Inventory Management Plan for Hazzzir Online

Final Year Project

BBA (Spring-2021)

Submitted by
Kinza Zaheer Reg No: 170146
Areeba Nawaz Malik Reg No: 170155

Faulty of Management Sciences

Air University School of Management (AUSOM)
Air University, Islamabad.

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 Final Year Project BBA (Spring-2021)
Inventory Management Plan for Hazzzir Online

Submitted By: Kinza Zaheer (170146)

Areeba Nawaz Malik (170155)

Supervisor: Sir Abdul Rafay Sheikh

AIR UNIVERSITY SCHOOL OF MANAGEMENT, ISLAMABAD.

*This project is submitted to the Air University, Islamabad, as a pre-requisite for the degree of
BBA.

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 Form 004B
Air University School of Management
BBA Final Year Project Spring-2021

Candidate’s Declaration of Authenticity

Instruction: Kindly use typed (word-processed) content to fill up this form:

I confirm that all content/material of this document represents my original

work based on personal research and findings with additional information

sources duly cited. I hereby also certify that this document has never been

submitted previously for any kind of academic assessment.

Candidate No. 1:

Name: Kinza Zaheer

Regd/Roll No: 170146

Batch: Spring, 2021

Date: June 03, 2021

Signatures:

Candidate No. 2:

Name: Areeba Nawaz Malik

Regd/Roll No: 170155

Batch: Spring, 2021

Date: June 03, 2021

Signatures:

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 Form 005B
Air University School of Management
BBA Final Year Project Spring-2021

Supervisor’s Certificate of Project Completion

Instruction: Kindly use typed (word-processed) content to fill up this form

Supervisor’s Acknowledgement of Project Requirement Fulfillment:

Project Title: Inventory Management Plan For Hazzzir Online

Candidate No. 1 Name: Kinza Zaheer

Regd/Roll No: 170146

Candidate No. 2 Name: Areeba Nawaz Malik

Regd/Roll No: 170155

This is to certify that the BBA Project conducted by above mentioned students
has been completed under my supervision with following features:
• The project has adequately met mandate and deliverables agreed between
the Student Team, Supervisor, and the Client.

• The Report fulfills all academic requirements including List of Chapters

and their constituent content according to Hardbound Report Requirement
Rubric (Doc-003) mentioned in the BBA Project Handbook.

• The project is found fit for defense.

_______________________________________
(Supervisor’s Signatures and Date)

Advisor’s Acknowledgement to Receive Documentation:

This is to affirm that all items have been duly received from Supervisor
relevant to their respective area of responsibility.

___________________________
(Advisor’s Signatures and Date)

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 Form 002C
Air University School of Management
BBA Final Year Project Spring-2018

Final Project Approval Sheet

Instruction: Kindly use typed (word-processed) content to fill up this form

Topic of Research: Inventory Management Plan for Hazzzir Online

Candidate No. 1 Name: Kinza Zaheer Candidate No. 2 Name: Areeba

Nawaz Malik
Regd/Roll No. 170146 Regd/Roll No. 170155

Batch: Spring, 2021 Batch: Spring, 2021

1. Cover/Title Page
2. Final Project Approval Sheet (Form 002-C) – duly signed
3. Candidate’s Declaration of Authenticity (Form 004-B)
4. Supervisor’s Certificate of Project Completion (Form 005-B)
5. Executive Summary
6. Table of Contents
7. List of Figures
8. Mandate, Deliverables and Timeline
9. List of Chapters (Note: Chapter numbers and titles may alter based on type of
project )
Chapter 1: Introduction and Company Profile
Chapter 2: Literature Review
Chapter 3: Objective
Chapter 4: Problem Description
Chapter 5: Methodology
Chapter 6: Project Scope
Chapter 7: Feasibility Analysis
Chapter 8: Solution Application Area & Milestones
Chapter 9: Data Analysis
Chapter 10: Warehouse Layout Designing
Chapter 11: Conclusion/ Recommendations
10. References
11. Appendix
12. Plagiarism Certificate of Final Document- (Signed by the Supervisor)
13. CD – Softcopy of the document including data file
It is certified that the improvements (if any) identified during the defense have been made
and
issues rectified to the satisfaction of Supervisor.

Approved by:
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Client Supervisor Internal Examiner Advisor Dean

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Acknowledgment

First of all, Alhamdulillah! Thanks to the Almighty Allah for all his blessings.
We want to express our sincere gratitude to our supervisor, Mr. Abdul Rafay, for providing
his extremely helpful guidance, comments and suggestions throughout the project.
Also we have to thank our friends, fellow colleagues for being such a huge support
throughout the project. Without them this project wouldn’t get to its maximum as with
debates on this idea it got a bit polished and gaps were eradicated.
Last but not least, we would also like to pay thanks to our family who always stood by our
side, even in this harsh situation of COVID-19. Without their care and support we wouldn’t
have made this far.

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Executive Summary
It is important for the Firm to have effective inventory Management system as it help the firm
to keep track of the inventory and ideal placement of stock to meet the customer demand.
Nowadays firm need to focus on their inventory management system to reduce their cost and
increase value in order to increase profitability. Firm have to bring changes in accordance
with the change in technology, change in customer’s preferences.
This project is aimed at developing an inventory management system for Hazzzir Online so
that it will reduce its cost and can cope up with the increasing demand in the market due to
COVID-19.Through this system Firm can keep track of its inventory and calculate the
Economic Order Quantity so that it get to know what should be the best size of the order in
order to reduce the associated cost and also includes the safety stock which will help the firm
to meet fluctuated demand and reorder point which depicts when to order .
All these techniques help Hazzzir Online to increase efficiency in its operation.

