CHAPTER-

1
(
INTRODUCTI
ON)
I
NTRODUCTI
ONOFI
NVENTORYMANAGEMENT:

I
nvent
oryManagementi
spi
vot
ali
nef
fect
iveandef
fi
cientor
gani
sat
ion.I
tisal
sov
itali
ncont
rolof
mat
eri
alsandgoodst
hathav
etobehel
dforl
aterusei
nthecaseofpr
oduct
ionorl
aterexchange
act
ivi
ti
esi
n t
he caseofser
vices.Thepr
inci
palgoalofi
nvent
orymanagementi
nvol
veshav
ingt
o
bal
ancet
heconf
li
cti
ng economi
csofnotwant
ingt
ohol
dtoomuchst
ock.Ther
eby hav
ingt
oti
e
upcapi
talsoast
ogui
deagai
nstt
hei
ncur
ri
ngofcost
s such as st
orage,
spoi
l
age,
pil
fer
ageand
obsol
escencesandt
hedesi
ret
omaket
hei
tem orgoodav
ail
abl
ewhenandwher
erequi
red(
qual
i
ty
andquant
it
ywi
se)soasav
ertt
hecostofnotmeet
ingsuchr
equi
rement
s.I
nvent
ory pr
obl
ems of
t
oogr
eatorsmal
lquant
it
iesonhandcancausebusi
ness f
ail
ures.I
famanuf
act
urer
sexper
iences
st
ockoutof acr
it
icali
nvent
oryi
tem pr
oduct
ionhal
tscoul
dresul
ts.Mor
eov
er,
ashopperexpect
s
t
her
etai
l
erl
osesacust
omernotonl
yont
hati
tem butal
soonmanyot
heri
temsi
nthef
utur
e.The
concl
usi
on one mi
ghtdr
aw i
sthatef
fect
ivei
nvent
ory managementcan make a si
gni
fi
cant
cont
ri
but
iont
oacompany
’spr
ofi
taswel
lasi
ncr
easesi
tsr
etur
n ont
otal
asset
s.

I
tist
hus managementof t
hiseconomi
csofst
ockhol
ding, t
hat i
sappr
opr
iat
elybei
ngr
efer
sto
asi
nvent
orymanagement
.Ther
easonf
orgr
eat
erat
tent
iont
oinv
ent
orymanagementi
sthat t
his
f
igur
e,f
ormanyf
ir
ms,i
sthel
argesti
tem appear
ingont
heasset
ssi
deoft
hebal
ancesheet
.
Essent
ial
l
y,I
nvent
orymanagementwi
thi
nthi
scont
extoff
oregoi
ngf
eat
uresi
nvol
vespl
anni
ngand
cont
rol
.Thepl
anni
ngaspect
sinv
olv
esl
ooki
ngaheadi
nter
msoft
hedet
ermi
nat
ioni
nadv
ance:

Whatquant
it
yofi
tem t
oor
der
;and
How of
tendoweor
derf
ort
hem mai
ntai
ntheov
eral
lsour
ce-st
ock si
nkcoor
dinat
ioni
nan
economi
cal
l
yef
fi
ci
entway
?

The cont
rolaspect
,whi
ch i
s of
ten descr
ibed as st
ock cont
rol
sinv
olv
es
f
oll
owi
ngt
hepr
ocedur
es,set
upatt
hepl
anni
ngst
aget
oachi
evet
heabov
eobj
ect
ive.Thi
smay
i
ncl
udesmoni
tor
ingst
ockl
evel
sper
iodi
cal
l
yorcont
inuousl
yanddeci
dingwhatt
odoont
hisbasi
s
ofi
nfor
mat
ion t
hati
s gat
her
ed and adequat
ely pr
ocessed.Ef
for
ts mustbe made by t
he
managementofanyor
gani
sat
iont
ost
ri
keanopt
imum i
nvest
mentoni
nvent
orysi
ncei
tscostmust
moneyt
oti
edowncapi
tali
nexcessi
nvent
ory
.Inr
ecentt
imesat
tent
ionwasf
ocusedont
he
dev
elopmentofsui
tabl
emat
hemat
icalt
ool
sandappr
oachesdesi
gnedt
oai
dthe deci
sion-
maker
i
nset
ti
ngopt
imum i
nvent
oryl
evel
s.

Economi
cOr
derQuant
it
yLev
el(
EOQ)hast
husdev
elopedt
otakecar
eoft
he
weaknessemanat
ingf
rom t
het
radi
ti
onalmet
hodsofi
nvent
orycont
rolandv
aluat
ion,whi
cht
o
someext
enthaspr
ovedusef
uli
nopt
imi
zi
ngr
esour
cesandt
hus,mi
nimi
singassoci
atecost
s.
Fi
nanci
alanal
yst
ssoundedenoughwar
ningont
hedangerexposet
othel
ongr
unpr
ofi
tabi
l
ity as
wel
lascont
inui
ty ofbusi
nessconcer
nswheni
tsi
nvent
ori
esar
elef
tunmanaged.

MEANI
NGOFI
NVENTORYMANAGEMENT:

Themostobj
ect
iveoft
hei
nvent
orycont
roli
stodet
ermi
neandmai
ntai
nanopt
imum l
evelof
i
nvest
ment i
ninv
ent
ory
.Inv
ent
orymanagementandI
nvent
orycont
rolmustbedesi
gnedi
sto
meett
hedi
ctat
esofmar
ket
placeandsuppor
tst
he company
’sst
rat
egi
cpl
an.

I
nvent
orymanagementandI
nvent
orycont
roldonotmaket
hedeci
sionsormanageoper
ati
ons:
t
heypr
ovi
det
hei
nfor
mat
iont
oManager
swhomakemor
eaccur
ateandt
imel
ydeci
sionst
o
managet
hei
roper
ati
ons.

Thebasi
cbui
l
dingbl
ocksf
ort
heI
nvent
oryManagementsy
stem andI
nvent
orycont
rolact
ivi
ti
es
ar
e:

Sal
esFor
ecast
ingorDemandManagement

Sal
esandOper
ati
onsPl
anni
ng

Pr
oduct
ionPl
anni
ng

Mat
eri
alRequi
rementPl
anni
ng

I
nAccount
ingLanguage i
nvent
orymeans t
hest
ockoff
ini
shedgoods
onl
y.I
nmanuf
act
uri
ngconcer
ns,
itmayi
ncl
udes r
awmat
eri
als,
wor
k-i
n-pr
ogr
essandst
oreset
c.,

DEFI
NTI
ONOFI
NVENTORYMANAGEMENT:

Accor
dingt
o“Kot
ler
”(2000)
,Inv
ent
orymanagementr
efer
stoal
lact
ivi
ti
esi
nvol
ved i
ndev
elopi
ng
andmanagi
ngt
heact
ivi
ti
esi
nvol
vedi
ndev
elopi
ngandmanagi
ngt
hei
nvent
oryl
evel
sof Raw
mat
eri
als,Semi–f
ini
shedmat
eri
alsandFi
nishedgoodssot
hatadequat
esuppl
i
esar
eav
ail
abl
e
andt
hecost
sofov
erorunderst
ocksar
elow.

Accor
dingt
o“Mor
ri
s”(
1995)st
ressedt
hati
nvent
orymanagementi
nit
s
br
oadestper
spect
ivei
stokeept
hemosteconomi
calamountofoneki
ndofasseti
nor
dert
o
f
aci
l
itat
eani
ncr
easei
nthet
otalv
alueofal
lasset
s oft
he or
gani
zat
ion-
humanandmat
eri
al
r
esour
ces.

Accor
dingt
o“Dr
ury
”def
inedi
nvent
oryasast
ockofgoodst
hati
smai
ntai
nedby
t
hebusi
nessi
nant
ici
pat
ionofsomef
utur
edemand.
 OBJECTI
VESOFTHESTUDY:
Thi
sst
udyi
sbasedont
hef
oll
owi
ngobj
ect
ives:

 Tosuppl
yther
equi
redmat
eri
alscont
inuousl
y

 Tomai
ntai
nsy
stemat
icr
ecor
dofi
nvent
ory

 Tounder
standopt
imum t
heef
fi
cientusageofI
nvent
ory.

Tor
educel
osses,
damages,
andmi
sappr
opr
iat
ionofmat
eri
als

 Tomakest
abi
l
ityi
npr
ice
NEEDFORTHESTUDY:
Thestudyofinvent
orymanagementistovisual
i
ze thef
utur
e outcomespart
icul
arl
yon f
inanci
al
aspect
s hencether
eisa needforstudyi
ng theimport
anceofinvent
orymanagementi
nt oday
's
busi
nessscenar
iowithr
espectt
oVIJAYADAI RY(KDMPMACUL)

Thi
sstudy helpstounderstand t
hebasi cconceptofinvent
orymanagementanditsvit
al
rolei nmi nimi
singthecost andmaxi misi
ng pr ofit
s.Invent
oryManagementisrequir
ed at
diff
er entlocat
ionswit
hinaf actor
yandprotectstheregularandplannedcour
seofproducti
onat
disturbanceoccurri
nginrunningoutofmateri
alsorgoods.HenceIchoosethetopi
casmypr oj
ect
atVI JAYADAI RY(KDDMPMACUL)
SCOPEOFTHESTUDY:
I
nvent
orybecomes mor
e power
fuldev
icei
nVI
JAYADAI
RY(
KDMPMACUL)t
ocont
rol
l
ingt
he
or
gani
sat
ionalact
ivi
ti
es and aut
omat
ic coor
dinat
ion of t
he act
ivi
ti
es t
hrough t
he
pr
edet
ermi
ned t
arget
s.Agai
ntheyv
isual
i
ze t
hef
utur
eout
comes par
ti
cul
arl
yon f
inanci
al
aspect
s hencepr
edi
cti
onoft
he per
iodahead andpr
obl
emsandal
ter
nat
ivesol
uti
onst
osol
ve
t
hem i
ncr
eases t
hemanager
ial
abi
l
iti
es.

Fi
rst
,toknowhowmuch i
nvent
oryi
stobemai
ntai
nedi
nandt
oensur
econt
inui
tyofsuppl
yint
he
ev
entofi
ncr
easeei
theri
ndemandorl
eadt
ime.Thi
squant
it
yofi
nvent
oryi
scal
l
edsaf
etyst
ock.
Ther
eisnouni
ver
sal
l
yusedf
ormul
afordet
ermi
ningsaf
etyst
ockquant
it
y,butsuggest
edar
isk
av
ersecal
cul
ati
ons.

Secondt
oknow whent
oreor
der
ingi
nmat
eri
alf
ori
nvent
oryi
nVI
JAYADAI
RY(
KDMPMACUL)
Gener
all
ythi
spoi
ntoft
imei
sdet
ermi
nedwhent
hequant
it
yofmat
eri
alsi
nst
ockdecr
easest
o
cer
tai
nlev
el,
cal
l
edt
her
eor
derpoi
nt.
METHDOLOGY:
Themet
hodol
ogyofcoll
ect
iondat
aisani
mpor
tantpar
toft
hest
udy
.Thesour
cesofdat
acanbe
di
vi
dedi
ntot
woparts:

1.PRI
MARYDATA

2.SECONDARYDATA

PRI
MARYDATA:Inf
ormation of thepri
marydatafort
hestudycol
l
ect
edbypersonali
nter
act
ion
oft
heof
fi
cer
s andpersonsofvar
iouslevel
sinv
olv
edinInv
entor
yManagement
.

SECONDARYDATA:Thesecondar ydataisrequi
redtostudy is coll
ect
edfr
om theannual
report
spubli
shedVIJAYADAIRY(KDMPMACUL)f rom 2013-
2017andal
sodatar
equi
red fort
he
studyiscol
l
ectedf
rom magazi
nes,newspaper
sandinter
net.
LI
MITATI
ONSOFTHESTUDY:

 Thest
udyi
sconduct
edwi
thi
nsuf
fi
cientdat
aav
ail
abl
eandanal
ysi
swasdoneaccor
dingl
y.

 Theanal
ysi
sismadebei
ngont
hef
igur
espubl
i
shedi
ntheannual
repor
tsoft
hecompany
.

 Mostofthei
nfor
mati
onhasbeenkeptconf
ident
ialandassuchi
snotpassedonas par
tof
t
hepol
i
cyofthecompany
.

 Thest
udyi
sbasedont
hef
inanci
aldat
aoft
hepastf
ivey
ear
sonl
y
 CHAPTER-
2
I
NDUSTRYANDCOMPANYPROFI
LE
DAI
RYI
NDUSTRYI
NINDI
A
I
ndi
ahast
hewor
ld’
slar
gestcat
tl
e&Buf
fal
opopul
ati
onsadapt
edt
otr
opi
calel
i
mat
e&
poornut
ri
ti
on&env
ironment
.Acct
oLi
vest
ockcensus1982,
Indi
a’
sbov
inepopul
ati
onwas191
mi
l
li
oncat
tl
e&69mi
l
li
onbuf
fal
oes.Mi
l
kpr
oduct
iongi
vesempl
oymentt
o70mi
l
li
ondai
ry
f
armer
s.I
nter
msoft
otalpr
oduct
ionI
ndi
aranks2nd t
oUSAwi
thapr
oduct
ionof71mi
l
li
on
t
onsi
n1997-
1998.Thepr
oduct
ionofv
ari
ouspr
oduct
sin2002,
428(
000met
ri
ctons)

APDDCFwasf
ormedi
nOct1981t
oimpl
ementoper
ati
onf
lood-
IIpr
ogr
am t
hrough
i
nvol
vementofpr
oducer
sinor
gani
zi
ngmi
l
kpr
oduct
ionpr
ocur
ementpr
ocessi
ng&i
twi
l
llow
duet
orapi
dpopul
ati
ongr
owt
h.I
twas178gr
am/dayi
n1990.Ther
ewasonl
yani
ncr
easeof50
gr
amsperdayf
rom 1980-
90.I
tisexpect
edt
hatmi
l
kav
ail
abi
l
itywi
l
lreach213gr
am/
capi
ta/
day
by200A.
Dasagai
nst300sci
ent
ist
.TodayI
ndi
aranksf
ir
sti
nMi
l
kpr
oduct
ioni
nthewor
ld.

Dai
rydev
elopmenti
nIndi
a:

I
ndi
ahast
hewor
ld’
slar
gestcat
tl
ebuf
fal
o popul
ati
onadapt
edt
otr
opi
calcl
i
mat
e& poor
nut
ri
ti
on&env
ironment
.

ACCt
oli
vest
ockcensus1982,
Indi
a’
sbov
inepopul
ati
onwas191mi
l
li
on&69mi
l
li
onbuf
fal
oes.
Thef
orecastf
or2000A.
Dis204mi
l
li
oncat
tl
e&78buf
fal
oes.

Dai
rydev
elopmenti
nIndi
arecei
vedaf
il
li
paf
teri
ndependencewheni
ndust
ri
ali
zat
ion&
awakeni
ngwar
rant
edt
heest
abl
i
shmentofor
gani
zedmi
l
kcol
l
ect
ion,
processi
ngdi
str
ibut
ionof
mi
l
ktocat
est
heneedsoft
heexpandedur
banpopul
ati
on.Pl
anneddev
elopmentofdur
ingwas
1stt
akenupi
nthe1st5y
earpl
an(
1951-
56)
.Themai
ndet
err
entf
act
orsf
armi
l
kpr
oduct
ionwas
i
nadequat
eofsui
tabl
emar
ket
ingst
ruct
urei
nther
uralar
eas.Mi
l
kwasbei
ngmar
ket
edi
nthe
f
orm ofgheewhi
chdi
dnotpr
ovi
desuf
fi
cienti
ncomet
othef
armer
stot
akeupt
hedar
ing.I
n
mostoft
hest
atesl
argesdai
ri
esar
easpr
oduces&Ur
banmi
l
ktr
eat
mentuni
ts.Someoft
he
dai
ryuni
tsal
soest
abl
i
shedachai
noft
ri
llcol
l
ect
ion&chi
l
li
ngcent
ersi
nther
uralar
east
o
aboar
dnecessar
yfaci
l
iti
esf
orhandl
i
ngmi
l
kinl
argev
olume& f
orl
ongdi
stancet
ranspor
t
wi
thoutspoi
l
age.Thesepr
ocessi
ngcent
ershav
ehadast
imul
ati
ngef
fectont
hedai
ryi
ndust
ry
i
nthecount
ry.

I
ndi
ahaswor
ld’
slar
gestcat
tl
epopul
ati
onhowev
er,percapi
talcat
tl
epopul
ati
oni
nver
y
l
esscompar
edt
o dev
elopednat
ions.Dai
ryf
armi
ngi
sregar
dingnat
ions.Dai
ryf
armi
ngi
s
r
egar
dingasasubsi
diar
ynowi
thasbecomeani
mpor
tantagr
obusi
ness.

Fi
rstdai
ryf
armi
sest
abl
i
shedbymi
l
itar
yatAl
l
ahabadi
n1989,Br
it
isht
roopsgotmi
l
k
suppl
i
esf
rom t
hatf
arm.I
tal
soor
gani
zedcr
ossbr
eedi
ngwi
thEur
opeancat
tl
ebr
eeds.

I
ndi
aisacount
ryofv
il
lagewher
efar
mer
shav
esmal
llandhol
dings.Moneyl
ender
s
bor
rowmoneyatv
eryhi
ghi
nter
estr
ates.Theexpl
oit
edt
hef
armer
swhower
epoor
.

Asar
esul
tasl
argenooff
armer
sinpune& Ahmednagaropenhost
il
it
iesagai
nst
money
lender
sin1879.Subsequent
lyl
andi
mpr
ovementact1883,&agr
icul
tur
eact1884wer
e
passedt
oadv
ancedl
oansatr
easonabl
erat
esofi
nter
estt
ofar
mer
s.Thegov
ernmentr
eal
i
zed
t
hatt
hecooper
ati
vecr
edi
tsoci
etyactwasessent
ial
.Butenact
edhadf
oll
owi
ngshor
tcomi
ngs.

