Assessment of Inventory Management in Textile Industry

  AssessmentofI nvent orymanageme menti nText i l eI ndust r y (A casest udyofKK Texti l eI ndust r y)

  Ar esear chRepor tSubmi mi t t edtoAccount i ngdepart menti n Par t i alFul fil l mentofTheRequi r eme mentFor B. ADe Degr eei n  Account i ng.

Pr epar edby:Abdul ker i m Bi r eda  Advi sor:Mr .MuhammedAr agi e

Depar t mentofAccount i ng Col l egeofBusi nessandEconomi mi cs  Ji mmaUni ver si t y

  Ma May,2012  Ji mma,Et hi opi a

 Abst r act  Thi sr ese ar ch paper t r i ed t o assessi nve nt ory ma manageme ment s ofKK t ext i l e I ndus t r y .I t addre ss ed f our basi cr es ear ch ques t i ons desi gned t o asse ss i nv ent or y manage ment per f or mance of t he i ndus t r y . For t hi ss t udy t he r es ear cheruse dbot hpri maryandse condar ydat a,butmuchf ocuse doni nt he pr i mar y dat ai n whi c h mor ei nf or mat i on c oul d be obt ai ned by co nduct i ng unst ruct ur edi nt ervi ew andst ruct ur equest i onnai r es. Speci fical l yt hest udyt r i edt oexami mi net hei ndust ryi nve nt oryma manageme menti n appr opr i at e way ,t o comp mpare and cont r astt he act ualpr act i ce ofKK t ext i l e i ndust r yi nve nt or y manageme ment wi t ht he t heor e t i cal aspect s of i nve nt ory manage me nt ,and t o det er mi ne t he i ndus t r ys t r engt h and we aknes se s wi t h r egar di ngt oi nvent oryma manageme mentsyst em m. . Accor di ngl y ,t hest udywi l lhavea r el evance atl eastf or t he or gani zat i on t oi dent i f y pr obl em ms s and st r engt hs r el at ed t oi t si nvent oryma manageme mentand pr act i ce,t ol ook asanyopport uni t y andt r eatandi nt ur nt ohaveagoodi nve nt oryma manageme mentandpr act i ce.  Thei nt er pr e t at i on f ocuson t her esul tofpr e v al e ntdat a undercons i der at i on. Rel ev ant r ec om mm mendat i on t hat hel ps t he i ndust r yt or edesi gn t he cur r ent sys t em and ot herar eas t he i ndust ry shoul d gi ve speci al s at t ent i on wi l lbe made.

I

 Acknowl edgement

I nt he firs tand t he mos tgr eatwoul dl i ke t hanks f ormy my Al l ah,he gi vet he pe r s i s t e nc eoft oac c ompl i s ht hi spape r . Next ,Iwoul dl i ket oexpr essoutappr eci at i on andi ndebt ednesst omyadvi sor Muham mm med Ar agi e,who c ont r i but et o me nec es sar yi nf or mat i on as we l las gi vi ng advi se t o done t hi s paper . And al s o, I woul dl i ke t hanks Ji mma uni ver si t y especi al l y col l ege ofBusi ness and Econom mi i cs f or desi gni ng t hi s pr ogram t hr ought hatst udent sdeve l opt hei rknowl edge.

Fi nal l y ,Iwo ul dl i ket osi nc e r et hankst hee mp mpl o y e e so fKK t e x t i l eI ndus t r y ,who  we r e wi l l i ng t or es pond t o my i nt er vi e w and t hanks f ormy f r i ends and my f ami mi l ywhohel pedme medonet hi spaper .

 T eof I Iabl Content  Abs t r act-I  Ac knowl edge me nt-I I  Tabl eofc ont ent-I I I

Chapt erOne  :I nt r o duc t i on 1. 1. 1. 2. 1. 3. 1. 4.

1. 5. 1. 6. 1. 7. 1. 8. 1. 9.

Bac kgr oundoft hes t udy-1 Bac kgr oundoft heor g ani z at i on-2 St at e m me e ntoft hepr obl e m-4 Obj e ct i v eoft hes t udy5 1. 4. 1.Ge ner alobj ec t i v e-5 1. 4. 2.Speci ficOb Obj ect i v e-5 Re sear c hQue st i on-5 Si gni fic anceoft hes t udy-6 Scopeoft hes t udy6 Li mi t at i onoft hes t udy-6 St r uct ur eoft hes t udy-7

Chaptert wo:Li t e r at ur eRe v i e w 2. 1. De fini t i onofi nv e nt or y manag eme nt8 2. 2. Nat ur eofi nv ent or i es9 2. 3. Whyi nv ent or yhol dbyor g ani z at i ons9 2. 4. Typeofi nv ent or y-10 2. 5. Requi r eme mentf oreffect i vei nvent orma manageme ment-11 2. 6. I nv e nt or yma manag eme ntt e c hni que s-12 2. 7. I nv ent or yc ont r olpr o ce dur e s-16

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ChapterThr ee:Res ear c hMe t hodol ogy& Des i gn 3. 1. Dat at ype- 19 3. 2. Subj ectoft hes t udy -19 3. 3. Sour c eofdat aCol l ect i on19

3. 4. 3. 5. 3. 6. 3. 7. 3. 8.

Me t hodofdat ac ol l ec t i on-1 19 Sampl es i z e-20 Sampl i ngt e chni que-20 Dat apr o ce ss i ngandAnal y zi ng-20 Me t hodofpr e s e nt i ngt heoutc ome21

Chapt erFour: Dat apr e s e nt at i o n,Anal y s i sa ndI nt e r pr e t at i o n 4. 1.Re spondent spe r sonali nf or m ma at i on-22 4. 2.Nat ur eo fi nv e nt or yma manag e me me nto ft heo r g ani z at i on-24 4. 3.ThePol i ci esandpr ocedur esofi nvent orymanageme ment- 25 4. 4.I nv ent or yc ont r olsys t e m-27 4. 5.I nv e nt o r ymanag e me me ntt e c hni q ue soft heor g ani z a t i o n-29 4. 6.Fi v ey ear sdat aofi nv ent or yac t i v i t y-31 Chapt erFi ve:Summar y,Concl usi onandRe Recomm mmendat i on 5. 1.Summar yofFi ndi ngs-34 5. 2.Concl usi on-35 5. 3.Recomme ndat i on-37 Re f e r ence-39 Appendi x-40

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Chapt erOne:I nt r oduct i on 1. 1. Backgr oundoft hest udy I nve nt oryconsi st soft hemosti mport ante l eme mentofanysys t em deal i ngwi t h t hesuppl y ,manuf act ur eanddi st r i but i on ofgoodsandser vi ce.Theconceptof i nv ent or y manage ment i sv er y ol d but i tc am me ei nl i ght wh when har r i e F. W, publ i shedhi swor koncl assi calor dersi zemo modelandt hewor kwasext endedby r ayme mend F. F( 1991)and Wi l son R. M ( 1934) .Butonl yaf t ert hesec ond wor l d

 warwi t ht he de v el opmentofoper at i onalr esear c h and c omput e rt ec hnol ogy t hatt het he or e t i c alc onc ept sg otapr a ct i c alappl i c at i on. Hol di ng i nvent ory i s of t en i nt er pr et ed as carr yi ng an asset ,butal so means carryi ng ri sk i nt erms ms ofobsol escence det eri orat i on axed qual i t yf aul t si n financi alt er msi nve nt oryi mpact st hebal anceshee t ,cash flow,pr ofitandl oss account .Oper at i onal l yi nve nt ory affec t s pr oduct i on effi ffic ci ency and on t i me del i ver y( col dr at t e,1999)i dent i fiesi nvent orya key comp mponentf orme measur i ng  bus i nessper f or mancei n manuf act ur i ngenv i r onme nt .Thusgoodmanageme nt o fi nv e nt o r y ,e s s e nt i alt oac hi e v i ngbus i ne s so bj e c t i v eandbui l di ngc o mp mpe t i t i v e advant age.I nvent orymanageme mentr ef er st ot heeve nt soract i vi t i est hataffect i nv ent ory dur i ng t he proc es s of t r ans t r ansf er r i ng i n put r es our ce s and mat er i alt o put goods.Achi ev i ng i nve nt or y manageme ment i s a pr ec ur sor t o i nv ent or y manage me ntwhi c hi sconcer ned wi t ht heme me ansuse dt o bal anc e i nfli ct i ng organi zat i onal obj ect i ves on t he over al ll evel of st ock hel dt o det er mi neopt i mum i nvent oryl eve lf oreach( Dabbker ,1982) .

1. 2. Backgr oundoft heorgani zat i on KK pr i vat el i mi t edcomp mpanywases t abl i shedi n 1992byMr Mr ,Ket em ma aKebede,a pi oneeri nt heeconomi mi cpol i cyofDer geRegi medebi l i t at ed.I n vi ew oft hei n ade quat eo fi t si ni t i alas s e t st hec o mp mpanyado pt e df o rt hes ho r tt e r m as t r at e g y ofengagi ngi nt hebusi nesst hatr equi r esmi mi ni mum r esour cesbot hi ncashand i n ki nd.I tmer el yst at edasdi st ri but i on ofi mpart edand l ocal l ymanuf act ur ed t ext i l e pr oduct s, as wel l as an export er of agr i cul t ur al comm mmodi t i es .

Si mul t aneousl y ,i tsoughtt opr omo mot ei t sbusi nessconnect i onsanddi ver si f yi t s oper at i onst oi mpr ovei t sfinanci alandhuman r esour ces.Af t ert woyear si nt he  bus i ness,t hecompanywasabl et or egi s t eradefini t esi gn ofgr owt h.I tl e ased and co mpl e t el yf ur ni shed a t wo r oom offi ffic ce space ,e mpl oy ed one qual i fied sec r et aryandt wosal esme men.  The c ompany pr i nc i pl e s ar ec r edo,c har t er ,vi si on and mi ssi on i s based on l ong-l ast i ngcor eval uesand cl earst r at egi cf r ame mework.Thecomp mpanyst r at egy  bui l ds up on t hi ss t r ong f oundat i on wi t h af ocus on c ont i nue d successf ul deve l opment oft he comp mpany .Al lt hese pr i nci pl es setdi st r i ct s t andards of  behav i orandpr ovi deahi ghdegr e e oft r anspar ency ,t her e f or egi v i ngl i f et ot he “ s pi r i tofpr i v at el i mi t e dc ompany .  Thec ompanyvi si on aspi r et os eet heKK pr i v at el i mi t ed companyat t ai ned a si gni ficant posi t i on i n t he r egi onal and i nt er nat i onal t r adi ng house, i n suppl yi ngandr ender i ngawi derangeofcomm mmodi t i esandser vi cesr espect i vel y , and t her eby ,gai n ast r ongpr ese ncei nt hewor l d wi debusi nessar ea.Wewi wi l l ear n ourcus t ome mer s ’ent husi asm t hr ough cont i onus i mpr ov eme mentdri v en by t hei nt egri t y ,t eam workandi nnovat i onofKK pri vat el i mi t edcomp mpanypeopl e.  Themi s si on oft hecompanyi st oge t herwi t h ourcus t omer sand par t ner s,we dev el op, ma manuf act ur e,suppl y and r ender comm mmodi t i es and se r vi ce s whi c h acqui r e, t r ansm mi i t , cont r ol and r ec or d pr ec es si nf or mat i on enabl i ng our cus t ome mer t o oper at e and manage pr oce ss es i n a saf er el i abl e ec onomi mi cal pr ofit abl eandenvi r onment al l yr esponsi bl ema manner .  Thecompanymai nl ypur c hasei t sr aw mat e r i al sandot hert r adi ngi t emsf ori t s t ext i l ef act ori esf r om wel lknown suppl i er si n Kore a,I ndonesi a,and Chai na. Chemi mi cal s and ot her dye s t uffs ar e acqui r ed f r om Eur opean count r i es l i ke

