7th term- thesis on inventory management

A Project Report on

“CURRENT INVENTORY PRACTICES OF REAL

ESTATE DEVELOPERS”

Submitted by:

T.SHREEDHAR Roll No. 233084

U.RAJESH KUMAR Roll No. 233085

D.RAVINDER REDDY Roll No. 233092

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

Post-Graduate Program in Advanced Construction Management

UNDER THE ESTEEMED GUIDANCE OF

Prof Rajiv Gupta, Head of A.C.M

NICMAR, Hyderabad.

&

B.Sudharshan Reddy General Manager (Projects)

Radha Infra Projects Ltd

Hyderabad.

PGPACM XXIII BATCH 2009-11

NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH

HYDERABAD.

C E R T I F I C A T E

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

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

T SHREEDHAR (Roll No. 233084), U RAJESH KUMAR (Roll No. 233085) and

D RAVINDER REDDY (Roll No. 233092) in partial fulfillment of academic requirements for

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

carried out by them under my guidance and supervision.

Date: Signature of the Guide

Hyderabad Prof. RAJIV GUPTA,

HEAD OF A.C.M

NICMAR, Hyderabad.

Prof. K.R.Ramana,

Dean-In-Charge

NICMAR’s-CISC

DECLARATION

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

ESTATE DEVELOPERS – A CASE STUDY” is a bonafide work carried out by us under the

guidance of Prof. Rajiv Gupta. Further, we declare that this has not formed the basis of award of

any degree, diploma, associate ship or other similar degree or diploma and has not been

submitted anywhere else.

SHREEDHAR.T Roll No.233084 Signature

RAJESH UBA Roll No.233085 Signature

RAVINDER REDDY.D Roll No.233092 Signature

Date:

Place: Hyderabad

ACKNOWLEDGEMENT

The research thesis is a team work and the satisfaction that accompanies the successful

completion of this task would be incomplete without the mention of the people who made it

possible. Though it is possible to thank them personally, we take this opportunity to express our

gratitude to them.

We are deeply indebted and highly obliged to our thesis

guide Prof. Rajiv Gupta, Head of ACM, NICMAR, Hyderabad, without whose help we

couldn’t have started the thesis and would not have got any lead for whom to approach and

the methodology to be followed and for guiding and correcting us on the right track.

We also extend our deep gratitude to N.Govardhan Reddy, Executive

Director & B.Sudharshan Reddy, GM-Projects, Radha Realty, Hyderabad, for his valuable

suggestions and support in carrying out the thesis work in the right path.

We would also thank Prof. K. R. Ramana, Dean-In-Charge, NICMAR’s-CISC,

Prof.Sri Hari, Deputy Dean, NICMAR’s-CISC for their supporting nature.

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

over the country in providing us with the relevant data and the references required for the

successful completion of the thesis

Last but not the least we would like to thank our parents for reposing so much

faith and care in us, giving us the financial and mental support to strive through and complete the

thesis.

Their constant encouragement and guidance provided us infinite motivation

throughout the thesis work.

Regards,

SHREEDHAR.T

RAJESH UBA

RAVINDER REDDY.D

ABSTRACT

We framed our project ‘Current Inventory practices of real estate developers’ with Radha

Realty's one of the ongoing project 'Maple Town' in Hyderabad. During the course of our project

we were able to study the material flow in the construction sector as per the scheduled activity

and requirement. As per our project's focus we made a positive attempt to analyze the flow of

materials throughout the project in terms of its usage as per the oncoming requirement of the

proposed activity.

Primarily Inventory management is about specifying the size and placement of stocked goods at

various stages of the project. Inventory management is required at different locations within a

facility or within multiple locations of a supply network to protect the regular and planned course

of production against the random disturbance of running out of materials or goods yielding in

profits.

The material layout also avoids confusion and risks thereby creating a safe atmosphere in the

construction site. The role of material management in various organizational functional activities

such as material purchasing decision, material forecasting, material planning and budgeting,

selection of potential information from sources are identified as key learning’s of the project.

Also, inventory management with direct linkage with other functional areas of management such

as TMQ, HRM, IT etc and application of tools & techniques of inventory classification in the

real life situation that elaborates on stock levels and rating analysis.

We also took a stand to find out the techniques to select vendors and various aspects in source

selection stressing on the local source who is in a reachable limit from the construction site, with

its positive and negative analysis since the key to successful analysis is to identify the important

characteristics of the particular purchase.

The graphical representation of our analysis is a result of the work we carried through our

project. It educates the trigger points, the point which helps the staff in charge creating an order

for the material so that the work shall not stop.

Index

S.NO CONTENTS Page. No

1.0 Chapter 1

1.1 Introduction 1

1.2 Case study objective 2

2.0 Chapter 2

2.1 Introduction 3

2.2 Leadership team 4

2.3 Current project 5

2.4 Contact address 5

3.0 Chapter 3

3.1 About maple town 6

3.2 Amenities 6

3.3 Club facilities 7

3.4 Facilities 8

3.5 Roads & landscaping 9

3.6 Specifications 10

3.7 Area statement 10

3.8 Floor plans 11

3.9 Layout map 12

3.10 Location map 13

4.0 Chapter 4

4.1 To study how inventory management practices 14

4.2 To find out the techniques for vendor selection 17

4.3 Applying tools and techniques 20

4.4 Finding inventory requirement at different stages 27

4.5 Study of reliable local material ‘utilization’ 38

4.6 Stock maintenance 44

5.0 Chapter 5

5.1 Conclusion 47

6.0 Suggestion 48

7.0 References 52

National Institute of Construction Management and Research, Hyderabad.

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

CHAPTER l

INTRODUCTION

Current Inventory Management Practices of Real Estate Developers

(A Case Study)

As a part of NICMAR's PGP ACM program, we had an opportunity to study an important aspect of

the construction process which is inventory management. The project encouraged us to build our

skill towards the material management and its trigger areas.

The Opportunity to visit construction site encouraged us to correlate between the book and practices,

where the required materials are placed properly in their respective yards making it feasible for the

staff in collecting them for the proposed use and educated us that the Inventory Management consists

of a series of processes on the multiple functions with reference to the tracking, handling and

managing of goods and materials that are held in stock.

Through this platform we were not only exposed to inventory management and its database, but also

able to understand that the costs can be substantial to store and move inventory. Innovative methods,

such as Just-in-Time inventory control, can save costs and move products and services to customers

with less wait time.

The experience encouraged us to learn the tricks and traits of the inventory practices of the

developer. Thus, enabling ourselves to face the relevant challenges after the completion of our PGP

program.

CASE STUDY OBJECTIVE

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

In the due course of the project life cycle inventory management plays a major role in

controlling the project cost. In order to carry forward the project as scheduled and keep it within the

scheduled budget, Risk management gears up in minimizing the damage that might cause in the

project life cycle.

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

quantity as and when required and also to minimise investment in inventories.



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

inventory management. A proper planning of purchasing, handling, storing and accounting should

form a part of inventory management. An efficient system of inventory management will determine

four vital factors.

1. What to Purchase?

2. How much to purchase?

3. From where to purchase?

4. Where to store and so on?

The purpose of inventory management is to keep the stocks in a manner that neither there

shall be over-stocking nor under-stocking. The investments in inventory should be kept in reasonable

limits so that he primary purpose shall be accomplished and it is „let the work shall not stop‟.

In the initial stage of the construction project, the organization has to plan, schedule and

implement for materials, machinery and resources required. When it comes to the materials for a

scheduled project, planning engineer and the project manager must derive the materials required

using the relevant techniques available. Let‟s say, the (EOQ) economic order quantity for a particular

activity can be calculated and meet the requirements.

This frame work is about the case study on the inventory and risk management in the

project‟s life cycle. The ABC analysis, vendor rating, selection criteria, financial comparisons

through procurement and other techniques used in controlling the project cost and its timely

completion in the ongoing project of Radha Realty located in Hyderabad.

The main objectives of our project study are :

1. To study how inventory management practices play an important role in supporting other

activities of an organization.

2. To find out the techniques for vendor selection.

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

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

Life Cycle (PLC).

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

6. Stock maintenance: Practice of A class Inventories.



CHAPTER 2

INTRODUCTION OF THE COMPANY

Radha Realty Corp Pvt. Ltd

2.1 Overview

Founded in 1997 with more than a decade of empicable track record to its credit, Radha Realty Corp

Pvt Ltd contributed to realty boom in Hyderabad. Every customer is an inspiration to us and we

endeavor to keep that inspiration intact by creating healthier, happier communities. Truly, building

enduring relationships is much more than a slogan to us. With a passion for creating value to the

customers Radha Realty has come up with one successful real estate development after another in

Hyderabad.

Radha Realty has undertaken some of the largest projects in plotted development and gated

communities so far in Hyderabad and Bangalore. Some of the prestigious projects Oxygen City,

Maple Town and Town Homes, Dews Ville speak for what Radha Realty stands for.