1) Onl
ycr
edi
tsoci
eti
esar
eresi
sted

2)Cl
assi
fi
cat
ionoft
hesoci
eti
esi
ntour
ban&r
ural
wassci
ent
if
ic.

3)I
twassel
ect
edr
egar
dingdi
str
ibut
ionofpr
ofi
tthusanot
heractnamedt
hecooper
ati
ve
soci
eti
esAct
1912wasenact
ed.Theactt
ool
car
eofcr
edi
tundert
hesuper
visi
onofcent
ral
bank.

Thecooper
ati
veuni
onsr
emai
nedcont
rol
subj
ect
s.I
nthey
ear1919cooper
ati
vesoci
eti
es
becomeast
atesubj
ect&f
ellwi
thi
nthescopeofpr
ovi
sionl
egi
slat
ive.Eachpr
ovi
ncesst
ated
f
ormul
ati
onsoft
hei
rrequi
rement
s.Af
teri
ntendancet
hecooper
ati
vemov
ementmader
api
d
st
udi
es& gov
tadopt
edt
hepol
i
cyofpr
omot
ingofcooper
ati
vemov
ementf
arest
abl
i
shi
ng
economi
cwel
far
eint
hecount
ry.Thecooper
ati
vesect
orswasgi
venani
mpl
ementpl
acei
nthe
neweconomyandact
edasabal
ancebet
weenpr
ivat
esect
or&publ
i
csect
or.I
tbecomespace
wi
tht
hepr
ogr
essofmov
ement&t
her
eshoul
dbeuni
for
mit
yofcooper
ati
vesoci
etyAct1956
wasamended19t
imest
osui
tthechandi
ngci
rcumst
ances.Hencet
hegov
tofI
ndi
aappoi
nteda
commi
tt
eei
n1956t
orev
iewcooper
ati
veact
sindi
ff
erentst
ates&pr
epar
edamodel
bil
l
.

APDAI
RYDEVELOPMENTCOOPERATI
VEFEDERATI
ON(
APDDCF)

APDDCFwasf
ormedi
nact1981t
oimpl
ementoper
ati
onf
lood-
IIpr
ogr
am t
hroughact
ive
i
nvol
vementofpr
oducesi
nor
gani
zi
ngmi
l
kpr
oduct
ion,
procur
ementpr
ocessi
ng&mar
ket
ingon
‘
thr
eet
ier
’cooper
ati
vest
ruct
ureaspert
henat
ional
pol
i
cyofI
ndi
a.

Thet
hreet
ir
esy
stem consi
stsofpr
imar
ydai
ryi
soper
ati
vesoci
eti
esatv
il
lagel
evel
cooper
ati
veuni
onatdi
str
ictl
evel
&feder
ati
onatt
hest
atel
evel
.

Pl
anni
ngi
nvest
menti
noper
ati
onf
lood-
II

Pl
an–34.
43Cr
s

Pl
an–247.
53Cr
s

Pl
an–187.
00Cr
s

Pl
an–349.
17Cr
s

Pl
an–1166.
00Cr
s

Pl
an–600.
00Cr
s

Pl
an–1700.
00Cr
s

Mi
l
kpr
oduct
s:

Thesur
plusmi
l
kaf
termeet
ingr
equi
rementoft
hel
i
qui
dmi
l
kisbei
ngconv
ert
edi
nto
pr
oduct
sli
kef
oodmi
l
kpowder
,Ghee,
But
ter
,St
eri
l
izedmi
l
k,doodhpeda,
etc.Al
lthesepr
oduct
s
subj
ectt
ost
ri
ctqual
i
tycont
rol
bef
orebei
ngdi
spat
ched.

TheAPDai
ryDev
elopmentf
eder
ati
onhasgot6pr
oduct
smanuf
act
uri
nguni
tsi
nAP:
Namel
y:

1.Mi
l
kpr
oduct
sfact
ory,
Hyder
abad

2.Mi
l
kpr
oduct
sfact
ory,
Chi
tt
or

3.Mi
l
kpr
oduct
sfact
ory,
Nandy
ala

4.Mi
l
kpr
oduct
sfact
ory,
Proddut
oor

5.Sangam Dai
ry,
Vadl
amudi

6.Mi
l
kPr
oduct
sfact
ory
,Vi
j
ayawada

7.Mi
l
kpr
oduct
sfact
ory,
Nal
gondaRangar
eddy

8.Mi
l
kpr
oduct
sfact
ory,
Kar
im NagarDai
ry
Themar
ket
ingdi
vi
sionoft
hef
eder
ati
oni
sdoi
ngmar
ket
ingoft
hemi
l
kpr
oducedbyt
heabov
e
uni
ts.Publ
i
crel
ati
onadv
ert
isement
,tr
aini
ngar
econt
rol
l
edbyt
heJoi
ntDi
rect
or(
Trani
ng&
Mar
ket
ing)
.Themar
ket
ingwi
ngconsi
sts38member
sofempl
oyeespr
esent
ly.

MAJORDAI
RYPRODUCTSMANUFACTURESI
NINDI
A&THEI
RBRANDS

Company Br
ands Maj
orpr
oduct
s

Nest
le Mi
l
k-mai
dcer
alacMi
l
o, Sweent
ended
Lact
ogen,
&Ev
ery
day
. condensedmi
l
kpower
,
Mal
ted f
ood, Mi
l
k
powder
, & dai
ry
whi
tener
,Ghee & I
ce
cr
eam.

Ghee&I
cecr
eam

Mi
l
dfoodsLt
d Mi
l
kfood

Smi
tukl
i
neBeechem l
td Hor
li
cks,
Mal
tov
a,Vi
va Mal
tedmi
l
kfoodGhee
But
ter & Ot
her Bady
mi
l
kfoods

Guj
arat
h cooper
ati
ve Amul But
ter Ghee & ot
her
mar
ket mi
l
kpr
oduct
s.

Car
dbur
y Bour
nvi
ta I
nfantmi
l
kfoodmal
ted
mi
l
kfood

Br
it
anni
a Mi
l
kman Fl
avour
ed mi
l
k Ghee,
Mi
l
kpowderBi
scui
ts&
Ghee
Or
gani
zat
ionofadai
ryf
arm:

Ther
ear
emanyact
ivi
ti
esi
nvol
vedi
nsuccessf
ulr
unni
ngofadai
ryf
arm .manyoneoft
hese
act
ivi
ti
esi
sasi
mpor
tantasanyot
herf
orpr
ofi
tabl
edai
ryf
armi
ngcoor
dinat
ionofal
lthese
act
ivi
ti
esi
nadai
ryf
armi
sknownasor
gani
zat
ionoft
hedai
ryf
arm.

ManagementofAni
mal
s:

Thesesuccessesofdai
rydependupont
hegoodheal
thandwel
lbei
ngoft
hecowandbuf
fal
oes
mai
ntai
nedi
nthedai
ryandt
hei
rpr
oduct
ion.Thev
ari
ousaspect
stobeconsi
der
edar
e:

Housi
ng

Feedi
ng

Br
eedi
ng

Di
seasecont
rol
.

ManagementofLabour
:

Labouri
sbecomi
ngcost
lyandscar
ceandhenceor
gani
zat
ioni
sbecomi
ngmor
edi
ff
icul
t.The
f
arm shoul
dbesopl
annedt
hati
tshal
lbepossi
blet
ocompl
etel
ymanagewi
thf
ami
l
ylabour
.
Hi
redl
abourshoul
dbemi
nimum andusedonl
yforsuchoper
ati
onsassowi
ng,har
vest
inget
c.,
per
manentl
abouri
fempl
oyedshoul
dbemi
nimum butpr
ovi
dedwi
thal
lfaci
l
iti
esl
i
kehousi
ng
andshoul
dwel
lpai
dandl
ookedaf
tersot
hatt
heywi
l
lwor
kwhol
ehear
tedl
y.

ManagementofEqui
pmentSmal
ldai
ri
esmayhav
elessequi
pmentandmachi
ner
yli
ke
chi
l
li
ngpl
antpast
eur
izi
ngpl
ant
,tr
act
ort
rai
l
erhar
vest
er,
andsuchot
heragr
icul
tur
alequi
pment
s.
Thesehav
etobekepti
ngoodwor
kingcondi
ti
onsot
hatal
ldai
ryandagr
icul
tur
aloper
ati
onwi
l
l
goonnor
mal
l
ysot
hatal
ldai
ry&agr
icul
tur
aloper
ati
onswi
l
lgoonnor
mal
l
yandmi
l
kmaybe
t
ranspor
tedi
ngoodcondi
ti
onf
ormar
ket
ing.

Managementofmi
l
kandmi
l
kpr
oduct
s:

Thepr
ofi
tabi
l
ityofadai
rydependsupont
hef
armi
nwhi
cht
hemi
l
kisdi
sposedof
.Fl
uidmi
l
k
moneyt
hanmi
l
kpr
oduct
s.Sel
l
ingi
nci
ti
esf
etchesmor
emoneyt
hani
nsmal
l
ert
owns.Mi
l
k
t
ranspor
tedt
olongerdi
stancesmaycostmor
eont
ranspor
t.Ther
eis achanceofspoi
l
agei
f
mor
eti
mei
sal
l
owedbet
weenmi
l
kingandsal
eunl
essmi
l
kispast
eur
izedand pr
eser
ved
pr
oper
ly.

Recor
dKeepi
ng:

Recor
dkeepi
ngi
simpor
tanti
nadai
rywhi
chwi
l
lenabl
eust
oknowt
hatact
ualposi
ti
onoft
he
dai
ryi
nal
laspect
stoenabl
eust
opl
anpr
oper
lyr
ecor
dmayper
tai
ntoal
laspect
sofdai
ryi
ngv
iz,
f
eedi
ngbr
eedi
ngandmanagement
.Itwi
l
lenabl
ethef
armert
obr
eedt
hecowsi
nnt
imet
ogi
ve
bal
ancedr
ati
onsaccor
dingt
omi
l
dyi
eldt
oknow t
heact
ualpr
oduct
ionofmi
l
kofi
ndi
vi
dual
cows,
toknowpr
ofi
tandl
ossi
nthef
arm et
c.,

Oppor
tuni
ti
esi
ndai
ryf
armi
ng:

Dai
ryi
soneoft
hei
mpor
tantsi
debusi
nessesofni
net
yper
centoft
heagr
icul
tur
ist
sofour
v
il
lages.Acat
tl
erear
ingar
eanageol
dpr
act
ice&al
mostal
lthel
andhol
dingpeopl
ekeepone
agr
icul
tur
eoper
ati
ons.

Dai
ryent
erpr
isei
sanef
fi
cientandl
abouri
ntensi
vebusi
ness,
sot
hatt
heshal
efami
l
yof
t
hef
armeri
spr
essedi
ntoser
vice&t
heyar
eabl
etopr
oducesomepr
oduct
iver
esponsef
rom
t
hel
i
mit
edhol
ding,
uti
l
izi
ngagr
icul
tur
albypr
oduct
ive&wast
est
hatwi
l
lgot
owast
eot
her
wise.
Bot
hmal
es&f
emal
es&ol
dandy
oungcanbeusef
ull
yempl
oyedf
ordi
ff
erentt
ypesofwor
kina
dai
ryf
arm.

Thebypr
oduct
sofdai
ryi
ndust
ryl
i
keski
m mi
l
k,whenet
c.,canbef
edt
othei
rli
vest
ock.
Theski
m mi
l
kisofhi
ghv
alueandcanbeusedf
orpoul
tr
yandswi
nwi
thmor
epr
ofi
ts.Far
mer
s
whosel
lmi
l
kfati
nthef
orm ofbut
ten&gheepr
oduceski
mmi
l
k.Thi
scanbeef
fect
ivel
yusedi
n
f
eedi
ngpi
gsandpoul
tr
ysi
nceski
m mi
l
kisanex
cel
l
entsour
ceofpr
otei
n,mi
ner
alsandv
itami
ns.
Thedai
ryi
ndust
rycanal
sopr
ovi
dev
ari
ousj
oboppor
tuni
ti
est
othemi
l
li
onsoft
her
uraland
ur
banpopul
ati
onapar
tfr
om pr
ovi
dingt
hev
ari
ousoppor
tuni
ti
es.

Legal
standar
ds:

I
nIndi
athev
ari
ousst
andar
dsf
ordai
ryi
ndust
ryar
efor
mul
atedbyf
ouragenci
es.

1)TheI
ndi
anst
andar
dsi
nst
it
uti
on(
ISI
)

2)Cent
ral
commi
tt
eef
orf
oodst
andar
ds(
CCFS)

3)Di
rect
orat
eofmar
ket
ing&i
nspect
ion(
AGMARK)

4)Def
ensesser
vices
 Thesef
ouragenci
eshav
ether
edi
ff
erentspear
sofact
ivi
ti
es,al
thoughal
ltr
ytowor
kin
cl
osestcol
l
abor
ati
on.Thest
andar
dsbyI
SIar
etobeadopt
edonv
olunt
arybasi
s.TheCCFSi
s
st
atut
arybodywhi
chnotonl
ylay
sdownst
andar
dsf
orf
oodpr
oduct
sincl
udi
ngdai
rypr
oduct
s
butal
soenf
orcest
hesame.I
nconsul
tat
ionofCCFSt
heGov
tofI
ndi
a.,Mi
nist
ryofHeal
th
f
ramespr
event
ionoff
oodadul
ter
ati
onr
uleundert
hepr
event
ionoff
oodadul
ter
ati
onAct
.The
cur
rentsetofr
ulesar
eknownaspr
event
ionoff
oodadul
ter
ati
onr
ules1976underAGAMARK
schemepr
ovi
si
onexi
stsf
orgr
adi
nggheeonl
yamongstt
hedai
rypr
oduct
s.Thedi
ff
erence
ser
viceshav
ethei
rsepar
atest
andar
dsf
ort
hei
ronr
equi
rement
s.

St
andar
dizedmi
l
kismi
l
kwho’
sfat&SNFhav
ebeenadj
ust
edt
oacer
tai
npr
edet
ermi
ned
l
evelunderPFAr
ules(
1976)
.Thest
andar
dizedmi
l
kforl
i
qui
dconsumpt
ionshoul
dcont
ainsa
mi
nimum of4.
5&8.
5SNFt
hrought
hecount
ry.Thest
andar
dizat
ioncanbedonebypar
tl
y
ski
mmi
ngt
hef
ati
nthemi
l
kwi
thcr
eam separ
atororbyadmi
xtur
ewi
thf
reshr
econst
it
utedski
m
mi
l
linpr
operpr
opor
ti
ons.

DAI
RYI
NGI
NANDHRAPRADESH

Thepr
ogr
am ofdai
rywasi
nit
ial
l
yst
art
edwi
tht
hecommendabl
ehel
poft
heUni
tedNat
ions
i
nter
nat
ionalchi
l
dren’
semer
gencyf
und(
UNI
CEF)
,food&agr
icul
tur
eOr
g(FAO)
,Fr
eedom f
rom
Hungercampai
gnor
gofUK.Theseor
gani
zat
ionsassi
stedal
otofest
abl
i
shmentofdai
ryuni
ts
atHy
der
abad and Vi
j
ayawada a i
n 1967 & 1969,r
espect
ivel
ywhi
ch l
ed t
o pi
oneerdai
ry
dev
elopmentpr
ogr
am i
nAndhr
aPr
adeshl
atesasetofcool
i
ng&chi
l
li
ngcent
ershav
ebeenst
ep
t
ofeedt
hesegi
gant
icuni
ts

Themi
l
kpr
oducer
shav
ebeenf
aci
ngei
theral
otofpr
obl
emsi
nthepr
ocessofpr
oduct
ion&
mar
ket
ingofmi
l
kimpr
opert
ranspor
tfaci
l
itypoort
echnol
ogyadabsenceofpr
icepar
tfaci
l
ity
,
poort
echnol
ogyandabsenceofpr
icepar
ti
cul
arl
ydur
ingf
lushper
iodet
c.I
twasatt
hiscont
ext
t
heGov
tofAPhasv
iewedt
oconst
it
uteadai
rydev
elopmentcor
por
ati
on.Mor
ethan3.
5Lakhs
mi
l
kpr
oducer
sget20crRsperAnnualf
orsuppl
yi
ngofmi
l
kofwhi
ch69% oft
otalbenef
it
s
bel
ongst
osmal
l&mar
ginalf
armer
s,agr
icul
tur
all
abour&ot
herweakersect
ionoft
her
ural
communi
ty.

Wi
thal
ltheseef
for
tsbyAPPDC&NEEDt
odayAndhr
aPr
adeshhasanexcel
l
entpot
ent
ial
f
orpr
oduct
ionwi
thpr
ogr
essi
vef
armer
swhoar
emor
erecept
acl
etot
henew t
echnol
ogy&
sci
ent
if
icpar
ti
es.Theest
imat
edmi
l
kpr
oduct
ioni
s40Lakhsl
i
ter
sperday
.Todayast
rongwav
e
ofwhi
ter
evol
uti
oni
ssweepi
ngcr
eat
inganewhopeofel
i
minat
ingsoci
oeconomi
cinbal
ances.
A.
Pisposedt
obet
hedai
ryl
andofI
ndi
apl
ayi
ngani
mpor
tantr
oleont
heNat
ionalMi
l
kgr
id.
Wi
tht
hei
mpl
ement
ati
onofoper
ati
onf
loodI
Ipr
ogr
am i
nAPt
het
ampsofdai
rydev
elopment
hasgai
nedamoment
um pr
ovedat
hrustt
ocr
adi
cat
epov
ert
y&unempl
oymenti
nrur
alar
eas
br
oughtgr
ater
sawakeni
ng&conf
idenceamongt
hepr
oducer
stomanagert
hei
rownaf
fai
rs
t
hrough dai
ry cooper
ati
ve ofAP.The dai
ryf
eder
ati
on i
s mar
chi
ng a head wi
th dai
ry
cooper
ati
vest
oher
aldanewer
aofpr
osper
it
y.

