Two-Bin System: Under this system, the inventory items are grouped into two categories. In one group or bin, sufficient quantity is kept to meet the current requirements over a designated period of item. The selection of a suitable method assumes significance in view of the fact that it has a direct bearing on the cost of goods sold and consequently on profit. Therefore, the method should be selected in the light of probable effects on profits over a period of years.
The discussion here of the methods to value inventory should, therefore be viewed in this perspective. The merit of FIFO method is that the physical flow of materials matches the flow of cost. This is because of the assumption underlying the valuation of inventory, according to this method. As the name LIFO suggests, the use of inventory is valued on the basis of the inverse sequence of receipts. This matching of current costs with current revenues is the essence of the argument for the LIFO method.
Average Cost Method: According to average cost method, each purchase is added to inventory and an average cost determined. Materials are charged into cost of sales at this average until another lot is received, when a new average unit inventory cost is calculated. Excluding the cost of merchandise, the costs associated with inventory fall into two basic categories: i Ordering or Acquisition or Set-up Costs, and ii Carrying Costs. These costs are an important element of the optimum level of inventory decisions.
It is also called as setup cost. They are involved in maintaining or carrying inventory. The cost of holding inventory may be divided into two categories. Those that Arise Due to the Storing of Inventory: The main components of this category of carrying costs are i storage cost, that is, depreciation, insurance, maintenance of the building and utilities; ii insurance of inventory against fire and theft; iii deterioration in inventory because of pilferage, fire, technical obsolescence, style obsolescence and price decline; iv serving costs, such as labour for handling inventory, clerical and accounting costs.
The Opportunity Cost of Funds: This consists of expenses in raising funds interest on capital to finance the acquisition of inventory. If funds were not locked up in inventory, they would have earned a return. This is the opportunity cost of funds or the financial cost component of the cost. Linking of Costs based and Physical Based Inventory Management: The carrying costs and the inventory size are positively related and move in the same direction.
If the level of inventory increases, the carrying costs also increase and vice-versa. Total Cost: The sum of inventory increases, the carrying costs represent the total cost of inventory. This is compared with the benefits arising out of inventory to determine the optimum level of inventory.
Should the quantity to be purchased be large or small? Such inventory problems are called Order quantity problems. The firm knows with certainty the annual usage consumption of a particular item of inventory.
The rate at which the firm uses inventory is steady over time. The orders placed to replenish inventory stocks are received at exactly that point in time when inventories reach zero.
Lead Time: It is the time normally taken in receiving delivery after placing orders with suppliers. Collateral Strength. Inventory Position 3. Agreement papers of all authorized persons like Debenture holders, Shareholders etc.
All required documents. From this statement it can judge the financial strength of the Company. While analyzing of Financial Strength of the Company, Inventory is also having its own emphasis role. Because if company is having less inventory than its requirement then company will get less finance from Banks and visa- versa. So here high inventory means, high in the sense company should have sufficient inventory according to its order.
Not more than its order. Let us have a look on some Inventory related Ratios and also some important financial ratios those, which are related to Inventory. The financial statement provides a summarized view of the financial position and operations of a firm.
The analysis of financial statement is, thus an important aid to financial analysis. Tasks of Financial analyst is to: 1 Select the information relevant to the decision under consideration from the total information contained in financial statement.
In brief, financial analysis is the process of selection, relation and evaluation. Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and the profit and loss account. Financial analysis can be under taken by management of the firm, or by parties out side the firm, viz.
The nature of analysis will differ depending on the purpose of the analyst. Ratio Analysis related to Inventory Ratio analysis is a powerful tool of financial analysis. Ratios help to summarize large quantities of financial data and to make qualitative judgment about to form a qualitative judgment the focus of financial analysis is on the key figures in the financial statements and the significant relationships that exist between them.