Ger many , Swi wi t z e r l and, Spai n, and Bel gi um. The comp mpany sal es and di st r i but i onsar ecomp mposedoffivesal esshopswi wi t hi nt hecapi t al ,Addi sAbaba, t wo br anc h offic ffice si n Shasheme mene,Des si e,t hr eebi gwa war ehouse s,aboutt en del i v er yt r uc ks and c omp mpet e nt per sonneland mor et han 100 wel lknown di s t r i but o r st hr o ug ho utt henat i o n. Oneoft hemo mostpr oducei nKK pr i vat el i mi t edcomp mpanybl anket st hesei t em t he maj ori nst i t ut i onalbuyer s ar e mi ni st ryofdef ense,f eder alpol i ces and Addi s  Ababapol i ce,Et hi opi an r edc r os s,Oxf am,t r adeuni on,as soc i at i onsandot he r r e g i o nalo ffi ffic c e s .T he c o mp mpany o ff ac i l i t at ei t s bus i ne s s ac t i v i t y and f ul fil li t s  wor ki ngcapi t alr equi r ementhasr el at i on shi pwi t ht hewel lknown financi e rof Et hi opi a, t hes e ar e comm mmer ci al bank of Et hi opi a, Abyss i ni a bank, Awash i nt er nat i onalbankanduni t edbank.  Themanagementand or gani z at i onals t r uct ur eofKK pr i v at el i mi t ed company hasbe e nc har ac t e r i z e dbyse v e r aldi s t r i c tt r e nds i nt e r ms msofi t sor g ani z a t i o nal ev al uat i on.As most oft he pr i vat e busi ness comp mpani es KK pr i vat el i mi t ed comp mpany used t o be managed by t he f ar si gnt e d and vi si onary owner Mr Mr . Ket ema maKebede.Butduet ot hei ncr easei nt hevol umeofbusi nesst r ansact i on and t he si z e ofwor kabl e,t he nee dt o comp mpet e wi t h huge l ocaland f or i gn mul t i nat i onalbusi nesscom mp panyi tcame met obel i evet hati ti snecess aryt ohave  we l l or gani z e dands t affedor gani z at i onals t r uct ur e.

1. 3. Stat eme mentoft hepr obl em  Ast her esear c herbr owset hewebsi t er el at ed t oi nv ent or ymanage me nt ,hol d t hef ol l owi ngf act st hatnecessi t at ef ort hi sst udyt obeconduct edwhi chhasa r ese ar ch t opi c ofasse ssme mentofi nve nt ory manageme menti nt ext i l ei ndust r y , par t i c ul ar l y KK t e x t i l ei ndus t r y .I nt hefi r s tpl ac ei nv e nt o r yma manag e me me nti st he proc essoft r acki ng pr oductor der skeepi ng adequat eam mo ountofpr oduct son hand and or gani z i ng pr oduct si n war ehouse and r e t ai ll ocat i on.And al so i nv ent or y manage ment i st he act i v e co nt r ol pr ogr am whi c h al l ows t he manag eme nt of sal es, pur c hases and payment s wi t h goo d i nvent or y manage ment ,comp mpani esar eabl et omo moni t orwhatshi pme ment st heyhavecomi mi ng i n and goi ngoutt ocust ome mer ,al l owi ngt hem t okeep j ustenough i nve nt oryi n s t ockt ome mee tdema mand.  Then i nv ent or ymanagementl e t scompani e senj oymanybenfit swhi c hi nc l ude ac hi e v i ngi nv e nt o r ybal anc e ,us i ngr e s our c ewi s e l y ,c ut t i ngc o s t s ,s a v i ngt i me and bec om mi i ng mor ee ffient and pl anni ng a head f or seas onalc hanges i n demand.  Ac cor di ngt ot heseevi dencet hi ss t udyi semphasi z eonhow KK t e xt i l ei ndus t r y per f orms mst heact i vi t yt ocome meup wi t h a good r esul tal ongwi t h at t ai ni ngt he mai nobj e c t i v eo ft hei ndus t r y .

1. 4. Obj ect i veoft hest udy

1. 4. 1.GeneralObj ect i ve  Themai n obj ect i v eoft hes t udyi st oass es st hei nv ent or ymanagementofKK t e xt i l ei ndus t r y . 1. 4. 2.Speci ficOb Obj ect i ves - Toexami mi net he i ndus t r yi nv ent or ymanage ment i nappr opri at eway . - To comp mpar e and cont r astt he act ualpr act i ce ofKK t ext i l ei ndus t r y i nv ent or y manage ment wi t h t he t heor e t i cal aspect s of i nv ent or y manage ment . - Todet er mi net he i ndus t r yst r engt h and weaknes se swi t hr eg ar di ngt o i nv ent or ymanage ment . - Togi v es ome mec ons t r uct i v es ugg es t i onsandr ec omm mmendat i onbase don t he f ac toft hes t udy .

1. 5. Res ear chquest i ons 1.Doest he i ndust rymanagei t ’ si nvent oryi nappr opri at eway? 2. .D Doe s t he i ndus t r y i nve nt or y manage me nt pol i cy , pr oc edur e and t echni quesar et oma mai nt ai nt heopt i mum l eve l ? 3.Doest he i ndust ryver ycar f ult obuyt heri ghti t em ms s,att heri ghtpr i ce andi nt heri ghtquant i t y? 4.Does t he i ndust r y i nt er r el at ed t heor e t i cal aspect s of i nve nt or y manageme mentwi t ht heact ualpr act i ceofi nve nt oryma manageme ment ?

1. 6.Si gni ficanceoft hest udy

The r esear cherhas an expect at i on,t he st udy wi l lpr ovi de a cl earpi ct ur e about t he v al ue or i mpor t ance of i nv ent or y manage ment i n

KK t ex t i l e

i ndust r y and t oi dent i f y pr obl em conce r ni ng i nv ent ory manageme ment .I ti s  bel i ev ed t hatt hes t udy wascl ear l yr eflect ,whatt o seeanyoppor t uni t i est o ut i l i z e ,t og i v er e l e v antr e c omme ndat i o n,s ug g es t i o n ands ol ut i o nt hathe l pt o p manage mentas wel las t he or gani z at i on t o make good deci si on concer ni ng abouti nve nt oryma manageme mentand hel pi n desi gni nga bet t ersys t ema mat i cf orm f or i nv ent ory manageme mentsys t em m. .I n addi t i on,t o gi ve an ov er vi ew oft he f act oryuseofi nvent oryma manageme menti ndust ryt oext ernalbodi es.

1. 7. Scopeoft hes t udy Si nce t he mai n obj ec t i v e of t he s t udy i st he ass es sme ment of i nv ent or y manageme menti nt ext i l ei ndust ry part i cul ar l y ,KK t ext i l ei ndust ry ,t hest udy del i mi t ed t o ex am mi i ni ng s t or e depar t ment , pr oduct i on depar t me nt and pur chasi ng depart ment of t he i ndus t r yi n or der t oi nve st i gat et he i ss ue i ndeapt handt oma maket hes t udymanage abl e.

1. 8. Li mi t at i on oft hest udy  The r ese ar c hf ace a pr obl em oft i me t o col l ect al lnecessar y dat af r om emp mpl oy ee s oft he i ndus t r y and some me r es pondent s ar ei nv ol unt ary t o gi v e a vai l abl ei nf o r ma mat i o n.I n addi t i o n,t heempl o y eri si nv o l unt ar yt ot e l lt her e al i nf orma mat i onr egar di ngt hei nvent oryma manageme mentoft heor gani zat i on.

1. 9. St r uct ur eoft hes t udy  The s t udy was ar r anged i nf ourc hapt er s .The fir s tc hapt erdeal s wi t ht he i nt r oduct or ypartmai nl yaboutback gr ound oft hest udy,backgr ound oft he organi zat i on,st at eme mentoft hepr obl em, m,obj ect i veoft hest udy ,si gni ficanceof t hest udy ,scopeoft hest udyand l i mi t at i on oft hest udy .Thesecond chapt er c onc e r ne d wi t hr e l at e dl i t e r at ur er e v i e w de s c r i be st hede t ai lt he o r e t i c alas pe c t of t he s t udy. The t hi r d c hapt er deal s wi t h dat a col l ec t i on me t hods and met hodol ogyandt hef our t hchapt erpr ovi dedat apr esent at i on,anal ysat i onand i nt er pr et at i on.Fi nal l y ,t he l ast chapt er pr ovi de summary ,concl usi on and r ec omm mmendat i ons.

ChapterTwo:Li t er at ur eRevi ew Li t er at ur er evi ew means l ocat i ng l i t er at ur ei n vari et y ofsour ces r eadi ng i t caref ul l yandt horoughl yor gani zi ngi ti nf orma mat i ont heme mesal ongwi wi t ht hel i neof i nv e s t i g at i on.The sepur pos ei sl i t e r at ur er e v i e wt oe s t a bl i s haf ami l i ar i t ywi wi t ha  body ofknowl e dge and es t abl i shes cr edi bi l i t y .A r e vi e w t el l sa r eader t hat r es ear cherknowst her es ear chi n an ar eaandknowst hema maj ori ss ueandal so t oshow t hepathofpri orr esear chandhow acurr entpr oj ecti sl i nkedt oi t .So t he r ev i e w shows appl i cat i on ofi nv ent or y manage mentwh whi c hi s gi v en t he i nf or mat i on f or use i n conduct i ng t he t ext i l ei ndus t r y about i nve nt or y manageme mentandoutl aysi naccor dancewi t haccount i ngpr i nci pl e.

2. 1.Defini t i on ofI nvent oryMa Manageme ment  Thewor di nv e nt or yhasbeende finedi nmanyways.Gene r al l yt hr eedefini t i ons havebeenchosen whi cht obemo mor eappr opr i at et ot het opi cdev el opedi nt hi s s t udy . I nve nt oryarest ockofr aw mat er i al s,wor ki n pr ocessand fini shedgood.That appear at number ous poi nt st hr oughout a fir ms pr oduc t i on and l ogi s t i c channel( Bal l su2004,p. 326) .Accor di ngt ochaseJocobsandAqui l ando( 2004, p. 545)i nvent oryi st hest ock ofanyi t em orr esour ceusedi n an or gani zat i on.  Wher eas Mosi c h( 1988 p. 396)i nv ent or yi scan bedefined ast heamountof r aw mat er i al s,fini dhedgoodsandwor ki npr ocesst obest ockedf ort hesmo moot h r unni ngofapl ant soper at i on.Soa manuf act ur ecomp mpanywi l lhol d st ocksas t he adequat eamo mountofmat er i alr es our cei n at r ansf or mat i on sys t em m. .Many

aut hor s hav e define dt he wor d manage me nti n di ffer entway s.Pl unke tand  At her1986definedmanage me ntast hepr ocessofs e t t i ngandac hi evi nggoal s t hr ough t he e xe cut i on of fiv e basi c manag ement f unct i ons ( Pl anni ng, o r g a ni z i ng ,s t affing ,di r e c t i ngandc o nt r o l l i ngt hatut i l i z ehuman,Fi nanc i aland mat eri alr esour ce.Ther ef ore,i nvent oryma manageme menti st hepr ocessoft r acki ng productor der skeepi ngadequat eamo mountofpr oduct son hand and or gani z i ng pr oduct si n War ehouseand r et ai ll ocat i on.Andal soi nve nt oryma manageme menti s t heact i vecont r olpr ogr am whi ch al l owst hema manageme mentofsal es,pur chases andpayme ment s.