Fi
nanci
alAssi
stance:

Thenat
ionalcooper
ati
vedev
elopmentcor
por
ati
on(
NCDC)hasbeenpr
ovi
dingf
ini
cal
Assi
stancet
odai
rycooper
ati
vesf
oror
gani
zat
ionmedi
um &smal
lsi
zeddai
rypr
ocessi
ngpl
ant
s
&mi
l
kchi
l
li
ngcent
ers.Thecor
por
ati
onhassanct
ionedat
otall
oanassi
stanceofRs.
6.33Lakh
f
orest
abl
i
shmentof29cooper
ati
vedai
ryuni
tscompr
isi
ng17chi
l
li
ngcent
ers&12cool
i
ng
cent
ers.

DAI
RINGI
NDUSTRYI
NKRI
SHNADI
STRI
CT

Dai
r es2ndpl
yoccupi acei
near
ningl
i
vel
i
hoodnextt
oagr
icul
tur
einKr
ishnadi
str
ict
,ast
he
cat
tl
eweal
thi
nthi
sdi
str
icti
smor
e.Thedai
rydev
elopmentuni
onaf
terchangi
ngdi
ff
erentMgt
sy
stemsi
snow st
eppi
ngi
ntocooper
ati
vesect
ort
ohel
pthesmal
l&backwar
dfar
mer
sby
maki
ngt
hem member
soft
heuni
on.

Kr
ishnadi
str
ictwi
thi
tscar
gear
eacl
aimsnot
abl
epl
acei
nagr
icul
tur
alact
ivi
ti
es.I
tisa
l
ongt
imeapt
it
udef
ort
heagr
icul
tur
alf
armer
stopossessdai
rycat
tl
eal
ongwi
thcat
tl
efar
agr
icul
tur
e.Thi
saspecthasdr
awnt
heat
tent
ionoft
heof
fi
cial
sofUNI
CEF,FAOandgov
tof
I
ndi
a.Af
teranal
yzi
ngt
hedai
rypr
ospect
s,t
heyexpr
essedt
hev
iew t
hatt
her
ecoul
dbebr
ight
f
utur
efordai
ryschemei
nKr
ishnadi
str
ict
.Accor
dingl
yasur
veywasunder
takent
oexpl
oret
hat
mar
ketf
orsur
plusmi
l
kin1960-
61.Thi
smar
kst
hef
ir
stst
epi
ndev
elopmentt
hedai
ryi
ndust
ryi
n
t
hest
ate.

I
NINDI
ADAI
RYPLANTSOPERATI
NG

Dai
rypl
ant
s Number Capaci
ty

000’
L/day

Cooper
ati
ve 2123 28394

Pr
ivat
e 403 32415

Ot
her
s 63 12170
 Tot
al 678 72979

(
Sour
ces:
companyr
epor
ts)

COMPANYPROFI
LE

DAI
RYI
NDUSTRYI
NKRI
SHNADI
STRI
CT:

Kr
ishnaDi
str
icti
sonr
iverant
rackofKr
ishnaabut
ti
ngBayofBengal
.Ithasat
otalar
ea
of8727sqkms.Themaj
oract
ivi
tyi
sagr
icul
tur
e.I
thas17.
39l
akhacr
esofl
andundercr
op
cul
ti
vat
ionofwhi
ch66%i
sir
ri
gat
ed.Thehumanpopul
ati
oni
s39.
54l
akhs.I
thas972i
nhabi
ted
v
il
lages.Thel
i
ter
acyi
nthedi
str
icti
s41.
71%.Thedi
str
icti
sknownf
ori
tsqual
i
tycat
tl
e.I
nmi
l
k
cat
tl
epopul
ati
oni
trankssecondi
nthest
ate.Buf
fal
oispr
edomi
nantmi
l
kani
mal
.

Or
gani
zeddai
ryi
nKr
ishnacommencedi
n1965wi
thi
ntegr
atedmi
l
kpr
ojectassi
stedby
t
heUNI
CEF.Ami
l
kconser
vat
ionpl
anti
s1.
25LLPD(
lakhl
i
ter
sperday
)wascommencedi
nApr
il
,
1969atVi
j
ayawada.

Thedai
ryi
ndust
ryi
nthedi
str
icthadi
tsbegi
nni
ngunderst
ategov
ernmentaspar
tof
ani
malhusbandr
yact
ivi
ty.I
ntegr
ati
onofdai
ryi
ndust
ryi
ntot
hedepar
tmentofani
malhusbandr
y
t
ookpl
aceper
iodi
cal
l
yint
henameofdi
ff
erentpr
oject
s:

I
ntegr
atedMI
LKpr
oject(
1960)

Dai
rydev
elopmentdepar
tment(
1971)

Andhr
aPr
adeshDai
ryDev
elopmentCor
por
ati
on(
1974)

A.
PDai
ryDev
elopmentCo-
oper
ati
veFeder
ati
on(
1981)

Real
i
zingt
hemi
l
kpr
oduct
ionpot
ent
ial
i
tiesoft
hei
nver
siont
rack,t
heGov
ernmentof
Andhr
aPr
adeshandGov
ernmentofI
ndi
awi
th“
UNI
CEF”assi
stancehasest
abl
i
shed“
Int
egr
ated
Mi
l
kpr
oject–Hy
der
abad-
Vij
ayawada”
,li
nki
ngt
hepr
oduct
ionandconsumpt
ioncent
ers.Thus
Kr
ishnadi
str
icthast
hedi
sti
nct
ionofst
art
ingor
gani
zeddai
ryact
ivi
ti
esbycommi
ssi
oni
ngami
l
k
chi
l
li
ngat“
PAMARRU”i
nFebr
uar
y,1965t
hef
ir
stoft
het
ypei
nAndhr
aPr
adesh.Or
gani
zat
ionof
co-
oper
ati
ve st
ruct
ure on ANAND PATTERN was i
nit
iat
ed i
n 1983.I
ttook compl
ete
managementofDai
ryact
ivi
ti
esoft
heKr
ishnaDi
str
ictf
rom Febr
uar
y1985.

Atpr
esent
,thedi
str
icthas534or
gani
zeddai
ryco-
oper
ati
vesoci
eti
eswi
thov
er92600member
pr
oducer
s.Ther
e ar
e 300 mi
l
kpr
oducer
s’associ
ati
on cent
erst
oo f
unct
ioni
ng besi
des co-
oper
ati
vesoci
eti
es.Theuni
oncol
l
ect
smi
l
kfr
om about2,
13,
896mi
l
kpr
oducer
scov
eri
ng815
v
il
lagesor
gani
zedt
hrough35mi
l
krout
es.Di
str
ictuni
onhas6mi
l
kchi
l
li
ngcent
ersoneeach
oper
ati
ngatpamar
ru,HanumanJunct
ion,Veer
anki
l
ock,Gudl
aval
l
aru,Chi
l
ikal
uandTi
ruv
uruwi
th
at
otalpr
ocessi
ngcapaci
tyof1.
70l
akhl
i
ter
sperday.I
thasmi
l
kpr
oduct
sfact
orywi
tht
he
f
aci
l
iti
est
omanuf
act
uredi
ff
erentmi
l
kpr
oduct
s.

Themi
l
kpr
oduct
sfact
oryatVi
j
ayawadahandl
essur
plusmi
l
kfr
om al
lcoast
aldi
str
ict
s.
About2.
10l
akhkgs/
daywi
thpeakt
ouchi
ng3.
18l
akhkgs/
day
.Thef
act
oryconser
vesf
ati
nthe
shapeofwhi
tebut
terusual
l
ytot
heext
entof1000M.
Tspery
ear
.

Uni
onmar
ket
sabout2,00,
000l
i
ter
s/daymar
ketmi
l
kto1l
akhf
ami
l
iesi
nthedi
str
ict
.It
manuf
act
urespr
oduct
sli
keGhee,
But
terMal
ail
addu,
dat
esKhov
a,But
terBur
fi
,Chocol
ateBur
fi
,
andDoodhpeda,Gheepr
oduct
s,ski
m mi
l
kpowder
,UHTMi
l
k(Tet
raBr
ik)
.Thesepr
oduct
sar
e
manuf
act
ured i
nthi
s dai
rywi
tht
he br
and name of“
VIJAYA”ar
e popul
arf
ori
ts qual
i
ty
t
hroughoutt
henat
ion.UHTmi
l
khasmar
ketatBombay
,Goa,Pune,Cal
cut
taandHy
der
abad.
New UHTpr
oduct
ssuchasst
eri
l
izedcr
eam,sl
i
m mi
l
k,Tr
ader
sfr
om count
iesl
i
keSi
ngapor
e
andBr
unei
pal
i
ngor
der
swi
tht
hedai
ryf
ormi
l
kpowder
.
 Uni
onmanuf
act
uresandmar
ketabout35t
ons/
dayofcat
tl
efeedbesi
des400MTS
mi
ner
almi
xtur
eperannum.Dai
ryco-
oper
ati
vesi
nvi
l
lageshav
egr
adual
l
ydev
elopmentt
radi
ng
sur
plusandt
hisaspectcoupl
edwi
thgov
ernmentschemesr
esul
ti
ngi
nest
abl
i
shi
ngt
hei
rown
bui
l
dingsi
n345v
il
lagesv
aluedatRs/
-2.
2cr
ores.

AnAspet
icpacki
ngst
ati
onwassetupi
nthemi
l
kpr
oduct
sfact
oryt
opack50,
000l
i
ter
s
ofl
ongt
hemi
l
k(UHTMI
LK)perday
.Uni
onhasal
so2cat
tl
efeedmi
xi
ngpl
ant
swi
that
otal
capaci
tyof50M.
T/day
.Pl
antt
oincr
easepr
ocur
ementt
otwol
akhl
i
ter
saday
.Vi
j
ayadai
ryi
s
t
heonl
yuni
texpor
ti
ngpr
oduct
stocount
ri
esl
i
keMal
aysi
a.

Kr
ishnami
l
kuni
oni
sadi
str
ictmi
l
kpr
oducerco-
oper
ati
vecamei
ntoexi
ti
ngi
nJul
y1983,
r
egi
ster
ed“
KRI
SHNA DI
STRI
CTMI
LK PRODUCERSCO-
OPERATI
VEUNI
ON LI
MITED”
.Itt
ook
ov
ert
hemanagementgoi
ngdai
ryact
ivi
ti
esKr
ishnadi
str
ictofAndhr
aPr
adeshdur
ingFebr
uar
y
1985.Kr
ishnami
l
kuni
oncur
rent
ly815f
unct
ionaldai
ryco-
oper
ati
onsi
nvi
l
lagesandi
ntr
oduced
f
rom v
ari
ouschi
l
li
ngcent
ersanddi
str
ictr
out
es.

RANKI
NGOFTHEDI
STRI
CTI
NANDHRAPRADESH

1)Pr ng………………3rd
ocessi

2)Mi
l
kpr
oduct
ion………….2nd

3)Mar
ket
i .2nd
ng……………….

Kr
ishnadi
str
icthasmi
l
kpr
ocur
ementr
angi
ngf
rom 45,
000kgst
o2,
00,
000kgs.perdayf
rom
1969t
o2014.Thedi
str
ictbei
ngbuf
fal
osconcent
rat
edhaswi
depr
ocur
ementf
luct
uat
ions.I
t
was consi
der
ed i
mmi
nentt
oreduce t
he seasonali
mbal
ance i
n mi
l
k pr
oduct
ion.New
pr
ogr
ammer
swer
edr
awnup.I
nduct
ionof“
X”br
edcowshasbeent
akenupsi
nce1990t
o
i
ncr
easemi
l
kpr
oduct
ionpot
ent
ial
l
y.Di
str
icthasv
erycl
oseani
malheal
thcov
eragebyt
he
ani
malhusbandr
ydepar
tment
.Thedi
str
ictco-
oper
ati
vesmi
l
kuni
on pr
ovi
dest
hef
oll
owi
ng
i
nput
stof
armer
sfori
ncr
easedmi
l
kpr
oduct
ion.

 Vet
eri
nar
yfi
rstai
dfaci
l
iti
es

 Ani
mal
vacci
nes&medi
cinesatsubsi
dizedpr
ices

 A.
I.
Faci
l
iti
es.

 Br
eadi
ngbul
l
s

 Fodderseedsatsubsi
dizedr
ates

 Pr
emi
xedcat
tl
efeed
 Cat
tl
einsur
anceat2/
3subsi
dy.

 Ext
ensi
onser
vices.

PROCESSI
NG:

Mi
l
k pr
ocessi
ng ofmi
l
ks i
tdone by past
uri
ng and chi
l
li
ng t
he mi
l
k atcer
tai
n
t
emper
atur
es.Thef
at% andchi
l
li
ngt
hemi
l
katcer
tai
ntemper
atur
es,t
hef
at% andSNF% i
s
st
andar
dizedaccor
dingl
yforv
ari
oust
ypesofmi
l
kissentt
obypr
oduct
ssect
iont
opr
oduce
v
ari
ouspr
oduct
s.

PRODUCTI
ON:

I
nthepr
oduct
ionsect
iont
hemi
l
kandmi
l
kpr
oduct
sar
epr
oducedt
heexcessmi
l
kis
conv
ert
edi
ntoski
m mi
l
kpowder(
SMP)
,But
tert
omeett
hedemandt
olear
nseasons.

SALES:

I
ndent
srecei
ved f
rom v
ari
ous boot
s and par
lor
s.Dependi
ng on t
he i
ndent
sthe
consol
i
dat
edr
epor
tsar
erai
sed.Theser
epor
tsar
esentt
ovar
ioussect
ions.Reconci
l
iat
ion
st
atement
sar
epr
epai
daccor
dingt
othei
ndent
sandt
hedet
ail
sofst
ockdel
i
ver
yar
emai
ntai
ned
f
orv
ari
ouspar
lor
s,boot
sandi
nst
it
uti
on.Andhr
aPr
adeshhaspr
omi
nentpl
acei
nthedai
ryof
I
ndi
a.Dai
ryandmi
l
ksuppl
yhasbeengi
veni
mpor
tancei
nthef
ivey
earpl
ansoft
hest
ate.Not
onl
ywi
thav
iewhashel
phadt
hef
armert
oimpr
ovet
hei
rincomehadi
tenabl
ed.

HI
STORYANDESTABLI
SHMENT:

Andhr
aPr
adeshhaspr
omi
nentpl
acei
ndai
ryi
ngI
ndi
a.Thecat
tl
eweal
thofAndhr
a
Pr
adeshi
sest
abl
i
shedatRs.220cr
oresand70%oft
otalofmi
l
kpr
oduct
sfact
ory
,Vi
j
ayawada
wascommi
ssi
onedan11.
4.1994.
Mil
kpr
oduct
sfact
oryVI
JAYAWADAi
shav
ingt
hesi
teof27.
3
acr
es.Atpr
esentt
hecostofUNI
CEFequi
pmentander
ect
ioni
sabout19.
4cr
ores(
1983-
1984)
.

TheKr
ishnadi
str
ictmi
l
kpr
oduct
sfact
ory
’sdat
eofr
egi
str
ati
oni
sin6.
7.1983.Aut
hor
ized
shar
ecapi
talRs.
10,
00,
00,
000,pai
dupshar
ecapi
talRs.
48,
12,
00,
000member
sofsoci
eti
es
r
egi
ster
ed518,
numberofsoci
eti
esaf
fi
li
ated.

I
n1979-
1980machi
ner
ywasest
abl
i
shedi
npr
ocessi
ngsect
ionschi
l
lercapaci
ty80,
000
l
i
ter
scapaci
tyt
anks.Nowt
heabov
ecapaci
tyi
simpr
ovedchi
l
lercapaci
ty.
 Mi
l
kpr
oduct
sfact
ory
,VI
JAYAWADAwascommi
ssi
onedon11.
04.
1969.Thi
sfact
oryhas
t
hei
nst
all
i
ngcapaci
tyof1.
25Lakhsl
i
ter
sperdayi
nthef
ir
stst
agewi
thpr
ovi
sionf
orexpansi
on
of3.
50l
akhl
i
ter
sperdayi
nthesecondst
age.Mi
l
kpr
oduct
sfact
ory
,VI
AJAYAWADAhast
he
di
sti
nct
ionofhandl
i
ngmi
l
ktoi
tscapaci
tyi
nthesecondy
earoper
ati
on.Apar
tfr
om handl
i
ng
mi
l
ktoi
tscapaci
tyi
nthesecondy
earoper
ati
on.Apar
tfr
om handl
i
ngmi
l
kKr
ishnadi
str
ict
,it
al
sohandl
edsur
plusmi
l
krecei
vedf
rom di
str
ictofVI
SAKAPATNAM,
EASTANDWESTGODVARI
,
PRAKASAM AND NELLORE.Thef
act
oryhadpackhol
dingdur
ing1982-
1983,wi
thav
iew of
handl
i
ngt
hei
ncr
easedsur
plusmi
l
kgotf
rom NELLORE,PRAKASAM andEAST andWEST
GODAVARIDI
STRI
CTS,asecondspr
aydr
yingpl
antwi
thal
atestdesi
gnt
opr
oduceabout
124MTofmi
l
kpowderhasbeenest
abl
i
shedandcommi
ssi
oneddur
ing1982.

Thef
act
oryhasapr
ovi
siont
omake8MToft
hedemandf
rom publ
i
cwi
l
lbe
conv
ert
ed i
nto pr
oduct
s.VI
JAYAWADA i
nthe st
ate dur
ing 1977 t
estwas successf
ull
y
conduct
edonmanuf
act
ureofi
nfantmi
l
kfood,basedont
hef
ormul
aepr
ovi
dedbycent
ralf
ood
t
echnol
ogi
calr
esear
chi
nst
it
ute,MYSORE.Subsequent
lymi
l
kfoodwi
tht
hebr
andnameof
“
VIAJAYASPRARY”wasi
ntr
oducedi
nconsumerpackof1Kgand1/
2kgt
hroughoutt
hecount
ry.
Thi
smi
l
kpr
oduct
sfact
ory
,VI
AJAYAWADA hadt
hedi
sti
nct
ionofbei
ngf
ir
stpubl
i
csect
or
or
gani
zat
ion i
ntheconsumerpacks.I
n addi
ti
on t
otheabov
emi
l
kpowderi
sal
so bei
ng
manuf
act
urei
nthef
act
ory
.