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Table of Contents
Table of Content:
Final Year Project BBA (Spring-2021)..................................................................................................2

Candidate’s Declaration of Authenticity................................................................................................3

Supervisor’s Certificate of Project Completion......................................................................................4

Final Project Approval Sheet..................................................................................................................5

Acknowledgment...................................................................................................................................7

Executive Summary...............................................................................................................................8

Table of Contents...................................................................................................................................9

Chapter 1:.............................................................................................................................................15

1) Introduction:.....................................................................................................................................15

1.1) Company Profile.......................................................................................................................15

1.1.1) Tagline:..............................................................................................................................17
1.1.2) Organizational Mission:.....................................................................................................17
1.1.3) Organizational Vision:.......................................................................................................17
1.1.4) Competitors:.......................................................................................................................17
1.1.5) Products:............................................................................................................................18
1.1.6) SWOT Analysis:................................................................................................................18
Chapter 2:.............................................................................................................................................19

2) Literature Review:............................................................................................................................19

2.1) Inventory Management of Walmart:.........................................................................................19

2.1.1) Walmart’s Vendor-Managed Inventory Model...................................................................19
2.1.2) Types and Roles of Inventory at Walmart Inc....................................................................19
2.1.2.1) Inventory of Finished Goods:......................................................................................19
2.1.2.2) Transit Inventory:........................................................................................................20
2.1.2.3) Buffer Inventory:.........................................................................................................20
2.1.2.4) Anticipatory Inventory:...............................................................................................20
2.1.3) Just-in-Time Cross-Docking in Walmart’s Inventory Management...................................20
2.1.4) Managing Inventory across Walmart’s Supply Chain........................................................21
2.1.4.1) ABC Analysis:.............................................................................................................21
2.1.4.2) Inventory Information System:....................................................................................21
2.1.5) Financial Impact of Walmart’s Inventory Management.....................................................21
2.2) Inventory Management of Flipkart:...........................................................................................21
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 2.2.1) Warehouse Management:...................................................................................................22
2.2.1.1) Inbound Processing:....................................................................................................22
2.2.1.2) Store Management:......................................................................................................22
2.2.1.3) Outward Processing:....................................................................................................22
2.3) Inventory Management of Daraz.pk:.........................................................................................22
2.3.1) Consignment Model:..........................................................................................................23
2.3.2) Cross-Dock Model:............................................................................................................23
2.3.3) Drop-Ship Model:..............................................................................................................23
2.4) Inventory Management of Amazon:..........................................................................................24
Chapter 3:.............................................................................................................................................25

3) Objective:.........................................................................................................................................25

Chapter 4:.............................................................................................................................................26

4) Problem Description:.......................................................................................................................26

4.1) Need of this project (an answer to “why?”)...............................................................................26

4.2) Solution we are providing (an answer to “what”)......................................................................26
Chapter 5:.............................................................................................................................................28

5) Methodology:...................................................................................................................................28

5.1) Study Area:...............................................................................................................................28

5.2) Research Design:.......................................................................................................................28
5.3) Sampling Procedures:................................................................................................................28
5.4) Data Sources:............................................................................................................................28
5.5) Data Analysis:...........................................................................................................................28
5.6) Design Methods:.......................................................................................................................28
5.7) Questionnaire Design:...............................................................................................................28
Chapter 6:.............................................................................................................................................29

6) Project Scope:..................................................................................................................................29

Chapter 7:.............................................................................................................................................30

7) Feasibility Study:.............................................................................................................................30

7.1) Risk involved:...........................................................................................................................30

7.2) Resource Requirement:.............................................................................................................30
Chapter 8:.............................................................................................................................................31

8.1) Solution Application Areas:......................................................................................................31

8.2) Milestones:................................................................................................................................31
Chapter 9:.............................................................................................................................................32
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9) Data Analysis:..................................................................................................................................32

9.1) Inventory Management Techniques:.........................................................................................32

9.1.1) Data Given:........................................................................................................................32
9.1.2) Economic Order Quantity (EOQ).......................................................................................36
9.1.2.1) Benefits:......................................................................................................................36
9.1.2.2) Formula:......................................................................................................................37
9.1.2.3) Components:...............................................................................................................37
9.1.2.4) Interpretation:..............................................................................................................38
9.1.3) Safety Stock.......................................................................................................................42
9.1.3.1) Importance of safety stock...........................................................................................42
9.1.3.2) Protection against demand spikes................................................................................42
9.1.3.3) Buffer stock for longer lead times...............................................................................42
9.1.3.4) Prevention against price fluctuations...........................................................................43
9.1.3.5) Formula:......................................................................................................................43
9.1.3.6) Interpretation:..............................................................................................................44
9.1.4) Reorder Point.....................................................................................................................47
9.1.4.1) Benefit:........................................................................................................................47
9.1.4.2) Components:...............................................................................................................47
9.1.4.3) Formula:......................................................................................................................47
9.1.4.4) Interpretation:..............................................................................................................48
9.1.5) Demand Forecasting...........................................................................................................51
9.2) Survey Response:......................................................................................................................56
9.3) Findings:...................................................................................................................................62
Chapter 10:...........................................................................................................................................64

10) Warehouse Layout Designing:.......................................................................................................64

Chapter 11:...........................................................................................................................................65

11) Conclusion and Recommendations:...............................................................................................65

11.1) Conclusion:.............................................................................................................................65
11.2) Recommendations:..................................................................................................................66
References............................................................................................................................................67

Appendix..............................................................................................................................................68

Plagiarism Report.................................................................................................................................73