Radha Realty is planning to take up signature villa developments aimed at premium segment of the

market as well as apartments for first time buyers. The affordable housing segment would be tailor-

made for the requirements of urban communities providing lifestyle amenities to make them feel

comfortable. They are built with unique contemporary living spaces utilizing the best practices in

design and construction. Radha Realty has significant investments in sister concerns focusing on

infrastructure for commercial and hospitality sectors.

Radha Realty strongly believes that the communities we live in should be vibrant spaces. Towards

that end, Radha Realty is the principal sponsor of Hyderabad 10K run and half marathon. The 10K

run represents people coming together in large numbers to raise awareness about health and fitness

related issues. Radha Realty is the principal benefactor of “Project 511” aimed at improving the

quality of instruction in the Government schools. Tens of thousands of children are benefited through

this program.

Radha Realty is a corporation found on the core values of integrity and innovation. The company is

poised to make giant waves in the real estate development sector in the years to come.

2.2 Vision

To be the first choice of the customers for all their space requirements.

2.3 Mission

To provide quality spaces where people of all ages can live, work and play.



2.4 Core Values

Customer delight, to deliver the product promised on time and with the best quality, to be sensitive

towards the environment and surrounding communities and to be the employer of first choice known

for its innovation and professional approach for real estate development.

2.5 Innovation and Creativity

Being into constructions, innovation and creativity are our core values. Delivering the magnificent

exteriors that are architecturally fabricated is our constant effort. We strive to add luxury, style and

comfort to your ambience.

2.6 Client Satisfaction

Understanding client‟s requirements and delivering solutions is what we value. We value our people

and cherish our customers in enduring relationships.

2.7 Integrity

Integrity of workforce makes the foundation of any organization. Our team is zealous and

responsible in contributing positive results. A group of professional individuals can make large

difference in escalating the organizational growth.

The team at Radha Realty consists of highly professional personnel having deep industry knowledge

and vast experience with companies, not just in India but across the globe.

2.8 Leadership Team

1. Mr. Ravindranath Reddy - Managing Director

2. Mr. K Ramakrishna Rao - Director

3. Mr. N Govardhana Reddy - Executive Director

4. Mr. D Anil Prabhu Kumar - Director, Strategic Planning Sales and Marketing

5. Mr. J Rajasekhara Reddy – Director



2.9 CURRENT PROJECTS

Gated Communities

1. Dews Ville

2. Maple Town

3. Maple Town –II

4. Mulberry Meadows

5. U31

Plotting Ventures

1. Green Lands

2. Oxygen city

3. Fortune Meadows

4. Creep Town

5. Dew Drops

6. Mukund Meadows

Apartments

Carnival

2.10 CONTACT ADDRESS:

Radha Realty Corp Pvt. Ltd.

Plot No: 824,

8-2-293/82/A/824,

Road No. 40, Jubilee Hills,

Hyderabad - 500 033.

- 91-40-23607090.



CHAPTER 3

MAPLE TOWN PROJECT

3.1 About Project “Maple Town”

Radha Realty launches Maple Town Phase II, a gated community of 198 villas located near APPA

junction with direct access from the Outer Ring Road and situated just 20 minutes drive from the

International airport & 15 mins drive from Gachibowli the hub of Hyderabad‟s globally renowned IT

Industry. Famous Educational institutions such as the Glendale Academy and Shadan Medical

College are located less than 5 mins away Maple town is designed with perfect mix of latest

international design and local requirements, best of specifications and high-end materials and

offering world class amenities at a very affordablebprice.

At this 20 acres integrated gated community with its luxury villas & Plots dotting the exquisite

landscape; you have the luxury of choosing if you want to live or invest. The message of our unique

creation is profound: Space matters. Welcome and define the edges of your space with the grand

living at Maple Town.

3.2 Amenities

An aesthetically designed swimming pool with a filtration plant will be provided with separate hinge

rooms for men and women. There will be a provision for toddler‟s pool too. An ideal location for

evening gathering of the residents to spend their leisure in style. The club house would have facilities

like the Health Club with Sauna and Jacuzzi. Maple Town is designed to sway you off our feet with

its architectural excellence. The open spaces between the Villas and within the gated community

would be covered with green landscapes making this place a Garden of Eden. The Perimeter of this

project would be protected like a fortress with an 8 feet wall with solar fencing. Professional

security personnel would mean the campus 24X7, ensuring the safety of the residents. CC TV,

intercom connection between each dwelling unit and the main gate, Wi-Fi connectivity and so on are

also a part of the security plans of the project.



3.3 CLUB FACILITIES

3.3.1. Air –conditioning Gym

3.3.2. Spa

3.3.3. Swimming Pool

3.3.4. Library

3.3.5. Party Hall

3.3.6. Café

3.3.7. Guest Rooms

3.3.8. WI-FI

3.3.9. Lounge

3.3.10. Children Recreation zone

3.3.11. Tennis

3.3.12. Squash

3.3.13. Indoor Badminton

3.4 FACILITIES

3.4.1. Landscaped Gardens

3.4.2. Tree Lined Vistas

3.4.3. Street Lighting

3.4.4. Underground Cabling

3.4.5. Underground Drainage

3.4.6. Broad Band Connectivity

3.4.7. Sewerage Treatment Plant

3.4.8. Generator Back-up

3.4.9. Black Topped Roads with side walks

3.4.10. Jogging Track

3.4.11. Water Purification Plant

3.4.12. Polyclinic/Convenience Store

3.4.13. Solar Fencing

3.4.14. Intercom Facility

3.4.15. Round the Clock Security

3.4.16. Wi-Fi Enabled

3.4.17. Centrailised Gas



3.5 ROADS & LANDSCAPING

60‟ & 40‟ wide internal roads with avenue plantation lead you to houses built on plot areas of 2,

67,355 yards with areas ranging from 2400 -3300 sft. What truly sets this residential cluster apart is

the landscaping, integration of technology at your behest, with most of the area being Wi-Fi enabled.

3.6 SPECIFICATIONS

3.6.1. R.C.C. FRAMED STRUCTURE

a) Earthquake resistant foundation with R.C.C. M20 grade concrete designed for Seismic

zone 2.

3.6.2. SUPER STRUCTURE

a) Brick masonry with good quality bricks in cement mortar.

3.6.3. PLASTERING

a) Internal Double coat cement plaster with smooth finish.

b) External Double coat sand faced cement plastering.

3.6.4. DOORS

a) Main door Best Teak Wood door-frame & shutter aesthetically designed with

melamine polishing and designer hardware of reputed make. Internal doors:

b) Frames: Best Teak Wood frame.

c) Shutters: Molded & paneled shutters with Melamine polishing & standard hardware.

3.6.5. WINDOWS

Window Frames & shutters in Best Teak Wood {polished inside and painted outside) or

uPVC, with glass panels & provision for mosquito mesh, fitted with elegantly designed

M. S. Painted grills, and standard hardware.

3.6.6. PAINTING

a) External Sandtex Mat/ Exterior emulsion paints of Asian / ICI make or

equivalent



b) Internal Smooth finish with good quality putty over a coat of primer finished

with two coats of Acrylic emulsion paint Servant Quarters & Service Areas: Two

coats of Acrylic OBD over one coat of primer.

3.6.7. FLOORING

a) Vitrified porcelain tiles of 24"x24" with 4" skirting of Johnson or equivalent.

b) Bathrooms :Ceramic non-slippery, acid resistant tile flooring of Johnson/Kajaria or

equivalent-Staircase: Polished Marble/granite with skirting.

c) Covered Terrace & Balconies: Rustic series ceramic tiles of Naveen/ J Johnson or

equivalent.

d) Parking Area: Best quality cement based parking tiles over PCC bed.

3.6.8. TILES CLADDING & DADOING

a) Elevation cladding: Granite/slate cladding.

b) Kitchen: Glazed ceramic tile dado up to 2'0" height above

c) Kitchen platform: Johnson or equivalent make

d) Bathrooms: Glazed ceramic tile dado of Johnson / Kajaria / Bell or equivalent tiles up

to full height

e) Utilities / Wash: G glazed ceramic tile dado up to 30" height.

3.6.9. KITCHEN

a) Granite platform with Stainless steel sink / Crystal sink with bath municipal provision

for bore water.

b) Provision for fixing Aqua-guard. Provision for cabinets, exhaust fan & chimney-

Modular kitchen is optional at extracost.

3.6.10. UTILITIES / WASH

Provision for washing machine, dish washer & wet area for washing utensils etc.

3.6.11. BATHROOMS

All the bathrooms consist of



a) Granite counters top wash-basin with hot and cold mixer valve.

b) E WC with flush tank of Hindustan/ Parry make.

c) Hot and cold wall mixer with shower (exposed).

d) Bath-tubfor master bedroom.

e) Provision forgeysers in all bathrooms.

f) All C.P. fittings are chrome plated of Jaquar / Mark / ESS

g) ESS or equivalent make.