GROWTHOFTHEFACTORY:

Asani
ntegr
alpar
toft
heabov
epr
ojectt
hemi
l
kpr
oductf
act
ory
,VI
AJAYAWADAWAS
COMMI
SSI
ONEDON11.
04.
1969.Thi
sfact
oryhasgotani
nit
ialhandl
i
ngcapaci
tyof11,
25,
000
l
i
ter
sint
hest
agewi
thpr
ovi
siont
ohandl
e2,
50,
000l
i
ter
sofl
i
qui
dmi
l
kint
hesecondst
age.I
t
hascr
ossedt
hemar
kof1,
00,
000l
i
ter
sint
hev
eryf
ir
sty
earofi
tsoper
ati
onget
ti
ngadmi
rat
ion
f
rom t
heUNI
CEFof
fi
cial
s.

I
NTEGRATEDMI
LKPROJECTS:

A schemev
iz.
,thei
ntegr
atedmi
l
kpr
oject
,Hy
der
abadandVi
j
ayawadaatacostof
Rs.
4.35cr
oreshasbeenset
upt
omakef
ullut
il
izat
ionoft
hesur
plusmi
l
koft
hear
ea.Mi
l
k
pr
oduct
spl
antatacapaci
tyof1,
25,
000l
i
ter
sperdayi
nthef
ir
stphaseand2,
50,
000l
i
ter
sper
dayi
nthesecondphaseatVI
JAYAWADARESPECTI
VELY.

Mi
l
k pr
oductf
act
ory
,VI
JAYAWADA AREA OF SI
TE 27.
3 ACRES,THE VALUE OF
FACTORYBUI
LDI
NGRs.
120l
akhsmoneygi
venbyUNI
CEFf
ormachi
ner
yRs.57l
akhscostof
i
nvest
mentonnumberofwor
ker265.Atpr
esenty
ear
lyear
ningsar
eRs.
56cr
oresandanuual
t
urnov
erRs.60cr
ores.I
nthey
ear1983-
1984t
heannualt
urnov
eri
sabout19.
4cr
oresandt
otal
st
affi
s2,
064.

CHI
LLI
NGCENTERS:

TheVI
AJAYAWADAmi
l
kpr
oduct
sfact
oryhassetupsi
xchi
l
li
ngcent
ers,
whi
char
egi
ven
undercent
er,hav
ebeenpr
oduci
ngchi
l
ledmi
l
kfort
hecomposi
ti
onoft
hev
ari
oussegment
sof
t
heconsumer
s.Chi
l
li
ngcent
ersusev
erysuccessf
ull
ytomi
l
kpr
oduct
sfact
ory
.Fol
l
owi
ngar
e
cent
ersi
nKr
ishnadi
str
ictundert
hecont
rol
ofVI
AJAYAWADAmi
l
kpr
oduct
sfact
ory
:

 Pamar
ru

 HanumanJunct
ion

 Veer
anki
lock

 Gudl
aval
l
eru

 Chi
l
lakal
l
u

 Ti
ruv
uru

MI
LKDI
STRI
BUTI
ONCENTERS:

Townsal
es(
inLi
ter
s) No.ofsel
l
ingboot
s Dai
l
y

Vi
j
ayawada 1321 1,
89,
921

Godav
ari 90 4,
383

chi
l
lakal
l
u 86 6,
894

Ti
ruv
uru 110 5,
535
Pamar
ru 320 27,
610

SALESCENTERS:

VI
JAYAWADA:RTCBusst
andsuperbaz
aar
,Rai
l
wayst
ati
onmi
l
kpr
oduct
sfact
ory
,vast
ral
atha,
Vi
j
ayadai
rypar
lour(
nearAl
ankart
heat
re)Benzci
rcl
e,Sat
hyanar
ayanapur
am,machav
aram,
pat
amat
aet
c.

CAPACI
TIES:
Mi
l
k 2,
00,
000l
i
ter
sperday

Ghee 5t
onsperday

But
ter 7t
onsperday

Mi
l
kpowder 5t
onsperday

Ref
ri
ger
ati
oncapaci
ty 1.
5tonecapaci
ty

St
ream gener
ati
on 15t
onesper1pr
t

Mi
l
kpacki
ng 1,
25,
000packet
sperday

Chi
l
li
ng 1,
50,
000l
i
ter
sperday

Pr
ocessi
ng 1,
50,
000l
i
ter
sperday

TRANSPORT

Ther
ear
eabout25v
ehi
clesi
ntr
anspor
tor
gani
zat
ion,
mil
kpr
oduct
sfact
ory
,Vi
j
ayawada.

Roadt
anker
s

 4t
onesof15,
000l
i
ter
scapaci
ty

 4t
anksof10,
000l
i
ter
scapaci
ty

 3di
str
ibut
ionv
ehi
clesf
orsal
es

 6i
nspect
ionv
ehi
cles
 I
naddi
ti
ont
othese25v
ehi
clesar
etakenhi
ref
rom pr
ivat
etr
anspor
ter
sfordi
str
ibut
ionof
mi
l
k.Themi
l
kfeedt
ochi
l
li
ngcent
ersandf
arof
fpl
acesl
i
kev
isakapat
nam Nel
l
oreandchi
tt
ori
s
bei
ngt
ranspor
tedbyt
her
oadt
anker
s.I
tisal
sot
ranspor
tedt
oal
lmet
ropol
i
toanci
ti
esofDel
hi
Mumbai
,Cal
cut
taandChennai
thr
ought
hei
nsul
atedt
anker
s.

RESEARCHANDDEVELOPMENT:

TheI
ndi
acounci
lofagr
icul
tur
alr
esear
chhasst
art
edar
esear
chschemedur
ingt
he
per
iod1970-
71t
oundert
aker
esear
chonmi
l
kpr
oduct
s.Undert
hisschemesof
tcheese,
but
ter
mi
l
kpowdercur
d,Doodhpeda,
icecr
eam mi
x,but
teret
c.ar
e,manuf
act
ured.

NEEDFOREXPANSI
ON:

Wi
tht
hei
ntr
oduct
ionoft
hebabyf
ood,t
hemi
l
khandl
i
ngcapaci
tyhasbeenr
educedt
o
about80-
85t
housandl
i
ter
sofmi
l
kinv
iew oft
hesugarcont
entaddedi
nmanuf
act
ureoft
he
babygood.Ther
efor
eiti
spr
oposedt
oexpandt
hepr
esentpl
antbyaddi
ngaddi
ti
onalbui
l
dings
i
ntheexi
sti
ngv
acantar
eaadj
acentt
othet
ranspor
tsect
ion.Thi
swi
l
lenabl
ethef
act
oryt
o
handl
e1.
5lakhl
i
ter
sperday
.

MANAGEMENT:

1)Managementoft
hecompanyshal
lconsi
stofboar
dofdi
rect
orschai
rmanandmanagi
ng
di
rect
or.

2)Thechai
rmanoft
heaf
fi
li
ateduni
onenr
oll
edasnumber
.

3)Nomi
neeoft
hegov
ernmentofAndhr
aPr
adeshi
fthegov
ernmentofAndhr
aPr
adeshi
sa
member
.

4)Chai
rmanoft
heboar
dofdi
rect
ionsshal
lov
ergener
almeet
ing.I
ncaseoft
hisabsencet
he
meet
ingshal
lbeconduct
edbyachai
rmanf
orm amongstt
hemember
spr
esent
.

5)Thegener
albodyshal
lbecal
l
edonceaf
inanci
aly
earwi
thi
ngr
at ngon31stDecember
erendi .
Thi
sshal
lbe“
Annualgener
almeet
ing”
Aspeci
algener
albodymeet
ingmaybecal
l
edatany
t
imebyamaj
ori
tyv
oteofboar
dofdi
rect
orsandshal
lbecal
l
edwi
thonemont
hatl
east1/
5
oft
hemember
sofder
ivat
ionorbyt
her
egi
str
arofcooper
ati
vesoci
eti
es.

6)PROVI
SIONUNDERACT:

1)Subj
ectt
osuchr
esol
uti
onast
hegener
albodymayf
rom t
imet
oti
mepass.The
execut
ionmanagementoft
heuni
onshal
lconsi
stofnotmor
ethan17member
sasdet
ail
ed
bel
ow.
 a)2el
ect
edr
epr
esent
ati
veofaf
fi
li
ated30soci
eti
es

b)3gov
ernmentnomi
nees.

c)Regi
str
arofcooper
ati
vesoci
eti
esoft
hisnomi
nee

2)Di
rect
orofani
mal
husbandr
yorhi
snomi
nee.

3)Managi
ngdi
rect
or,
A.Pdai
rydev
elopmentcor
por
ati
onorhi
snomi
nee.

a)Onet
obeadopt
edbyt
heboar
dfr
om t
heexper
tsi
nmi
l
kbusi
ness.

b)Nomi
neeoff
inanci
ngagency
.

c)Assoonast
heel
ect
ionoft
hemember
soft
heboar
dov
ert
heyshal
lmeetandel
ecta
chai
rmenandv
ice-
chai
rmanwhowi
l
lhol
dof
fi
cef
oroney
ear
.Theel
ect
ionandv
ice-
chai
rmani
s
t
obehel
d,i
nthesamemannerev
eryy
eari
mmedi
atel
yaf
tert
hegener
albodymeet
ingi
nwhi
ch
t
her
aini
ngv
acanci
esofdi
rect
orsf
il
ledu

ORGANI
SATI
ONCHART:

Gener
alBody

Boar
dofMgt
 Managi
ngDi
rect
ors

Pr
ocur
ement&I
nputcont
rol
l
er Per
sonnel
off
icer

Mar
ket
ingManager Qual
i
ty

Pr
oduct
ionManager St
ores

Pl
antMai
ntenance MI
S

Di
rect
or(
Finance) APS

THE GENEARALPOWER DUTI

ES AND RESPONSI
BILI
TES OFTHE MANAGI
NG DI
RECTORS ARE AS
FOLLOWS:

 Heshal
lgener
alcont
rol
loant
headmi
nist
rat
ionsandbusi
nessoft
hef
eder
ati
on.

 Heshal
lpowerf
orandonbehal
foft
hef
eder
ati
ont
oencl
osesi
gnnegot
iat
eschecks
ot
hernegot
iat
esonbehal
foft
hef
eder
ati
on.Heshal
lal
sosi
gnal
ldeposi
ts,
recei
ptsand
oper
ateasaccount
soft
hef
eder
ati
onwi
thanybank.

 Heshal
lal
l
owcr
edi
ttobuy
erwi
thi
nli
mit
sfi
xedbyt
heboar
dfr
om t
imet
oti
me.

 Heshal
lmakenecessar
yar
rangement
sfort
ranspor
tandst
orageofdai
ryandal
l
ied
pr
oduce.

 Heshal
lar
ranget
osuppor
ttr
aini
ngt
othest
affmember
soft
hef
eder
ati
onuni
onand
soci
eti
es.

 Heshal
lappoi
ntconsul
tantorexpor
tsandf
ixt
hei
rremuner
ati
on.

BOARDOFDI
RECTORS:

Theboar
dconsi
stoft
hef
oll
owi
ng:

 Chai
rmanoft
heaf
fi
li
ateduni
onenr
oll
edasmember
s

 Regi
str
arsoft
hecooper
ati
vesoci
eti
es
  Onenomi
neeoft
hef
inanci
ngagency
.

 Managi
ngdi
rect
oroft
hef
eder
ati
on.

 3nomi
neesoft
hest
ateGov
ernmentr
epr
esent
ingi
nter
estdai
rydev
elopment
.

Anymembernomi
nat
edt
otheboar
dmayatanyt
imer
esi
gnf
rom hi
sof
fi
cebysendi
nga
l
ett
ert
oGov
ernmentandsuchr
egi
str
ati
onshal
lcomei
ntoef
fectf
rom t
hedat
eonwhi
chi
tis
accept
edbyt
heGov
ernment
.

TheGov
ernmentshal
lnomi
nat
ethechai
rmanoft
hatboar
dti
met
oti
me.Thesecr
etar
y
oft
heGov
ernmentdeal
i
ngwi
thdai
rydev
elopmentshal
lbet
hev
ice-
chai
rmanoft
heboar
d.Al
l
t
hemember
sofboar
dexpectmanagi
ngdi
rect
orandchai
rmanoft
hef
eder
ati
onshal
lbe
honor
ary
.

MANAGI
NGDI
RECTOR:

Themanagi
ngdi
rect
orshal
lbeappoi
ntedbyt
heGov
ernmentf
rom t
imet
oti
meupon
sucht
ermsandcondi
ti
onsast
heGov
ernmentt
hinksf
irandt
heGov
ernmentext
endssuch
i
temsasi
tmayduenecessar
yandexpedi
te.

STAFFPOSI
TIONOFTHECOMPANY:

Depar
tment NoofPer
sons

Managi
ngDi
rect
or 1

Dai
ryDi
rect
ors 2

Dai
ryManager
s 8
AsstDai
ryEngi
neer
s 8

Qual
i
tycont
rol
off
icer
s 1

AsstDai
ryManager
s 22

FodderDev
elopmentof
fi
cer
s 2

Juni
orEngi
neer
s 8

Techni
cal
staf
f 111

Tr
anspor
t 31

Fi
nance 39

Admi
nist
rat
ion 117

Fi
eldst
aff 88

Ot
her
s(NonTechni
cal
) 375

Tot
al 803

KDMPMACULOBJECTI
VES:

Ev
olv
ingl
ongt
erm pol
i
ciest
oencour
ageanddev
elopmi
l
kpr
oduct
ionandpr
oduct
ivi
tyi
n
t
hedi
str
ict
.Achi
evi
ngco-
ordi
nat
ionamongv
ari
ouspr
ogr
ammer
sint
hedi
str
ictt
oopt
imi
ze
r
esour
ceut
il
izat
ion.Pr
ovi
dingr
emuner
ati
veandassur
edmar
ketf
ort
hemi
l
kpr
oducedbyt
he
f
armer
sroundt
hey
ear
.

I
mpr
ovi
ngef
fi
ci
encyi
nmi
l
kcol
l
ect
ion,t
ranspor
tpr
ocessi
ngandmar
ket
ingwi
tht
he
emphasi
sonr
educi
ngt
hecostofoper
ati
onsatv
eryst
agef
rom emphasi
sonr
educi
ngt
hecost
ofoper
ati
onsatv
eryst
agef
rom r
uralf
armert
our
banconsumer
.Incr
easi
ngi
nav
ail
abi
l
ityof
mi
l
kanddev
elopmentt
hemar
ketofmi
l
kpr
oduct
s.

Dev
elopmentt
hemanpoweroft
heor
gani
zat
iont
oreachexcel
l
encei
nthei
rwor
kingl
i
fe
andcr
eat
eapr
o-act
iveor
gani
zat
ionalcul
tur
eforachi
evi
ngcompet
it
iveedge.Consol
i
dat
ionand
expansi
onofco-
oper
ati
vest
ruct
urewi
thspeci
alat
tent
iont
osmal
lfar
mer
sandweakersect
ion
ofmi
l
kpr
oduci
ngcommuni
ty.Tr
ader
sfr
om count
ri
esl
i
keSi
ngapor
eandBr
uneipl
aci
ngor
der
wi
tht
hedai
ryf
rom mi
l
kpowder
.
KDMPMACULSTRTEGY:

Mi
l
kpr
ocur
ementact
ivi
ti
eswi
l
lbei
ntensi
fi
edf
orsecur
ingi
ncr
easedshar
einexi
sti
ng
mar
ket
abl
esur
plus.Concent
rat
ionofmi
l
kpr
oduct
ionenhancementpr
ogr
ammer
swi
thspeci
al
emphasi
sonani
mal
breedi
ng,
fodderdev
elopmentandani
mal
heal
th.

Mar
ket
ingi
nthedi
str
ictwi
l
lbei
ntensi
fi
edf
orbet
terr
emuner
ati
on,pr
ivat
izat
ionbey
ond
depar
tment
all
evel
.Maj
orst
rengt
hofuni
onbei
ngasept
ict
echnol
ogyemphasi
sonv
alueadded
asept
icmi
l
kpr
oduct
s.Tosur
viv
eandgr
ow i
ntheemer
gingcompet
it
iveenv
ironmentt
her
e
woul
dbemor
edel
egat
ionofwor
kacr
osst
heor
gani
zat
ioncal
l
ingf
oraccount
abi
l
ityt
hrough
wel
ldef
inedpar
amet
ers.

Pr
oduct
ivi
tyi
mpr
ovementbycor
por
ater
est
ruct
uri
ngwi
thchangei
nmanager
ialsy
stem
t
omakepeopl
emor
esy
stem dependentr
athert
heni
ndi
vi
dualdependent
.Int
ensi
vet
rai
ningf
or
al
llev
elsofst
aff
,whi
chcanr
eal
l
yhel
ptoi
mpr
ovet
hef
unct
ioni
ngofor
gani
zat
ion.I
ntr
oduct
ion
of“
rewar
dandpuni
shment
”sy
stem.

I
ntr
oduct
ionofqual
i
tysy
stem underI
SO:9001-
2000,L.
S.O:4001-
2004 and HACCP
cer
ti
fi
cat
ion.