2. 2.Natur eofi nvent ori es I nvent ori es consi st s ofgood hel df or sal et o cust ome mer s,part i al l y comp mpl et ed goods,andmat er i alandsuppl i est obeusedi npr oduct i on.I nvent oryi t em ms sar e acqui r ed and sol d cont i nui ng by a mer chandi si ng ent er pri se or acqui r ed, pl ace d i n pr oduct i on, c onve r t ed t o a fini shed pr oduc t , and so l d by a manuf act ur i ngent er pri se.Thesal eofmer chandi seorfini shedpr oduct si st he pr i marysour ceofr ev enuef ormo mostnon ser vi cebusi nessent er pr i ses( Mosi ch 1988p. 397) .

2. 3.Whyi nvent oryhol dbyOr Or gani zat i ons Par t i c ul ar l ys t e v e ns o n( 1999p. 77)t her e a s onf o rho l di nv e nt o r i e sar edi s c us s e d i nde t ai li nt hef o l l o wi wi ngpar ag r aphs . Fi r st ,i nvent ory hel ps t o pr oj ect agai nst st ock out s, del ayed del i ver s and expect edi ncr easei nt heri skofshort agesl ayscan occur sbecauseofweat her c ondi t i o ns ,s uppl i e ss t o c ko ut s ,de l i v e r so fwr o ng mat e r i al s ,q ual i t y pr o bl e m andsoon.Ther i skofshort agecanber educebyhol di ngsaf et yst ockwhi chare

st ocksi n exc essofave r age dema mand t o comp mpensat ef orvar i abi l i t yi n dema mand andl eadt i me. Sec ond, t o dec upl e per at i ons, hi st or i cal l y manuf act ur i ng fir ms have use d i nvent ori esasbuffer sbet ween success i veoper at i on t omai nt ai n cont i nui t yof pr oduct i on t hatwoul d ot herwi sedi st r i but edbyev ent ssuch asbr eakdown of equi pm me entand acci dent s t hatcauseappor t i on atoper at i on t oshut down of t em mp por ar i l y .The pr obl em i sr es ol ve d,fir ms hav e use d buffer sf r om suppl i es and fini shed goods i nv ent or yt o buffer s al e oper at i on f r om manuf act ur i ng des cr i pt i ons mor er ec ent l y ,c om mp pany hav et aken a cl os er book at buffe r i nvent ori esrecogni zi ng t he costand spaces t hey r equi r e and r eal i zi ng t hat findi ngand el i mi nat i ngsour cesofdescr i pt i on can gr eat l ydecr eased t heneed f o rde c oupl i ngo pe r a t i o ns .  Thi r d,i tal s ohel pst osmoot h pr oductr equi r eme nt si n afir m maye xper i e nce se asonalpat t er ns i n dem ma and of t en bui l d up i nve nt or i es dur i ng atse asonal peri odst ome meet sveryhi ghr equi r eme mentduri ngcert ai nperi od.

2. 4.TypeofI nvent ory Re g ar di ngt y pe so fi nv e nt o r y di ffe r e ntl i t e r a t ur e spr o v i dedi ffe r e ntd es c r i pt i o n ofi nvent oryt ypebasedon t hei rownt ask obj ect i ve.However ,f ort hi sst udyt he r ese ar cherf avourt hei nve nt oryt ypepr ovi dedby St ockand Manber t( 2001,p 232-235) Cycl e st ock i si nvent ory t hatr esul t sf r om t he r epl eni shmentpr ocess and i s r equi r edi nor dert ome meetdem ma andundercondi t i onofcer t ai nt yt hati swhent he fir m canpr edi ctdema mandandr endst i mesal mostper f ect l y .

I nv e nt o r i e si nt r a ns i tarei t em ms st hatarei nr out sf r om onel ocat i on t o ot her .  The y may be cons i der ed par t s ofcycl es t oc k ev en t hr ough t he y ar e not s hi pme ntunt i laf t e rt he yar r i v eatt hede s t i nat i o n. Saf e t yorbuffe rs t o c ki she l di ne x c e ssofc y c l es t o c k be c aus eofunc e r t ai nt yi n dema mand orl ead t i me.The not at i on i st hata port i on i nv ent or y shoul d be devot edt ocovershortr angevari at i oni ndem ma andandl endt i me. Seasonalst ock i sa f orm ofr espect i vest ock t hati nvol vet hataccumul at i on of i nvent orybef oreareason begi nsi nordert oma mai nt ai nast abl el abourf orceand st abl ei n runsori nt hecaseofagri cul t ur alpr oduct s,i nvent oryaccumul at ed ast her e s ul to fagr o wi ngs e as ont hatl i mi t sa v ai l abi l i t yt hr o ug ho utt hey e ar s . Deadst ocki ki si nv e nt o r i e st hatnoonewantatl e as ti mme di at e l y .Theq ue s t i o ni s  whyanyor gani z at i onwoul di ncurt hecos t sas soci at edwi t hhol di ngt he sei t em r at hert han si mpl ydi sposi ngoft hem. m.Oner eas on mi ghtbet hatmanage ment expect eddema mandt or esumeatsome mepoi nti nt hef ut ur e.

2. 5.Requi r eme mentf oreffect i vei nvent orymanageme ment Reg ar di ng r eq ui r em me ent s f or e ffec t i v e i nv ent or y manage me nt di ffer ent l i t e r at ur e sde s c r i bei ndi ffe r e ntwa y sbas e do nt he i ro wnt as ko bj e c t i v e ,butf o r t hi s st udy t he r ese ar cher f avor part i cul ar l y St ephenson ( 1999,p. 561562) descr i bei nhi sbookaboutr equi r em me ent sf oreffect i vei nvent oryma manageme menti n t of ourdi st i nctmechani sms mst hatare: -

2. 5. 1.I nvent or ycount( keept r ack)t hei nvent or y  Thi smec hani smst ocont r olt hei nv ent or y ,physi calcounthast obeconduct ed.  Thi sc ountenabl est ot hemanage rt ode t e r mi net hequant i t yon hand.Then

t he manage r es t i mat e how muc h wi l lbe dema mand per i od pr i or t ot he next del i veryperi odsandbasest heorderquant i t yont hati nf orma mat i on.

2. 5. 2.Dema mandf orcas tandl eadt i mei nf orma mat i on I nvent ori esareusedt osat i sf ydema mand r equi r eme ment .So,i ti sessent i alt ohave r e l i abl ee s t i mat eoft heamo untandt i mi ngofde m ma and.Si mi l ar l y ,i ti se s s e nt i al t oknow how l ongi twi l lt akef orordert obedi ver se.I naddi t i on,managerneed t o know t he ext end t o whi c h demand and l ead t i me ( t he t i me bet ween subm mi i t t i ng and or der & r ec ei vi ng i t mi mi ght vary t he gr eat er t he pot ent i al  v ar i abi l i t yt he gr eator t he need f or addi t i onals t oc kt or e duce t he r i s k of s ho r t ag ebe t we e n de l i v e r s .Thus ,t he r ei scr i t i c all i nk be t we e nf o r e c as t i ngand i nv ent or yma manage ment .

2. 5. 3.Costi nf or mati onhol di ngi nvent or i es I nvi t es t hr ee basi c cost hol di ng t r ansact i on

or der i ng and short age cost s

ho l di ngorc ar r y i ngc os t sr e l at e st ophy s i c al l yha vi ngi t e ms msi ns hor t ag ec os t s .

2. 5. 4.Or deri ngcost  Ar et hecos tofor der i ngandr e cei vi ngi nv ent or yt he yar et hecos tt hatv ar ywi t h t he act ualpl ace me nt on or der .Thes ei nc l udes det er mi ni ng how muc hi s needed,pr epari ngi nvoi ces,shi ppi ngcost s,i nspect i nggoodsup on arr i valf or qual i t yand quant i t yand mot i vegoodst ot em mp por aryst or ageor der i ngcostare gener al l yexpr essed as fixed dol l aramountperor derr egar dl essofor dersi ze short agecost sr esul twhendema mandexce edt hesuppl yofi nve nt oryonhand.

2. 6.I nventorymanageme mentTechni ques

Di ffer entl i t er at ur es pr ovi de di ffer entdescr i pt i on ofi nvent ory manageme ment t ec hni ques based on t hei rown wn t ask obj ect i ve .Howev er ,f or t hi s st udy t he r es ear cherf av ort hei nve nt or ymanageme mentt ec hni quespr ovi ded by J. Gi t man ( 1997,p. 797802) .

2. 6. 1Economi mi corderquant i t y Oneoft hema maj ori nve nt or yma manage ment spr obl em t ober es ol v edi show muc h i nve nt oryshoul d beaddedwhen i nve nt oryr epl aced,i ft hefir mi sbuyi ngraw mat eri al .I thast odeci del osti nwhi chi thast obe pur chasedon r epl aceme ment . I ft hefir m pl anni ng a pr oduct i on r un t hei ss uei show muc h pr oduct i on t o sc hedul e( how muc h t o make)t hes e pr obl e ms ar e cal l e d or der quant i t y pr obl ems ms.And t het ask oft hefir mi st ode t er mi net heopt i mum orec onomi mi c or derquant i t y( oreconomi mi c /ofsi z e)det er mi ni ng on opt i mum i nve nt oryl ow i nv o l v et wot y pe sofc os t s .i . eor de r i ngcos tandc ar i ngc os t . Economi mi cor derquant i t yi st hati nvent oryl evelt hatmi ni mi zet het oalorderi ng andc ar i ngc o s t . Ec o no m mi i co r de rq uant i t yi st hati nv e nt o r yl e v e lt hatmi ni mi z et het o t alo r de r i ng cos tand car i ng ( hol di ng)cos t .Or deri ng cos ti ncr ease wi t ht he numberof or der st hust hemo mor ef r equent l yi nve nt ory ,on ot herhandi tt hefir m mai nt ai n l ar g ei nv e nt o r yl e v e l st he r ewi wi l lbef e wo r de r spl ac e d and o r de r i ngc o s twi l lbe r e l at i v e l ysmal lt husor de r i ngcos t sde c r e as ewi wi t hi nc r e as i ngsi z eofi nv e nt o r y . Car i ngc os tv ar ywi t hi nv e nt o r ys i z e .Thi sbe ha vi ori sc ont r o lt ot hatofo r de r i ng cost s whi ch decl i ne wi t hi ncr ease i ni nve nt ory si z e,t he economi mi c si ze of i nv ent orywoul dt husdepend on t r adeoff bet wee n car i ngcost sand or der i ng c o s t s .