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List of Figures
Figure 1: Hazzzir Online Website.................................................................................................15
Figure 2: Facebook Page...............................................................................................................16
Figure 3: Information on Facebook Page......................................................................................17
Figure 4: Economic Order Quantity for Ghee's Products..............................................................40
Figure 5: Economic Order Quantity for Cooking Oil Products.....................................................41
Figure 6: Economic Order Quantity for Pulses Products..............................................................41
Figure 7: Economic Order Quantity for Flour Products & Sugar.................................................42
Figure 8: Safety Stocks for Ghee Products....................................................................................45
Figure 9: Safety Stocks for Cooking Oil Products........................................................................46
Figure 10: Safety Stocks for Pulses Products................................................................................46
Figure 11: Safety Stocks for Flour Products & Sugar...................................................................47
Figure 12: Reorder Point for Ghee Products.................................................................................49
Figure 13: Reorder Point for Cooking Oil Products......................................................................50
Figure 14: Reorder Point for Pulses Products................................................................................50
Figure 15: Reorder Point for Flour Products & Sugar...................................................................51
Figure 16: Demand Forecasting for Ghee Products......................................................................53
Figure 17: Demand Forecasting for Cooking Oil Products...........................................................54
Figure 18: Demand Forecasting for Pulses Products.....................................................................55
Figure 19: Demand Forecasting for Sugar and Flour Products.....................................................56
Figure 20: Gender..........................................................................................................................57
Figure 21: Income..........................................................................................................................57
Figure 22: Question 1 Response....................................................................................................58
Figure 23: Question 2 Response....................................................................................................58
Figure 24: Question 3 Response....................................................................................................59
Figure 25: Question 4 Response....................................................................................................60
Figure 26: Question 5 Response....................................................................................................60
Figure 27: Question 6 Response....................................................................................................61
Figure 28: Question 7 Response....................................................................................................61
Figure 29: Question 8 Response....................................................................................................62

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List of Tables
Table 1: Milestones........................................................................................................................31
Table 1: Product Lists with Prices and Demand............................................................................35
Table 2: Costs associated with techniques.....................................................................................36
Table 3: Economic Order Quantity................................................................................................38
Table 4: Other Information............................................................................................................39
Table 5: Safety Stocks...................................................................................................................44
Table 6: Reorder Points.................................................................................................................48
Table 7 : Demand Forecasting.......................................................................................................52

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List of Abbreviation
JIT: Just-In-Time
FIFO: First-In First-Out
IT: Information Technology
3PL: Third-Party Logistics Provider
AI: Artificial Intelligence
QR: Quick Response
EOQ: Economic Order Quantity
ROP: Reorder Point

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Chapter 1:
1) Introduction:
Hazzzir Online is an online grocery store and their office is located at G/9 Markaz. It is
owned by Haris and his brother. The aim behind the business was to sell grocery at cheapest
price with good quality.
The project idea is that Hazzzir Online want to increase their efficiency in their operations and
they discuss issues with us. As they have faced problem of overstock and out of stock so we
have planned to make inventory management system. In this system, we explain how they
manage inventory.

1.1) Company Profile

Hazzzir Online is an online supermarket in Islamabad, Pakistan. If you are stuck at work or
busy in any daily life situation, you can order daily grocery, fresh meat, fresh fruit &
vegetables by using app. The same day will be delivered at your door step within hour.

Hazzzir also offers to book a courier-guy to deliver and collect your valuable consignment at
your door step, within no time and that too by tracking your courier.

By using Hazzzir cash facility you can securely deliver and receive cash at your doorstep no
time and that too by tracking your cash-boy.

Figure 1: Hazzzir Online Website

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Figure 2: Facebook Page

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 Figure 3: Information on Facebook Page

1.1.1) Tagline:
Save More With Go!

1.1.2) Organizational Mission:

Our mission is “To provide the products to customers at a best cheapest price as compared to
market and also provide same as market price”.
1.1.3) Organizational Vision:
• Facilitate the people according to technology and ease.

• To be recognized as a premier quality e-retailer.

• And we want to be the most selling marketplace in Pakistan, where people will get
every grocery product that they want to buy.

1.1.4) Competitors:
• Grocer App

• Airlift Express

• Metro Online
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 • Gradeone Mart

1.1.5) Products:
• Meat

• Vegetables

• Fruits

• Grocery

• Food Corner

• Iftar items

• Savour Foods

1.1.6) SWOT Analysis:

Strength:
• Best quality products.

• Low prices as comparative to the super-mart.

• 3-wide range of products.

Weaknesses:
• It’s positioning and promotion is difficult in Pakistan because in Pakistan people still
believe that online selling and retailing is deceit.

Opportunity:
• Due to covid-19 demand of online grocery is high.

Threat:
• Market is easy to enter.

• High competition.

• Change on government policies like taxes.

• Rapid change in technology.

