available for Sale:
After the product has reached the back office of the store then the
shelf in-charge with co-ordination with the store manager decides a place for
displaying the product for better sales. Here many times the product needs to
be placed at a particular shelf only because that space has been rented to that
company for that product. Many times there are certain “offers” that are
given by the company to attract customers the store manager has to see to it
that the “offer” has been displayed properly and the price tags have been put
up in order.
Even in this step there is no scientific method to support the actions
all the actions are performed totally on “experience”. Thus this analysis
shows that there has to be a scientific method to support the actions of the

56
staff. The staff needs to be made aware about various Inventory
Management & Control Systems that are available in the market or the
methods that they can use to make the Inventory Storage more effective.
From the above analysis (reorder analysis) it can be seen that even after not
having any scientific base line, the staff of TCS is doing a considerable job
in making exact reorders, but still the proportion of making shorter reorder
i.e running the product into a out of stock situation is very high.
Thus by using a scientific & technical base for Inventory Management &
Control System TCS could do wonders to its turnover.

57
 ANALYSIS FOR CUSTOMER SREVICE

EXCELLEN
AVERAGE T
11% 21%

The quality of the products

available at TCS is really good
as 70% of the customers said
GOOD
68%

EXCELLENT GOOD AVERAGE

EXCELLEN
POOR T
AVERAGE
3% 18%
16%

The variety of the product

at TCS is very good as
63% of the customers said
GOOD
63%

EXCELLENT GOOD AVERAGE POOR

58
 NO
4%

96% of the customers said

that the store was clean
YES
96%

YES NO

NO
8%

92% of the customers said that the

parking provided for us was
sufficient & appropriate.
YES
92%

YES NO

59
 POOR
A VER A G E E XC E LLE N
1%
11% T
27%

61% of the customers said that the

overall appearance of the staff
members of TCS is good.
GOOD
6 1%

EXCELLENT GOOD AVERAGE POOR

NO
20%

80% of the customers said

that the signages in the store
were informative. YES
80%

YES NO

60
 EXCELLEN
AVERAGE T
24% 18%

58% of the customers said

that the visibility and shelf
space arrangement was good.

GOOD
58%

EXCELLENT GOOD AVERAGE

TELE-
CALLING FLYERS
2% 26%

47% of the customers said that NEWS

they have come to know about PAPER
47%
the offers at TCS through
newspaper, 26% by flyers &
25% by mouth publicity. MOUTH
PUBLICITY
25%

FLYERS MOUTH PUBLICITY

NEWS PAPER TELE-CALLING

61
FEMALE
44%

56% of the customers were

female and 44% were male.

MALE
56%

M ALE FEM ALE

62
ANALYSIS HAS BEEN DONE ON THE BASES OF:

 The Sample Size considered for this analysis is 5 sub categories of

each main category.
 Thus the Population for the analysis becomes 20 different products
with 20 different weekly sales figures, & thus requiring 20
different reorder schedules.
 The information give by the staff at TCS is correct and accurate.
 The values i.e in case of capital are in terms of Dirham.
 The Stock was measured on Monday 30th July 2007.
 A week is considered from Sunday to Saturday.
 The analysis has been done under certain time constraint.
 For analysis of customer service at the store random sample of 100
customers per store has been done and the analysis has been don
on the basis of the answers that the customers has submitted,
corresponding to the given questionnaire.
 The stock taking has been at “Safa Park” branch of T. Choithram
& Sons. And the same data has been generalized.
 Questionnaire for customer service has been filled up at various
branches of TCS, and the same have been used as a base for
analysis of customer service.

63
FINDINGS

64
 FINDINGS

From the research that I have conducted I have come across the following
findings:
 Awareness among the Staff of TCS regarding modern Techniques of
Inventory Management & Control System needs to be updated.
 Even after not having any Scientific or Technical Base the staff at
TCS perform a fabulous job in maintaining considerable standards for
inventory management.
 In the present system there are areas where the company needs to pay
more attention.
 Every often it so happens that the products reach the store a bit too
late, i.e the supply chain management of the company needs to be
upgraded.
 The percentage of shrinkage due to employee theft is considerable.
 The receiving area at many stores is not up to the mark.
 The supply chain management is very weak, which results in products
getting out of stock.
 Every store of TCS is designed on the basis of demand patter of the
customers arriving at that store.
 The product availability at TCS is commendable.
 Some stores of TCS face a parking problem.
 The offers given to the customers are repeated every time.
 Most of the customers have come to know about the offers through
News papers and Flyers but less amount of customers have came to
know through Tele-calling.

65
 Satisfaction level of existing customers is satisfactory, however for
the future prospects more changes and efforts have to be taken.
 There is a huge potential of TCS as they have the maximum branches
in Gulf as compared with others.
 Most of the customers found the store hygiene up to the mark.
 In almost all stores a grid layout of store layout has been used which
helps the product to be displayed very effectively.
 The availability of products is satisfactory.
 The people do not find any problem in finding the products they want,
& the prices of the products are very clearly and effectively visible.

66
RECOMMENDATIONS

67
 RECOMMENDATIONS

From the analysis conducted so far I suggest the following

Recommendations:
 The staff should be trained to use new system of Inventory Control
system.
 Even after not using any scientific or technical base the staff is so
efficient in giving exact figure of reorder, then if given a good
technical & scientific support the store could reach great heights.
 The receiving section at some stores needs to be upgraded.
 The manual inspection system that is followed could be replaced with
electronic scanner system.
 For the reorder system instead of depending on staffs experience the
company should go for technical (automatic) reorder.
 More distribution of flyers in Newspapers should be there with which
the customers will be able to know the offers.
 There should be new offers everytime.
 Tele-calling should be done to the customers to inform them about the
new offers.
 More focus should be given on the advertisements of TCS.
 Hoardings should be put up in the key areas of the city.
 SMS should be given to the customers about the new offers.
 In-store buzz should also be conducted at each store of TCS

68
 The most important recommendation is the number of TCS members
should be increased, and more number of trained staff should be
recruited.
 More customers should be converted into TCS members

S.W.O.T ANALYSIS

69
 S.W.O.T ANALYSIS

STRENGTH

 Limited competition.