Econom mi i cor derquant i t y=

0 wher eC=Car i ngcos t C

O=or der i ngcos t

 Thus t he f or mul at o de t er mi ne t he r ecor di ng poi nt when s af e t ys t oc ki s mai nt ai ne dasf o l l o ws : Reorderpoi nt=l eadxaver ageusagesaf et yst ock

2. 6. 2.St ock l evel I soneofmat eri alcostmanageme mentt echni ques.I nordert osavedoverst ocki ng orunders t ocki ng mostoft hel ar ge rcomp mpani esadapts ci ent i fic approac h of fixi ng st ock l ev el .Underst ock i s when t he mat er i ali n st ock i s bel ow t he r equi r edam mo ountoverst ocki ngi swhenexcessm ma at er i al sar ehel di nst orebyt he  bus i nessor gani z at i on.Ther ef or eeac hi t em ofmat er i al ss houl dbekeptwi t hi n t heappr o pr i at el e v e lo fma mat e r i al sbyfix i ngs t o c kl e v e l .Thes t o c kl e v e lar er e or derl ev el ,mi ni mum l ev el ,maxi mum l ev eland economi mi cor derquant i t yorr e or de rquant i t y . Maxi mum l ev eli st hema mat er i alatt hel owes tr at eofconsumpt i on whi ch coul d  bee xpect ed,i fde l i v er ywasr ecei v edi nshor t es tpos si bl et i me.  Theaddi t i onaloft her eor de rqual i t ys howst hehi ghes tpoi ntofmat e r i alwhi c h  woul dbeal l owedt hef or mul at hatde t er mi nemaxi mum l e v e li sasf ol l ows. Maxi mum l eveli sasf ol l ows: Maxi mum l e v el=r e or der+ r eor der = mi ni mum xmi ni mum Level quant i t y consumpt i on r eor der

  Reor derpoi nti st he pr obl em how mucht oor deri ssol ve sbydesc r mi ni ngt he ec onom mi i c or der quant i t y .Yett he answer shoul d be t hought t ot he r ec or d pr obl em when t oor der .Thi si st hepr obl em ofdet er mi ni ngt her eor derpoi nt .  Ther eor de rpoi nti st hati nv ent or yl e v elatwhi c h on or dershoul dbepl acedt o r epl eni sh t he i nvent ory .To det er mi ne t he or derpoi ntundercer t ai nt yt o be shoul dknow l eadt i me,ave r age usageandeconomi mi cor derquant i t y . Lead t i me i st he norma malt akesi nr epl eni shi ng i nve nt oryaf t ert he or derhas  bee n pl aced by c er s ai nt yt hatmeans us age and l ead t i me do notfluct uat e undersuch asi t uat i on r eorderpoi nti ssi mpl yt hati nvent oryl evelwhi ch wi l l  be: Reorderpoi nt : -Lead x aver age usage saf et y st ock.I ti s di fficul tt or edi cat e usageand l ead t i meaccur at el y .Thedema mand f ormat er i al sma mayfluct uat ef r om day t o day orf r om wee kt o wee k.Si mi l ar l yt he act ualdel i ve r yt i me may be di ffer entt hedel i ve rypr obl em ofst ockout .Some memi mi ni mum orbufferi nve nt ory ascushi onagai nstunexpect edi ncr easedanddel ayedondel i ver yt i me. Re c or dl e v e li st hel e v e lo fmat e r i al satwhi c h pur c has er e q ui s i t i o ni si ni t t at e d f orf r esh suppl i est hi sl eveli sfixed by r eorderi ng when mat eri al sf ai lt ot he mi ni mum.Thef or mul ai s: Mi ni mum l e v el=r eor der- mi ni mum x mi ni mum Level consumpt i on r eor derper i od.

2. 6. 3.Pr operst orage I nt he i nt er nalpr ocedur ef orpur chasi ng mat er i al s ar e mat ched by si mi l ar pr oce dur es f or s t or i ng and i ss ui ng mat er i al i n or der t o saf eg uar d t he

i nve st ment . Thepr ocedur ei ncl udes t or ageandi onsur ancema mat er i al smu mustbe car ef ul l yi dent i fied st or ed.Reor der ed and pr eser ved by t hest or er oom cl er k. Mat er i alr equi si on i s pr epare d by t he f act ory supervi sorand i ndi eat es t he quant i t yj ob numberdescr i pt i on et c.when t hema mat er i al sar et r ansf er r ed f om t hest orer oom.

2. 6. 4.Just–i nt i mei nvent or ycont r ol:  Thej us t i nt i mei nv ent or ycont r oli smor ej us toni nv e nt or ycont r olsys t em,i ti s a pr oduct i on and manage ment s ys t em m. .Notonl yi si nv ent or y cut down t o mi ni mum,butt het i meand phys i caldi st ancebet wee nt hevar i ouspr oduct i on oper at i on ar eal sor educed.I n addi t i on manageme menti sunwi l l i ngt ot r adeoff cos t st o dev el op cl ose r el at i on shi p wi t h suppl i er s and pr om mo ot e speedy r e pl e ni s hme nto fi nv e nt o r yi nr e t ur nf o rt he abi l i t yt o ho l dl e s ss af e t ys t o c k ( pewon p. 728) .The j us ti nt i me i nv ent or y sy s t em depends on how wel l co mpani esmanagei n suppl i er st he sy s t e m

put st r em me endous pr es sur e on

suppl i er s. The y wi l l have t o dev el op adequat e sy s t em and pr oce dur es t o sat i sf act oryme meett heneedofmanuf act ur es.

2. 6. 5.Outsour ci ng  A f e w y e ar s ago t her e was at endency on t he par t ofmany c ompani es t o manuf ac t ur e al lcom mp ponent si n house now mor e and mor e compani e s ar e ado pt i ngt hepr ac t i c eouts o ur c i ng . Outsour ci ng i s a sys t em ofgi vi ng at t ent i on t o mat er i al s accor di ng t ot he de g r e eoft he i ri mpo r t anc e .I ti sno tde s i r abl et akes omede g r e eofc ont r o lo n al l t hei t ems ms.Thefirm shoul dpayma maxi mum at t ent i ont ot hosei t ems mswhoseval ue

i shi g he s tf o rt hi spur po set hei t e m wi l lbedr i e di nt he r ec at ag or i e sA, B andC t he hi gherv al ue i t ems ms ar e cl ass i fied as ‘ A”i t ems ms and woul d be undert he hi ghestcont r ol‘ C”i t em r epr esentr el at i vel yl eastval ue and woul d be under s i mpl ec ont r o l“ B”i t e m ms sf al li nbe t we e nt he s ec at e g or i e sandr e qui r er e as o nabl e at t ensi on ofmanage ment .The A,B,C anal ys i s can cont r act s on i mport ant i t ems msandal soknownascont r olbyi mport anceandexce pt i on.  Thef ol l owi ngs t epsar ei nv ol v edi ni mpl ement i ngt heA, B, C anal ysi scl as si f yt he i t em ms sofi nvent ori esdet er mi ni ngt heexpect ed usei n uni t sand t hepr i ceper uni tf ore ac hi t e m. m. 1.Det er mi net het ot alval ueofeach i t em bymu mul t i pl yi ngt heexpext eduni t s  byi t suni t spr i ce. 2.Rank t hei t em i n accor di ngwi t ht het ot alval uegi vi ngfir str ank t ot he i t e m m, ,wi t hhi g he s tt o t a lv al ue . 3. .C Com mb bi ne i t em ms s on t he basi s of t he i rr el at i v ev al ue t of or m t hr ee cat egori esA,B,andC ( i mpandeyp.633)

2. 6. 6.I nvent or yt ur nover  Thei nv ent or yt ur n ov err at i oi ndi cat et hee ffic i enc yoft hefir m i n pr oduci ng ands e l l i ngi t spr o duc t .I t ’ spr o duc tc al c ul at e dby : I nvent oryt urnover=Costofgoodsol d Aver agei nvent ory

Gener al l yahi gh i nvent oryt ur noveri si ndi cat eofgood i nvent oryma manageme ment . I ft heabs o l ut ei nv e nt o r i e sha v et obewr wr i t t e no fft hi swi wi l ladv e r s e l yaffe c tt he  wor ki ngc api t aland l i qui di t ypos i t i on oft hefir m.A hi gh i nv ent or yt ur n ov er ma ybet her e s ul to fo v e rl o wl e v e lo fi nv e nt o r yr e pl ac e me me nt sar ec os t l yf o rt he

fir mt hust ohi gh andt ool ow i nvent oryt urnoverr at i osshoul dbei nves t i gat ed f urt her( i mpandey ,p. 123125) .

2. 7.I nvent or ycont r olpr ocedur es Oneoft hemo mosteffect i veofensuri ngouti nves t menti ni nvent oryundercont r ol i st o check al li t em i nvent oryon r egul arbasi concephysi calcheck has been carri edt her esul tcan t obecomp mpar edwi t ht heore t i calorbooki nvent ori esany di sc r epanci es not ed and act ed on t her e ar et wo chi efmet hod ofi nve nt or y checki ng ( Wi l l am ms son,1998) .These are di scussed i n det ai li nt he f ol l owi ng subsect i onparagr aph.

2. 7. 1.Perpet uali nvent ory I sconcernedwi t ht herecor di ngatt heyoccurofi nvent oryi nei t herquant i t yor qual i t yand val ue.Thei t em per pet uali nvent oryusual l yr ef er st oa syst em of i nve nt ory moni t or cont r olr at her t han an i nve nt ory t aki ng pr ocedur e wi t h pr ef ect ur ali nvent oryeveryi t em ati nvent oryusual l yhasi town st oresl edger cardasanyt r ansact i on affect i ngoni t em t akepl acet hest orel edgercar di sup dat ed wheat heri tbean i ssueorr ece i ptorgoodsatanyt i met her ef or et he  bal ance i ni nv e nt or y att he i t e m i s know and c an si mpl e be r ead f r om t he s t or e sl e dg erc ar d.

2. 7. 2.Peri odi ci nvent ory  Thi si st hepr ocessofcount i ng v al ui ng ,se l ect ed i t em atdi ffer enti t ems on r out i ngbasi s.I nt hi swayev er yi nve nt oryi t em hasan equalchanceofbei ng

checkedatanyt i meandi nt hel ongwi l lbecheckedatl eastoncerunal li t em i n addi t i on t ot heuseofr andom number sent er i ngt hatal li t em ar echeckedat l eastoncei naccount i ngper i ods.I nt hi swa waynotonl ycan t hephysi calandt he t heore t i calbal ancebechecked agai nsteach ot her s,butal soanydi scr epanci es can be corr ect ed f or af t eral li nves t i gat i on are carr i ed outi nt o how t hey occ ur r ed any di sc r epanci es t hat ar i se mus t be r epor t ed and depi ct wi t h i mmedi at el y ,t hemo mor eser i ousdi scr epanci esma maybea mat t erf orachangeof po l i c yo rpo l i c yac t i o n.Annuali nv e nt o r yc he c ki ti sape r i o di ci nv e nt o r yc he c k and i smo mostusual l ycar r i edoutaspartoft heannualaudi tal li t ems msi smo most usual l ycarr i edoutaspartoft heannuali nvent orycheckedcarri edatonet i me  bec ause t he annuali nv e nt or yc he c ked usual l y car r i e d out atpar t at t he annualaudi tt her e wi l lusual l y be an ext er nalaudi t or si n at t endance at i nv ent or y c hec k whi c h i nsur e t hat t he r es ul t s obt ai ned ar e ope n t o i nde pe nde nts e c ur i t y .  Anal ys i s ofi nv es t menti ni nv ent or yi ti s a maj orr esponsi bi l i t y oft he fini cal managert oove rs eet hemo move mentofi nve nt oryi san i nve st mentdeci si on.The anal ysi s shoul d t her ef or e, i nvol ve an ev al uat i on of t he pr ofit abi l i t y of i nves t mentdeci si on. Thegoaloft hei nvent orypol i cywi l lmaxi mi zet hefirm  v al ue ata poi ntt he i nv ent or y pol i c y wi l lmaxi mi z e atwhi c hi nt er me nt alor mar gi onalr et ur nf r om t hei nve st menti ni nve nt oryequal st hei ncr eme ment alor margi nalcostoff undsusedt ofinancet hei nves t menti nvent ory .  The i ncr e me nt alanal ys i s shoul d beuse dt o comput et he v al ue ofoper at i ng pr ofiti nves t ment ,i nve nt ory r at e ofr et ur n and costoff unds.A change i n i nvent ory pol i cy i s descr i be i ft he i ncr em me ent alr at e ofr et ur n exceeds t he r e q ui r e dr a t eofr e t ur n.