3.6.12. ELECTRICAL:

a) Concealed copper wiring in PVC conduits.

b) 33KV substation to ensure quality power.

c) Power outlets for Air-conditioners In all bedrooms.

d) Power outlets for geysers in al I bathrooms.

e) Power plug for cooking range chimney, refrigerator, micro ovens, mixergrlnder In

kitchen.

f) Plug points for refrigerator, T.V. & audio systems etc, wherever necessary.

g) 3 Phase supply for each unit and Individual meter boards. Miniature Circuit Breakers

<MCB> & ELCB of MDS / Merlinger or equivalent make.

h) All electrical fittings of M l< / Northwest or equivalent make. Solar water heating system

is optional at extra cost

3.6.13. TELECOM

a) Telephone points in all bedrooms, drawing & dining areas.

b) Provision for internet connection In study room/bedrooms.

c) Intercom connectivity to security from all houses.



3.6.14. CABLE TV

Provision for cable in all bedrooms & living-room.

3.6.15. INTERNET

Internet CAT 6 cable for internet connectivity.

3.6.16. GENERATOR

100% back-up for all electrical points excluding geysers and air conditioners.

Note: The developers reserve the rights for any additions in plans and elevations. All details are

subject to change and all optional amenities other than the above specifications are all extra cost.

3.7 Area Statement for EAST PLOT

East Facing-1 (40' x 80')

Plot Area 355.50 Sq.Yds.

Ground Floor Area 1712 Sft.

First Floor Area 1620 Sft.

Terrace Floor Area 100 Sft.

Total Area 3432 Sft.

Table 1: East Facing-1 Plot Dimensions

East Facing-2 (40' x 80')






Table 2: East Facing-2 Plot Dimensions



3.8 Area Statement for WEST PLOT

West Facing-1 (40' x 80')






Table 3: West Facing-1 Plot Dimensions

West Facing-2 (40' x 80')






Table 4: West Facing-2 Plot Dimensions



3.10 LOCATION MAP



CHAPTER 4

DATA ANALYSIS & INTERPRETATION

4.1 OBJECTIVE 1: To study how inventory management practices play an

important role in supporting other activities of an organization.

Connectivity of work is predominant in any form of activity and it is proved to be a backbone for the

construction process. The case study on the ongoing construction project has hooked up with various

connections with one and other activity and the one above playing an important role is the subject

„material management.

The subject is important because the project has to reap higher returns which is a challenging task yet

achievable through inventory management. Hence our primary objective is to study how inventory

management practices play an important role in supporting other activities of an organization.

Table 5: Role of Materials Management in Various Organizational Functional Activities

Role of Material Management Description

Decision on making the material or buying. Such a decision may be taken if:

i) Supplies are not adequately obtained

successfully in the past

ii) The quality of supplied goods is not of

standard



iii) The volume requirement of sales is

exceeding the possible manufacturing

capacity

iv) The material fails in the cost analysis

Materials Forecasting

The materials management needs to forecast the

requirements. Some of the questions that need to

considered for it are:

i) Is this material being needed for longtime?

ii) Will there be any requirement after 10 years

for this material? Will the supplier exist after

10 years

iii) Are there any changes or technological

break- though for this material?

iv) · Are the prices going to rise in the future?

Materials Planning and Budgeting

Materials‟ planning is of the major control activity

that an organization needs to put in place. It is

feasible because of materials management.

Selection of Potential information sources

This will include selection of suppliers, and other

market research information such as price trends,

corporate environment etc. The materials

management data may help this task.

Purchasing commits a lot of capital of an

organization. Materials management information



Purchasing with a difference allows very creative purchasing by organization as it

sees most of the trends. It also helps while

purchasing in uncertain situation.

Forecasting of Price

This is most essential function thus, has been kept

separately also. A good price forecasting system

based on material management and market research

information may bring an organization into a win-

win situation.

Store Management and inventory control with

a difference

Materials management helps in the store functions

such as: control of material being received, proper

storage, minimization of obsolescence, highlighting

of unused stocks, ensuring good housekeeping,

verification of stock, timely delivery of goods,

proper storage and presentation of materials, dealing

with scrap materials etc.

LINKAGE WITH OTHER FUNCTIONAL AREAS OF MANAGEMENT

The Materials Management can be directly connected to the functional areas of customer

satisfaction through Total Quality Management (TQM), Human Resources Management

(HRM); environmental issues in material management, cost and finance issues and IT related

issues.



4.2 OBJECTIVE 2: To select various vendors from the available techniques

Source selection encourages the company from the competitors through the quality of

materials supplied and by maintaining the required stock for the project.

Some important aspects in source selection:

4.2.1. Local Sources

Generally local sources are preferred, provided they meet the requirements of the

buyer in terms of quality, delivery, and price. A personal follow-up or a local “phone

call” is enough for effecting quicker deliveries. In fact, some organisations prefer

local suppliers even though they may not compare favorably with outside suppliers.

This local goodwill is sure to pay in the long run. It is not uncommon to find big

organisations in India encouraging ancillary suppliers in and around their plants

through technical and financial assistance.

4.2.2. Subcontracting

Selection of sources for subcontracting is another special issue. The manufacturer

may decide to „off-load‟ some products to suppliers so as to facilitate scheduling of

production in the plant. It also enables better utilisation of human resources. This

happens because subcontracting is just an extension of the plant‟s activities and since

subcontractors are generally small,they may be in need of technical assistance.

4.2.3. Choice between Small and Large Suppliers

Often in selecting suppliers, the materials manager is faced with this question. If-the

requirements are small, the small supplier is the obvious choice. A personalised

contact can be established and because he is small, he is likely to have fewer

customers, be more loyal and meet even unusual requests. Big suppliers are equipped-

to meet larger requirements. They usually have reserve facilities and may thus be able

to meet additional requirements. They may have R & D facilities which will enable

the buyer to obtain technically superior products.

4.2.4. Sole Source versus Multiple Sources

The buyer must decide whether to place all orders with one supplier, or to give them

to two or more suppliers. Using more than one supplier has several advantages,

providing there is enough business to keep all genuinely interested. Multiple sources

provide a broader technical base. Competition is kept alive as suppliers seek to

increase their share of the business. The buyer company is protected against failure at

one supplier‟s plant. However, if the policy of the buyer company to have sole



sourcing for its products and supplies wherever feasible, and this policy is

implemented successfully, there is guarantee of long-term and lasting buyer-seller

relationship.

4.2.5. Inside Source

There are occasions when the buyer company may have to decide if the needed part or

component can be manufactured within its own plant, or procure it form outside. This

is known as the make-or-buy decision. The advantages and disadvantages must be

evaluated in each case in terms of the individual company‟s situation.

4.2.6. Buyer-Seller Relations

Developing, establishing, and maintaining good buyer-seller relationships must be the

goal of any progressive purchasing function. It is essential that the seller‟s

representative is treated fairly and honestly in all transactions. When the seller has

confidence in the buyer, the buyer‟s task can be accomplished more effectively. When

goodwill exists, negotiations are shorter, terms and conditions are simpler to agree

upon, and disputes are kept at a minimum because of good communications. As an

added bonus, the buyer‟s company has a better image, not merely as a customer, but

as a good company to do business with.

The aim of source selection is to find the one most satisfactory source, or a group of

alternative sources with adequate and reasonably comparable qualifications. Thus

succeeding orders for the same item can be placed with these same suppliers with

confidence in the original selection. In other words, the decision as to a source of

supply contemplates a continuing and long-lasting mutually productive relationship.

4.2.7. Loyalty to Suppliers

A continuing buyer-seller relationship, based on mutual confidence and satisfaction,

implies a policy and, a responsibility of loyalty to suppliers. This is the antithesis of

opportunism and constant “shopping around” in purchasing. It is true that some cost

savings can be made by such methods, but it is usually at the sacrifice of uniformity

and continuity of supply. Especially, it sacrifices the assurance of supply that is the

first responsibility in purchasing. Without established and loyal sources of supply,

every recurring requirement presents a procurement problem of the first order, and the

work of the purchasing department is magnified beyond all reason and proportion.



Financial strength and stability of the supplier company may be essential to assure continuity

of supply and reliability of product quality. A competent buyer should be able to read and interpret

financial reports and make intelligent conclusions from the data.

Past performance provides an excellent insight into probable future success. The key to

successful analysis is to identify the important characteristics of the particular purchase.

Usually, three important factors are evaluated.

i) Quality Evaluation is simply reviewing the supplier‟s record in respect to meeting the

required specifications, which is measured as a percentage of acceptable shipments or

delivery. It should be the policy for the quality-control section to inform the purchasing

department of the facts concerning each shipment/delivery.

ii) Price Evaluation in its simplest form is the net price quoted in each instance for conforming

goods compared to the prices quoted by competitors. Consistency of success and integrity in

price behavior would provide a measure criterion.

iii) Service Evaluation includes prompt submission of data, response to inquiries, delivery

performance, special services rendered, and other intangibles. Most of the elements in this

factor are subjective in nature.