Liquidity Ratios b. Activity Ratios c. Profitability Ratios A. Liquidity Ratios: Liquidity refers to the ability of the firm to meet its obligations in the Short run, usually one year. Liquidity ratios measure the ability of the firm to meet its current obligations. Liquidity ratios by establishing a relationship between cash and other Current assets to Current obligations provide a quick measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity, and also that it does not have excess liquidity.
Therefore it is necessary to strike a proper balance between high liquidity and lack of liquidity. Following are some of the important liquidity ratios: 1. Current Ratio 2. Quick Ratio 3. Net working Capital Ratio B. Activity Ratios: Activity ratios are concerned with measuring the efficiency in asset management. Sometimes, these ratios are also called efficiency ratios or asset utilization ratios.
The efficiency with which, assets are converted into sales. For this reason, such ratios are also designated as turnover ratios. Turnover is the primary mode for measuring the extent of efficient employment of assets by relating the assets to sales.
An activity ratio may, therefore, be defined as a test of the relationship between sales and various assets of a firm. Several activity ratios can be calculated to judge the effectiveness of asset utilization. Inventory Turnover 2. Assets Turnover 3. Fixed Assets and Current Assets Turnover Asset Measurement for different methods of inventory valuation: FIFO Method: Under this method, as noted earlier, inventory is valued on the assumption of chronological cost flow.
The vale of inventory as show in the balance sheet would reflect the current cost, if FIFO method were used. It will reflect rather the cost of raw materials purchased in the past year. Assuming rising prices, the inventory value based on the LIFO method would tend to be undervalued. For example inventory purchased as early as six years or more. In that situation, the inventory figure included in the balance sheet would be actually the price paid on the purchase of inventory six years ago.
This would imply that the balance sheet would not reflect the current worth of the inventory. That the inventory value will not be correct is another way of saying that the balance sheet will present a distorted picture of the affairs of the firms.
The modified method will, thus, serve the needs of correct income determination as well as correct asset measurement. This increase in profit is termed as liquidation profit, which is equal to the difference between the current cost of inventory and the cost of inventory purchased in the past. In fully export-oriented business this is one of the main department, where this department gets an approval to sell their goods in foreign countries.
And also their main intention is to maintain all documents of those that are related to the exporting of their products. Logistics Inventory Management: Yes, already we have observed about the meaning of Inventory Management in the Organization. But in fully export oriented business; Inventory Management is a very important concept. Because every exporter or importer, they do not know about each other who are staying in other countries.
So every company, which are exporting or importing of materials, they should communicate each other through banks only. These banks are listed by Central Bank of that Nation. This Working Capital can also financed by Banks.
While in export oriented business it is slightly different task. For having an assistance by banks they should first evaluate followings: 1. Some Financial Ratios 4. Agreement papers of all authorized persons like Debentures, Shareholders etc. Which are also parts of financing the working capital requirements of the Companies.
Commercial Papers CPs : In the recent past, Commercial Papers CPs have become one of the best methods for financing the working capital requirements of the companies.
These guidelines apply to the companies trying to raise the funds by issuing the CPs. As per these guidelines, a a company means a company as defined in section I aa of Reserve Bank of India Act, Section I aa of Reserve Bank Act, defines a company as the company as the company as defined in section 3 of the companies Act, We will consider the bank as a source for financing the working capital requirement of the organizations under the following heads: Amount of Assistance To obtain the bank credit for financing the working capital requirements, the company is required to estimate the working capital requirement properly.
To estimate the requirement of working capital requirement properly, the company will be required to estimate its level of current assets and current liabilities properly, as working capital is the difference between current assets and current liabilities.
For this, the techniques like ratio analysis, trend analysis etc. More accurate the estimation of the level of current assets and current liabilities, more accurate the estimation of level of current capital. Then, the company will have to approach the bank along with the necessary supporting data. On the basis of estimates submitted by the company, the bank may decide the amount of assistance that can be extended.
While extending the working capital assistance, the bank may prescribe the margin money requirement. Linking of Costs based and Physical Based Inventory Management: The carrying costs and the inventory size are positively related and move in the same direction.