  Chapt erThr ee:Resear chme m et hodol ogyandDesi gn  Thi sr e f ert ot hev ar i abl esov erwhi c ht hedat af ort hes t udyhasbeenc ol l ect ed andt heme met hodt hat usedi nt hedat acol l ect i on,anal ysi sandi nt erpre t at i ons.

3. 1.Dat at ype  The r ese ar c her t r i ed t os t udy abouti nv ent or y managementi n KK t e xt i l e i ndust ry .Thedat a gat her edf orst udyar ebot hpri maryandsecondarydat a.

3. 2.Subj ectoft hest udy  Ther ese ar c hert r i est os t udyabouti nv e nt or ymanagementf ort heac hi e v ement o ft heobj e c t i v eoft hes t udy ,t her e s e ar c he rus e dde s cr i pt i v eanal y s i sofdat a.

3. 3.Sour ceofdatacol l ect i on  Ther esear c herused t hepr i mar ydat a and se condar ydat a sour cesbutmor e f ocuson pr i marydat a bec auseobt ai ned enough i nf or mat i on i n gr eatdept h, avoi d on i nt erpre t at i on oft heanswerf ort hequest i on.And al so,avoi dr ef usal t og i v et her i g hti nf o r ma mat i o n aswe l lasi ti sfle x i bl e .Thepr i mar ydat as o ur c eof t hi ss t udy i ncl uded t he emp mpl oy ee s and t he r el at ed depar t ment s such as, pur chasi ng depar t ment ,pr oduct i on depart ment,s t or e depart mentand al so t hema manageme ment .Bes i desofpri marydat asour ce ,se condar ydat asour ceand al soi ncl udedi nt hi sst udy .Thesei nf orma mat i on hasbeen obt ai nedt hr ough l ast fiv ey e a r sf o rfinanc i als t at e m me e nt .

3. 4.Methodofdatacol l ect i on  The dat a wer e obt ai ned f r om t wo t ypes ofsour ce.These ar e pr i mar y and se condar y dat a sour ce . The r es ear cher use dt he pri mary dat a col l ec t i on t echni quei nor dert ogetfir sthandi nf orma mat i on f r om t her espondent s.Andt he pr i marydat acan becol l ect edbypr epari ngaquest i onnai r e.Thequest i onnai r e t ypeswhi ch t he r ese ar cherused i sst r uct ur ed ques t i onnai r e.Theset ypesof ques t i onnai r ewas use dt oi n val uea cl oseended ques t i onsand open ended ques t i ons. And al so t he r es ear c her wi del y use d di r ec t obser v at i on and unst ruct ur ed i nt erv i ew met hod i n or dert o getr el i abl ei nf orma mat i on because flexi bi l i t yofquest i onst oquest i oni ng and t her esearcheri sal l owed t omu much

f r eedom.Theres earc heri n addi t i on used t hesecondary dat a col l ect ed f r om t heconsecut i vel astfiveyears( 20072011)financi alst at eme mentoft hei ndust ry .

3. 5.Samp mpl e si ze Usi ng al lpopul at i on f or dat a col l ect i on i s di fficul tf or one r esear cher .As samp mpl i ngi susi ngsma mal lpartofl argepopul at i on t oma makeconcl usi on aboutt he  whol e popul at i on. The r e se ar c her s el ect ed 20 r esponde nt sf r om di ffer e nt depar t ments uc h asst or edepar t ment ,pr oduct i on depar t mentand pur c hase depart mentt hr oughest abl i shi ngj udgm me ent alsamp mpl i ngt echni que. .

3. 6.Samp mpl i ngt echni que I nt hi ss t udyt hes am mp pl i ngme me t hoduse dt oacqui r et her es pondent swasnonprobabi l i t yj udgme ment alsamp mpl i ng t ec hni que.Thi st ec hni que has bee n use d samp mpl i ng me me t hod,bec ause t o sel ec t ed r es pondent st hat have t he expect ed goodknowl edgeaboutt hei nve nt orymanageme menti nt hei ndust r yaswel last he r ese ar cherper mi tt o havecomp mpl et ef r eedom ofsel ect i ng i ndi vi dualwho can pr ovi der el evantdat aandt ochosesampl eel em me entaccordi ngt ot her esear cher  wi s h/de si r e .

3. 7.Dat a Pr ocess i ngandAnal yzi ng  Af t ert henecess ar ydat ahasbeencol l ec t edf r om bot hpr i mar yandsecondar y sour ce s,t he nextassi gnmenthad dat a pr oce ss i ng and anal yz i ng.Thus,t he r ese ar cherwasusedt abul at i on and per cent agewh whi ch hel pst her ese ar chert o pr e s e nta l lt hec o l l e c t e di nf o r ma mat i o ni nt hes i mpl e s tf o r mt oar r i v eate ffe c t i v e concl usi ons and possi bl er ecomm mmendat i ons.Dat a pr ocess i ng i s an act i vi t y  whi c hi nv ol v es edi t i ng,codi ng and c l assi f yi ng dat at o make i ts ui t abl ef or f urt heranal ysi s,t hen t hecomp mpi l ed dat ahaspr ocessed.Af t eral lt her el evant

dat a has been col l ec t ed and pr oce ss ed,t hen t he y hav e been anal ys i s has f urt hert r ansf orma mat i on oft hepr ocessed dat agroups.Fi nal l y ,t heoutcocme meof t he pr oj ec t woul d be pr es ent ed on wr i t t en mat er i al and det ai l ed or al pr e s e nt at i o n.

3. 8.Met hodofpresent i ngtheout come me Once t he anal ysi s pr ocess i s comp mpl et ed,t he i nt er pr et at i on ofal ldat a was f ol l ows, i t has been pr es ent ed usi ng di ffer ent t ool s such as t abl e and per cent age t o make cl eart he r el at i on am mo ong vari abl e.Fi nal l y ,t he anal yzed dat ahasbee n pr es ent edi n eas yunder s t andwayt odr aw concl usi on andfind outt hema maj orf act orst hataffecti nvent oryma manageme ment .

Chapt erFour:Dat aPr esent at i on,Anal ysat i onandI nt erpret at i on Pr i marydat aanal ysi sarecol l ect edf r om t heKK t ext i l ei ndust ryemp mpl oyeeson t he basi s ofs t r uct ur e ques t i onnai r e and unst r uct ur ed i nt er vi ew dat a.The r es pondent s was se l ec t ed base d on t hei r emp mpl oyme ment st at us who cont r ol s i nv ent or y f r om s t or e depar t ment , pr oduc t i on depar t ment and pur c hase depar t ment . Sec ondar y dat a ar e col l ec t ed f r om se condary r es our ce s suc h as financi al st at em me entoft hecomp mpany( bal ancesheetandi ncome mest at em me ent )f ort hel astfive  y e ar s( 20072011) .Cos tofgoods ol dandfini s hedgoodsi nv ent or yar er equi r ed ont hei ncome mest at eme mentt ocal cul at est ockt urnoveroft hepastfiveyears.

4. 1.Respondent s ’Per sonalI nf orma mat i on I nt hi spoi ntoft hest udyt hedat agat her edf r om pr i marysour cesareanal ysi s and i nt erpret .A t ot alof16 quest i onswe wer edi st ri but ed t ot heemp mpl oyeeofKK t ext i l ecomp mpanyandal lr espondent sarer et urned.

4. 1. 1.Respondent s ’Sexdi st r i but i on Sex No Per ce nt age Mal e 12 60% Femal e 8 40%  Tot al 20 100%  Tabl e4. 1:Re spondent s ’Se xdi s t r i but i on Sour ce:Quest i onnai r e

 As i t s can bee ns een f r om t he abov ei nf or mat i on t he r espondent s 60% ar e mal esand 40% ar ef em ma al es .Fr om t hi st abl et her es ear cherge t st hatmostof t heemp mpl oyeesaremal es.

4. 1. 2.Respondent s ’educat i onall evel  Al t er nat i v e No Per c ent age De gr eeandabov e 6 30% Di pl oma 8 40% Ot herspeci f y 4 20% Exper i enc e 2 10%  Tot al 20 100%  Tabl e4. 2:Re spondent s ’educat i onall e v e l Sour ce:Quest i onnai r e

 Asi tcan bee ns ee nf r om t heabov ei nf or mat i on 30% oft her espondent shav e degr ee and abov e 8( 40%)di pl om ma a 4( 20%)ot her s pec i f y and 2 ( 10%)hav e exper i ence.Fr om t hi si nf orma mat i on,t her esear cherget st heor gani zat i on mor e em mp pl oy eeby t he y hav e di pl om ma a and degr eeand above .Hence ,mos to ft he em mp pl oyeesareeducat ed.Sot hatt hecompani esi nt er nalcont r oloveri nvent ory i ss t r o ng.

4. 1. 3.Respondent s ’agedi st r i but i on  Age No Pe r cent age 18–25 2 10% 26–35 12 60% 36–41 6 30% 42–66 0 0%  Tot al 20 100%   T abl e4: 3:Re s po nde nt s ’ag edi s t r i but i o n

Sour ce:Quest i onnai r e

 Ac cor di ngt ot hi st abl ei nf or mat i on 10% oft heempl oye esar ef oundatt heage ofbet wee n 1325,60% ofagebe t wee n 2635,30% ofagebe t wee n 3641 and 0% ofage bet wee n 4266.as t he r es ear c herge tt he or gani z at i on i s mor e em mp pl oy ee sbyagebet wee n2635.Hence ,mostoft heemp mpl oy ee soft hecomp mpany ar ey oung.Fr om t hi s,t her ese ar cher concl udet hatt hecomp mpanyhavest r ong l aborf or c ei nor de rt oac hi e vei t sobj e ct i v e.

4. 2.Nat ur eofi nvent oryma manageme mentoft heOr Or gani zat i on  A manuf act ur i ng e nt er pr i sehassev er alt ypesofi nv ent or i es ,r aw mat er i al s, f act orysuppl i es,good i n pr ocessandfini shedgoodsar ebasi ccomm mmodi t i esor ot her pr oduct s obt ai ned di r ect l yf r om nat ur alr esour ces or acqui r ed f r om ot her s,whi ch wi l lbei ncorporat ed physi cal l yi nt o a fini shed pr oductf act ory suppl i es are si mi l ar t o mat er i al ,butt hei rr el at i on t ot he end pr oducti n i ndi r ect . Goods i n pr ocess consi st s of part i al l y comp mpl et ed pr oduct s and i ncl udes t he cost of di r ect ma mat er i al , di r ect l abor , and f act ory over head. Fi ni shedgoodsarei t em ms st hatarecom mp pl et eandr eadyf ors al eandi ncl udet he same mecostel em me ent sast hosei ngoodi npr ocess. Re sponse  Yes No Do y ou known t he t e r m  Tot al i nv ent or ymanage ment ?  Tabl e4. 4:t het er mi nv ent or ymanagement Sour ce:Quest i onnai r e

No 16

Per cent age 80%

4

20%

20

100%

Show i nt abl e4. 4 16( 80%)r es pondent s,r es ponset haty est het em i nve nt or y manage mentques t i onand4( 20%) %)r es pondent sr es ponsedonotknow t het er m i nv ent oryma manageme ment .Fr om t hi si nf or mat i on,t he r es ear chercan concl ude t hatt her ei si nvent oryma manageme menti nt hei ndust ry .