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

real life situation.

As per the inventory management theory there are various tools and techniques emerged in order

to control the material flow yet maintaining minimum stock level. In our study we witnessed the

application of tools and techniques of inventory classification in real life situation.

A record for every work shall be carried at the site and periodic reports in the form of electronic and

paper are prepared and sent to the head office of the financial affairs and database maintenance. This

process ensures transparency in the work flow and avoids bottlenecks in the due course of the

project.

4.3.0 TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT AND CONTROL

The following are the important tools and technique of inventory management and control.

4.3.1. Determination of stock levels.

4.3.2. Determination of safety stocks.

4.3.3. Selecting a proper system of ordering for inventory.

4.3.4. Determination of economic order quantity(EOQ).

4.3.5. A.B.C. Analysis.

4.3.6. V.E.D. Analysis.

4.3.7. Inventory turnover ratios.

4.3.8. Classification and codification of inventories

4.3.9. Preparation of inventory reports.

4.3.1. Determination of stock levels:

Carrying of too much and too little of inventories is detrimental to the firm. If the inventory

level is too little, the firm will face frequent stock-outs involving heavy ordering cost and if

the inventory level is too high it will be unnecessary tie-up of capital. Therefore, an affective

inventory management requires that a firm should maintain an optimum level of inventory



where inventory costs are the minimum and at the same time there is no stock-out which may

result in lost of sale or stoppage of production. Various stock levels are discussed as such.

4.3.1.1. Minimum Level: This represents the quality which must be maintained in hand at all

times. If stocks are less than the minimum level then the work will stop due to shortage of

materials.

Following factors are taken into account while fixing

i. Lead Time: The time taken in processing the order and then executing it is known as

lead time. It is essential to maintain some inventory during the period.

ii. Rate of Consumption: It is the average consumption of material in the factory.

iii. Nature of Material: If a material is required only against special orders of the customer

than minimum stock will not be required for such materials. Minimum stock level can be

calculated with the help of following formula:

Minimum stock level = Re-ordering level – (Normal consumption) ´ Normal Re-order

period)

4.3.1.2. Re-ordering Level: Re-ordering level or ordering level is fixed between minimum

level and maximum level. Re-ordering level is fixed with the following formula:

Re-ordering Level = Maximum Consumption ´ Maximum Re-order period.

4.3.1.3. Maximum Level: It is the quantity of material beyond which a firm should not

exceed its stocks. If the quantity exceeds maximum level limit then it will be overstocking. A

firm should avoid overstocking because it will result in high material costs. Overstocking will

mean blocking of more working capital, more space for storing the materials, more wastage

of materials and more chances of losses from obsolescence.

Maximum Stock Level = Re-ordering Level + Re-ordering Quantity – (Minimum

Consumption ´ Minimum Re-ordering period).

4.3.1.4. Danger Level: It is the level beyond which materials should not fall in any case. If

danger level arises then immediate steps should be taken to replenish the stocks even if more

cost is incurred in arranging the materials. If materials are not arranged immediately there is a

possibility of stoppage of work. Danger level is determined with the following formula:



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

purchases.

4.3.1.5. Average Stocks Level: The average stock level is calculated as such:

Average Stock Level = Minimum Stock Level + ½ of re-order quantity.

4.3.2. Determination of Safety Stocks

Safety stock is a buffer to meet some unanticipated increase in usage. The usage of inventory

cannot be perfectly forecasted. It fluctuates over a period of time. The demand for materials

may fluctuate and delivery of inventory may also be delayed and in such a situation the firm

can face a problem of stock-out. The stock-out can prove costly by affecting the smooth

working of the concern. In order to protect against the stock out arising out of usage

fluctuations, firms usually maintain some margin of safety or safety stocks. The basic

problem is to determine the level of quantity of safety stocks. Two costs are involved in the

determination of this stock i.e. opportunity cost of stock-outs and the carrying costs. The

stock outs of raw materials cause production disruption resulting into higher cost of

production. Similarly, the stock-out of finished goods result into the failure of the firm in

competition as the firm cannot provide customer service. If a firm maintain low level of

safety frequent stock-outs will occur resulting into the large opportunity costs. On the other

hand, the larger quantities of safety stocks involve higher carrying costs.

4.3.3. Ordering systems of Inventory

The basic problem of inventory is to decide the re-order point. This point indicates when an

order should be placed. The re-order point is determined with the help of these things: (a)

average consumption rate, (b) duration of lead time, (c) economic order quantity, when the

inventory is depleted to lead time consumption, the order should be placed. There are three

prevalent system of ordering and a concern can choose any one of these:

a) Fixed order quantity system generally known as economic order quantity (EOQ) system.

b) Fixed period order system or periodic re-ordering system or periodic review system.

c) Single order and schedule part delivery system.



4.3.4. Economic Order Quantity (EOQ)

Economic order quantity is the size of the lot to be purchased which is economically viable.

This is the quantity of materials which can be purchased at minimum costs. Generally,

economic order quantity is the point at which inventory carrying costs are equal to order

costs. In determining economic order quantity it is assumed that cost of managing inventory

is made up solely of two parts i.e., ordering costs and carrying costs.

4.3.4.1. Ordering costs: These are the costs which are associated with the purchasing or

ordering of materials. These costs include:

a. Costs of staff posted for ordering of goods. A purchase order is processed and then placed

with suppliers. The labour spent on this process is included in ordering costs.

b. Expenses incurred on transportation of goods purchased.

c. Inspection costs of incoming materials.

d. Cost of stationery, typing, postage, telephone charges, etc.

These costs are also known as buying costs and will arise only when some purchases are made.

When materials are manufactured in the concern then these costs will be known as set-up costs.

These costs will include costs of setting up machinery for manufacturing materials, time taken up

in setting, cost of tools, etc.

The ordering costs are totaled up for the year and then divided by the number of orders placed

each year.

4.3.4.2. Carrying Costs: These are the costs of holding the inventories. These costs will not

be incurred if inventories are not carried. These costs include:

a. The cost of capital invested in inventories. An interest will be paid on the amount of

capital locked-up in inventories.

b. Cost of storage which could have been used for other purpose.

c. The cost of materials due to deterioration and obsolescence. The materials may

deteriorate with passage of time. The loss of obsolescence arises when the materials in

stock are not usable because of change in process or product.

d. Insurance cost.

e. Cost of spoilage in handling of materials.

The longer the materials kept in stocks, the costlier it becomes by 20 percent every year. The

ordering and carrying costs have a reverse relationship. The ordering cost goes up with the

increase in number of orders placed. On with the increase in number of units, purchased and

stored..



The ordering and carrying costs of materials being high, an effort should be made to minimise

these costs. The quantity to be ordered should be large so that economy may be made in transport

costs and discounts may also be earned. On the other hand, storing facilities, capital to be locked

up, insurance costs should also be taken into account.

4.3.4.3. Assumptions of EOQ: While calculating EOQ the following assumptions are made.

a. The supply of goods is satisfactory. The goods can be purchased whenever these are

needed.

b. The quantity to be purchased by the concern is certain.

c. The prices of goods are stable. It results in stabilising carrying costs.

When above-mentioned conditions are satisfied, economic order quantity can be calculated with

the help of the following formula:

Where

A = Annual consumption in rupees.

S = Cost of placing an order.

I = Inventory carrying costs of one unit.

4.3.4.4. EOQ and Quality Discount: Customer is offered some discount for bulk purchase or

if the size of a single order is large. Thus, the price per unit of an item may decrease for buying

larger quantities. The quantity discount affects inventory cost in three ways:

a. As the price per unit is reduced, the total price for the lot is reduced.

b. The lot size is increased, the number of offers is reduced and as a result the total ordering

cost is reduced.

c. The average inventory holding increase and as a result the storage cost will increase.

I

SA2EOQ



Thus, to decide whether to avail the quantity discount or not, first of all EOQ is determined

and then its total cost without quantity discount and with quantity discount is determined. In

case, the total cost is less due to quantity discount the offer is accepted, other wise it is

rejected. The following example illustrates the point.

4.3.1.5. A-B-C Analysis

The materials are divided into a number of categories for adopting a selective approach for

material control. Under A-B-C analysis, the materials are divided into three categories viz, A,

B and C. Past experience has shown that almost 10 percent of the items contribute to 70

percent of value of consumption and this category is called „A‟ Category. About 20 percent

of the items contribute about 20 percent of value of consumption and this is known as

category „B‟ materials. Category „C‟ covers about 70 percent of items of materials which

contribute only 10 percent of value of consumption. There may be some variation in different

organisations and an adjustment can be made in these percentages.