MI
LKPROCURMENTI
NMPF-
VIJAYAWADA:

Mi
l
kpr
oducedt
wiceadayf
rom 600v
il
lagesi
ntheamongt
hese600cent
ersabout195
r
egi
ster
edsoci
eti
esunderANANDPATTERN.Agoodmi
l
kpr
ocur
ementi
nfr
ast
ruct
urehasbeen
dev
elopedf
ort
hel
astsev
eraly
ear
sint
hedi
str
ict
.Iti
senv
isagedt
oopencer
tai
ncent
erst
o
boostupmi
l
kpr
oduct
ionwi
thor
eandmor
eact
ivepar
ti
cipat
ionofmi
l
kpr
oducer
sunder
oper
ati
onf
loodI
Ipr
ogr
am andsubst
ant
iali
mpr
ovementi
nmi
l
kpr
oduct
ioni
senv
isagedi
nnear
f
utur
e.

MI
LKSUPPLY:

Mi
l
kpr
oduct
sfact
oryVi
j
ayawadasuppl
i
esmi
l
kinVi
j
ayawadaandt
oneart
ownsi
n½
l
i
terand1l
i
tersachet
s.Bul
ksuppl
i
est
ohospi
tal
s,host
alsandot
heri
nst
it
uti
onsbesi
desr
egul
ar
mar
ketmi
l
ksuppl
i
es.
Mil
kpr
oduct
sfact
ory
,Vi
j
ayawadadi
spat
chesmi
l
ksuppl
i
esMi
l
kpr
oduct
s
f
act
ory
,Vi
j
ayawadadi
spat
chesmi
l
ktomadr
as,
Hyder
badandCal
cut
ta.

ORGANI
ZATI
ONALSTRUCTURE:

Or
gani
zat
ion st
ruct
urei
sthebasi
cfr
ameofwhi
ch t
hemanager
’sdeci
sion maki
ng
behav
iort
akesi
mpor
tantpl
ace.I
tbasi
cal
l
ydeal
swi
thr
elat
ionshi
ps.I
tist
hepat
ter
ninwhi
ch
v
ari
ouscomponent
sar
eint
err
elat
edori
nter
connect
ed.Thi
spr
escr
ibest
her
elat
ionshi
psamong
v
ari
ous posi
ti
ons si
nce t
he posi
ti
ons ar
e hel
d by v
ari
ous peopl
e wi
tht
he or
gani
zat
ion.
Or
gani
zat
ionalst
ruct
urei
sthe t
otal
l
y of bot
hfor
maland i
nfor
malr
elat
ionshi
ps.The
or
gani
zat
ionst
ruct
urei
nvol
vest
hef
oll
owi
ngst
eps:

1)I
dent
if
icat
ionofact
ivat
es

2)Gr
oupact
ivi
ti
es

3)Del
egat
ingofaut
hor
it
y.

I
ntheKDMPMACULor
gani
zat
ionalst
ruct
ure,chai
rmani
stheheadofboar
dofdi
rect
ors.
Gener
alManagerhasv
ari
ousl
andscr
eat
edunder hi
mli
kepl
antmanage,pr
oduct
ionmanager
,
account
sof
fi
cer
,per
sonalof
fi
cer
,sal
esmanager
,medi
calof
fi
cer
,qual
i
tycont
rolof
fi
ceret
c.,
Ever
y
managerdel
egat
e’saut
hor
it
ytosubor
dinat
es.I
tisv
isi
blet
hather
eispoorunder
standi
ngand
coor
dinat
ionamongal
ldepar
tment
soft
heor
gani
zat
ion.Thi
shar
moni
ousr
elat
ionshi
pbet
ween
t
hedepar
tmentl
eadst
ofaci
l
itat
eef
fi
cientmanagementandef
fect
ivecommuni
cat
ion.Opt
imum
useofor
gani
zat
ional
resour
ceandst
imul
ati
ngcr
eat
ivi
tyi
ntheor
gani
zat
ional
mechani
sm.

DETAI
LSATAGLANCE:

THEKDM PRI
DUCERSCO-
OPERATI
VEUNI
ONLI
MITED

1.numberofv
il
lagescov
ered 815

2.numberofcooper
ati
vesoci
eti
es 549

3.numberofmi
l
krout
ers 35

4.
numberofchi
l
li
ngcent
ers 6

5.
numberoff
eedmi
xi
ngpl
ant
s 2

6.
mil
kpr
oduct
sfact
oryar
ea 27.
3acr
es

7.
val
ueoff
act
orybui
l
dings Rs.
120l
akhs

9.v
alueofot
herbui
l
dingsandi
nvest
ment Rs.
270l
akhs

10.dat
eofcommi
ssi
oni
ngofmi
l
kpr
oductf
act
ory 11.
04.
1969

11.Tot
alst
aff 250

12.dat
eoff
ormat
ionofuni
on 6.
7.1983

13.dat
eoft
ransf
erofmanagementofuni
on 8.
2.1985
PACKI
NG:

Mi
l
kiscol
l
ect
edf
rom col
l
ect
ionpoi
ntandi
spast
eur
izedandconv
ert
edi
ntomi
l
kpowder
.
Aspert
hedemandoft
her
equi
rementt
hepowderi
smi
xedwi
thwat
erandconv
ert
edbackt
omi
l
k,
chur
nedandt
hequal
i
tycont
rol
l
erscheckqual
i
ty,andt
henappr
ovet
hemi
l
kforpacki
ngqual
i
ty
cont
rol
l
erscheckt
hequal
i
ty,
andt
henappr
ovet
hemi
l
kforpacki
ng.

MI
LKANDMI
LKPRODCUTS:

TodayKDMPMACUof
fer
sthewi
destspect
rum ofmi
l
kpr
oduct
sinI
ndi
a,undert
hebr
and
nameVI
JAYA.Thesei
ncl
udeGhee,But
terpr
ocessedcheddarcheeseandcheesespr
ead,UHT
mi
l
k(st
dmi
l
ktonedmi
l
klow f
at,Fl
avor
edMi
l
k(Mer
riMi
l
k),Sl
i
m Mi
l
kinTet
rapacks,St
eri
l
ized
cr
eam ,ski
m Mi
l
kpowder,dai
ryWhi
tener
,Cooki
ngBut
terandi
cecr
eam.Sev
eralamongt
hese
car
ryt
heAGMARK,
Anat
test
ati
onofqual
i
tybygov
ernmentofI
ndi
aandt
heI
SImar
kofBur
eauof
I
ndi
ast
andar
ds.

Thebr
andVI
JAYAconnot
esqual
i
tyadqual
i
ty,
whi
chmakesi
tat
rust
edNamei
nmi
l
li
onsof
househol
dsacr
osst
hecount
ry.I
naddi
ti
on,KDMPMACU al
somanuf
act
urespr
oduct
ssuchas
st
eri
l
izedFl
avor
edmi
l
k Panni
er(
indi
genousunr
ipendedcheese)DoodhPeda(
desi
ccat
edmi
l
k
sweet
)andBut
ter
mil
kwhi
chi
smar
ket
edt
hroughanet
wor
kofVi
j
ayaDai
rypar
lour
sandachai
nof
r
etai
l
ersspr
eadacr
ossAndhr
aPr
adesh.

TheDai
ryi
sequi
ppedwi
tht
heI
SO9001:
2000cer
ti
fi
cat
ionandr
ecent
lyI
SO14001:
2004
cer
ti
fi
cat
ion.

DI
FFERENTPRODUCTSOFVI
JAYADAI
RY:

GHEE:

 Compl
eteMi
l
kFat(
99.
7%)

 Gr
anul
arandWhi
tei
ncol
or

 Agmar
kSpeci
alGr
adepr
oduct(
Gov
t.ofI
ndi
aCer
ti
fi
cat
ion)

 Usedasacooki
ngmedi
um.

 Shel
f–l
i
feof6mont
hsatambi
entt
emper
atur
e

 Hy
gieni
cal
l
ymanuf
act
uredandpacked.
 Pl
easantf
lav
or.

 Ri
cesour
ceofener
gy.

GHEEPACKET

 Compl
eteMi
l
kFat(
99.
7%)

 Gr
anul
arandWhi
tei
nCol
our
.

 Agmar
kSpeci
alGr
adepr
oduct(
Gov
tofI
ndi
aCer
ti
fi
cat
ion.
)

 Usedasacooki
ngmedi
um

 Shel
f–l
i
feof6mont
hsatambi
entt
emper
atur
e

 Hy
gieni
cal
l
ymanuf
act
uredandpacked

 Pl
easantf
lav
our

 Ri
cesour
ceofener
gy.

COOKI
NGBUTTER:

 Has76%Mi
l
kFat
,Whi
tei
ncol
our
.

 Canbemadei
ntoGheeapery
ourchoi
ce.

 Needsr
efr
iger
ati
on.

 Pl
easantt
ast
e.

 Usedal
soasacooki
ngmedi
um.

U.
H.TMI
LK:

 Tr
eat
edatUl
tr
aHi
ghTemper
atur
eandasept
ical
l
ypacked.

 St
eri
l
e,Bact
eri
afr
eeandcanbeconsumeddi
rect
ly.

 Needsnor
efr
iger
ati
on.

 Cont
ains4.
5%f
atand8.
5%SNF.

 St
aysf
reshf
or120day
s.

 Gi
vesexcel
l
entandf
ir
m cur
ds.
 Hy
gieni
cal
l
ypacked.

 Nat
ural
tast
ewi
thhi
ghnut
ri
ti
vev
alue.

 Packagi
ngmat
eri
alabsol
utel
yimper
meabl
eandnon-
ret
urnabl
e

 Av
ail
abl
easagr
ocer
yit
em.

 Homogeni
zed.

SLI
M MI
LK:

 Mi
l
kfr
eef
rom f
at

 St
eri
l
izedwi
thU.
H.Tpr
ocessandpackedasept
ical
l
y.

 Needsnor
efr
iger
ati
on.

 Has8.
7%Mi
l
kSNF.

 Shel
fli
feof4mont
hsatambi
entt
emper
atur
e

 Lowcal
ori
edi
etmi
l
k.

 Bect
eri
afr
eeandcanbeconsumeddi
rect
ly

 Gi
vesf
ir
mfatf
reecur
ds.

SKI
M MI
LKPOWDER:

 Manuf
act
uredbydr
yingski
m mi
l
kspr
aydr
yingt
echnol
ogyaf
terPr
econcent
rat
ion.

 Ri
chi
nPr
otei
nandCar
bohy
drat
es.

 Const
it
ute3%Moi
stur
e,35%pr
otei
n,52%Mi
l
ksugarand1%Fat
.

 Shi
eld–l
i
feof12mont
hsatambi
entt
emper
atur
e.

 Pr
oducti
shy
droscopi
candshoul
dbest
oredi
nai
r-
ti
ghtcont
ainer
s.

 Sol
ubi
l
ityof99.
5%

 BI
Smar
ked.

MERRIMI
LK:

 Sweet
enedf
lav
oredmi
l
kwi
th1.
5%Fatand9.
0%SNF.
 Av
ail
abl
einSt
rawber
ry,
Rasber
ry,
Vani
l
la,
Pineappl
eandBadam f
lav
ors.

 St
eri
l
e,Bact
eri
afr
ee

 Needsnor
efr
iger
ati
on.

 Saf
e-l
i
feof3mont
hs.

 Excel
l
entheal
thdr
ink.

 U.
H.TPr
ocessedandasept
ical
l
ypackedHomogeni
zed.

STERLI
ZEDCRAM:

 Has30%Mi
l
kFatwi
thaddedst
abi
l
izedandemul
sif
ier
s.

 U.
H.Tpr
ocessedandasept
ical
l
ypacked.

 Neednor
efr
iger
ati
on.

 Shel
f-
li
feof3mont
hs.

 Canbeusedcof
feewhi
teni
ngwhi
ppi
ngt
obeuseddesser
tset
c.

 Nut
ri
ti
veandFr
esh

 St
eri
l
e,Bact
eri
afr
eeandnochemi
cal
changes.

 Hoogeni
zed.

DOODHPEDA:

 Madef
rof
reshmi
l
k

 Desi
ccat
edsweet
enedmi
l
kpr
oduct

 Cont
ains20%Mi
l
kFat
.

 Smoot
h,gr
anul
art
ext
ure.

 Shel
fli
feofoneweekatambi
entt
emper
atur
e.

CURD:

 Madef
rom st
andar
dizedandpast
eur
izedmi
l
kusi
ngbact
eri
alcul
tur
e.

 Shel
fli
feof1weekunderr
efr
iger
ati
on.
 Packedi
nfoodgr
adepol
ypr
opy
lenecups.

 Pl
easantf
lav
our
.

PANNER:

 Coagul
atedmi
l
kpr
oductmadef
rom past
eur
izedmi
l
k.

 Ri
chi
npr
otei
n.

 Shel
f–l
i
feof1week.

 Needsnor
efr
iger
ati
on.

 Usedasanaddi
ti
vei
nvar
iousv
eget
ari
anandnon-
veget
ari
andi
shes.

SERVI
CESOFFEREDTOTHECONSUMERS:

1)Of
fer
ingwi
der
angeandmi
l
kpr
oduct
ssui
ti
ngt
ochangi
ngneeds.

a)Var
iet
iesofpast
eur
izedmi
l
kof
fer
edf
orsuppl
y:

 Vi
ajay
agol
d(f
at7%SNF9%f
ull
cream mi
l
k)

 Vi
ajay
aSpeci
al(
fat6%SNF9%f
ull
cream mi
l
k)

 Vi
ajay
aPr
emi
um (
fat4.
5%SNF8.
5%st
andar
dmi
l
kfor
ti
fi
edwi
thVi
tami
n‘A’
.

b)RangeofUHTpr
ocessedmi
l
kpr
oduct
swi
thshel
f–l
i
feof4mont
hs:

 UHTpr
ocessedst
andar
dizedmi
l
kin200ml
and1000ml
Tet
raBr
ickpack.

 St
eri
l
izedcr
eam I
n200ml
Tet
raBr
ickPack.

 Fl
avor
edmi
l
k(LASSI
)in200ml
Tet
raBr
ickPack.

c)Rangeoff
reshmi
l
kpr
oduct
s:

 Cur
d(100ml
,200ml
and500ml
cups)

 Lassi
e200ml
Pol
ypacks.

 But
ter
mil
k200ml
Pol
ypacks

 Panner100gm,
200mg,
500mg,
and1Kgpackages.

 Doodhpeda25gm,
250gm,
500gm and1KgPackages.
  Mi
l
kcake250gm,
500gm and1Kgpacks.

Khar
jur
aKov
a250gm,
500gm and1Kgpacks

Khar
bhuj
a200ml
pack.

 Kul
fiBadam 200ml
pack

 Badammi
xpower200gr
spacket

Gi
ftpack450gmsand900gmspacket

Mi
l
keyMangomagi
c200ml
and1000ml
packages.

d)Rangeofot
herpr
oduct
s:

 Vi
j
ayaGheeconsumert
inpacksof½Kg,
1Kg,
2Kg,
5Kg,
15Kg,
andi
npol
ypackof200ml
and500ml
.

 Ski
mmedmi
l
kpowderi
n½Kg,
1Kgand25Kgpacks.

 Cooki
ngbut
teri
n500gmsand20Packs.

2)Speci
aldi
scountt
oint
uit
ional
buy
ersonpur
chaseofmi
l
kinbul
kquant
it
iesi
nloosecondi
ti
oni
n
cans.Suppl
yofmi
l
ktoconsumer
sonpur
chaseofmont
hlymi
l
kcar
ds.Roundt
hecl
ockav
ail
abi
l
ity
ofmi
l
kpr
oduct
sthr
ough250col
dchai
npoi
nti
nthedi
str
ict
.Conduct
ionconsumereducat
ion
campst
ocr
eat
eawar
eness.Aboutqual
i
tyOfmi
l
kandmi
l
kpr
oduct
s.Fr
eesuppl
yofchi
l
led
dr
inki
ngwat
ert
opar
ti
esbuy
ingmor
ethan200l
i
ter
sofmi
l
konspeci
alor
der
.

“
SWOTANALYSI
SOFKDMPMACU”

STRENGTH:

 Mi
l
kpr
oduct
ionpot
ent
ial
inKr
ishnadi
str
icti
ssubst
ant
ial

 Abi
l
ityt
ohandl
eper
ishabl
epr
oductmi
l
k

 Adequat
einf
rast
ruct
ural
faci
l
iti
esav
ail
abl
e

 Av
ail
abi
l
ityofwel
lexper
iencedpr
ofessi
onal
s.

 Excel
l
entbr
andv
aluef
or“
VIJAYA”

 Abi
l
ityt
omeetanyconsumerdemandf
ormi
l
kandmi
l
kpr
oduct
s.
  Abi
l
ityt
oof
ferbestqual
i
tyl
ongl
i
fepr
oduct
s.

 Est
abl
i
shedbondageswi
thf
armer
s.

 Accesst
odev
elopmentf
undsandgr
ant
s.

 Accesst
oot
herco-
oper
ati
ves.

 Vi
j
ayaDai
ryi
stheonl
yuni
texpor
ti
ngmi
l
kpr
oduct
stocount
ri
esl
i
keMal
aysi
a.

WEAKNESS:

 Hi
ghf
ixedcostoccupy
ing15%ofbusi
nesst
urnov
er.

 Mi
l
kandmi
l
kpr
oduct
sar
ehi
ghpr
icedl
oosi
ngcompet
it
iveedge.

 Pr
ocess/
productmanuf
act
uri
ngf
aci
l
iti
esandout
dat
ed.Lackofmoder
nfaci
l
iti
es.

 Wor
kcul
tur
eandcompat
ibl
ewi
thgr
owi
ngdemandf
orcust
omerser
vice.

 Empl
oyeeski
l
lsatv
ari
ousl
evel
srequi
reupgr
adat
ion

 Hi
ghr
ati ass4thst
oofcl aff
.

 Busi
nesssy
stemsandmoder
nmanagementcul
tur
eisy
ett
obeadopt
ed.

 Manager
slackbusi
nessexper
ience.

 Sy
stem mov
esv
erysl
owl
y;duet
olackofpr
operdel
egat
ional
lthi
ngsseem t
owai
tfort
hechi
ef
execut
ive.