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Chapter 2:

2) Literature Review:
2.1) Inventory Management of Walmart:
Walmart Inc.'s inventory management has been a major contributor to multinational retail
business’s success. Considering the company’s size, efficient and effective inventory
management is very important to operating efficiency. Walmart features cutting-edge
technologies. Walmart has mastered the art of upgrading its inventory management processes
and methods. As a result, Walmart is an example of how of modern technology and
innovation may help in improving inventory management efficiency. Advance inventory
management is one of the basic organizational capabilities that allows Walmart to lead the
global retail market, despite the fact that many other reasons contribute to its success. This
type of leadership establishes the firm's competitive advantage in the marketplace against
targets and firms such as Amazon.
2.1.1) Walmart’s Vendor-Managed Inventory Model
Walmart's inventory management success is due to the vendor-managed inventory model's
efficient implementation. Suppliers in this model have access to information from the
company's information system, such as current inventory levels. Walmart manages and
supervises the actual transportation of goods from warehouses to stores, while suppliers select
when to supply extra goods to the Walmart.
The benefit of minimizing inventory movement delays across the supply chain is Walmart's
vendor-managed inventory. This advantage is achieved due to suppliers that have direct
access to existing data on their goods inventory at Walmart stores. Another advantage is the
reduction of costs associated with inventory management.
2.1.2) Types and Roles of Inventory at Walmart Inc.
Some of the following types of inventory Walmart practices are noteworthy.
• Inventory of finished goods
• Transit inventory
• Buffer/safety stock inventory
• Anticipation Inventory
2.1.2.1) Inventory of Finished Goods:
In Walmart's company, the type of finished goods inventory is the most important. Finished
goods are sent to the company's stores, where they are stored and inventory is filled on a
regular basis. As a result, such inventory serves to support the Walmart store's operations, for

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selling at store, they carried finished goods from the company's merchandise distribution
centers to retail buyers.
2.1.2.2) Transit Inventory:
The second most important type of inventory used by Walmart to support its retail operations
is transit inventory. Goods in transit are included in this type of inventory. Because to
Walmart's global supply chain limit, some goods may be in transit for days or weeks. This
inventory type's purpose is to support the repayment of finished goods inventories at
commercial distribution centers and Wal-Mart stores.
2.1.2.3) Buffer Inventory:
When demand suddenly fluctuates, Walmart uses a type of buffer inventory in its stores,
keeping a short distance from additional goods to maintain business continuity. To that end,
Walmart stores will always have extra storage.
Given that existing retail market forecasting methods may be inaccurate, the role of such
inventory is to assure the company's reasonable capacity to meet the sudden increase in
demand.
2.1.2.4) Anticipatory Inventory:
Walmart uses anticipatory inventory to ensure that it can meet customer demand to maximum
capacity. This inventory type is similar to buffer inventory in that the company maintains an
extra supply of goods on hand to avoid an increase in demand. The anticipatory inventory
type is based on seasonal variations in the market and related experimental data. For example,
Walmart dramatically expand the size of its inventory before to Black Friday and on Friday in
order to fulfill the high demand on this special shopping day. The role of this inventory type
will be able to fulfill the expected seasonal increase in demand.
2.1.3) Just-in-Time Cross-Docking in Walmart’s Inventory Management
Company uses a different methods to manage its inventory. Only just-in-time inventory must
be arranged in a just-in-time (JIT) approach when it comes to inventory management. This
procedure outlines the measures and activities in order to reduce storage and related costs. At
Walmart, the current inventory method is implemented in the cross-docking form. Supplier
trucks and company trucks meet at the firm's warehouses or distribution centers in cross-
docking. The goods are delivered to the stores by Walmart trucks, who transfer them directly
from supplier trucks.
The main benefit of cross-docking in Walmart warehouses is that inventory sizes are reduced.
Warehouses only hold a small amount of inventory. Maintaining a small inventory is less
expensive. Cross-docking also allows Walmart to deliver goods more quickly. This situation

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allows the firm to respond quickly to fluctuations in market demand and related factors. As a
result, this inventory management method supports Walmart's operational efficiency and
business flexibility.
2.1.4) Managing Inventory across Walmart’s Supply Chain
2.1.4.1) ABC Analysis:
In category A, Walmart's inventory includes finished goods sold in its stores as well as
operating equipment such as supply chain management and inventory management
information systems. Items in this category are monitored and recorded on a regular basis.
Other equipment or supplies used to operate, such as maintenance equipment and office
furniture, are included in Walmart's inventory as Category B items. These items are
moderately monitored and have a high level of accuracy in recording moderation. Home
furnishings and office supplies, such as paper, fall into Category C because they are only
slightly monitored and recorded. This category has the least impact on the company's day-to-
day operations.

2.1.4.2) Inventory Information System:

Walmart is known for its modern information systems, which are specifically designed to
serve international retail operations, including e-commerce. Every aspect of the business is
covered by these information systems. Walmart has an inventory management system that
gives suppliers access to data at the inventory level of their products. The system is designed
to support the company's vendor-managed inventory model, which helps company to reduce
operating costs and offer marketable prices.

2.1.5) Financial Impact of Walmart’s Inventory Management

Due to some of the expense of inventory management is passed on to suppliers, the Walmart
vendor-managed inventory model lowers inventory management costs. The company's overall
cost leadership strategy is supported by the combination of finished goods inventory, transit
inventory, buffer inventory, and anticipatory inventory. Cross-docking at Walmart also helps
to reduce inventory costs by reducing inventory size as a form of temporary inventory. The
company's profitability and financial stability are aided by this shared vision.

2.2) Inventory Management of Flipkart:

Flipkart uses the Continuous Review Model for inventory management, and when the
inventory level reaches a particular level, inventory is ordered again.