Class No. of Items % Value of Items %

A

B

C

10

20

70

70

20

10

A-B-C analysis helps to concentrate more efforts on category A since greatest monetary

advantage will come by controlling these items. An intention should be paid in estimating

requirements, purchasing, maintaining safety stocks and properly storing of „A‟ category

materials. These items are kept under a constant review so that a substantial material cost

may be controlled. The control „C‟ items may be relaxed and these stocks may be purchased

for the year. A little more attention should be given towards „B‟ category items and their

purchase should be undertaken at quarterly or half-yearly intervals.



4.3.1.6. VED Analysis

The VED analysis is used generally for spare parts. Spare parts are classified as Vital (V),

Essential (E) and Desirable (D). The vital spares are a must for running the concern smoothly

and these must be stored adequately. The non-availability of vital spare will cause havoc in

the concern. The E types of spares are also necessary but their stocks may be kept at low

figures. The stocking of D type of spares may be avoided at times. If the lead time of these

spares is less, then stocking of these spares can be avoided. The classification of spares under

three categories is an important decision. The classification of spares should be left to the

technical staff because they know the need urgency and use of these spares.

4.3.1.7. Inventory Turnover Ratios

Inventory turnover ratios are calculated to indicate whether inventories have been used

efficiently or not. The purpose is to ensure the blocking of only required minimum funds in

inventory. The inventory turnover ratio also known as stock velocity is normally calculated as

sales/average inventory or cost of goods sold/average inventory cost. Inventory conversion

period may also be calculated to find the average time taken for clearing the stocks.

4.3.1.8. Classification and Codification of Inventories

The inventories of a manufacturing concern may consist of raw materials, work in process,

finished goods, spares, consumable stocks, etc. All these categories may have their sub-

divisions. The raw materials used may be of 3-4 types, finished goods may also be of more

than one type, spares may be of a number of types and so on. For a proper recording and

control of inventory, a proper classification of various types of items is essential. The

inventories should first be classified and then code numbers should be assigned for their

identification.

The identification of short names are useful for inventory management not only for large

concerns but also for small concerns. Lack of proper classification may also lead to reduction

in production. Generally, material are classified according to their nature such as construction

materials, consumable stocks, spares, lubricants, etc. The coding class of materials is

assigned two digits and then two or three digits are assigned to the category of materials in

that class. The third distinction is needed for the quality of goods and decimals are used to

note this factor.

CostatInventoryAverage

SoldGoodofCostRatioTurnoverInventory

InventoryAverage

SalesNet

)(



4.3.1.9. Inventory Reports

From effective control, the management should be kept informed with the latest stock

position of different items. This is usually done by preparing periodical inventory reports.

These reports should contain all information necessary for managerial action. On the basis of

these reports management takes corrective action wherever necessary. The more frequently

these reports are prepared the less will be the chances of lapse in the administration of

inventories.

4.4 OBJECTIVE 4: Determine inventory requirement at different stages of

construction project i.e. over Project Life Cycle.

In this case study, we determine the inventory requirement for one villa at different stages of

construction project. The Activity breakup is mentioned below which show the project completion

with respect to time.

Project Activity Breakup

S.No Description of work

Project Completion

%

1 Footings 3.4

2 Plinth Beam 6.9

3 G.F Slab 10.3

4 F.F Slab 13.8

5 S.F Slab 17.2

6 G.F Brick Work 20.7

7 F.F Brick Work 24.1

8 Internal Plastering 27.6

9 External Plastering With Elevations 31.0

10 Elevation Cladding 34.5



11 Sloped Roof Tiles 37.9

12 Toilets cladding 41.4

13 Flooring 44.8

14 StaircaseGranite 48.3

15 Luppam Internal (2 Coats) 51.7

16 Paper Coat & Primary 55.2

17 External primary 58.6

18 Fenesta Windows 62.1

19 Main Door Shutter 65.5

20 Door Shutters Fixing 69.0

21 Grills Fixing 72.4

22 Electrical Wiring 75.9

23 Electrical Switches Fixing 79.3

24 Internal Painting (1st Coat) 82.8

25 Internal Painting (2nd Coat) 86.2

26 Doors Polishing 89.7

27 Staircase Railing With Polish and Glass Fixing 93.1

28 Plumbing Final Fittings 96.6

29 Parking Tiles 100.0

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



The following Inventory are required to construct one villa in the maple town

project.