OPPORTUNI
TIES:

 Responsi
vemi
l
kpr
oducerbase

 Goodpubl
i
cimage

 Emer
gingt
rendsofi
ncr
easedspendi
ngonf
oods

 Rapi
dut
il
izat
ion.

 Gr
owi
ngf
oodser
vicesect
or.

 Responsi
vest
ategov
ernment

 Pat
ter
nofi
ncr
easedspendi
ngonf
oods

 I
ncr
easedpur
chasi
ngcapaci
tyofmi
ddl
ecl
ass.
 Expor
toppor
tuni
ti
esf
orl
ongl
i
feasept
icmi
l
k.

 Vol
unt
aryr
eti
rementschemet
opr
unemanpowerst
rengt
h.

THREATS:

 I
ntensecompet
it
ioni
nli
qui
dmi
l
kmar
ket

 Ent
ryofor
gani
zedpr
ivat
esect
orsi
ndai
rybusi
ness.

 I
ncr
easi
ngcompet
it
ionf
ort
hemar
ket
abl
esur
plusmi
l
kinr
ural
areas.

 Empl
oyeesResi
stancet
ochange.
 CHAPTER-
3
Theor
eti
cal
framewor
k

I
NVENTORYMANAGEMENT
I
nvent
ori
es
Inv
ent or
ies const
it
utethe mosti mpor
tantpartoft he currentassets ofl ar
ge majori
ty of
compani es.Onanav er
agetheinvent
ori
esareappr oxi
mately60%oft hecurrentassetsi
npublic
l
imitedcompani esinIndi
a.Becauseofthelargesi zeofinventor
iesmai nt
ainedbyt hefi
rms,a
considerabl
eamountoff undsiscommi tt
edtot hem.I ti
st heref
ore,imperati
vetomanaget he
i
nvent or
ieseff
ici
entl
yandeff
ecti
velyi
nordert
oavoidunnecessar yinvest
ment.
 Nat
ureofI
nvent
ori
es
I
nvent
ori
esarest
ockoftheproductofthecompanyismanufact
uri
ngf
orsal
eandcomponents
makeupofthepr
oduct
.Thevar
iousfor
msoft hei
nvent
ori
esi
nthemanuf
act
uri
ngcompani
esare:

Raw Mat
eri
al:I
tist
hebasi
cinputt
hati
sconv
ert
edi
ntot
hef
ini
shedpr
oduct t
hrought
he
manufactur
ingprocess.Rawmat
eri
alsar
ethoseuni
tswhi
chhav
ebeenpur
chasedandst
oredf
or
f
utur
epr oduct
ion.

Wor
k-i
n-pr
ogr
ess:I
nvent
ori
esar
esemi
-manuf
act
uredpr
oduct
s.Theyr
epr
esentpr
oductt
hat
needmor
ewor
ktheybecomef
ini
shedpr
oduct
sforsal
e.

Fi
nishedGoods:I
nvent
ori
esar
ethosecompl
etel
ymanuf
act
uredpr
oduct
swhi
char
ereadyf
or
sale.St
ocksofraw mater
ial
sandwor k-
in-
progressfaci
li
tateproduct
ion,whi
l
estockoff
ini
shed
goodsisrequi
redforsmoothmarket
ingoperat
ions.Thus,invent
ori
esserveasal
i
nkbetweenthe
product
ionandconsumpti
onofgoods.

I
nvent
orymanagementmeani
ng:

I
nvent
orymanagementi
sthesuper
visi
onofnon-
capi
tal
i
zedasset
s(i
nvent
ory
)andst
ocki
tems.
 

Acomponentof 
suppl
ychainmanagement,
invent
orymanagementsuperv
isesthefl
owofgoods
f
rom manuf
acturer
stowarehousesandf
rom t
hesefaci
li
ti
estopoi
ntofsale.Akeyfuncti
onof
i
nvent
orymanagementist
okeepadet ai
l
edrecordofeachneworret
urnedproductasitent
ersor
l
eavesawarehouseorpoi
ntofsale.
 

Component
sofi
nvent
orymanagement
:

1.
Bar codepr i
nter :Bar codesgr eatlysimplifyt hei t
em aut omat i
ngpr ocess.Di f
fer enti temsi nt he
inventor yar eassi gneddi ff
er enti t
ems.Thesebar codesar epr intedont hei t
em cov eront hei r
arrivalint hei nvent orywi t
ht hehel pofbar codepr i
nt ers.Thesepr intersar eav ailablei ndi f
ferent
sizest oadher et ov ar
yingpr i
nti
ngneedsofdi f
ferent -
sizeor gani zati
ons.Forexampl e,asmal l
companywi l
lhav elowerbar codepr int
ingneedsduet olessv olumeofpr oducts, wher easal arger
organi zati
onwi l
l hav emor epr inti
ngneedsduet oahi gherv ol
umeofi t
ems
2.
Bar codescanner : Toscant hebar codesprintedoni temsi tisimper ativetohav ebar codescanner s.
Independentoft heappl i
cationt ype&t hebusi nessenv ir
onment ,scanner sareusedf orr eadingt he
bar codepr intedont heit
ems.Ther eadv aluei senter eddi rectl
yt ot hecomput ersy stem f orfurther
processi ng.
3.
Inv ent
or y managementsof twar e soluti
on:Thi si st he hear tofany aut omat ed i nventor y
managementsy st em.Thesof twaremai ntainsadat abaseofal lthei t
emsav ailablei nt hest ock,
updat ingit,real-timewi thev erynewst ockent ryanddi spat ch.Itisv er yimpor t
antt hatt hebusi ness
owneri ssur eaboutt hemanagementsof twar ehe/ shechoosesast herear emanysuchsol uti
ons
av ail
able,allofwhi chmi ghtnoti ntegratewi thanor ganizationt hatwel l
.Itisadv i
sabl et hatone
sel ect
sani nv ent orymanagementsof twaret oolfrom ar eli
ablev endoronl y.GOI S- Pro,I nventoria,
Fishbowl areaf ewr eputedi nv entorymanagementsof t
war esol utions.

Mobil
ecomputer
s:Computer
sar erequi
redtohostthemanagementsolut
ions,anddispl
aythe
i
nvent
orydat
at othemanagers.However,usualcomput
erscannotper
for
mt hetaskthatwel
l
because mobi li
tyis a keycr i
teri
on forwar ehouse managementcomput ers.Hence,mobil
e
comput er
swi t
hWi -
Fiaccessibi
lit
yar eamustf orev er
ygoodi nvent
orymanagementsy st
em.
Somemanagementsol uti
onsalsoof ferinv
entoryaccessthroughmobiledev i
ceslikei
Phone,
i
Pads,Andr oi
dsmar tphones& t ablet
s,etc.Youcanoptf orthesedev i
cesi fyouhavesuch
sol
utions;thiswil
laddt othemobi li
tyatt
ri
buteandallowy ouaccesstovit
alinvent
orydat
aeven
wheny ouar eonthemov e.

Thef ourconstit
uent
smentionedabovear ebynomeanst hecompl et
elistofconstit
uent sfora
goodi nventor
ymanagementsy st
em;insteadt
heyar eonlythemai nconstituent
sthatev erygood
system mustpossess.Addi
ti
onall
y,advancedmanagementsy st
emsmayi ncludeconsti
tuentsli
ke
barcodel abel
s,Aut
omatedRepleni
shmentRoutines,Int
er-
War ehouse&I nter-
CompanyTr ansf
ers,
Backor derManagementsystems,etc.forenhancingtheireffi
ciencyasi nventor
ymanagement
system.

I
NVENTORYDECI SI
ONS:InanI
nvent
oryCont
rolsi
tuat
ionst
her
e ar
ethr
eebasi
cquest
ionsar
eto
beanswer
ed.Theyare:

 Howmucht oor der?Thati stosay, whatistheoptimalquantit

yofani t
em t hatshouldbe
orderedwhenev eranor deri
splaced?
 Whenshoul dt heor derbepl aced?
 How muchsaf et yst ockshould bekept ?Thuswhatquant i
tyofani t
em i nexcessoft he
expectedrequi rement sshouldbehel dasabuf ferstockinantici
pat
ionoft hev ari
ati
onsin
it
sdemandand/ort hetimeinvolvedinacquiri
ngf r
eshsuppl i
es.
I
NVENTORYCOSTS:I ndet erminingopt i
malinventorypoli
cy,thecri
teri
onmostof ten isthecost
f
unct
ion.Thecl assicali nvent oryanal
y si
sidentif
iesfourmaj orcostcomponent s.Dependingon
t
hestructur
eofani nv ent orysituati
on,someoral ltheseareincludedintheobjecti
vef uncti
on.

PURCHASECOSTS:Thi sref
erstonomi nalcostofi
nvent
ory.Iti
st hepur
chasepri
cefortheter
ms
thatarebroughtoutsi
desources,andt heproduct
ioncostifthei t
emsareproduced wit
hinthe
organi
sati
on.Thismaybeconst antperunit,oritmayvaryast hequant
it
ypurchased/produced
i
ncreasesordecreases.

ORDERI NG COST/SET-UPCOST:Thiscat egoryofcost sisassociat

edwi ththeacquisit
ionor
orderi
ngofinvent
ory.Fi
rmshav et
opl aceorderswit
ht hesuppli
erstorepl
enishi
nventoryofraw
mat er
ial
s.I
tincl
udescostsassoci
atedwi ththeprocessi
ngandchasi ng ofthepurchaseorder,
tr
ansformati
on,i
nspecti
onforqual
i
ty,expedit
ingov
erduesor der
sandsoon.

Thepar al
l
elofor deri
ngcostswhenuni t
sar epr
oducedwi thi
ntheor ganizat
ionandt hecostof
acquir
ing materi
alsconsi
stsofcl
eri
calcostandcostofstati
onery.Iti
stherefor
ecall
ed aset-up
cost.Theorderi
ngcostisli
kelyandtakentobeindependentoft heordersize.Ther
eforet
heunit
orderi
ng/setupcostdecli
nesast hepurchaseorder/producti
onr unincr
easesi nsi
ze.Order
ing
costsareinv
olvedin:

1.Prepari
ngapur chaseorder .
2.Receiv
ing,I
nspecting,Recordingthegoodsr ecei
vedt oensurebothquanti
tyandqual
i
ty.
CARRYINGCOST:Theyar einvolvedinmai ntai
ningorcarr
yingtheinvent
ory
.Itrepr
esent
sthecost
associ
atedwithsort
ingani t
em ini nvent
ory.Carryi
ngcostsarealsoknownashol di
ngcostorthe
st
oragecost
.

Themai
ncomponent
soft
hiscat
egor
yofcar
ryi
ngcost
sar
e:

St
oragecost
s.

I
nsur
anceofi
nvent
oryagai
nstf
ir
eandt
hef
t.

Det
eri
orat
ioni
ninv
ent
orybecauseofpi
l
fer
age,
fir
e,t
echni
cal
obsol
escence.

Ser
vingcostsuchasl
abourf
orhandl
i
ngi
nvent
ory
,cl
eri
cal
andaccount
ingcost
s.

Theoppor tunit
ycostoff undconsi
stsof expenses inraisi
ngoff undstofinanceand
acqui
siti
onofinventory .I
ffundswerenotlockedupininvent
orytheywoul dhaveearnedar eturn.
Thisistheopportunitycostorfinanci
alcost
s.Thecarryi
ngcostandi nventorysi
zeareposi t
ively
rel
ateandmov esi nt hesamedi recti
on.I
fthelevelofi
nventor
yincrease thecarry
ingcostal so
i
ncreasesandv i
ce-v ersa.

Ashor
tagecanev
okedi
ff
erentr
eact
ionsf
rom cust
omer
s.

STOCKOUTCOSTS:

St ockoutcost smeans thecostassociatedwithnotser

vingt hecustomers.St
ockouti
mply
shortage.Ifthestockoutisi
nternal
(i
nproducti
on)itwoul
di mplysomepr oducti
onisl
ostand
result
ingini dl
eti
mef ormenandmachi neorthatworkisdelayedwhich at
tr
actssomepenal
ty.
Whi l
ei fstockoutisexter
nal
,i twouldresul
tinlossof pot ent
ialsal
esor lossofcust
omer
goodwi l
l.

Techni
quesi
ninv
ent
orymanagement
:

Inmanagi nginventor
ies,thef i
rm’
sobj ecti
veshouldbetobei nconsonancewi t
hthesharehol
der
wealthmaxi mizati
onpr inci
ple.Toachi evethi
s,t
hef i
rm shoul
ddet er
minet heoptimum l
evelof
i
nv entory
.Effi
cient
lycont rol
ledinventori
esmaket hefi
rmf l
exibl
e.Inef
fi
cientinvent
orycontr
ol
result
si nunbalancedi nventoryandi nfl
exi
bil
i
ty-
thefir
m maysomet i
mesr unoutofst ockand
somet imespil
eupunnecessar ystocks.

EconomicOrderQuant ity(EOQ) :Themaj orpr oblem t

ober esolvedi show mucht heinventor y
shouldbeaddedwheni nventoryisreplenished.Ifthefi
rmisbuy ingr awmat eri
als,i
thastodeci de
l
ot si
nwhichithastopur chaseonr eplenishment .Ift
hefir
mi splanni ngaproduct i
onrun,t
heissue
i
showmuchpr oducti
ont oschedule.Thesepr oblemsar ecal
ledor derquanti
typroblems,andt he
taskofthefi
rmi st odetermi netheopt imum oreconomi clotsi ze.Determineanopt imum lev el
i
nv ol
vestwotypesofcost s:
-

Or
deri
ngCosts:Thister
mi susedi
ncaseofrawmateri
alandincludesal
lthecostofacqui
ri
ngr
aw
mater
ial
.Theyi
ncludethecostsi
ncur
redi
nthefol
l
owingacti
vi
t i
es:

Requi
sit
ion

Pur
chaseOr
der
ing

Tr
anspor
ti
ng
Recei
vi
ng

I
nspect
ing

St
ori
ng

Orderi
ngcosti ncreasewiththenumberofor der
splaced;thusthemorefr
equentl
yi nventoryis
acquir
ed,thehi ghert hefi
rm’sorderi
ngcost s.Ontheot herhand,i
fthefi
rm mai ntai
nsl arge
i
nv ent
ory
’slevel,t
her ewil
lbefewor derspl
acedandor der
ingcostswi
llber
elat
ivel
ysmal l.Thus,
orderi
ngcostsdecr easewitht
heincreasi
ngsizeofinv
entor
y .

Carr
yingCost
s:Cost
sareincurr
edformaintai
ningagi
venl
evelofi
nvent
oryar
ecal
l
edcar
ryi
ng
cost
s.Thesei
ncl
udethef
oll
owingact
ivi
ti
es:

War
ehousi
ngCost

Handl
i
ng

Admi
nist
rat
ivecost

I
nsur
ance

Det
eri
orat
ionandobsol
escence

Car
ryi
ngcostsarev
aryingwit
hi nventorysize.Thi
sbehavi
ori
scontr
arytothatofor
deri
ngcosts
whi
chdecli
newithi
ncreaseininventorysize.Theeconomi
csizeofi
nventor
ywouldthusdepend
ontr
ade-
offbet
weencarryi
ngcostsandor der i
ngcost
.

ABCSy
stem:

ABCsy
stem ofi
nvent
orykeepi
ngi
sfol
l
owedi
nthef
act
ori
es.Var
iousi
temsar
ecat
egor
izedi
nto
t
hreedi
ff
erentl
evel
sint
heor
deroft
hei
rimpor
tance.Fore.
g.i
temssuchasmemor
y,hi
ghcapaci
ty
pr
ocessor
sandr
oyal
tyar
epl
acedi
nthe‘
A’cat
egor
y.Lar
genumberoff
ir
mshast
omai
ntai
n
sev
eralt
ypesofi
nvent
ori
es.I
tisnotdesi
rabl
ethesamedegr
eeofcont
rolal
lthei
tems.Thef
ir
m
shoul
dpaymaxi
mum at
tent
iont
othosei
temswhosev
aluei
shi
ghest
.

Thef
ir
m shoul
dther
efor
e,cl
assi
fyi
nvent
ori
est
oident
if
ywhi
chi
temsshoul
drecei
vet
hemost
ef
for
tincont
rol
l
ing.Thef
ir
m shoul
dbesel
ect
ivei
nappr
oacht
ocont
roli
nvest
menti
nvar
ious
t
ypesofi
nvent
ori
es.Thi
sanal
yti
calappr
oachi
scal
l
ed“
ABCAnal
ysi
s”.Thehi
gh-
val
uei
temsar
e
cl
assi
fi
edas“
Ait
ems”andwoul
dbeundert
ight
estcont
rol
.“Ci
tems”r
epr
esentr
elat
ivel
yleast
v
alueandwoul
drequi
resi
mpl
econt
rol
.“Bi
tems”f
alli
nbet
weent
het
wocat
egor
iesandr
equi
re
r
easonabl
eat
tent
ionofmanagement
.

TYPESOFI
NVENTORI
ESVALUATI
ONS:

VED-ANALYSIS:In VED-
Analy
sis,thei
temsarecl
assif
iedont hebasi
softhei
rcr
it
ical
i
tytothe
pr
oduct
ionprocessorotherservi
ces.IntheVEDclassif
icat
ionofmater
ial
s,Vst
andsf orVi
tal
i
temswi thoutwhicht
heproductionprocesswoul dcomet ostandsti
l
l.Ei
sthesy st
em denot
es
Essenti
alit
emswhosestockoutwoul dadv erselyaff
ectstheeff
ici
encyoft
heproducti
onsyst
em.
The term DstandsforDesir
ableit
emswhi char erequir
edbutnotimmediat
elycausealossto
product
ion.TheVEDanal
ysisisdonemai nl
yinr espectofspar
eparts.