4. 3.Thepol i ci esandpr ocedur esofi nvent oryma manageme ment Re sponse  Yes Doe sy our i ndus t r y has No pol i ci es and pr ocedur es  Tot al t o kee p i nv ent or y t hat

No 16

Per cent age 80%

4

20%

20

100%

a v oi de x c e ssi nv e nt o r y  Tabl e4. 5:t hei ndus t r ypol i c i es& pr oce dur es Sour ce:Quest i onnai r e

Showni nt abl e4. 5,16( 80%)r espondent sr esponset hatKK t ext i l ei ndust ryhas doespol i cesand pr ocedur et okeep i nvent oryt hatav oi d excessi nvent oryand 4( 20%)r espondent ssai dt hatt hei ndust rydoesnotpol i cesand pr ocedur et o keep i nvent oryl evelt hatensur enotgoi ngoutofexcessi nvent ory .Hence,t he r ese ar cherconcl ude t hat ,t he i ndust ryhas pol i ci es and pr ocedur es t o keep i nv e nt or yt hata v oi de x ce s si nv e nt o r y . Re sponse  Yes I st her e opt i mall evelof

No 16

Per cent age 80%

i nv ent or yma manage menti n No

4

20%

t hei ndust ry?  Tot al 20  Tabl e4. 6:Thei ndus t r yr eg ar di ngopt i mall e v elofi nv ent or y . Sour ce:Quest i onnai r e

100%

 Ascan beobs er v ed f r om t abl e4. 6,16 outof20 or80% r espondent sr es pond t hat t e xt i l ei ndus t r y has opt i mal i nv ent or y and 4 out of 20 or 20% of r espondent sr espondt hatt hei ndust ryhasexcessi nvent oryors t ocki ng.Fr om t hi si nf o r ma mat i o nt her e s e ar c he rc o nc l udet hatt he r ei sopt i mall e v e lo fi nv e nt o r y manage ment , par t i cul ar l y f r om t abl e 5 t he i ndus t r y f ol l ows i nv ent or y manageme mentpol i ci es,pr ocedur esandt echni ques.

I s t her e pr oduct i on depar t ment fini s hed i nv e nt o r y?

del i v er y goods

Respons e - Del i v er yont i me

No 18

Per cent age 90%

- Some met i met her el at e de l i v er y

2

10%

0

0%

- Doe snotdel i v er yon t i me  Tot al

20

  100%

 Tabl e4. 7:Ti medel i v er e dfini shedgoods Sour ce:Quest i onnai r e

 As c an be t abl e 4. 7, ( 90%) r esponde nt t hat t he i ndus t r yi n pr oduct i on depar t ment del i v er y fini shed goods i nv ent or y del i v er y on t i me, 2( 10%) r es pondent st hatsome met i mel at edel i v er y and no any oner es ponds doesnot del i ver y on t i me t he i ndust ry .Hence,t he r esear cherconcl ude t hatt her ei s enough wor ki ngcapi t albecauseofi t scash i snothol dbyi nvent oryaswel las

t hei ndust rywasnotf acepr obl em ofi nvent oryobsol escentduet ot hef actt hat t hei nv e nt or yi sde l i v e r e dont i me . I s

t he r e

t he Res ponse - Ther ei sst r ongcoor di nat i on coo r di nat i on am mo ong - Ther ei ssat i sf act ory pr oduct i on depart ment , c oo r di nat i o n s t or e depar t ment and - Ther ei sweakcoor di nat i on pur c hasedepar t mentof - Ther ei sl ow coor di nat i on t hei ndust ry?  Tot al  Tabl e4.8:Coor di nat i onamongdepar t ment Sour ce:Quest i onnai r e

No Pe r cent ag e 14 70% 6

30%

0

0%

0

0%

20

100%

 As s hown t abl e 4. 8, 14 out of 20 or 70% r espondent s, r esponse t hat coor di nat i on amo mongpr oduct i on,st or eand pur chasedepar t ment sar est r ongl y coor di nat ed and 6( 30%) %) of r es pondent s r esponse t hat t he i ndus t r y depart ment sar esat i sf act orycoor di nat ed.Noanyoner esponset hati ndust ry depart mentweakandl ow coordi nat i onf ort hequest i on. Duet or espond oft her espondent s,t her ei sst r ong coor di nat i on amo mongt he depart ment soft hei ndust ry .Ther ef or e,t her esear cherconcl udet hatt hewor k oft hei ndust ryi sper f or medont i meandt hecust ome meror der ssat i sfiedont i me.  As a r e sul t ,t he l e v elofsal es i nv ent or yi si ncr eased as wel las i t s pr ofit i nc r e as e.

4. 4.I nvent or ycont r olsyst em

 Whi c hi nv ent or y cont r ol

Re sponse Per pe t ual

No 0

Per cent age 0%

sys t em

does

t he P e r i o d i c

i ndust ry use? Bot h  Tabl e4. 9:Cont r ols ys t em Sour ce:Quest i onnai r e

20

100%

0

0%

 Ass hown i nt abl e4. 9,20 outof20 or100% r esponde nt sr es ponset hatt he i ndust ryusePer i odi ci nve nt orysyst em. m.Butt hei ndust ryof0% r esponset he i ndust ryuseper pet uali nve nt orysyst em. m.Aspert her esponseofr espondent s t hei ndust ryr ecor dedi nvent orywheni toccurandeve ryi t em hasi t sownst ore l edgercar dandi nvent orycount edperi odi cal l y .Ther esear cherunder st andt hat on KK t ext i l ei ndust ry t her ei s a huge quant i t i es and l ow uni tpri ce ofi t s i nv e nt or y .

How

many t i me t he

Re sponse Quart er l y

Semi miannual l y i ndus t r y count ( c hec k)  Annual l y i t si nv e nt or y ?  Tot al  Tabl e4. 10:Chec ki ngi nv ent or yi t ems Sour ce:Quest i onnai r e

No 18

Per cent age 90%

2

10%

0

0%

20

100%

 Ascan beshown f r om t abl e4. 10,18 outof20 or90% r espondent sr espond t hat i ndus t r y count i n quar t er l y 2( 10%) r es pondent sr es ponse t hat t he i ndust rycounti t si nvent oryi nsemi miannual l y .Fr om t heabovei nf orma mat i on,t he r esearcherconcl udet hatt hei ndust ryusedperi odi ci nvent orysyst em. m.

Re sponse  Al ways How of t en i si nv ent or y Mostof t en r e t ur ned by cus t ome mer sa Fe w r e s ul tofde f e ct ? None  Tot al  Tabl e4.11:I nv ent or yr e t ur nedbyc us t omer Sour ce:quest i onnai r e

No 0

Per cent age 0%

0

0%

13

65%

7

35%

20

100%

 Asc anbeobser v edf r om t abl e4. 11,0outof20( 0%)r espondent sr es ponset hat t he i nve nt ory r et ur ned by cust ome mer s as a r esul tofdef ectt he ques t i on f or al way s and mos t of t e n, 13 out of 20 or 65% t hat r espondent sr espond i nvent oryre t urnedbycust ome merasaresul tofdef ectf ort hequest i on.Few and7 outof20or35% t her es pondent sr es pondi nve nt or yr et ur nedbycust om me erasa r esul tofdef ectf ort hequest i on none.Hence,t her esear cherunder st and t hat t her ei sapr obl em ofpr oduct i oneffi ffic ci encyi nt hepr oduct i ondepart ment .

4. 5.I nvent oryma manageme mentt echni quesoft heor gani zat i on

 Whi c ht ype ofi nv ent or y manag eme nt t ec hni que doest hefir mf ol l ow?

Re sponse   Economi mi cor derquant i t y

No 5

Pe r cent age 25%

-Jus ti nt i me

4

20%

-ABC

4

20%

-St oc kl e v el

7

35%

-Al loft heabov e

0

0%

20

100%

 Tot al  Tabl e4. 12:I nv ent or ymanagementt ec hni que

Sour ce:Quest i onnai r e

 Asc anbeseenf r om t abl e4. 12,5outof25% r espondent sr espondt hei ndus t r y f ol l ow econom mi i cor derqual i t y .Thi si nvent oryma manageme mentt echni quedet er mi ne t hathow mach i nve nt or yi sadd.When i nv ent or yr epl ace d and when t oor der det er mi ne t hatt he r ec or derpoi ntatwhi c h an or dershoul d be pl ace d an i nvent ory .4outof20or20% r espondent sre spondt hei ndust ryf ol l ow j usti n t i me,andABC t ec hni que,7outof20or35% r espondent sr es pondt hei ndust r y f o l l o ws t o c kl e v e li t st e c hni q uei no r de rt og uar do v e rs t o c ki ngo runde rs t o c k keptma mat eri alwi t ht heappr opri at el eveloft hemat eri albyfixi ng st ock l evel , 0( 0% %) )t he i nve nt oryma manageme mentt ec hni que f ol l ow ec onom mi i c or derquant i t y ,  ABC t ec hni que ss t oc kl ev elandj us ti nt i me. Fr om t hi si nf orma mat i on,t her esearcherunder st andt hatt hei ndust ryf ol l ow good i nvent oryma manageme mentt echni quesbecausei nst ockl evelt echni quet her earer e or derl ev el ,mi ni mum l ev elmaxi mum l ev eland ec onomi mi c or derquant i t y or r e o r de rquant i t y .

Re sponse  Yes Does t he i ndus t r y No manage i t ’ si nvent ory i n  Tot al appr opr i at ewa way?  Tabl e4. 13:managi ngi nv e nt or y Sour ce:Quest i onnai r e

No 18

Per cent age 90%

2

10%

20

100%

Showni nt abl e4. 13,18outof20or90% r espondent sr esponset hatKK t ext i l e i ndust ryhasma managei t ’ si nve nt oryi n appr opr i at ewayand2outof20or10% t hei ndust ryi sdoesnotmanagei t ’ si nvent oryi n appr opri at eway .Hence,t he r es ear cher under s t and t hat t he i ndus t r y mi ni mi z e cos t and obsol es ce nt i nvent orybecauseoft hei ndust ryma managei t ’ si nvent oryi nappr opri at eway. Doe st he i ndus t r yv er y Re sponse  Yes car f ul t o buy t he r i ght No i t em, m, at t he ri ght pri ce  Tot al and i n t he r i ght

No 20

Per cent age 100%

0

0%

20

100%

q uant i t y ?  Tabl e4. 14:Pur c hasedi nv ent or y Sour ce:quest i onnai r e

 Asc an beobser v ed f r om t abl e4. 14,20( 100%)r espondent sr espond t hatt he i ndust ryappl yver ycarf ult obuyt heri ghti t em, m,att heri ghtpri ceand i nt he r i ghtquant i t y .So,notanyonere sponse( 0%)r espond.Thei ndust ryi snot hi ng t o done t hi s ques t i on. Hence ,t he r es ear cher concl ude t hat t he i ndus t r y pur chased t he r i ghti t ems ms and t he r i ghtquant i t i es.Thus,hel pt o mi ni mi z e  was t agei nv ent or yaddi t i onal l y ,i ndus t r ypur c has edatt her i ghtpr i cet hathel p t omi mi ni mi zepr oduct i oncost .