If the level of inventory increases, the carrying costs also increase and vice-versa. Total Cost: The sum of inventory increases, the carrying costs represent the total cost of inventory. This is compared with the benefits arising out of inventory to determine the optimum level of inventory. Should the quantity to be purchased be large or small? Such inventory problems are called Order quantity problems. The firm knows with certainty the annual usage consumption of a particular item of inventory.
The rate at which the firm uses inventory is steady over time. The orders placed to replenish inventory stocks are received at exactly that point in time when inventories reach zero.
Lead Time: It is the time normally taken in receiving delivery after placing orders with suppliers. Collateral Strength. Inventory Position 3. Agreement papers of all authorized persons like Debenture holders, Shareholders etc. All required documents. From this statement it can judge the financial strength of the Company. While analyzing of Financial Strength of the Company, Inventory is also having its own emphasis role. Because if company is having less inventory than its requirement then company will get less finance from Banks and visa-versa.
So here high inventory means, high in the sense company should have sufficient inventory according to its order. Not more than its order. Let us have a look on some Inventory related Ratios and also some important financial ratios those, which are related to Inventory. The financial statement provides a summarized view of the financial position and operations of a firm. The analysis of financial statement is, thus an important aid to financial analysis. Tasks of Financial analyst is to: 1 Select the information relevant to the decision under consideration from the total information contained in financial statement.
In brief, financial analysis is the process of selection, relation and evaluation. Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and the profit and loss account. Financial analysis can be under taken by management of the firm, or by parties out side the firm, viz.
The nature of analysis will differ depending on the purpose of the analyst. Ratio Analysis related to Inventory Ratio analysis is a powerful tool of financial analysis. Ratios help to summarize large quantities of financial data and to make qualitative judgment about to form a qualitative judgment the focus of financial analysis is on the key figures in the financial statements and the significant relationships that exist between them.
Liquidity Ratios b. Activity Ratios c. Profitability Ratios A. Liquidity Ratios: Liquidity refers to the ability of the firm to meet its obligations in the Short run, usually one year. Liquidity ratios measure the ability of the firm to meet its current obligations. Liquidity ratios by establishing a relationship between cash and other Current assets to Current obligations provide a quick measure of liquidity.
A firm should ensure that it does not suffer from lack of liquidity, and also that it does not have excess liquidity.
Therefore it is necessary to strike a proper balance between high liquidity and lack of liquidity. Following are some of the important liquidity ratios: 1.
Current Ratio 2. Quick Ratio 3. Net working Capital Ratio B. Activity Ratios: Activity ratios are concerned with measuring the efficiency in asset management. Sometimes, these ratios are also called efficiency ratios or asset utilization ratios. The efficiency with which, assets are converted into sales.
For this reason, such ratios are also designated as turnover ratios. Turnover is the primary mode for measuring the extent of efficient employment of assets by relating the assets to sales. An activity ratio may, therefore, be defined as a test of the relationship between sales and various assets of a firm. Several activity ratios can be calculated to judge the effectiveness of asset utilization.
Inventory Turnover 2. Assets Turnover 3. Fixed Assets and Current Assets Turnover Asset Measurement for different methods of inventory valuation: FIFO Method: Under this method, as noted earlier, inventory is valued on the assumption of chronological cost flow. The vale of inventory as show in the balance sheet would reflect the current cost, if FIFO method were used. It will reflect rather the cost of raw materials purchased in the past year.
Assuming rising prices, the inventory value based on the LIFO method would tend to be undervalued. For example inventory purchased as early as six years or more. In that situation, the inventory figure included in the balance sheet would be actually the price paid on the purchase of inventory six years ago.
This would imply that the balance sheet would not reflect the current worth of the inventory. That the inventory value will not be correct is another way of saying that the balance sheet will present a distorted picture of the affairs of the firms.