HMLANALYSI S:Thisissimil
artotheABCanal ysi
sexceptthati
nthi
sanalysi
s,t heitemsare
cl
assif
iedonthebasisofuni
tvaluer
atherthanusageval
ue.Theit
emsarecl
assi
fiedaccor di
ngl
y
asthei
rcostperunitisH-hi
gh,M-medium andL-l
ow.Thi
st y
peofanal
ysi
sisusef ulforkeepi
ng
cont
rolovermat
eri
alsconsumpti
onatthei
rdepart
mentlev
els.

SDEANALYSI S:Thi
susesthecri
ter
ionoft
heavai
l
abi
li
tyoft
heitems.I
nthi
sanal
ysi
sS-st
andsfor
scar
ceitemswhi chareshor
tinsupply
.D-
ref
erst
othe di
ff
icul
tit
emsthatmi
ghtavai
l
ableit
ems
evenfr
om localmarket
s.

S-OSANALYSIS:S-OSanalysi
sisbasedonthenatur
eofsuppl
i
es.Wherei
nSrepresentst
heof f
seasonali
tems.This cl
assif
icat
ion ofi
tems i
s done wi
ththe ai
m ofdeter
mi ni
ng proper
procur
ementofst
rat
egi
es.

FSNANALYSI S:Basedont heconsumpt i

onpatternoftheitems,t
heFSNcl assi
fi
cat
ioncal
lsfor
classi
fi
cat
ionofit
ems,asF- FastMov i
ng,S-Sl
ow Mov i
ngandN- NonMovinggoods.This‘
speed’
classi
fi
cat
ionhel
psinthearrangementofstocksinthestor
esandinthest
oresandindeter
mini
ng
thedist
ri
buti
onandhandli
ngpat t
erns.

XYZANALYSI S:XYZanalysisisbasedont hecl osi

nginvent
or yvalueofdiff
erenti t
ems.Items,
whoseinventoryval
uesarehi gh,ar
eclassedasX- i
temswhilethosewi t
hlowi nvestmentinthem
areter
medasZ- i
tems.Otheri t
emsar etheY- i
temswhosei nventoryval
ueisneithert oohi
ghnor
toolow.Itcanbeeasilyvisuali
zedthatthesev er
alty
pesofanal ysi
sdiscussedar enotmut ual
l
y
excl
usiv
e.Theycanbe, andoftenare,usedjointl
ytoensurebettercontr
olovermat er
ial
s.

PURCHASI
NG:

 I
NTRODUCTI
ON:
Thescar cityofr aw mat eri
alshaspr act i
call
yputt hepeopl einpurchasi ngdepar t
menti nav ery
ti
ghtposit i
on.Thepur chasi ngdepartmentcanbei nabet t
erpositi
on.Asoft odayt her
ear efour
di
fferentgr oupsofbuy ers,v i
z,a)consumer s,b)Mi ddlemen,c)Gov er
nmentagenci esandd)
Manuf actures.Inf actthewhol eeconomyi sdependentont hi
sgr oupf orsur vival
.Thesecond
groupcompr isessuchasmoneycol lectionoft r
ader saswhol esal
er s,retail
ers,anddistribut
ors
whobuynotf ortheirownconsumpt ion,butt oselltoot hers.Thef ourthcat egoryofpur chases
i
ncludesmanuf actureswho conv ertr aw mat er
ials,component s,consumabl esand packi ng
mat er
ial
sf orusei ni ndustrialestabl
i
shment swher esal eableproduct sarepr oduced.Thesubj ect
ofpurchasingi sdiscussedher eitappliest ot
hebuy ing,madebymanuf actures.

 DEFI NITI
ON:
Init
snar row sense,theter
m“ purchasi
ng”ref
ersmer el
ytot heactofbuy i
ngani t
em atapri
ce.
Thi
sverynar rowconceptofpurchasinghasbeengraduall
ywidenedduringthel
ast70day s.
Accor di
ng to Alf
ord and Beatt
y“ Pur
chasing”isthe procuri
ng ofmat er
ial
s,suppl
i
es,
machines,t ool
s and ser v
ices requir
ed for equipment,maintenance and operati
on of a
manufacturi
ngplant”.

Accordi
ngtoWalters,purchasi
ngfunct
ionmeans“Theprocurementbypur
chaseofthe
propermat eri
alsmachi
nes,equi pmentandsuppliesf
orstoresusedi nthemanuf
actur
e.Ofa
productadaptedtomarket
inginpr operqual
i
tyandquant
it
yatproperti
meandatthelowestpr
ice,
consist
entwithqual
it
ydesired”.

Accor
dingtoWasting,FineandZen“Purchasi
ngi samanager i
alacti
vi
tythatgoesbey ond
thesimpleactofbuy i
ng.I tincl
udesresearch and developmentf orthepr operselecti
on of
mater
ial
sandsources,fol
l
ow- uptoensureti
melydeli
very;inspecti
ont oensurebothquantit
yand
qual
it
y;t
ocontrolr
ecei
vi
ng, sorekeepi
ngandaccounti
ngoper at
ionsrel
atedtopurchases”.

IMPORTANCEOFPURCHASI NG:Pur chasingf unctionpr ov i

desmat erial
st othef actorywithout
whi chwheel sofmachi nescannotmov e.
Aoneper centsav inginmat eri
alcosti sequi
v alenttoa10%i ncreasei nturnover.Effi
cientbuying
canachi ev ethi s.
Pur chasingmanageri st hecustodianofhi sf irm’spur seashespendsmor et han50% ofhi s
companyear ni ngsonpur chases.
Increasingpr opor t
ionofone’ srequirements,arenowbr oughti nsteadofbei ngmadeaswast he
practiceint heear l
ierday s.Buyingtherefor
eassumessi gnificance.
Pur chasingcancont ri
but etoimpor tsubsti
tuti
onandsav ef oreignexchange.
Pur chasingi st hemai nf actorinthetimelyexecut ionofindust rialprojects.
Mat erial
smanagementor gani
sationsthatexistnowhav eev olvedoutofpur chasi
ngdepar t
ments.
Otherf actorsl ike:-
Post warshor tages
Cy cli
calswi ngsofsur plusesandshor tagesandt hefir
straisingmat erialscosts.
Heav ycompet iti
on.
Growi ngwor l
dwi demar ket shavecont r
ibut
edt ot heimpor tanceofpur chasi
ng.

OBJECTI
VESOFPURCHASING:
I
tmaybeemphasi
zedthatsomeoft
hef
unct
ionsar
ethesol
eresponsi
bil
i
tyoft
hepur
chasi
ng
depart
ment,somear eshar
edwit
horderdepar
tment
sandther
emai
ningar
ether
esponsi
bil
i
tiesi
n
whichthepurchasi
ngdepart
menthasconsi
der
abl
eint
erest
.

RESPONSIBI
LITI
ESDELEGATEDTOTHEPURCHASI
NGFUNCTI
ON:
Obtai
ningpr
ices
Sel
ect
ingVendors

Awar
dingpur
chaseor
der
s

Fol
l
owi
ngupondel
i
ver
ypr
omi
ses

Adj
ust
ingandset
ti
ngcompl
aint
s

Sel
ect
ingandt
rai
ningofpur
chasi
ngper
sonnel

Vendorr
elat
ion

REVI
EW OFLI
TERATURE
I
nvent
orymanagementwasf
ir
sti
nvent
edbyAdam whenhenamedal
ltheani
mal
sorwhenhe
count
edthecl
eananduncl
eanbeat
sfort
hear
k,butf
ort
hesakeofbr
evi
tywewi
l
ljumpaheadt
o
modernt
imes.

Bef
oretheIndustri
alRevol
uti
onmerchant
sbasi
cal
l
yhadtowr i
tedownallofthe
pr
oduct
stheysoldever
yday .Thentheyhadtoordermor
eproduct
stobasedonthei
rhand–
wri
tt
ennot
esandthei
rgutfeel
ings.

Mer
chant
scouldnotreall
yaccountforstolengoodsunl
esstheydi
dti
me-consuming
physicalcount
sonar egul
arbasi
s.Theyal
sohadt roublemaki
ngsur
etheygott
heri
ghtnumberof
productswhenorderscameinbecauseofsparserecordkeepi
ng

In1889amannamedHer manHol l
eri
thinventedthefir
stpunch
cardthatcouldbereadbymachines.Byfeedingsheet
sofpapert hathaveal it
tl
ehol esi
nspecifi
c
places,peoplecouldrecor
dcomplexdataofv ari
etyofpurposesfrom censust akingtoclocki
ng
wiseinandoutofwor kThiswasbasical
lytheprecursort
ocomput er
st hatcanr eadthedatain
ti
nymi cr
ochips.

Inthe1960’
sagr oupofret
ail
erswi
thamet hodoft
racki
ngi
nvent
ory
,the
moder
nbar
code.Ther
eweresever
alcompet
ingty
pesofbar
codes.

Nowaday stheimplement
ati
onofinvent
orymanagementappl icat
ionshas
become a v al
uabl
et oolforor gani
zati
on l
ooki
ng more eff
ici
entmanage st ock.When t he
capabil
i
t i
esofappli
cati
onv ary,mostinvent
orymanagementapplicat
ionsgiveor gani
zati
ona
str
ucturedmethodofaccounti
ngforall
incomi
ngandoutgoi
nginvent
orywithi
ntheirf
acili
ti
es.

Organi
zat
ionssaveasigni
fi
cantamount i
ncost sassoci
atedwi
thmanuali
nvent
orycount
s,
admini
str
ati
veer
ror
sandreduct
ionsi
ninv
ent
oryst
ock-out
s.

CONCLUSI
ON:

AS Permyknowl
edgei
nvent
orymanagementpl
aysacr
uci
alr
olebecausei
tmakest
het
otal
pr
oduct
ionprocessalongwi
ththeal
locati
onofr
esour
ceswit
hinat
imewhi
chr
esul
tsi
nef
fi
cient
pr
oduct
ionandfinal
l
yconsumesprof
itsfort
heor
gani
sati
on

Asperthi
sper
ishabl
eor
gani
sat
ionofVIJAYADAIRY iobser
vethatt
heyfoll
ow JI
T,ABC,
SOS,
Techni
quesinor
dertomakepr
oduct
ionpr
ocessal
ongwiththefi
nanci
albudget

SI
ZEOFI
NVENTORY:Thesi
zeofi
nvent
orydependsonsev
eralf
act
orssuchassal
esv
olume,
capaci
tyofpl
antavai
labi
l
ityofr
aw materi
als,f
luct
uat
ionsinpr
iceofmater
ial
sf i
nished goods,
l
engthofproduct
ioncycl
eetc.Gener
all
yprogressi
veorgani
zat
ioni
nvent
orylevel
scont i
nuousl
y
i
ncreaseasi ncreaseinsal esandproducti
on.Asal r
eadystat
edt hepr
imeobject
iveofinvent
ory
managementi st ooptimizesizeofi
nventor
ysot hatsmoothperf
ormanceofpr
oduct i
onandsales
arepossible.Increaseinsi zeofinvent
oryinvolv
esext r
a costapartfr
om adverselyef
fect
ing
profi
tabi
l
ityandl iqui
dit
y.Thesi zeofnetworki
ngcapi t
alismeasuredwit
hthehelpoff oll
owing
rati
o

Si
zeofI
nvent
ory
=INVENTORY/TOTALCURRENTASSETS

Ther
esul
tsofsi
zeofi
nvent
oryr
ati
oasappl
i
edt
oKDMPMACUL

I
NVENTORY2012-
2013

PRODUCTS AMOUNT

MI
LKANDMI
LKPRODUCTS 2946775

CATTLEFEEDANDSEEDS 4446961

STORESANDPACKAGEMATERI
AL 2357037

MECHANI
CALANDGARAGESPARE 52129251

FEEDRAW MATERI
ALS 198016617

TOTAL 25,
98,
96,
641

CURRENTASSETS2012-
2013

PARTI
CULARS AMOUNT

I
NVENTORI
ES 259896641

CASHANDCASHEQUI
VALENT 461024182

TRADERECEI
VABLES 21053760

SHORTLOANSANDADVANCES 12270202

OTHERCURRENTASSETS 9777056

TOTAL 764021841

I
NVENTORY 2013-
2014

PRODUCTS AMOUNTS

MI
LKANDMI
LKPRODUCTS 27759006

CATTLEFEEDANDSEEDS 25933155

STOREANDPACKAGEMATERI
AL 210460245
MECHANI
CALANDGARAGESPARE 27292858

FEEDRAAW MATERI
ALS 304052706

TOTAL 59,
54,
97,
970

CURREENTASSETS

PARTI
CULARS AMOUNT

I
NVENTORI
ES 59,
54,
97,
970

CASHANDCASHEQUI
VALENT 69,
6690,
216

TRADERECEI
VABLES 1,
08,
61,
243

SHORTLOANSANDADVANCES 4,
76,
62,
601

OTHERCURRRENTASSETS 55,
91,
318

TOTAL 1356303348

I
NVENTORY2014-
2015

PRODUCTS AMOUNTS

MI
LKANDMI
LKPRODUCTS 435711898

CATTLEFEEDANDSEEDS 4,
18,
16,
855

STORESANDPACKAGEMATERI
AL 4,
97,
81,
619

MECHANI
CALANDGARAGESPARE 131107887

FEEDRAW MATERI
ALS 112241201

TOTAL 770,
659,
460

CURRENTASSETS2014-
2015

PARTI
CULARS AMOUNTS

I
NVENTORI
ES 77,
06,
59,
460

CASHANDCASHEQUI
VALENT 36,
02,
16,
634

TRADERECEI
VABLES 1,
31,
46,
981

SHORTTERM LOANSANDADVANCES 30,

56,
737

OTHERCURRENTASSETS 74,
37,
900
TOTAL 1154517712

I
NVENTORY2015-
2016

PRODUCTS AMOUNT

MI
LKANDMI
LKPRODUCTS 6,
516,
495,
106

CATTLEFEEDANDSEEDS 22,
85,
44,
934

STORESANDPACKAGEMATERI
AL 1,
97,
81,
619

MECHANI
CALANDGARAGESPARE 30,
645,
299

FEEDRAW MATERI
ALS 44,
4575578

TOTAL 72,
40,
07,
772

CURRENTASSETS2015-
2016

PARTI
CULARS AMOUNT

I
NVEENTORI
ES 72,
40,
07,
772

CASHANDCASHEQUI
VALENT 36,
02,
16,
634

TRADERECEI
VABLES 1,
31,
46,
981

SHORTTERM LOANSANDADVANCES 30,

56,
737

OTHERCURRENTASSETS 74,
37,
900

TOTAL 1177293884

I
NVENTORY2016-
2017

PRODUCTS AMOUNT

MI
LKANDMI
LKPRODUCTS 565736795

CATTLEFEEDANDSEEDS 65958543

STORESANDPACKAGEMATERI
AL 56796354

MECHANI
CALANDGARAGESPARE 232656729

FEEDRAW MATERI
ALS 2422376798

TOTAL 93,
76,
41820
CURRENTASSETS2016-
2017

PARTI
CULARS AMOUNT

I
NVENTORI
ES 93,
76,
41,
820

CASHANDCASHEQUI
VALENT 49,
02,
03,
150

TERADERECEI
VABLES 30,
37,
946

SHORTTERM LOANSANDADVANCES 85,

57,
230

OTHERCURRENTASSETS 94,
26,
798

TOTAL 1448866944

Showi
ngt
hesi
zeofI
nvent
ory

YEAR I
NVENTORY CURRENTASSETS SI
ZE

2012-
2013 25,
98,
96,
641 764021841 34.
0%

2013-
2014 59,
54,
97,
970 1356303348 43.
90%

2014-
2015 770659460 1154517712 66.
75%

2015-
2016 72,
40,
07,
772 1177293884 61.
49%

2016-
2017 93,
76,
41820 1448866944 64.
71%
I
NTERPRETATI
ON:
Thef
igur
eshowst
hesi
zeoft
hei
nvent
oryi
nthesel
ect
edent
erpr
isedur
ingt
he
per
iodof2012-
2017.I
tisev
identf
rom t
het
abl
ethati
nvent
oryconst
it
utedt
hemosti
mpor
tant
el
ementoft
otal
Cur
rentAsset
sint
hisst
udyasi
tisf
oundonav
erage66%oft
otal
Cur
rentAsset
s.
I
tisobser
vedf
rom t
het
abl
ethatt
hesi
zeoft
heI
nvent
ory
.

I
NVENTORYTURNOVERRATI
O:Thi
srat
ioi
ndi
cat
es t
henumberoft
imes i
nvent
oryor
st
ocki
srepl
aceddur
ingt
hey
ear
.Itmeasur
esr
elat
ionshi
pbet
weencostofgoodssol
dand
i
nvent
oryl
evel
.Ithel
pst
hemanagementt
oknowwhet
hert
hest
ockoff
ini
shedgoodshel
dsal
es
ar
ereasonabl
eorunr
easonabl
easscompar
edwi
thpr
edet
ermi
nedst
andar
d.

Agai
nithel
pst
odet
ermi
neev
ent
hel
i
qui
dit
yofaconcer
nasi
tindi
cat
est
her
ateatwhi
cht
he
i
nvent
oryorst
ocki
sconv
ert
edi
ntosal
esandt
hem i
ntocash.