 Good reputation of the company (T. Choithram & Sons.)

 Quality of service.

 Highly cooperative, experienced and efficient staff & crew members.

 Exclusive Products.

 Use of modern technology like credit card billing & loyalty

progrramme.

 Wide range of products to suit all customer segments.

 Maximum number of branches (Approx.27)

WEAKNESS

 Target customer base very small.

 No presence in semi urban sector.

70
  Promotional campaigns are nearly absent.

 Less advertising efforts.

 At Some times products are out of stock.

 Weak supply chain management.

 Offers are repeated commonly.

OPPORTUNITIES

 Can build a strong distribution network to trap the untouched market.

 Customer education will improve the customer base.

 Increasing awareness will result in increase in customer base.

 None of the supermarkets have 27 branches in U.A.E..

 No of competitor’s is increasing very fast, especially In Dubai.

 By making some good promotional efforts TCS can gain more

number of customers who will be loyal.

THREATS

 Competition with big giants like LuLu, Spinys, Al Madina Super

market Etc.

71
 Challenges posed by other retailers in the market.

 Customer may shift to other supermarket.

 Lower customer base may hinder prompt service.

BIBLOGRAPHY

72
 Bibliography

 Research Methodology, methods and techniques by C.R.Kothari-2nd

edition.
 TCS Brochures & Flyers.
 Web Search Engine

73
ANNEXURE

74
 COMPREHENSIVE STUDY OF THE INVENTORY
MANAGEMENT SYSTEM AND ITS IMPACT ON COST AT
‘TCS’

QUESTIONNAIRE

1. What is the stores average stock in hand?

2. What is the time period after which a regular inventory check is done
in the store and in the warehouse?
Daily Weekly Monthly

3. How much time is given to stock taking and how many people are
employed for it?

4. Do we follow the procedure for annual stock taking?

Yes No

5. Who makes the following decisions:

-What to store?
-How much to store?
-When to store?
-Where to store?

75
6. What is the procedure that is followed stock taking and reordering?

7. What is the procedure to calculate reorder point?

8. In the process of stock taking, inventory control, and reordering when

does the store manager come into action?

9. Who issues the Purchase Order (PO)?

10.What are the documentations required for making a PO?

11.What is the procedure followed to make a purchase order, for local

supplier and for imported goods?

12.What is the procedure followed after the PO has been received?

76
13.What system do we follow for Sales Documentation?

14.Do we observe seasonal sales?

Yes No For Some Products
15.Is the supply and availability of products affected by seasonal
variation? If yes how do we keep a check on it?

16.What is the % share of fresh and perishable goods in the entire

inventory?

17.What is the % amount of perishable goods that are produced by us and

that is purchased from others?

18.How is the inventory check for perishable goods done?

19.On what basis is a vendor selected for a certain commodity?

77
20.Do we have a rating system for our vendors? If yes on what scales are
the rated?

21.Do we observe inventory shrinkage? If Yes, how much of it is due to

-Shoplifting.
-Employee Theft.
-Inventory record errors.

22. How are returns and damages handled?

23. At the end of each accounting year approximately how much

inventory is found unaccountable? (in %).

24. Do we have a duplicate receipt of the goods that we sale at the cash
Counter?

25. Do we follow a regular check between the cash counter sales and the
Inventory records?

26. Do we follow any special techniques to increase the durability/expiry

of certain commodities?

27. What suggestions do you have to improve the inventory management

of the store?

78
 QUESTIONNAIRE FOR CUSTOMER SERVICE

Dear Customer,
In an effort to serve you better, we request you to fill in the
following questionnaire.
1. How often do you shop at Trumart?

(Weekly / fortnightly / monthly / quarterly / half yearly)

2. Are you a Trusmart member? (yes/no)

3. How do you find the quality of the products?

(Excellent / good / average / poor)

4. How did you find the variety of products?

(Excellent / good / average / poor)

5. Did you come across any difficulty while purchasing or billing?

(yes/no)
Reason: _________________________________________
79
 _________________________________________.

6. Do you wish any products to be added in our store?

(yes/no)
Which: __________________________________________

7. Was the store clean? (yes/no)

8. Was the parking space provided to you appropriate?

(yes/no)

9. How was the overall appearance of the crew members?

(Hair, dressing, body language, communication skill)
(Excellent / good / average / poor)

10. Were the signage’s informative? (yes/no)

11. How was the visibility and shelf space arrangement of the store?
(Excellent / good / average / poor)

12. How did you come to know about the offers?

(Flyers / mouth publicity / news paper / Tele-calling)
Other: _____________________________________________.

13. Any other observations:

________________________________________________________
________________________________________________________
___________________________________.
80
 14. Any other suggestions:
________________________________________________________
________________________________________________________
___________________________________.

Personal information:

Name: __________________________________________.

Age: ________. Sex: (Male / Female)

Address: ___________________________________________
___________________________________________.

Contact no. : ________________. Mobile: _______________.

“THANK YOU”

81
PHOTOGRAPHS OF T. CHOITHRAM AND SONS

82
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84
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