4. 6.Fi veyear sdataofi nvent oryacti vi ty 4. 6. 1.I nvent oryTur nOver

 Tode t er mi nehow e ffec t i v e l yt hefir m managi ngi nv ent or yand al sot ogai n an i ndi c at i o no fl i q ui di t yo fi nv e nt o r y ,wec o mp mput et hei nv e nt o r yt ur no v e rr a t i o . I nv ent or yt ur n ov er i s one aspec t of r at i on anal ys i s whi c h meas ur e how e ffe c t i v e l ymanag i ngi t si nv e nt o r i e s . I nvent oryt urnover=

costofgoodssol d Endi ngfini shedgoodsi nve nt ory

 Thi sr at i ot el las how many t i me i nv ent or yi st ur ned ov er i nt or ece i v abl e t hr ough sal e dur i ng t he ye ar .The hi ghert he i nve nt or yt ur nove r ,t he mor e effi ffic ci entt hei nve nt or yma manageme mentoft hefir m.Thef ol l owi ngschedul esshow t hei ndus t r yi st ur nov e rr at i o( ac t ual )  Year

Cos tofgoodsol d Endi ng fini shed I nv ent or y goodsi nvent ory 2, 107, 259 2, 001, 351 13, 749, 285 16, 742, 453 12, 279, 605

t ur n

o v e r 1. 53 1. 37 1. 46 3. 09 3. 95

2007 3, 232, 472 2008 2, 732, 310 2009 20, 095, 293 2010 51, 728, 976 2011 48, 314, 651  Tabl e4. 15:I nv ent or yt ur nov e r Sour ce:Fi nanci alst at em me entoft hei ndust ryf r om 20072011

 Theabov et abl eshowst hei nv e nt or yt ur n ov err at i ooft hei ndus t r y .Thet ur n overofi nvent oryi nt hei ndust ryvari esf r om yeart oyear .Thei nvent oryt urn overr at i oi n2007was1. 53t i mes.I n2008t hei ndust ryt urnoverr at i oshowsi n 1. 37t i mesandi ti st hel owestr at i ocomparedwi t ht her estf oury earst urnover r at i o.Hence,i nvent oryi nt erf acewi t hoper at i ngeffic ffici encyandcust ome merservi ce addi t i onal l y ,t hei nv e nt or ys ol dbe f o r eane xpi r a t i o n dat e .

4. 6. 2.I nvent ory t ur noveri ndays I tt el l s how many dayson ave r age,bef or ei nve nt oryi st ur ned i nt o account r e c ei v abl et hr o ug hs al e .  Av er ageageofi nv e nt or y=Dayi nt hey ear I nvent oryt urnover

 Year

Cos t

of Endi ng fini shed I nv e nt o r y  Av e r age

goodssol d goodsi nvent ory 2007 3, 232, 472 2, 107, 259 2008 2, 732, 310 2, 001, 351 2009 20, 095, 293 13, 749, 285 2010 51, 728, 976 16, 742, 453 2011 48, 314, 651 12, 279, 605  Tabl e4. 16:Av er ageofi nv e nt or y Sour ce:financi alst at eme mentoft he i ndust ry

t urnover 1. 53 1. 37 1. 46 3. 09 3. 93

i nv e nt o r y 235 262 246 116 96

 Tabl e4. 16shownt hati nv ent or yt ur nov e rr at eandt heav e r ageofi nv ent or yon t hei ndus t r yar ei nv e r s e l ypr o po r t i o n.Thehi g he rt hei nv e nt o r yt ur no v e rr at i o , t hel o we ri nv e r s e l ys t a yi nt hei ndus t r y .I n2008t hei ndus t r yi ss t o c ki st ur ne d  wi t hi n 262 daysand i t ’ st hel ar ges tdaysan i nv ent or ys t ay i nt hei ndus t r y r el at i vet ot he succeedi ng f oryears.I nt he 2007,t he i mpr ove i nt ur n over  bec ameappar entwhi c hr e ducet heav e r ageageofi nv ent or yi ni ndus t r yt o235 days.I n2009,t hei nvent oryaverageageofi nvent ory246days.  Thei ndus t r ye xper i ence dhi ghav e r ageageofi nv ent or yon2007,2008and246 ar e wi t h 235, 262 and 246 daysr es pect i ve l y ,t hi s shows t hatt her e was saw st ockt urnoveraccor di ngt ot hedat aobt ai nedf r om t hei ndust ry .Tot hecurr ent  y e arav er ageageofi nv ent or yi smor ebe t t e rt han i n whi c ht hei ndus t r yenj oy

hi gh profit re sul t ed f r om l ar ge sal ev ol ume. Fr om t hi si nf or mat i on, t he r ese ar cherc oncl udet hatt heamountofhol di ngi nve nt orydecr easeduet ot he i nc r e as e me me nto fi nv e nt o r yt ur no v e r . I nt heyear2009 t ur n ov erwasi ncr ease son pr ec edi ngyearand i t swa was1. 46 t i mes .I nt he t wo y ear s 2010 and 2011 t ur n ov er r at i oi s 3. 09 and 3. 93 r e spect i v el y .  Asi ti si n dedi c at ed i nt abl eabov et hei nv ent or yoffiv ey ear sfluc t uat ed wi t h l ar ge var i ance.The i nve nt ory r at i o of2011 was bet t er t hat i ndi cat es t he effect i ve and effic ffici entcont r olofi nve nt ory i nt he i ndust ry .Buti n al lt he pr ecedi ngyearthei ndust ryexperi encewi t hr el at i vel yl ow i nvent oryt urnover .  Thet ur nov e ri n 2011 i ndi cat e st hecos tofgoodssol di n abov e3. 93% t i mes fini shed goods i nv ent oryon ot herhands t he l owes tt ur n ov err at i oi n 2008 show t hatfini shedgoodsi nvent ori esre cycl ed1. 37t i mewi wi t hr espectt ocostof goods ol d.Al t hough t he i nve nt ory t ur n ove roft he pastt hr ee year s fitt he st andard oft he i ndust ry’ si nvent ory t ur noveri ndi cat et he f act ory had hi gh, s t oc kofi nv e nt or y . Gener al l y ,bot ht hei nvent oryt urnoverandover ageageofi nvent orypoi ntt hat t her ewa wassl ow movi ngi t ems msi ni ndust rywhi ch i st ur nr esul tacostpr obl em l i v e ds t o r a geandde pr e c i at i o ni nt hepas tf o ury e a r s .Co nv e r s e l yt hei ndus t r y ’ s pr esentperf orma mancei ni nvent orycont r oli sbet t ert han t hepasty ears ,hence t ur n overi si ncr eased and i tder i ve t he i nvent ory i nt er f ace wi t h oper at i ng effi ffic ci encyandcust om me erse r vi ce s.Themo mor et henumber sofdayst hei nve nt ory st udyi nt he i ndust ry ,t hel esst hei nvent oryi st urned countr ecei vabl e.Thi s mayari sest orageanddepr eci at i oncostt hatwi l lbechangeagai nstt hepr ofitof t hei ndust ryper i shabl egoodsandagecont r ol smu mustsol dbef or ean expi r at i on

dat e.The usual s i mpl i f yi ng assumpt i ons made i ni nv ent ory cont r ol st hat ho l di ngc os tar epr o po r t i o nalt ot hes i z eo fi nv e nt o r yi nv e s t me nt

Chapt erFi ve:Summ mmar y,Concl usi onandRecomm mmendat i on I nt hi ssect i on t here sear cherconcl udet hema maj orfindi ngoft hest udyf ocusi ng on t he ex i s t i ng s t r engt hs and weaknes se s ofi nv ent or y manage ment i n KK t ext i l ei ndust ry .And al soon t hebasi sfindi ngt her esearchergi vesuggest i ons and r ec om mm mendat i onst o mai nt ai nt hest r engt hsand t ot ackl eorr educet he pr obl em aref orwarded.

5. 1.Summar yofFi ndi ngs  To s um up,i nv ent or y managementi sbasi c al l y defined ast he act i v e cont r ol pr ogr am whi chal l owst hema manage mentofsal es ,pur c hase sandpayme ment swi t h good i nv ent or yma manage ment ,comp mpani esar eabl et omo moni t orwhatshi pme ment s t heyhavecom mi i ngand t hegoi ngoutt o cus t om me er ,al l owi ngt hem t o keep j us t enough i nve nt oryi ns t ock t o mee tdem ma and.Ther es ear chermo mot i vat ed i nt hi s findi ng f or t he pur pose ofknowi ng t he i nv ent or y manage ment s ys t em and eval uat i ngeffic ffi ci encyandeffect i venessofKK t ext i l ei ndust ry .  Themai n obj ec t i v eoft hefindi ngi st o ass esst hecr uc i alpr obl emscur r ent l y pr e v a i l i ngi nKK t e xt i l ei ndus t r y .I nKK t e xt i l ei ndus t r yt he r ei sane ffe c t i v eand effic i ent i nve nt or y manage me nt . The i ndus t r y has i mpl ement ed v ar i ous t echni queofcont r olsyst em i ncont r ol l i ngraw mat eri ali npr ogr essandfini shed g oo dsi nv e nt o r y .Par t i c ul ar l yfini s he dg oo dsa r ec o nt r o l l e dbyt hec o nc e pts t o c k l e v e li t e mt hei ndus t r ys e l e c t e dt hi st e c hni q uei ns uc hwa yt hathi g hv al uei t e m

arest r ongl ycont r ol l edandgr eatemp mphasi si sgi vent han l owerl eveli t ems ms.The i ndust rysel ect ed t hi smet hod f orcostconsi der at i on.Ther eareal sosci ent i fic t echni quema madebyt hei ndust rycycl i calandfixedor derquant i t i es.Thef orme mer concepthasbeendev el oped f orconsumeabl ema mat er i al swhi char er equi r edby pr oduct i on sect i on t osmo moot heroutoft hepr oduct i on act i vi t y ,whi l et hel at er sy s t em has been use dt he cont r olhi gh v al ue i t ems ms cl ose l yt o mai nt ai n r e l at i v e l yl o wi nv e s t me me nti ni nv e nt or y . St oredepart menti sr esponsi bl ef orr ecei vi ngand i ssui ngof mat er i al si n KK t e x t i l ei ndus t r y ,l i ker a w mat e r i al ,fini s he dg oo dse t cr e pr e s e nta v e r y l ar g e i nves t ment .Themai n obj ect i veofst or er oom i st or educel ossand det orat i on ofma mat er i al s.Accor di ngl yt he i nt er vi ew met hods,t he st or e depar t mentt he f o l l o wi ngpr o c edur et or e c e i ptt her a w mat e r i alt hatr e ac h att hei ndus t r ys i t e .  The s t or e depar t mentmai nt ai n appr opr i at e ac count i ng f ori nv ent or y cont r ol purpose.some me oft hesearephysi calcountandbi ncar e. I nt here or derpoi ntofi nvent oryl eve laredet er mi nehow manyi nvent oryar e r eor derf orasel l i ngand pr oduct i on act i vi t y .Thei ndust ryusedt hemi ni mum i nvent oryl evelusedf oreach st oredepart ment sandi t si mport antt hesuppl i er ar el e adst hatpr o duc t s .  The i nv ent or yt ur nov err at i o oft he fiv ey ear s per i ods fluct uat i on was l ar ge  v ar i ance,t hei nv ent or yt ur nov erof2010( 3. 93)i ti ndi cat et hei ndus t r yeffect i v e andeffic ffici entcont r olon i nvent ory.Butpr oceedi ngyear si nvent oryt urnover ,t he i ndust ry experi ence wi t hr el at i ve l ow t ur n ove r .The decl i ne i nt ur n ove r i ndi cat est hei ndust ryhashi gh st ock i nvent ory .Gener al l ybot ht hei nvent ory t ur n ove randt heave r ageval ueshow t hatt her ewassl ow movi ngi t ems msi nt he i ndust ryi nt urnr esul tacostpr obl em suchasst orageanddepr eci at i on costi n t hepas tf o ury e ar s .