The modified method will, thus, serve the needs of correct income determination as well as correct asset measurement. This increase in profit is termed as liquidation profit, which is equal to the difference between the current cost of inventory and the cost of inventory purchased in the past.
In fully export-oriented business this is one of the main department, where this department gets an approval to sell their goods in foreign countries. And also their main intention is to maintain all documents of those that are related to the exporting of their products. Logistics Inventory Management: Yes, already we have observed about the meaning of Inventory Management in the Organization. But in fully export oriented business; Inventory Management is a very important concept.
Because every exporter or importer, they do not know about each other who are staying in other countries. So every company, which are exporting or importing of materials, they should communicate each other through banks only.
This Working Capital can also financed by Banks. While in export oriented business it is slightly different task. For having an assistance by banks they should first evaluate followings: 1. Some Financial Ratios 4. Agreement papers of all authorized persons like Debentures, Shareholders etc. Which are also parts of financing the working capital requirements of the Companies. Commercial Papers CPs : In the recent past, Commercial Papers CPs have become one of the best methods for financing the working capital requirements of the companies.
These guidelines apply to the companies trying to raise the funds by issuing the CPs. Section I aa of Reserve Bank Act, defines a company as the company as the company as defined in section 3 of the companies Act, In the Indian circumstances, banks play a very major role in financing the working capital requirement of the organizations.
We will consider the bank as a source for financing the working capital requirement of the organizations under the following heads: Amount of Assistance To obtain the bank credit for financing the working capital requirements, the company is required to estimate the working capital requirement properly. To estimate the requirement of working capital requirement properly, the company will be required to estimate its level of current assets and current liabilities properly, as working capital is the difference between current assets and current liabilities.
For this, the techniques like ratio analysis, trend analysis etc. More accurate the estimation of the level of current assets and current liabilities, more accurate the estimation of level of current capital.
Then, the company will have to approach the bank along with the necessary supporting data. On the basis of estimates submitted by the company, the bank may decide the amount of assistance that can be extended.
While extending the working capital assistance, the bank may prescribe the margin money requirement. The percentage of margin money stipulation may depend upon the credit standing of the borrowing company, fluctuations in the price of security and the directives of RBI from time to time. Non-Fund Based Lending 2. Fund Based Lending. As such, the funds position of the lending bank remains intact. The Non-Fund Based Lending can be made by the banks in two forms: a.
Bank Guarantees b. As such, the funds position of the lending does not affected. The Fund Based Lending can be made by the banks in following forms: a. Loan b. Overdraft c. Cash Credit d. Working Capital Term Loans f. Packing Credit Security for Assistance: The bank may provide the assistance in any of the modes as stated above. But normally no assistance will be available unless the company offers some security in any of the following forms.
This inventory process is fully computerized and here paper work is very less. Only maintaining of documents, which were sent by suppliers as like challans etc. Otherwise it is fully computerized. Through computers only Store Department receives Purchase Order and by computer only they send documents of issuing of materials to manufacturing unit. For easy to communicate and planning of production activity, Apex Auto Ltd Unit II has having only one Godown in Procedures involved in receiving and issuing of materials are as follows: 1 Godown will first get Purchase Order No..
This Purchase Department gives a number for the each order made by Purchase Department only. Before placing any order to suppliers they first checks the materials in inventory as to know about whether materials are available in Inventory or not.
If not available in Inventory then only they will place an order according to the requirement. So, normally it does not have any stocks in its inventory. For every order from customers they make a fresh Purchase Order for purchasing of materials. It means whatever the materials are requiring for present orders, those materials are only they kept as stocks in Inventory. If these old stock is matches the requirements of product which has ordered now by its customers, then purchase Department will sent a notice to Inventory for issuing of those materials.
These old stock may be in form of Raw Material or in form of finished goods. Guard is not an employee of an organization. Moreover, usually depending on concurrency control method the effects of an incomplete transaction are not even visible to another transaction. Providing isolation is the main goal of concurrency control. Initially we bounded our research to find the general reasons that emerged the needs of Inventory Management System.