S.No Description QTY UNITS

4.4.1.0 Footing

4.4.1.1 PCC 5.25 Cum

4.4.1.2 RCC 11.6 Cum

4.4.1.3 STEEL 301 Kgs

4.4.2.0 Plinth Beam

4.4.2.1. PCC 3.75 Cum

4.4.2.2 R.C.C 7.5 Cum

4.4.2.3 STEEL 1626 Kgs

4.4.3.0 Ground Floor

4.4.3.1 Columns RCC 3.75 Cum

4.4.3.2 Steel 655 Kgs

4.4.3.3 Slab RCC 22.5 Cum

4.4.3.4 Steel 2080 Kgs

4.4.4.0 First Floor

4.4.4.1 Column RCC 3.1 Cum

4.4.4.2 Steel 515 Kgs

4.4.4.3 Slab RCC 20.75 Cum

4.4.4.4 Steel 1939 Kgs



4.4.5.0 Staircase

4.4.5.1 GF RCC 1.0 Cum

4.4.5.2 Steel 188.0

4.4.5.3 FF RCC 1.0 Cum

4.4.5.4 Steel 198.0

4.4.6.0 Brick Work

4.4.6.1 G.F 4" 186 Cum ft

4.4.6.2 9" 1305 Cum ft

4.4.6.3 F.F. 4" 210 Cum ft

4.4.6.4 9" 1040 Cum ft

4.4.6.5 S.F 4" 25 Cum ft

4.4.6.6 9" 755 Cum ft

4.4.7.0 PLASTERING

4.4.7.1 Internal Plastering

Sft

4.4.7.2 GF 4380.64 Sft

4.4.7.3 FF 3150.97 Sft

4.4.7.4 SF 1043.10 Sft

4.4.7.5 Ceiling Plastering

Sft

4.4.7.6 GF 1423.00 Sft

4.4.7.7 FF 1361.83 Sft

4.4.7.8 SF 438.25 Sft

4.4.7.9 External Plastering

Sft

4.4.7.10 GF 1255.16 Sft

4.4.7.11 FF 1508.75 Sft



4.4.8.PLUMBING REQUIREMENTS

S.NO DESCRIPTION OF ITEM Qty UNIT

1 European Water Closet (Floor Mounted) 5 NO's

2 Cisteran 5 NO's

3 Angle Vale 14 NO's

4 Wash Basin 4 NO's

5 Bottle Trap 4 NO's

6 Wash Basin Waste Coupling 4 NO's

7 Pillar Cock 4 NO's

8 Wall Mixer & Shower arm With Wall Flange 4 SET

9 Long Body Swinging Spout(Sink) 2 NO's

10 Sink With Drain Bord & West coupling,Bottle Trap 1 NO's

11 Bibcock With Wall Flange 5 NO's

12 CP Towel Rail of 20mm Dia 4 NO's

13 Soap Dish 5 NO's

14 Health Faucet set 5 NO's

15 Towel Ring of 150mm Dia 5 NO's

16 1520(L)X730(W)X465(W)CM Bath tub Spout with Popup waste 1 NO's

17 Mirror Of Size 650x450mm 4 NO's

19 Stone Ware Glagzed Pipes 150mm Dia 40 MTR

20 CI 100mm Anti Cock Roach Nahani trap with `P' Trap Type 11 NO's

21 Gully Trap 5 NO's

22 40mm dia(Sink Drain pipe) 2 MTR

23 32mm dIa(wash Basin Drain Pipe) 13 MTR

24 Sand Cast Iron (Balck) pipes 100mm Dia 28 MTR

25 Sand Cast Iron (Balck) pipes 75 mm Dia 50 MTR

26 PVC SWR Pipes 110mm 18 MTR

27 PVC SWR Pipes 50 mm 7 MTR

28 CPVC 3/4" Dia pipe 90 MTR

29 CPVC 1/2" Dia Pipe 30 MTR



30 CPVC 1"Dia Pipe 5 MTR

31 G.i Pipe 3/4" 5 MTR

32 G.i Pipe 1 1/4 28 MTR

33 G.i Pipe 1 1/2" 6 MTR

34 Non Return Vale 3/4" 3 NO's

35 Angular Stop Cock With Wall Flange 6 NO's

36 Geysers 25 Liters 3 NO's

37 GM Ball Vale 1" 2 NO's

GM Ball valve 3/4" 6 NO's

38 CPVC 1/2" Elbow 90° (Brass) 30 NO's

39 CPVC 1/2" Threaded End Plug 30 NO's

40 CPVC Step Over Bend 1/2" 8 NO's

41 CPVC 90° Elbow 3/4"X 1/2"(Reducer) 8 NO's

42 CPVC Reducer Tee(3/4"x1/2"x3/4) 21 NO's

43 CPVC Reducer Tee(1"x1/2"x3/4) 1 NO's

44 CPVC 1/2" Socket 6 NO's

45 CPVC 3/4"X1/2" Reducer Elbow 90° (Brass) 3 NO's

46 CPVC 3/4" Elbow 90° 10 NO's

47 CPVC 3/4" Socket 10 NO's

48 CPVC 3/4" Tee 5 NO's

49 CPVC 1" Tee 1 NO's

50 CPVC 1" Elbow 2 NO's

51 CPVC 1"Socket 2 NO's

52 CPVC 1"X 3/4" Reducer Socket 1 NO's

53 G.i 11/4" Elbow 2 NO's

54 G.i 11/4" X 1" Reducer Tee 1 NO's

55 G.i 11/4"X 3/4 " Reducer Tee 4 NO's

56 G.i 11/4" Socket 3 NO's

57 G.i 11/2"X1 1/4" Reducer Socket 1 NO's


59 G.i 11/2" Socket 2 NO's




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

62 G.i1/2 Dum Nut 3 NO's

63 G.i 3/4X1/2 Reducer Elbow 3 NO's

64 PVC 40mm 90° Elbow 1 NO's

65 PVC 40mm 45°Elbow 2 NO's

66 40mm X32mm Bush 1 NO's



69 PVC 32mm Socket 5 NO's

70 PVC 110mm Elbow 6 NO's

71 C.I 100mmTee With Door 3 NO's

72 PVC 50 Elbow 90° 2 NO's

73 C.I 100mm Bend 90° 5 NO's

74 C.I 100mm Socket 3 NO's

75 C.I 100mm 90° Bend With Door 2 NO's

76 C.I 100mm Cowl 2 NO's

77 C.I 75mm Cowl 4 NO's

78 C.I 75mm 90° Bend 4 NO's

79 C.I 75mm 90° Tee With Door 4 NO's

80 C.I 75mm 45° Bend 3 NO's

81 C.I 75mm Plain `y' 1 NO's

82 C.I 75mm With Door 3 NO's

83 Shellac(or)Hold Tight 1 KGs

84 Dori 15 NO's

85 Spunyarn 7 NO's

86 Taflone Tape 25 NO's

87 PVC Solvet Cement 1.5 Litre

88 CPVC Solvent Cemnt 3 Litre

89 Indian Water Closet 0 Set

90 Cistern 0

91 GM gate valve3/4" dia (screwed end) 1 NO's

92 GM gate valve1 1/4"mm dia(screwed end) 1 NO's



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

94 CPVC 1"X 3/4" Bushing 1 NO's

95 40mm Pipe -6kgf/cm2 6mt length 2.5 NO's

96 PVC 110mm Socket 1 NO's

97 110mm GI Clamps 8 NO's

98 50mm GI Clamps 3 NO's

4.4.9.FLOORING QUANTITIES

S.No Description Size Qty Unit

1 Vitrified porcelain tile 2737 Sft

2 Vitrified porcelain tile Skirting 826 Rft

3 Ceramic non skid floor tiles 8"x8" 211 Sft

4 Dadoing with Glazed Tiles 4"x8" 920 Sft

5 Granite slab (For Stair Case) 12"x24" 230 Sft

6 Cement paved Tiles 60 Sft

7 Interlock tiles 540 Sft

8 Granite platform in kitchen 58 Sft

9 Roof Tiles 780 Sft

10 Banglore stone Cladding 210 Sft

4.4.10.RAILINGS

S.no Description Total Qty Unit

1 MS StairCase Railing 156 Kgs

2 Window Grills 496 Kgs

3 Elevation Railings 176 Kgs

4 Painting 624 Sft



4.4.11.DOORS AND WINDOWS

S.No Description Qty Unit

1 Providing and Fixing Teak Wood Frame and teak wood

glazed shutter 4.88 Sqm

2 Providing and Fixing Teak Wood Frame and Flush

shutter 22.28 Sqm

3 Windows with Glass Shutters 43.68 Sqm

4.4.12.PAINTING QUANTITIES

S.No Description Qty Units

1 Internal 8574.70 SFT

2 Ceiling 3223.08 SFT

3 External 4924.07 SFT



4.4.13.ELECTRICAL QUANTITIES

S.No Description Unit

QUANTITY

GF FF Total

ELECTRICAL REQURIMENTS ONLY FOR SLAB

1 Pvc Conduit Of 25Mm Dia With 2Mm Thick Ft 800 600 1400

2 Fan Hook Boxes Nos 6 7 13

3 Deep Boxes Nos 20 25 45

4 25Mm Pvc Long Bend S Nos 70 45 115

5 End Clousers Nos 50 50 100

ELECTRICAL REQURIMENTS ONLY FOR WALLS

1 Pvc Conduit Of 25Mm Dia With 1.5Mm Thick Ft 500 450 950

2 25 Mm Juntion Boxes Nos 30 30 60

3 25Mm Pvc Long Bends Nos 35 35 70

4 Pvc Conduit Of 19Mm Dia With 1.5Mm Thick Ft 150 150 300

5 19 Mm Juntion Boxes Nos 25 25 50

6 19Mm Pvc Long Bends Nos 25 25 50

ELECTRICAL ITEMS Unit QUANTITY

1 5 A Switches Nos 63

2 5 A Socket(2 in 1) Nos 20

3 15 A Socket Nos 15

4 15 A Switches Nos 15

5 Inter Comm Jack Nos 1

6 Fan Regulator Nos 11

7 TV Socket Nos 6

8 TelePhone Jack Nos 7

9 Computer Jack(Internet) Nos 1

10 5 A 2 Way Switches Nos 22

11 Angle Holders Nos 25

12 Bottom Holders Nos 10

13 Ceiling Roses Nos 26

14 Foot Lamp Nos 5



15 Round Sheet Nos 70

16 Fan Round Sheet Nos 12

17 6 Way TPN DB Nos 2

18 40 A 100 mA 4 Pole Isolation Nos 2

19 6 A SP MCB Nos 18



4.4.14. EXTERNAL WORKS

S.No Description Qty Unit

1 Roads 230246 Sft

2 KerbStones 18000 Rft

3 Landscape 160798 Sft

4 STP LS

5 WTP LS

6 Pneumatic System LS

7 External Electrification LS

8 External Sewage System LS

9 Communications LS

10 Central Gas System LS

11 ClubHouse 16115 Sft

12 Compound Wall 6400 Rft

13 Solar Fencing 6400 Rft

14 Entrance Gate LS

Table 7: Above Tables showing the Quantity required for construction of one villa at maple town project



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

construction project.

Study of reliable local material utilization in a construction project. Here local is within the reach in

terms of transportation from the construction site. The project has the business with the source that

provides free logistics to the construction site and a reliable service.

In this case study, the company has used the following vendors in different category of “Maple

Town” Project. Based upon the analysis the organization has selected and doing business with the

listed vendors, thus giving importance to the smooth and laminar work flow in the construction site.

4.5.1 CEMENT VENDORS

4.5.1.1. Rassi Gold: Shiv Shakthi Agencies,

Raasi (Authorised) - Cement Distributor,

18-73/36/1/18,

Ambedkar Nagar,

Dammaiguda,

Hyderabad – 500076

4.5.1.2. Penna cement

SAI Krishna Agencies,

7-1-616/5/1/A,

Near R K Electronics,

Ameerpet,


4.5.1.3. Deccan Cement Ltd,

6-3-666/B, 3RD Floor,

Deccan Chambers,

Somajiguda,


4.5.1.4. Priya cements,

Opp Indian Bank,

SRI Nagar Colony,




4.5.1.5. Orient Cements

Adarsh Nagar,


4.5.1.6. Anjani cement: Anjani Portland Cement Limited

Anjani Cement Centre, Plot No. 7 & 8,

Nagarjuna Hills, Main Road, Hyderabad – 8

Phone: +91-40-23353038.

4.5.2 ELECTRICAL VENDOR:

4.5.2.1. BHARATI ENTERPRISES (INDIA)

#5-2-96/137, R.P. Road,

Secunderabad – 500003. A.P.

Tele: +91 40 27536312, 27532483

E-Mail: [email protected]

4.5.2.2. Polycab Wires Pvt Ltd

Mr Pradeep Chandrakanth

Asst Manager

402/A,4th

Floor, Surya kiran complex

S.D.Road ,Secunderabad.

A.P-500003

4.5.2.3. Schneider Electric

Janardha Tyagi

Schneider Electric India Pvt Ltd

D.No1-8-221, Ashok Bhoopal chambers

S.P.Road, Secunderabad-500003

4.5.2.4. Yogeshwar Enterprizes

#61A, M.G.Road,

Shop No:4&5,plaza house,

Opp: Punjab National Bank,

mailto:[email protected]



Secunderabad-500003.