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Stocks are ordered every 24-48 hours, and every transaction is recorded by using the FIFO
technique, in which the oldest time is shipped first, which is ideal for electronics because
technology becomes obsolete quickly.
Flipkart use sales to predict the level of inventory. It also use Data Mining in which they see
which product has been frequently searched and ad to wish list and also keep the record of
highly demanding product and keep stock of those products. It don’t keep stock of the product
that have less demand, they are only procured once the order has been placed.
Flipkart has partnered with some postal companies and they are held responsible for tracking,
reconciliation and management information system and they update the customers about the
shipment via email, text and through website.
2.2.1) Warehouse Management:
Flipkart has 7 major warehouses located in Mumbai, Kolkata, Delhi, Pune, Bangalore,
Chennai and Noida. Flipkart's warehouse management system has 3 steps:
2.2.1.1) Inbound Processing:
Goods are delivered from suppliers to warehouse and then they under quality check process,
then products are scanned to record their electronic entry into IT system and then each
products is packed.
2.2.1.2) Store Management:
When all the products are entered on IT system, the system generates a list of shelves that
marks the place where certain items should be placed and then it checks to see if there are any
pending order form incoming product, if so, then respective product is delivered directly to
Final Packaging Area. If the shelves are filled, the products are placed on an empty shelf, and
the list is updated with the new shelf number.
2.2.1.3) Outward Processing:
Firstly a pick list is generated on the bases of orders delivered on a particular day and then
products are picked form shelves and gathered toward final packaging Area then they are
packed in Flipchart’s boxes and following final packaging, the product is sent to the delivery
hub, where it is dispatched to the appropriate delivery hub.

2.3) Inventory Management of Daraz.pk:

Daraz.pk had warehouses in Karachi, Lahore, and Islamabad, which were Tier 1 cities. As a
result, retaining two types of sellers' inventories. The first is fast-moving products that need to
be stored in long-term warehouses to minimize shipments, and second, inventory is a key to
strategic sellers maintained as a service to those who were hesitant to play a major role in the
delivery process.
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Operations of warehouse were divided into four tasks: receiving (responsible for unloading),
inbound (responsible for bar coding), inventory (responsible for storage) and outbound
(responsible for shipping) are the four departments that make up the receiving department
(responsible for preparing and sending orders). Regardless, the team was instructed to
perform different tasks at peak hours for each event.
After placing an order on Daraz.pk, depending on the specific logistics model that applies to
the particular seller, the package had to be developed in a Daraz.pk warehouse or at a seller's
facility. The consignment model finished fulfilment from a warehouse, whereas the cross-
dock model or the seller's drop-ship model completed fulfilment from a warehouse.
Operational responsibilities varied significantly across the three logistics models.
2.3.1) Consignment Model:
Under the consignment model, when an order is received, the required item is added to a pick-
up queue at the Daraz.pk warehouse, where it is picked up from inventory, packed, and
dispatched by the outgoing team. Orders were processed and given over to the company rider
or 3PL courier the same day.
2.3.2) Cross-Dock Model:
All sellers who had not yet been identified as a trustworthy seller, i.e., those who were either
new or had unfavorable ratings, were used in cross-dock model. When an order was placed,
the item was picked up from the seller's warehouse and pre-delivered through an extended
operational cycle at the Daraz.pk warehouse, which included inspection, packaging, and
sealing.
2.3.3) Drop-Ship Model:
Under the drop-ship model, trusted sellers prepared and packaged the purchased items
themselves, based on their previous experience with drawers. The Vendor Operations team
worked closely with vendors and AIGX to make sure orders were packed and delivered on
time. When the seller receives notification that the ordered item is ready, the drawer arranges
for a rider or 3PL supplier to pick up the item in sealed form for direct customer delivery,
Sellers might drop off items at the 3PL facility for deliveries to and from cities other than Tier
1 cities. They were no longer bound for a fixed period of time as a result of this.
A more modest form of the drop ship model was that it was an organized model of the drop
ship with additional resources for strategic sellers, with Daraz.pk having resources for
packing and quality control in the seller's warehouse.

23
2.4) Inventory Management of Amazon:
Amazon uses a random stone process in which associate look for the place where the
particular item will fit, which does not have to be next to another item.
Everything is placed at random. When an online customer clicks buy, a handheld technology
scanner alerts associates, telling them where to get the merchandise and then using an
algorithm to send employees to the most appropriate location.
Before a customer has logs onto Amazon's website, Amazon has a very fairly good idea of
what customer ids going to buy. It’s thanks to deep learning, which is semi-occult. Artificial
Intelligence, or AI, is basically an algorithm that makes some assumptions about a customer
based on age, location, socioeconomic background and purchasing history and the near
warehouse is supplied with appropriate qualities of stock that customer is likely to consider
buying.
Amazon's modern fulfillment centers are patrolled by an army of squat Roomba like robots
that picked up entire shelves, or pods, and deliver them to human pickers stationed at
stationary workstations. These robots use cloud based software that can be described as AI
run air traffic control network that coordinates the route of every individual robot. It’s all
about optimization that what will be the best option to get to the product that won't interfere
with another robot.
To avoid traffic jams, the number of robots is kept low, and when their batteries run low, the
robots are told to reach the nearest recharging station. Changes have been made to enhance
working conditions since the robots took over the warehouse. Skylights, for example, are now
covered so that glare does not confuse the robot's sensors, as are air conditioning units that
blow downwards in the area where humans work, now blows sideways to avoid toppling
delicate items off moving shelves.
Individual sensors let the robot slow down or swerve to avoid obstacles in their path, while a
camera on the robot's undercarriage reads QR codes placed in the floor to navigate. There is
also labelling robots nicknamed slam machine and these can label up to one package every
second.
Kiva robots are considered to be the busiest employees of Amazon, they can weight up to 750
pounds in a fulfillment centers where larger units are handled by these robots then products
are travelled in totes (yellow boxes) through sky. High conveyor belt till they reach the slam
line (shipping labelling), where an Associate will pick it up, address it, and ensure that the
correct item is shipped out the door.