We used different techniques to collect the data that can clearly give us the overall image of the application. The techniques we used were interview with the developers, visiting online websites that are presented as the templates and visiting some organization to see their IMS application.
We have even visited some organization in Kathmandu valley and analyze its importance and try to develop the project by fulfilling all the weakness that were found in the application. We then decided to bulid same type of application with different logic flow and new language which will be suitable for the small organization. Once it is automated all the functions can be effectively managed and the organization can achieve the competitive advantage. The system is medium scale desktop application and has affordable price.
The benefits include increased efficiency, effectiveness, and the better performance. Comparing the cost and benefits the system is found to be economically feasible.
The solution provided by this system will be acceptable to ultimate solution for the stock management. The reasonable timeline reveals that the system development can be finished on desired time framework.
A Gantt chart is a graphical representation of a project that shows each activity task as a horizontal bar whose length is proportional to its time for completion. A Gantt chart for the project deliverables within time frame. It is a diagrammatic representation of the algorithm. The Process flow Diagram of our application is shown below: Figure 4.
The main purpose of a use case diagram is to show what system functions are performed for which actors.
Actor An actor is a person, organization or external system that plays a role in one or more interactions with the system System boundary boxes optional A rectangle is drawn around the use case called the system boundary box to indicate scope of the system.
It is used to develop console and graphical user interface applications along with Windows Form applications, websites, web applications, and web services in both native code together with managed code for all platforms supported by Microsoft Window, Windows Mobile, Windows CE,. NET Framework,. Microsoft Visual Studio simplifies the basic tasks of creating, debugging and deploying applications.
Microsoft Visual Studio comes with. NET Framework and supports applications targeting Windows. It has integrated support for developing Microsoft Silverlight applications, including an interactive designer. Microsoft Visual Studio offers several tools to make parallel programming simpler: in addition to the Parallel Extensions for the.
The Visual Studio code editor now highlights references; whenever a symbol is selected; all other usages of the symbol are highlighted. NET projects. Quick Search supports substring matches and camel Case searches.
The Call Hierarchy feature allows the developers to see all the methods that are called from a current method as well as the methods that call the current one. IntelliSense in Visual Studio supports a consume-first mode which developers can opt into. In this mode, IntelliSense will not auto-complete identifiers; this allows the developer to use undefined identifiers like variable or method names and define those later. Visual Studio can also help in this by automatically defining them, if it can infer their types from usage.
We have used Visual Studio Community , v It consists of the common language runtime CLR and the. NET Framework class library, which includes classes, interfaces, and value types that support an extensive range of technologies. NET Framework provides a managed execution environment, simplified development and deployment, and integration with a variety of programming languages, including Visual Basic and Visual C.
Net architecture is basically segregated in to three layers namely top, middle and bottom layer. The bottom layer is CLR, it is the heart of. NET Framework which provides the runtime environment in which programs are executed. The middle layer comprises the next generation of standard system services are brought under the control of the framework, making them universally available and standardizing their usage across languages.
NET Framework sits on top of the operating system. There has also been a lot of talk about. NET being ported over by some third-party companies so that a majority of the. NET Framework could run on other platforms as well. At the base of the. The CLR is the engine that manages the execution of the code. The next layer up is the. This layer contains classes, value types, and interfaces that you will use often in your development process.
Most notably within the. NET, which provides access to and management of data. The third layer of the framework is ASP.
NET and Windows Forms. Using ASP. NET, or Jscript. NET compilers provided by Microsoft. So how does the code that you typed into Visual Studio. NET become the code that the user receives when he is using your application?
It is fairly simple and straightforward. A simple Product Inventory management System Created using microsoft visual basic 6.
And is connected using. Note: Due to the size or complexity of this submission, the author has submitted it as a. Download project proposal, abstract, synopsis for VB6, VB. Also you can participant and share your project synopsis, project code, source file, project report with us. Download project proposal, mini synopsis for various technology.
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