YEAR COSTOF AVERAGE

GOODSSOLD I
NVENTORY=OPENI
NGI
NVEENTTORY+CLOSI
NGI
NVENTORY

2012-
2013 4096686265 259896641+231531160 = 245713900.
5

2013-
2014 3823162340 259896641+595497970 = 4276983055
2

2014-
2015 5221784287 5954979970+770659460
2 = 683078715

2015-
2016 5642703417 770659460+724007772
2 =747333616

2016-
2017 5917692269 724007772+937641820
2 = 1830824796

I
NVENTORYTURNOVERRATI
O=COSTOFGOODSSOLD\AVERAGEI
NVENTORY

YEAR COST AVERAGE RATI

O
OFGOODSSOLD I
NVENTORY

2012-
2013 4096686265 245713900.
5 16.
67
2013-
2014 3823162340 4276973055 8.
93

2014-
2015 5221784287 683078715 7.
64

2015-
2016 5642703417 747333616 7.
55

2016-
2017 5917692269 1830824796 7.
12

I
NTERPRETATI
ON:
From t
heabov
etabl
e,i
tisobser
vedt
hatt
hei
nvent
oryt
urnov
err
ati
ohasbeen
decr
easedf
rom 16.
67t
o7.
12t
imesf
rom they
ear2012-
2017
DAYSOFI
NVENTORYHOLDI
NG I
nvent
oryday
smeanst
heav
eragenumberofday
sgoods
r
emai
nini
nvent
orybef
orebei
ngsol
dal
socal
l
edday
scov
er,
stockcov
er,
day
sofi
nvent
ory or
day
ssal
est
oinv
ent
ory

DAYSOFI
NVENTORYHOLDI
NG= 365

I
NVENTORYTURNOVERRATI
O

YEARS NOOFDAYSI
N I
NVENTORYTURN PERI
OD
YEAR OVERRATI
O
(
DAYS)

2012-
2013 365 16.
67 22

2013-
2014 365 8.
93 41

2014-
2015 365 7.
64 48

2015-
2016 365 7.
55 48

2016-
2017 365 7.
12 51
I
NTERPRETATI
ON:Fr
om t
het
abl
ethet
rendofi
nvent
oryhol
dingper
iodoft
hecompany
.Iti
s
under
stoodt
hatt
heday
sofhol
dinghasgr
adual
l
ydecr
easedf
rom 51day
sto22day
s,because
t
hei
nvent
oryt
urnov
err
ati
ohol
dingper
iodar
eint
err
elat
ed.I
fthei
nvent
oryt
urnov
err
ati
o
i
ncr
easest
heday
sofhol
dingper
ioddecr
easesandv
ice-v
ersa.I
tindi
cat
est
hei
mpr
ovementi
n
t
hemanagementef
fi
ci
encyi
nconv
ert
ingt
hei
rinv
ent
ori
esi
ntosal
esasf
astaspossi
ble

FI
NISHEDGOODSTURNOVERRATI
O:A Fi
rm can’
tpr
oducei
mmedi
atel
ywhencust
omer
s
demand goods.Ther
efor
eto suppl
yfi
nished goods on a r
egul
arbasi
s,t
hei
rst
ock has t
o
mai
ntai
nedf
orsuddendemandf
rom cust
omer
s.I
ncaseofFi
rm seasonali
nnat
ure,subst
ant
ial
f
ini
shedgoodsshoul
dbekeptt
omeett
hepeakdemand.

FI
NISHEDGOODSTURNOVERRATI
O=COSTOFGOODSSOLD/FI
NISHEDGOODS

YEAR COST OF GOODS FI

NISHEDGOODS RATI
OS
SOLD

2012-
2013 4096686265 185903011 21.
74

2013-
2014 3823162340 517030052 7.
39

2014-
2015 5221784287 5163405077 1.
01

2015-
2016 5642703417 210618350 26.
79

2016-
2017 5917692269 235009040 25.
18
I
NTERPRETATI
ON:Fr
om t
heabov
etabl
eweconsi
der
edt
hatf
ini
shedgoodst
urnov
err
ati
oas
i
ncr
easedf
rom t
he21.
74i
nthey
ear2012-
2013 atacer
tai
nper
iod t
hatper
iodt
hat2014-
2015i
t
wi
l
ldecr
easest
o1.
01t
imesandf
inal
l
yint
hey
ear2015-
2016i
twi
l
lincr
easest
o26.
79 t
imesand
al
soi
nthey
ear2016-
2017i
twi
l
lbei
ntheposi
ti
onof25.
18t
imesoff
ini
shedt
urnov
err
ati
o.

DEBTORSTURNOVERRATI
O:I
tshowst
her
elat
ionshi
pbet
weensal
esanddebt
orsoft
hef
ir
m.I
t
al
someasur
est
hel
i
qui
dit
yoft
hef
ir
m .Thi
srat
ioi
ndi
cat
est
her
ateatwhi
chdebt
sar
ecol
l
ect
ed
i
nfl
uencest
hel
i
qui
dit
yoft
heconcer
n.I
not
herwor
dst
hisi
sther
ati
o,whi
chi
ndi
cat
est
heav
erage
col
l
ect
ionper
iodort
heav
erageper
iodofcr
edi
tal
l
owedt
odebt
ors.I
ftheact
ual
per
iodofcr
edi
tor
t
hei
deal
per
iodofcr
edi
tli
ke30day
sthei
ndi
cat
ioni
sthatt
hecr
edi
tper
iodi
snotef
fi
cient
.

DEBTORSTURNOVERRATI
O:TOTALSALES/DEBTORS

YEARS TOTALSALES DEBTORS RATI

O

2012-
2013 416916057 42294673 9.
85

2013-
2014 4071498024 31915003 12.
75

2014-
2015 516340507 24008224 21.
50

2015-
2016 566598737 15667322 36.
16

2016-
2017 59318599 5558287 10.
67
I
NTERPRETATI
ON:Debt
orst
urnov
err
ati
oindi
cat
est
henumberoft
imesdebt
orst
urnov
ereach
y
ear
.Gener
all
yhi
ghert
hev
alueofdebt
orst
urnov
er,t
hemor
eef
fi
cienti
sthemanagement of
cr
edi
t.I
nthi
sfi
gur
eatt
hey
ear
2012-
2013t
het
urnov
err
ati
owi
l
lbemi
nimum l
eveli
.e.
,9.
83andi
n
t
hey
eart
hedebt
orst
urnov
err
ati
owi
l
lbei
ncr
easesgr
adual
l
yint
hey
ear2015-
2016i
.e.
,36.
16 I
n
t
hey
ear2016-
2017t
hedebt
orst
urnov
err
ati
owi
l
lbei
nther
ati
oof10.
67.

DEBTORSCOLLECTI
ONPERI
OD:Thet
erm debt
orscol
l
ect
ionper
iod i
ndi
cat
est
heav
eraget
ime
t
akent
ocol
l
ectt
radedebt
s.I
not
herwor
ds,
areduci
ngper
iodoft
imei
sani
ndi
cat
orofi
ncr
easi
ng
t
heef
fi
ciency

DEBTORSCOLLECTI
ONPERI
OD= 365

DEBTORSTURNOVERRATI
O

YEARS NOOFDAYSI
NAYEAR DEBTORSTURNOVERRATI
O COLLECTI
ONPERI
OD

2012-
2013 365 9.
85 37

2013-
2014 365 12.
75 29

2014-
2015 365 21.
50 17

2015-
2016 365 36.
16 10
2016-
2017 365 10.
67 34

I
NTERPRETATI
ON:Fr
om t
heabov
etabl
ethedebt
orscol
l
ect
ionper
iodwi
l
lber
educedf
rom 2012-
201337day
sto2016-
2017t
o34day
ssot
hef
ir
m wi
l
lbeef
fi
cientposi
ti
ont
ocol
l
ectdebt
sfr
om
debt
ors.

CREDI
TORSTURNOVERRATI
O:Cr
edi
tor
stur
nov
err
ati
oshowst
her
elat
ionshi
pbet
weencr
edi
t
pur
chasesandcr
edi
tor
sincl
udi
ngaccount
spay
abl
e.Thi
srat
ioi
ncl
udest
heav
erageper
iodof
cr
edi
trecei
vedf
rom cr
edi
tor
sfur
theracompar
isonoft
hisr
ati
owi
tht
hedebtcol
l
ect
ionper
iod
r
ati
owi
l
lindi
cat
est
het
imel
agbet
weent
het
woper
iodofcr
edi
tandt
het
imel
agbet
weent
ocr
edi
t
per
iodwi
l
lindi
cat
est
hedur
ati
onf
orwhi
chwor
kingcapi
tal
isr
equi
redt
obear
ranged.

CREDI
TORSTURNOVERRATI
O=PURCHASES/AVERAGECREDI
TORS

YEARS PURCHASES AVERAGECREDI

TORS RATI
O

2012-
2013 3422896472 35662590.
5 95.
98
2013-
2014 3717174962 60245939.
00 61.
70

2014-
2015 4251865565 459591370 92.
5

2015-
2016 1051187343 35153318.
5 29.
90

2016-
2017 2084434829 39596854.
00 52.
6

I
NTERPRETATI
ON:I
tisal
sosi
mil
art
odebt
orst
urnov
err
ati
o.I
tindi
cat
est
hespeedwi
thwhi
cht
he
pay
ment
sforcr
edi
tpur
chasesar
emadet
othecr
edi
tor
s.Gener
all
yal
ow r
ati
oispr
efer
abl
e,
becausef
ir
m hav
etogetl
ow cr
edi
tper
iodst
oit
spur
chases.Buti
nthey
ear2016-
2017t
hecr
edi
t
per
iodi
stoi
ncr
easedatt
her
ati
oof451

CREDI
TORSPAYMENTPERI
OD:I
tisat
ermi
ndi
cat
est
hatt
het
imet
akenbyt
hecompanyt
o
compl
eteal
li
tcr
edi
tst
akenf
rom i
tscr
edi
tor
s

CREDI
TORSPAYMENTPERI
OD= 365

CREDI
TORSTURNOVERRATI
O

YEARS NOOFDAYSI
NA CREDI
TORSTURN PAYMENTPERI
OD
YEAR OVERRATI
O

2012-
2013 365 95.
98 4
2013-
2014 365 61.
70 6

2014-
2015 365 92.
5 4

2015-
2016 365 29.
90 12

2016-
2017 365 52.
6 7

I
NTERPRETATI ON:Fr om theabovetablethecredi
tor
spay mentper
iodwi l
lbeinaccurat
epositi
on
i
nt hey ear2012-2013i twas4day sandi tsl
i
ghtlyincr
easesinthey ear2013-
2014 andi twill
decreasesinthey ear2014-2015at4day sitwi
llbeinaccurat
ewayf orpaymentofitscredi
tsand
theyear2016-2017i tt
akes7day stoclearit
scredi
tamount

EOQANALYSI
S:I
nInv
ent
orymanagement
,economi
cor
derquant
it
yist
heor
derquant
it
ythat
mini
mizesthetotalhol
dingcostsandor der
ingcost
s.EOQ appl
iesonlywhendemandf ora
pr
oductisconst
antovertheyearandeachneworderi
sdeli
ver
edi
nf ul
lwheni
nvent
oryzer
o.Thi
s
i
sdonet omini
misevari
ablei
nventor
ycosts.

EOQ= 2A*
0

Economi
cor
derquant
it
y
A=Annual
Consumpt
ion

O=Or
der
ingcost

C= Car
ryi
ngcost

YEAR ANNUAL ORDERI

NG CARRYI
NG EOQ
CONSUMPTION COST COST

2012-
2013 2939.
26 40365.
59 773.
60 553.
83

2013-
2014 4456.
73 53901.
71 852.
70 751.
38

2014-
2015 6115.
15 74858.
17 884.
23 1017.
54

2015-
2016 9759.
84 80937.
74 815.
79 1391.
62

2016-
2017 9808.
03 93038.
80 860.
18 1456.
62

I
nt er
pret
ation:Fr om t
heabov etrend of EconomicOrder Quanti
tyoft hecompanyhasbeen
generall
yincreasedfr
om 553.83timesto1456.62timesduri
ngt heperi
odof2012-2013to2016-
2017 and i tis decr
easedfr
om 1456.62times to13291.62ti
mes dur i
ngtheperi
od2016-2017
to2015-2016.TheEconomi cOr derQuant
it
yishighert
heoperat
ingcy cl
ebecomesi twi
ll
leadsto
higherprofi
tstothecompany.

FI
XEDASSETSTURNOVERRATI
O: Fi
xedAsset
sTur
nov
err
ati
oist
her
ati
oofsal
est
othev
alue
off
ixedasset
s.I
tindi
cat
eshow wel
lthebusi
nessi
susi
ngi
tsf
ixedasset
stogener
atesal
es.A
decl
i
ningr
ati
omayi
ndi
cat
est
hatt
hebusi
nessi
sov
eri
nvest
edi
npl
ant
,equi
pmentorf
ixedasset
s.

FI
XEDASSETSTURNOVERRATI
O= COSTOFGOODSSOLD

AVERAGEFI
XEDASSETS
YEARS COSTOFGOODSSOLD AVERAGEFI
XEDASSETS

2012-
2013 4096686265 214898568+225341668 = RATI
O
220120118
18.
6
2
15.
4
2013-
2014 3823162340 225341668+270511172 =
247,
926,420 26.
3

2 40.
1

2014-
2015 5221784287 270511172+12,
57,
45,
540= 35.
8
198,
128,356

2015-
2016 5642703417 12,
57,45,
540+15,
53,
66,
859
=140556199

2016-
2017 5917692269 15,
53,66,
859+17,
49,
21,
589 =
165144224

INTERPRETATI ON:From theabov etabl

ethef i
xedassetsturnoverrati
owil
lbei ncreasedi nt
he
year2015-2016attherat
ioof40.1andi twil
lbedeclinedi
nt heyear2016-2017att heratioof35.
8
soitcl
earlystat
edthatdecl
iningoffi
xedasset srat
iowil
lanalysedthatthefi
rm wil
li nvestmorei
n
assetwhichrefl
ect
stheposi t
ionoftheorganizat
ioninthecompet i
ti
v eworl
d.

FI
NDI
NGS:
1.I
tisi
mpor
tantt
ost
udyt
hesi
zeof I
nvent
oryManagementofanyent
erpr
ise.I
tdeci
dest
he
needf
orbestowi
ngact
ioni
nthemanagementoft
hiscomponent
.Int
hisent
erpr
iseunder
t
hest
udyI
nvent
oryf
ormedamaj
orper
cent
ageofsi
zeofi
nvent
oryi
ncr
eases .I
tvar
ied
bet
weent
hel
owestper
cent
ageof34%i
n2012-
2013t
o hi
ghestper
cent
ageof 64.
71%i
n
 2016-
2017.

2.I
nthi
scomposi
ti
onofcur
rentasset
s domi
nat
ingt
hei
nvent
oryf
rom t
hey
ear2012-
2013
upt
o2016-
2017.

3.Someoft
hei
nvent
ori
esar
eor
der
edont
hebasi
sofmi
nimum st
ockorr
eor
derl
evel
.

4.Companyi
smai
ntai
ninggoodpr
opor
ti
onofi
nvent
ori
esi
ngr
oss wor
kingcapi
tal
.

5.Ther
eis no adequat
e st
oragef
aci
l
iti
esi
ncompany
.

6.TheKr
ishnaDi
str
ictMi
l
kPr
oducer
sMut
ual
l
yAi
dedCo-
oper
ati
veUni
onLi
mit
edusi
ng(FI
FO)
Fi
rsti
nfi
rstoutmet
hodf
orr
awmat
eri
als.

7.TheKr
ishnaDi
str
ictMi
l
kPr
oducer
sMut
ual
l
yAi
dedCo-
oper
ati
veUni
onLi
mit
edmai
ntai
nit
s
I
nvent
oryt
urnov
erRat
ioi
n opt
imum l
evelwhi
ch i
ncr
eases i
ts f
ir
m per
for
mance by
mai
ntai
ningaccur
atesal
esandi
ncr
easesf
ir
mspr
ofi
tnat
ure.

8.Thecompanyhast
omai
ntai
nthef
oll
owi
ngt
echni
quesl
i
keEOQ,ABC Anal
ysi
s,SOS
Anal
ysi
s.
SUGGESTI
ONS:

1.Per
iodi
cst
ockv
eri
fi
cat
ionwi
l
lpr
ovi
desmoot
hpr
oduct
ioncompar
edwi
thannualst
ock
v
eri
fi
cat
ion.

2.Thecompanyi
shav
inggoodsal
esf
ort
hei
rpr
oduct
sdur
ingal
lthey
ear
soft
hest
udy
.

3.Companyshoul
dtakemeasur
esf
ormai
ntenanceofpr
operst
oresandspar
es soast
o
av
oidt
heshor
tageofpr
oduct
s.

4.The EOQ cal

cul
ated i
s suggest
ing t
hatt
he company shoul
d obt
aini
tsi
nvent
ory
r
equi
rement
s by pl
aci
ng or
der
sfr
equent
lyt
oit
s suppl
i
ersr
ather t
han one t
ime
r
epl
eni
shment
.

5.Thecompanyshoul
dincr
easest
hest
oragef
aci
l
iti
es.

6.I
tisbet
tert
ost
artownmanuf
act
uri
nguni
tformat
eri
alsl
i
kewhi
chhasmonopol
ysuppl
i
er,
sot
hatOr
der
ingcostandCar
ryi
ngcostr
educesandcanhav
emat
eri
alsi
nti
me.
 CONCLUSI
ON:
Thegoalofweal thmaxi mizat
ion i
s affect
edbyt heeffi
ciencywithwhichi nvent
oryis managed.
Inv
entori
esconst it
uteabout 60% ofcur rentasset
scompani esinI ndia.Themanuf acturi
ng
companieshol dinvent
oriesintheform ofr aw mater
ial
s,wor kinprogr essandf ini
shedgoods.
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entori
esf aci
li
tatethesmoot hpr oducti
onandsal esoper ati
ont o guardagainstt heriskof
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echangesi nusagerateanddeliver
yinti
meandt otakeadvantageofpricefl
uctuati
ons.

I
nvent
oriesr epresentinvest
mentofaf irm’sfunds.Theobj ectiv
es
oftheinventor
ymanagementshoul dbet hemaxi mizati
onoft hev al
ueoft hef i
rm.Thereforethe
fi
rm shouldconsi
dercost,ret
urn,ri
skf actors.Ininventor
ymai nt
enancet wot ypesofcost sar e
i
nvolvedcarryi
ngcostandorderi
ngcostt hef i
rm shouldmi ni
mi zethetotalcost.Thefirmf ol
lows
i
nventorycontr
olt
echniques areA-B-C, EOQandJI Ttechniquesforbetterholdi
nginventori
es.