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Chapter 3:

3) Objective:
The aim of the project study is to develop the inventory management systems for Hazzzir
Online.
The objective of the project is to provide inventory management system through they keep
inventory at appropriate level to avoid having too much or shortage of inventory, as both are
not good for their business. Inventory management system helps to reduce the cost of
inventory and also help to increase the profitability of the business.
Another objective is to determine the demand of the product, buffer stock maintenance,
reorder level and calculate economic order quantity (EOQ). Moreover, our aim is to
restructure the warehouse layout.
We aim to provide set of computerized procedures to optimize the cost of ordering and
carrying inventory and efficiently utilizing the space in warehouse.

25
Chapter 4:

4) Problem Description:
4.1) Need of this project (an answer to “why?”)
A lot of tasks, such as inventory, were done manually until computers became accessible to
assist in the performance of some routine manual work. It may take a week or two, depending
on the size of the company or store, and a collaborative effort from accounting, warehouse,
and other departments. The inventory process is now quite quick. It can manage and track
real-time receipt and shipment, allowing the company to estimate sales more accurately and
avoid expensive storage and storage costs. Nonetheless, many business owners, particularly
small business owners, have not yet been persuaded to invest in inventory management
systems. To succeed, a small business must successfully manage its business flow process
effectively by realizing profits. One of the processes that can contribute to savings and
improved bottom lines is having up-to-date inventory records.
Firm is using manual system. There is no proper method being used by the firm for inventory
due to which they have to face issues like overstock and out of stock and they are randomly
placing their inventory in warehouse which have created cluttered and make it difficult to
effectively work with in. Manual system take too much time to record and also have chances
of error. Moreover, if they don’t have inventory, it disturbs the execution of the orders and
day-to-day business.
So, we will do the need assessment through conducting an interview from the owner and
operations department. Our population will be employees of the Hazzzir Online.

4.2) Solution we are providing (an answer to “what”)

To cater this problem, we will be doing inventory management by using some techniques like
• Economic Order Quantity (EOQ)

The ideal order quantity for a company to purchase to reduce inventory costs such as
holding costs, shortage costs, and order costs is known as Economic Order Quantity.
EOQ assists the company in maintaining a consistent inventory level while also
lowering costs. Companies may simply identify the most cost-effective number of
goods to order based on their operational costs by using EOQ.

• Lead time

26
 The time between placing an order and receiving it is known as lead time. It is an
important aspect of customer satisfaction. Customers, in general, wants goods or
services as soon as possible and with less effort.

• Safety stock inventory

Safety stock is an extra quantity of product held in the inventory to reduce the risks
that the product will be out of stock. It act like a buffer stock in situation the sales of
products are greater than expected. With this technique, a business owner makes sure
that a small however surplus amount of goods are kept on hand. By this, they are able
to keep against any unexpected fluctuation in demand that could strain their existing
product stock.

• Forecast inventory accurately

Inventory forecasting is the method for predicting future inventory levels based on
historical data, trends, and upcoming occurrences. Accurate forecasting helps
businesses have enough product to meet customer orders and not spend more or less
on inventory.

• Reorder point

A reorder point is a specific level that indicates when to place an order so that the
company does not run out of stock.

And after analysis we will be redesigning the layout of warehouse. Inefficient

management of inventory will affect the profit of the firm.

Following are the benefits that firm will have after this projects:

• It saves their money that would otherwise be wasted on inefficient products.

• It improved employee productivity.

Time is saved with good inventory management solutions. Inventory management

takes up less time, which increases production.

• It assists them in determining the exact amount of inventory they require. This can
help them avoid product shortages by allowing them to have only the right amount of
inventory on hand.

27
Chapter 5:

5) Methodology:
The methodology section outlines the method that will be used in this project, including study
area, research design, sampling procedures, data sources, collection methods and analysis
methods.

5.1) Study Area:

The project will be executed at Hazzzir Online, and primarily focus on firm’s inventory
management system.

5.2) Research Design:

Direct visual observation, face-to-face interviews, telephone interview, questionnaires, and
desk research will be used to collect data and information needed to facilitate the design in the
study.

5.3) Sampling Procedures:

Only employees and company owner will be contacted, interview will be taken from only two
person from supply chain, sales and finance department.

5.4) Data Sources:

Both primary and secondary sources will be used in this study; primary data will be collected
through methods such as direct observation, face-to-face interviews, questionnaires (survey)
and phone interviews.
Inventory procurement, sales records, and the store will all be used as secondary data sources.

5.5) Data Analysis:

Using tables in Microsoft Excel, the collected data will be analyzed qualitatively and
quantitatively.

5.6) Design Methods:

To facilitate proper inventory control, fixed order quantity methods, economic order quantity,
safety, and reorder levels will be defined under inventory control.

5.7) Questionnaire Design:

The questionnaire has 12 questions.

28
Chapter 6:

6) Project Scope:
The project's scope has extended to include procurement and the store department. The focus
of this research was on the Hazzzir Online’s inventory optimization method. The firm's
procedures will effect more on the level of inventory of the company, therefore the research
of purchase has a crucial part to play in inventory management, warehousing, and other
activities for satisfying the demand are evaluated.
This project is conducted only in the premises of Hazzzir Online. It has nothing to do with
other online grocery stores.
This project aims to provide only the stock optimization and layout designing for Hazzzir
Online. So the scope of this project will be “complete warehouse redesign of Hazzzir Online”.
This study will not be applicable to any other firm. Inexperienced author will make the
analysis less processed than professional analysis. And this study is only for academic
purposes.