4.5.2.5. Finolex Cables Limited,

# 403, 4th

Floor,

Minerva complex, S.D.Road,

Secunderabad -500003

4.5.3. STEEL VENDORS:

4.5.3.1. Tirupathi Udayog Ltd.,

Road no -12

Banjara hills,

Hyderabad-500034.

Tel no : +91 40 23310178

4.5.3.2. M/S Sujana Metal Products Limited,

18, Nagarjuna hills,Hyd – 082

Mr. Murali - 09347533494. [email protected]

4.5.3.3. Vinayak Steels Limited

#5-4-83, T.S.K Chambers

M.G.Road,

Secunderabad-500003.

4.5.3.4. GRIP TMT

Binjusaria ispat Pvt Ltd,

# C-1, Govt Industrial Estate,

Chandulai Baradari,

Bahadurpura,

Hyderabad 500064




4.5.4. PLUMBING VENDORS

4.5.4.1. Shankara Pipes India Ltd

1-1-40/1,Vasavi Towers,

2nd

Floor, S.D.Road,

Secunderabad 500003

4.5.4.2. Prince Pipes System,

Plot No 19, Near Kamineni Hospital,

L.B.Nagar Ring Road, Hyderabad 500063.

4.5.4.3. Hindustan Sanitaryware & Industries Ltd.

#398 , Ashoka Bhoopal chambers

S.P.Road, Secunderabad-500003.

4.5.4.4. H & R JOHNSON

House of Johnson,

1-10-73/2,

1st Floor Lumbini Arcade,Begumpet,

Hyderabad 500016.

Contact : K.Harikrishna

# 9949588192.

4.5.4.5. Asian Granito (India) Ltd,

Tiles in Toilet & Flooring

# 8-2-82/678,

Sony International Dhaba,

Old Bowenpally,

Secunderabad 500011.

4.5.4.6. Parryware Roca Pvt Ltd

Coromandel House 2nd

Floor,

Sardar Patel Road,

Secunderabad 500003.



4.5.4.7. Supreme Industries Ltd

# 3-5-907/2, & 908,3rd

Floor,

Mahavir Lok, Himayathnagar,

Hyderabad 500029.

Contact : S.Krishna Kumar Reddy,

# 98480 45659.

4.5.5. PAINTS

4.5.5.1. Asian Paints Ltd,

Plot # 104,

S.Malla Reddy Estate,

Jayanagar, R.T.C colony,

Tirumalghery,

Secunderabad- 500015.

4.5.5.2. Lewis Berger Home Painting

Survey No. 133,,

Plassy Lines,

Bowenpally,


4.5.5.3. Dulux Paints : Sri Bhagyalaxmi Hardwares

Shop 1 &2, G8,

Hydershakote(V)

Rajendernagar,

Hyderabad .

4.5.5.4. Nippon Paints India Ltd

# 133, B.N.Reddy

Mallareddy gardens,

Plassy Lines, New Bowenpally, Hyderabad -500021.

http://www.justdial.com/srch/search_cwa.php



4.5.6. COMPARISON OF VENDORS

From this comparison we can easily find out the multiple sources of inventory available with

vendors. In this comparison table the lead time, transportation cost, credit limit and various items are

compared to know which vendor can be select priority wise.

The Following the Category of Vendors has different specifications & supplies of materials:

4.5.6.1. CEMENT VENDORS

S.No Vendors Lead

time

Transport

ation cost

Credit

Limit

PBFS

C

PP

C

43

grad

e

55

grad

e

1

Rassi Gold: Shiv Shakthi

Agencies 4 Days Free 15 Days

2 Penna cement 4 Days Free 15Days

3 Deccan Cement Ltd 4 Days Free 16 Days

4 Priya cements 4 Days Free 15Days

5 Orient Cements 4 Days Free 20 Days

6 Anjani Portland Cement Limited 4 Days Free 15Days i

Table 8: Comparison of Cement Vendors

4.5.6.2. STEEL VENDORS:

S.No Vendors Lead

time

Transport

ation cost

Credit

Limit

Smart

Steel

Structur

al Steel TMT

1 Tirupathi Udayog Ltd 5 Days Free 10 Days

2 Sujana Metal Products

Limited 7 Days Free 15 Days

3 Vinayak Steels Limited 7 Days Free 15 Days

4 GRIP TMT 7 Days Free 15 Days

Table 9: Comparison of Steel Vendors



4.6. OBJECTIVE 6: Stock maintenance & Analysis of „A‟ class Inventories.

The main objective of this project is to overcome the work load and time consumption which

makes the maintenance of the stock in an organization as a tedious process.

In this Case study we have taken the Cement Item as „A‟ class inventory and did the Stock

Maintenance analysis from 01/01/2008 to 31/12/2008.

Cement Consumption and Re-order Date From 01/01/2008 to 31/12/2008

S.N

o From To Order Date

Total

order

qty

Consu

mption

Qty

Min.

Stock

Level

Total

Balanc

e

Opening Balance as on 01-01-08 1389

1 1-Jan-2008 15-Jan-2008 4-Jan-2008 3590 3689 1290 4979

2 16-Jan-2008 30-Jan-2008 17-Jan-2008 2520 2498 1312 3810

3 1-Feb-2008 14-Feb-2008 2-Feb-2008 5400 5100 1612 6712

4 15-Feb-2008 29-Feb-2008 19-Feb-2008 3600 4005 1207 5212

5 1-Mar-2008 15-Mar-2008 3-Mar-2008 5726 5800 1133 6933

6 16-Mar-2008 31-Mar-2008 15-Mar-2008 4320 4300 1153 5453

7 1-Apr-2008 14-Apr-2008 4-Apr-2008 6,840 6608 1,385 7993

8 15-Apr-2008 30-Apr-2008 22-Apr-2008 3600 4054 931 4985

9 1-May-2008 14-May-2008 5-May-2008 5400 5562 769 6331

10 15-May-2008 31-May-2008 19-May-2008 5760 5506 1023 6529

11 1-Jun-2008 14-Jun-2008 6-Jun-2008 3600 3595 1028 4623

12 15-Jun-2008 30-Jun-2008 18-Jun-2008 6470 6343 1155 7498

13 1-Jul-2008 15-Jul-2008 7-Jul-2008 3597 3097 1655 4752

14 16-Jul-2008 31-Jul-2008 17-Jul-2008 4120 5000 775 5775

15 1-Aug-2008 15-Aug-3008 8-Aug-2008 2880 2088 1567 3655

16 16-Aug-2008 30-Aug-2008 22-Aug-2008 2160 2560 1167 3727

17 1-Sep-2008 15-Sep-2008 9-Sep-2008 3240 3200 1207 4407

18 16-Sep-2008 30-Sep-2008 23-Sep-2008 2880 3406 681 4087

19 1-Oct-2008 15-Oct-2008 10-Oct-2008 3240 3040 881 3921

20 16-Oct-2008 31-Oct-2008 24-Oct-2008 3959 4090 750 4840

21 1-Nov-2008 15-Nov-2008 9-Nov-2008 5680 5800 630 6430

22 16-Nov-2008 30-Nov-2008 19-Nov-2008 4500 3890 1240 5130

23 1-Dec-2008 15-Dec-2008 12-Dec-2008 3600 3801 1039 4840

24 16-Dec-2008 31-Dec-2008 24-Dec-2008 3600 3540 1099 4639



Table 13: showing the Cement consumption & Order Qty from 01/2008 to 12/2008.

The graphical representation of our analysis is a result of the work we carried through our project. It

emphasizes the trigger points, the points which help the staff in charge to create an order for the

material so that the work shall not stop.

000

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

10 20 30

january

10 20 28

Febuary

10 20 31

March

10 20 30

April

10 20 31

May

10 20 30

June

RE-ORDER LEVEL

SAFETY STOCK LEVEL

OR

DE

RE

D Q

UA

NT

IT

Y

Figure 1 : showing the Consumption from 01/01/2008 to 30/06/2008



000

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

10 20 30

July

10 20 28

August

10 20 31

September

10 20 30

October

10 20 31

November

10 20 30

December

RE-ORDER LEVEL

SAFETY STOCK LEVEL

OR

DE

RE

D Q

UA

NT

IT

Y

Figure 2: showing the Consumption from 01/07/2008 to 31/12/2008

In this Case study, Re-order Level is set to 1200 bags and Safety Stock level is set to 800

bags, Daily consumption in this project is appx. 200 bags per day, so they have taken 4 days

required quantity in hands to avoid the work delay.

Henceforth, the company is ordering the Cement on an average for every fortnight.

The quantity of cement is ordered on an average is about 4000 bags for every fortnight.

Safety stock can be utilized as a strategic tool until the company can judge how accurate their

forecast is after the first few years.

The amount of safety stock an organization chooses to keep on hand can dramatically affect

their business. Too much safety stock can result in high holding costs of inventory. In

addition, products which are stored for too long a time can spoil, expire, or break during the

warehousing process. Too little safety stock can result in lost sales and, thus, a higher rate of

customer turnover. As a result, finding the right balance between too much and too little

safety stock is essential.



