Finished goods inventory control (Part-1) , A study of subcontracting system for moulded plastic components (Part-2); Wiltech India Ltd.

Abstract

With the cost of capital for short term funds being 18%, if we assume the cost of holding finished goods inventory to be 21%, then an extra inventory of 1000 units, priced at Rs. 10 per unit, costs Re. 2100 per year. If inventories could be reduced at all the stock pointe, then it would result in considerable savings to the company. In order to reduce the inventory at depots and C & F agents, the company should stock only as much as it can hope to sell. A study of primary sales figures indicated high variations in primary sales figures, without any discernible pattem Hence a forecasting system has been proposed in this report. The forecasting technique, initially proposed by Trigg, provides an exponentially smoothed average, an estimate for safety stock above this average and also a tracking signal to monitor the system.