29
Chapter 7:

7) Feasibility Study:
7.1) Risk involved:
People are inherently resistant to change, employees still want to do everything manually
because of low familiarity with technology.
So proper training and education should be provided to the staff so that they find these
techniques and excel more user friendly and easy than manual recording of data.
The system is expected to be economically affordable. The system is a medium-sized desktop
application with a low cost. Increased efficiency, efficacy, and performance are just a few of
the advantages. When the costs and benefits are weighed, the system is determined to be
economically feasible.
Changes are only identified once the project has started but with the knowledge about
potential challenges that may arises, we can stop them and predict the changes before it
started.
Other risk associated is the change in economic condition let say if the prices goes high the
demand of products would get changed and estimation will get effected and our project get
failed.

7.2) Resource Requirement:

Man power is required for this project who will responsible for performing calculation.
Finance is also required as they are shifting from paper work to computerized system which
have some cost associated.

30
Chapter 8:
8.1) Solution Application Areas:
The project will add to the value of the operation of Hazzzir Online. In addition to this, the
project will improve the accuracy of inventory order, growing customer's demands results in a
better structured warehouse, which improves the company’s efficiency and productivity.

8.2) Milestones:
Initially the time is required for permission and verification from supervisor then after
finalization of the project, it take only 3 months to complete this project. From spring 2021
our projects get started.

Task name Time frame

Research on inventory 4th April 2021
Designing 9th April 2021
questionnaires
Collect primary data 9th-19th April
2021
Collect secondary data 9th-19th April
2021
Obtained data 19th April 2021
Data analysis 20th April 2021
Classify material 22th April 2021
Determine economic 24th April 2021
order quantity
Determine safety stock 24th April 2021
Determine reorder level 24th April 2021
Determine 26th April 2021
replenishment system
Restructure store layout 26th April 2021
Report writing 18th May 2021
Report submission 3rd June 2021
Final Defense 10th –18th June
Presentation 2021
Table 1: Milestones

31
Chapter 9:

9) Data Analysis:
9.1) Inventory Management Techniques:
9.1.1) Data Given:
Here required information is given below table 1, which will help out in finding Economic
Order Quantity (EOQ), Safety Stocks, Reorder Point and Demand Forecasting. We get this
data from taking interview from company’s owner and his employees. For problem
identification, we conducted face-to-face interviews. After that, due to covid-19 situation we
take call interviews.
In interview, we ask several questions that are given below:
Question 1: Is your company selling products on market price or you have own price strategy?
Answer: We are selling our products at cheapest price as compared to other competitors and
also market price. Somehow we use same as market price in some products.
Analysis:
You can see the table 1, in which there is difference of prices in their company prices and
market prices. And they are selling at cheapest prices.
Ghee:
Difference of 3 rupees in Hazzzir price and market price. Company price is cheaper than
market price in Dalda Banaspati. But in other brands there is no difference.
Cooking Oil:
No difference of prices in all brand of cooking oil.
Pulses:
In white channa there is difference of 20 rupees. In black channa there is difference of 10
rupees. Also in yellow channa difference of prices is 15 rupees and 20 rupees difference in
yellow moong. Masoor and mash have a difference of 9 and 23 rupees and 12 rupees of
difference in red beans.
Flour:
Nafees flour has a difference of 20 rupees and super fine (5 kg) is of 45 rupees difference.
And in sugar, there is difference of 5 rupees.
Question no 2: What products you store in warehouse?
Answer: We store different products in warehouse. Like Ghee of different brands, same as
cooking oil of different brands, pulses, flour and sugar.
Analysis:
32
As in table 1, we show different brands of Ghee, flour and cooking oil. Also show different
types of pulses and sugar with its prices and demand.
Question 3: What is the annual demand of these products?
Answer: the demand of Dalda Banaspati is 675 units.
The demand of Manpasand Banaspati Ghee is 374 units.
The demand of Zaiqa Banaspati Ghee is 94 units.
The demand of Pak Pure Ghee is 23 units.
The demand of Dalda Oil Pouch 1 ltr is 923 units.
The demand of Meezan Sunflower Oil is 445 units.
The demand of Season Canola Oil 1 ltr pouch is 154 units.
The demand of Zaiqa Cooking Oil 1 ltr is 86 units.
The demand of Manpasand Cooking Oil is 103 units.
The demand of White Channa Daal is 518 units.
The demand of Kala Channa Daal is 216 units.
The demand of Yellow Dal Chana is 1426 units.
The demand of Yellow Daal Moong is 734 units
The demand of Daal Masoor is 734 units.
The demand of Daal Mash is 346 units.
The demand of Red Beans is 346 units.
The demand of Nafees Flour (15 kg) is 2430 units.
The demand of Super Fine Flour (5 kg) is 810 units
The demand of Sugar is 4050 kg.
Analysis:
These demand of all products are given in table 1. Through these figures we will calculate
EOQ and demand forecasting.
Question 4: How many warehouse your company have and where are they located and
warehouse is company own or not?
Answer: Company has three warehouses and they are located at G/9, H/11 and I/12. No,
company pay rent for these warehouses
Analysis:
Company has three houses at different location. And these warehouses are categorized into
three part:
Warehouse A
Warehouse B
33
Warehouse C
Question 5: What is the annual rent of the warehouses?
Answer: Warehouse A has RS 192000 rent.
Warehouse B has RS 300000 rent.
Warehouse C has RS 264000 rent.
Analysis:
These figures are also given in table 2. Table 2 shows monthly and yearly rent of the
warehouses. These figures help us to find out the holding cost in EOQ.
Question 6: How many orders you have placed from supplier in a year and what cost incurred
from supplier to warehouse?
Answer: Ordering cost is 2000 per order.
Analysis:
Hazzzir Online places 12 orders per year. And ordering cost is 2000 rupees per order. These
figures help in calculating the order cost per order in EOQ.
Question 7: What time is required between the placement of an order and delivery?
Answer: 1-3 days.
Analysis:
Average lead time is 1 and maximum lead time is 3 days. This is the time between placing an
order and delivery of an order.
Through interview questions we analyze the given data. And by using this data we calculate
EOQ, safety stocks, reorder point and demand forecasting for Hazzzir Online.