CHAPTER 5

CONCLUSION

Inventory management is important for keeping costs down, while meeting regulations. Supply and

demand is a delicate balance, and inventory management hopes to ensure that the balance is

undisturbed. Highly trained inventory managers and high-quality software will help make inventory

management a success. The ROI (return of investment) of inventory management will be seen in the

forms of increased revenue and profits, positive employee atmosphere, and an overall increase of

customer satisfaction.

As per the case study on the construction firm on a particular segment, it is clear that developer must

adopt all the available and known technologies and quantitative analysis in association with various

software‟s in order to achieve higher profits. Also, the materials flow throughout the activities has a

controlled behavior and there is a very significant usage of the local source and reliable firms. Every

move towards the inventory management clearly educates that the „work shall go on‟.

It has been concluded that the developer shall emphasize on single vendor who is empowered with

multiple quality materials, this has to be practice at the construction project in order to bring down

Material Cost, Transportation Cost. It enhances Company profits and minimizes the project duration.



CHAPTER 6

SUGGESTIONS

1. Developers has to concentrate on the renewable source of energy at the construction phase as in

the „solar panels‟ around the structure would replace the Hydel source. The renewable source

reduces the cost of materials such as steel, bricks and concrete. Thus, reducing their usage in the

process. To elaborate, there shall be majority of space for solar panels instead of walls and ceiling

area. The space shall be replaced by the solar walls and solar ceiling therefore molding the structure

to meet green building norms.

2. There shall be continuous improvements in the construction process in terms of its materials usage

or others. Let‟s consider steel for the matter of fact, it is now available in the customized form.

Vendors are now focusing on the customers requirement in order to enhance their sales and to

overcome competition in the market, the apparent change lead to the customized cut of steel as per

the drawings, because the facility would cut the reconciliation process and rolling margin.

Positive stroke

The solar concept would enhance the aesthetic appearance of the building and the facility encourages

green building concept.

The customized steel minimizes wastages and increases profits.

MATERIALS MANAGEMENT AND ITS FUNCTIONS

Materials can be put in three categories. First category is purchased materials like the raw materials,

components, spare parts and items that are used and do not appear in the end product. The second

category is of in-process materials or the materials in the semi-finished stages and lastly the finished

goods that are ready for customers. One has to manage these materials. The aim of this management

is to obtain the materials at the minimum possible price while maintaining quality also and to

maintain the inventories in such a way that minimum cost is incurred while maintaining adequate

materials for the production process.



The functions of the materials management are materials planning and control, purchasing, inventory

control, store keeping, material handling, warehousing, standardization & simplification and

organization & appraisal of materials. This course has been designed in such a manner so that you

get a feel of these functions in the subsequent blocks.

1. Materials planning and control: Material requirement lies at the core of successful material

management. This function is at the core of all the material requirements in any

manufacturing process.

2. Purchasing: This function identifies the sources of supply, does market research, call tenders

and select suppliers, negotiate with them and thus make available the raw materials.

3. Inventory control: This function is responsible for the location and storage of materials so

that they remain available at the minimum cost and quickest time.

4. Store keeping: This function is responsible for the receipt and issue of the materials. The

materials

5. Material handling: This function aims at minimizing handling and provision of equipments

for handling materials. This function is crucial for minimizing space requirements, effective

distribution and for providing better working space.

6. Warehousing: This function is responsible for the storage facilities for the materials,

weighing facilities, materials handling equipments, material distribution facilities, fire

fighting instruments etc.

7. Standardization and simplification: This function selects items of great demand and sets

the standards for quality, raw material, sizes and performance of any product.

8. Organization & appraisal of materials: This function helps in effective functioning by

proving smooth flow. It provides coordination and avoid delays and wastages

MATERIALS MANAGEMENT & MANAGEMENT OF FLOW OF

MATERIALS

In any organization, the responsibility for maintaining the quality of the product and incurring less

cost on its production is the responsibility of the production/ operation, deciding the price of the

product and finding the customers that will buy it comes under marketing. The question arises that if

it is so, what do the materials management function does? The answer is that from the time the

materials enter the warehouse of the organization from the suppliers, the role of materials

management starts and gets going till the final product is obtained. The interrelated activities that are

carried out to achieve this are sequenced after each other in a systematic manner. Management of

this flow of materials is called materials management. This flow of materials is met through a set of

activities presented in Table 1.2 given below



Table 14: Set of activities for flow of materials

S.No Activity Function

1 Planning

Setting the goals, indicating the sources of finance

2 Scheduling Requirements specification, quantum and delivery

schedules

3 Purchasing and

Procurement

Vendor selection, vendor contracts

4 Inspection and

Quality control

Conforming quality

5 Stores and Inventory

control

Determining inventories, maintenance and upkeep

6

Materials handling

and distribution

logistics

Controlling flows, distribution, shipments

The table above highlights the importance of integrated systems and dependence of function models

for decision-making. The organizations have now become multidimensional in nature. Total

materials management concept evolved to address this dimension and avoid conflicting objectives.

Total material management helps in establishing accountability so that response to a problem is

quick and appropriate.

The material functions are accomplished in more coordinated ways with the help of this integrated

approach. When this happens there is increased communication for the need of materials and hence

one gets lower costs, better inventory turnover, reduce stock outs and other significant benefits. Data

processing systems are designed on the basis of the integrated material function.



Bibliography/References:

1) Radha Realty „Maple Town‟ Staff members.

2) Sujana TMT

3) www.google.com

4) www.ignou.ac.in/edusat

5) The National Building Code of India 2005(NBC).

6) www.scribd.com/shree0605

Contact :

1. T.Shreedhar

+91 9052445996

[email protected]

2. Rajesh Kumar UBA

+91 9010349474

[email protected]

3. D.Ravinder Reddy

+91 998555996

[email protected]

http://www.google.com/

http://www.ignou.ac.in/edusat



National Institute of Construction Management and Research, Hyderabad.4.5.6.3. ELECTRICAL VENDOR:

S.No Vendors Lead timeTransport

ation cost

Credit

Limit

cables

(3core &

4 core)

Circuit

Breakers/

MCB

Home

Automati

on

Motor

Starter

Boxes,Ca

bles&

Interfaces

M.V.Tran

sformers

fuses &

Switches

Digital

Power

Meters

1 BHARATI ENTERPRISES (INDIA)7 Days FreePay on

Deliveryiiii iiii pppp pppp pppp pppp pppp pppp

2 Polycab Wires Pvt Ltd 7 Days Charges 10 Days pppp pppp iiii pppp pppp iiii iiii iiii

3 Schneider Electric 7 Days Free 15 Days pppp pppp iiii pppp pppp pppp pppp pppp

4 Yogeshwar Enterprizes 7 Days ChargesPay on

Deliveryiiii iiii iiii pppp pppp pppp pppp pppp

5 Finolex Cables Limited 7 Days Free 10 Days pppp pppp iiii iiii pppp iiii pppp i

4.5.6.4. Plumbing Vendors


ation cost

Credit

Limit

S.W.R

Pipes

PPR

Pipes

CPVC

PipesG.I Pipes Closets Urinals

Bath

tubes

Kitchen

sinksTaps

1 Shankara Pipes India Ltd 7 Days Charge 10 Days pppp pppp pppp pppp pppp pppp pppp pppp iiii

2 Prince Pipes System 7 Days Free 10 Days pppp pppp pppp pppp iiii iiii iiii iiii iiii

3 Hindustan Sanitaryware & Industries Ltd7 Days Free 10 Days iiii iiii iiii iiii pppp pppp pppp pppp pppp

4 H & R JOHNSON 7 Days Free 10 Days iiii iiii iiii pppp pppp pppp pppp pppp pppp

5 Parryware Roca Pvt Ltd 7 Days Free 10 Days iiii iiii iiii pppp pppp pppp pppp pppp pppp

6 Supreme Industries Ltd 7 Days Free 10 Days pppp pppp pppp pppp pppp pppp pppp pppp pppp

4.5.6.5. Paints Vendors


ation cost

Credit

Limit

Wall

Primer

Wall

Putty

Wood

PrimerDistemper Emulsions

Enamel

paint

Metal

coating

color

creation

1 Asian Paints Ltd 4 Days Free 7 Days pppp pppp pppp pppp pppp pppp pppp pppp

2 Lewis Berger Home Painting 4 Days Free 7 Days pppp pppp pppp pppp pppp pppp pppp pppp

3 Dulux Paints 4 Days Free 7 Days pppp pppp pppp pppp pppp pppp pppp pppp

4 Nippon Paints 4 Days Free 7 Days pppp pppp pppp pppp pppp pppp pppp pppp

Table 10: Comparison of Electrical Vendors

Table 11: Comparison of Plumbing Vendors

Table 12: Comparison of Paint Vendors


7th term- thesis on inventory management

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