5. 2.Concl usi on Concer ni ng t he appl i cat i on ofi nve nt ory manageme menti n KK t ext i l ei ndust r y mostofmanagi ngat t emp mptt oappl y ,l i ke: Regar di ngt odel i ver i ngfini shedgoodst her ei senough wor ki ngcapi t albecause o fi t sc as hi sno tho l dbyi nv e nt o r yaswe l last hei ndus t r ywasno tf ac epr o bl e m o fi nv e nt o r yo bs o l e s c e nt ,duet ot hef ac tt hatt hei nv e nt o r yi sde l i v e r e do nt i me .

Reg ar di ng coor di nat i on amo mong depar t ment s,t he wor k of t he i ndus t r yi s per f orme medon t i meandt hecust om me eror der ssat i sfied.Asar esul t ,t hel evelof s al e si nv e nt or yi si nc r e as e daswe l lasi t spr o fiti nc r e as e . Regar di ngt opur chasedi nvent ory ,t hei ndust rypur chasedt heri ghti t em ms sand t he ri ghtquant i t i es.Thus,hel pt o mi ni mi zewast age i nvent ory.Addi t i onal l y , i ndust rypur chasedatt heri ghtpri cet hathel pt omi mi ni mi zepr oduct i oncost . Regar di ngt o pol i ci esand pr ocedur esofi nve nt oryma manageme ment ,t hei ndust r y  was f ol l ows pol i ci e s and pr ocedur es t o ke ep i nv ent or yt hat av oi de xcess i nv ent ory ,t hat at t ai n opt i mal l ev el of i nv ent ory manageme ment . Wh Wher e as, r egar di ng t oi nvent ory cont r olsyst em t he i ndust ry used per i odi ci nvent ory syst em t hatcont r olhuge quant i t i es and l ow uni tpri ce ofi nvent ory .Fi nal l y , r egar di ngt oi nvent oryt urn overt her ei ncr easi ngi nvent oryt urn overt hr ough 20072011.sot her ei seffect i vei nvent oryma manageme menti nt hei ndust ry . Based on i nf orma mat i on gat her ed f r om i nt er vi ew ques t i onerand sec ondarydat a anal ysi st hef ol l owi ngparagr aphsar edi scussedt hes t r engt handwe weakness of t hei ndus t r y .

Fi r st ,t her ei sst r ong coor di nat i on amo mong depar t mentoft he i ndust r y .Thus, he l p

t of ac i l i t at et he o pe r at i o nalac t i v i t i e s and t he i ndus t r yc an mai nt ai n

opt i mall e v elofi nv e nt or i e sduet oav oi de xc es si v ei nv e nt or i e s..

Sec ond,t her ei squal i fiedman power ,goodi nve nt or yma manageme mentpol i ce sand pr ocedur esandt hei ndust rycaref ul l ypur chasedr aw mat eri al ssel ectt her i ght i t ems ms,t heri ghtquant i t y and t heri ghtpri cet hatar ehel pt o at t ai ni t s own obj ec t i v e.

Fi nal l y ,t he i ndust r y ar e weak pract i ce i n produci ng depar t ment bec ause i nve nt oryi sr et ur ned by cust ome mer s as a r esul tofdef ectand t or edesi gn on i nvent oryshoul dr estwi t ht ot opmanageme mentoft hei ndust ry .

5. 3.Recomm mmendat i on Base d on t he findi ng and concl usi on t he f ol l owi ng r ec omm mmendat i on ar ef or  war di nor dert osol v et hepr obl e msi dent i fiedands t r engt ht hee xi s t i ngse ct i on f or effec t i v ei nv ent or y manage ment .T o sol v et he pr obl em shoul dt ake t he f o l l o wi wi ngmaj orac t i o n. •

 The management of t he f act or y shoul d gi v e at t ent i on f or mat e r i al di spl aced a ve rywh wher ei nt hedepar t mentoft hei ndust ry .Thati st hey shoul dpr epar eappr opri at est oragear ea,sot hatdepr ecat i on,t hi scanbe mi ni mi ze.

•

Quant i t y and qual i t y of goods r ec ei v ed shoul d be spec i fied bef or e payme menti saut hori zed.

•

Pr o pe raut ho r i z a t i o ne x i s t sf o ri nv e nt o r yquant i t yr e m mo o v e df r o ms t o c k.

•

I nv ent oryi ss uesshoul d be val ued accor di ng t o an acce pt abl e met hod and t he cos t s shoul d be acc ount ed f or i n a manne rt hat pr ov i des adequat ei nf orma mat i onf orma manageme menti ncl udi ngvari ancef r om st andar d.

•

 The r eshoul dbef ul l yacc ount abi l i t yf orbot huni t sandbi r rf ori nv e nt or y quant i t yr ecei vedonhandandi ssuedors ol d.

•

Di ffer ence bet wee n book and phys i cal i nv ent or i es ar e as ce r t ai ned di ffer ence sadj ust ed and t heamo mountofov erageors hor t ageshoul d be pr o pe r l yac c ount e df o r .

•

I ncomi mi ngshi pmentshoul d beaccept edonl yi ft her ece i vi ngdepar t ment hasaut hori zat i oni nt hef orm ofacopyofpur chaseorder .

•

 Al lt r ans act i onspe r t ai ni ngt ot hei ss ueofs al esofi nv ent or i esquant i t y shoul dbeaccount edf orandent er edi nt hecont r ol l i ngperi od.

•

 Ter ms,pr i ce s,andcl ear i calac cur acyofr edor si nv oi ceshoul dbecor r ect  bef or epaymenti sal laut hor i z ed.

•

I nvent ory quant i t y shoul d be adequat el y pr ot ect ed agai nstl osses f r om t hef t ,spoi l age,unaut hori zedwi t hdr awalbyemp mpl oyee.

•

 The i ndus t r y shoul d use mat er i alr equi r ementpl an si nce i t sf as t ness sys t em t hi nki ngandbecome met hecor nerst oneofpr oduct i on sys t em wi t h t hel i mi tofi t sme met r ol ogy,i fwi l lr evi ew whati sneeded,how manyneeded,  whent he yar eneededandwhent he yshoul dbeor der .

Ref er ence t h Duncan Wi l l i ams mson ( 1998) ,Cos tand manage me ntac count i ng,6 ed.

Ne w de l hipr e nt i c eHa Hal ’i ndi a. t h Mosi ch A. N( 1988) , I nt er medi at e Acc ount i ng.6 ed.Uni t ed st at e of

 Ame r i ca. t h St ephen A.Rosset al( 1998) ,Fundame ment alofcor por at eFi nance,6 e d.

Uni t edst at eofAmer ci a.Van.Hof t man.

t h Lawr wr enceJ. Gi t man ( 1997) , Fi nanci almanageme ment ,8   e d.Uni t e ds t at e

ofAmeri ca. t h  Wi  Wi l l ai s t e v enss on ( 1999) , Oper at i onalmanage me nt .6   edn.Bi t so n Mc

Gr aw hi l l. I nt e r ne tWe bs i t e s Ht t p: //www.I nv ent or yManage ment .Com m. .Acc es se d03/03/2012.  www.Fi s hbowl .I nv e nt or ymanagement .Com .Acc es se d05/03/2012

 Appendi x  Ji mmaUni ver si t y Col l ageofBusi nessandEconomi mi cs Depart mentofaccount i ng

Dearr es pondent s  Thepur poseoft hi sques t i onnai r ei st o col l e ctdat af ort het hes i spr oj ectt i n r equi r em me ent f or par t i al f ul fil l ment of B. A degr ee i n account i ng i n Ji mma Uni ver si t y . You genui ne r esponse f or t he f ol l owi ng quest i ons i s ext r em me el y i mport antf ort he successf ulcomp mpl et i on oft hi s paper ,t he i nf orma mat i on your pr ov i de i s use d onl yf or t he pur pose i ndi cat ed and wi l l be kept hi ghl y c onfide nt i al . Iwo ul dl i k et ot ha nky o ui na dv a nc ef o ry o urc o ope r at i o na ndf o ri nv ua bl et i me .

Par tonegener ali nf orma mat i on Educat i onst at us Di pl oma ma Degr ee Ot herspeci f y Exper i ence  Age 18–25 26–35 3642 42-66 Sex:Mal e Fema mal e Par tt wo Quest i onsr egar di ngt oi nvent oryma manageme menti nKK t ext i l ei ndust ry I ns t r uc t i o ns  Wher ev ert her ei sal t er nat i v eanswert i c ki nt hebox I ft hequest i onr equi r eopenendedanswer swri t ebri efly 1.D .Doy ouknownt het er mi nve nt or ymanage ment ?  Yes No 2.Doesyouri ndust ryhaspol i ci esand pr ocedur est okeep i nve nt oryl ev el t hata v oi de x c e s si nv e nt o r y?  Yes No 3.I st her eopt i mall eve lofi nvent oryma manageme mentt hei ndust ry?  Yes No 4.Doest hei ndust ryhavecont r oli nvent oryi nusi ngi nvent orypr ocedur e?  Yes No 5. I st heproduct i ondepart mentdel i ver yfini shedgoodsi nvent ory? Del i ver yont i me So m me et i met he r ei sl at ede l i v e r y Doesnotdel i ver yon t i me 6.I .I s t her e t he c oor di nat i on amo mong pr oduc t i on depar t me nt , s t or e depart ment ,andpur chasedepart mentoft hei ndus t r y?  The r ei ss t r ongcoor di nat i on  The r ei ss at i sf ac t or ycoor di nat i on  The r ei swe akcoor di nat i on

 The r ei sl ow coor di nat i on 7.Youranswerf ort he abov e ques t i on 6 ot hert han st r ong coor di nat i on s t at et her e a so n 8.Whi chi nve nt or ysys t em pr ocedur edoest hei ndust r yuse ? Per pet ualpr ocedur e Peri odi cpr ocedur e Bot h 9.How manyt i met he i ndust r ycount /chec ki t si nve nt or y? Mont hl y Semi mi annual l y Annual l y 10.How of t eni si nvent oryre t urnedbycust ome merasresul tofdef ect ?  Al ways Mos tof t en Fe w None 11.Whi cht ypeofi nvent oryma manageme mentt echni quedoest hei ndust ryf ol l ow?

Economi mi cor derquant i t y Justi nt i me  ABC t ec hni que St oc kl ev el Al lt heabov e 12.Doest he i ndust ryma managei t ’ si nvent oryi nappr opr i at eway?  Yes No 13.Doest hei ndust ryverycarf ult obuyt heri ghti t em, m,att heri ghtpri ce andi nt heri ghtquant i t y?  Yes No 14. I f no que s t i on no.

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