34
Table 2: Product Lists with Prices and Demand

35
 Associated Costs PKR PKR
Rent Annual Rent
Warehouse A 16,000 192,000
Warehouse B 25,000 300,000
Warehouse C 22,000 264,000
Salary Annual
salary
Warehouse Employee 12,000 864000
Salary

Total inventory level 5425113

1% Scrap of inventory 54251

value

Cost (incurred supplier to 2,000

warehouse)
Table 3: Costs associated with techniques

9.1.2) Economic Order Quantity (EOQ)

When placing an order, firms only order currently required quantity rather than the Economic
Order Quantity (EOQ) is the ideal order quantity that will reduce the inventory cost,
warehousing cost, stock out and overstock cost. It helps firm to make better decision of what
should be ordered in specific time period.
9.1.2.1) Benefits:
Calculating Economic Order Quantity will be beneficial in following regards:
• Minimize inventory cost:

Storing excessive inventory can quickly rise storage costs. Inventory costs can also rise as a
result of how you order, what gets damaged, and what never sells. If you're continually
reordering low-volume products, EOQ can assist you figure out how much to order in a given
amount of time.
• Minimize stock outs:

EOQ can help you figure out how much and how often you need to reorder. You can avoid
stock outs by determining how much you need based on how much you sell in a certain period
of time. This way, you won't have too much inventory on hand for too long.
You could be surprised to learn that ordering in lower quantities is more cost-effective for
your company.
36
 • Improve overall efficiency
Overall, calculating EOQ can help you in making better inventory storage and management
decisions.
The truth is that many ecommerce businesses place purchases based on their “gut feelings”
about how much to order rather than ordering the exact amount of inventory required. Using
EOQ formula to properly quantify how much you need based on important cost variables is a
sensible move.
9.1.2.2) Formula:
The formula for economic order quantity is:
EOQ = √ (2 x S x D / H)
S = Setup costs (per order, including shipping and handling)
D = Demand (quantity sold per year)
H = Holding costs (per year, per unit)
9.1.2.3) Components:
Three variables make up the EOQ formula: holding costs, demand, and order cost.
Holding costs (H):
The overall cost of keeping inventory (also known as carrying costs) is referred to as holding
cost. How much do you spend per unit, per year, on inventory holding and storage?
Inventory Carrying cost/Holding cost = (Storage Costs + Employee Salaries + Opportunity
Costs + Depreciation Costs) / Total Annual Inventory Value
Annual demand (D):
How much demand for a product do you get each year? You have to determine how much
product you sell each year.
Order cost (S):
How much does an order cost each purchase, often known as "setup cost"? This is done per-
order and includes both shipping and handling fees.

37
 EOQ = √ (2 x S x D / C)
Annual Demand Holding Cost/unit Cost per Order Economic Order Quantity
Ghee
Dalda Banaspati 675 116 2000 153
Manpasand Banaspati Ghee 374 116 2000 114
Zaiqa Banaspati Ghee 94 116 2000 57
Pak Pure Ghee 23 116 2000 28

Cooking Oil
Dalda Oil Pouch 1 ltr 923 116 2000 178
Meezan Sunflower Oil 445 116 2000 124
Season Canola Oil 1 ltr pouch 154 116 2000 73
Zaiqa Cooking Oil 1 ltr 86 116 2000 54
Manpasand Cooking Oil 103 116 2000 60

Pulses
White Channa Daal 518 116 2000 134
Kala Channa Daal 216 116 2000 86
Yellow Dal Chana 1426 116 2000 222
Yellow Daal Moong 734 116 2000 159
Daal Masoor 734 116 2000 159
Daal Mash 346 116 2000 109
Red Beans 346 116 2000 109

Flour
Nafees Flour 15 kg 2430 116 2000 289
Super Fine Flour 5 kg 810 116 2000 167

Sugar 4050 116 2000 374

Total 14486 116 2000 707

Table 4: Economic Order Quantity

9.1.2.4) Interpretation:
The ideal order size to minimize costs and meet customer demand of Dalda Banaspati is 153
units and for Manpasand EOQ is 114 units. The ideal quantity for Zaiqa Banaspati is 57 units
and for Pak Puree the figure is 28 units to be order once to minimize the associated cost.
When talk about Cooking Oil the optimal quantity of Dalda Oil is 178 units and for Meezan it
is 124 units. From our calculation it is depicted that 73 units of Canola Season Oil need to be
ordered once and the EOQ for Zaiqa and Manpasand Cooking Oil is 54 units and 60 units
respectively.
An order of 134 kg of White Channa should be placed to avoid inventory holding cost and for
Black Channa and Yellow Dal Channa the figure is 86 kg and 222 kg which means it is the
ideal quantity to be order to reduce storage cost. For Daal Moong, Daal Masoor,
Daal Mash and Red Bean the optimal quantity is 159, 159, 109 and 109 respectively.

38
The EOQ for Nafees Flour (15 kg bag) and Super Fine Flour (5 kg bag) is 289 and 167 and
for sugar it is 374 kg.
These are the optimum quantities of products to be ordered and minimize the inventory cost,
warehousing cost, stock out and overstock cost.

Annual Demand Prices Total Price

675 300 202500

374 305 114070
94 291 27354
23 870 20010
1166

923 305 281515

445 310 137950
154 310 47740
86 295 25370
103 290 29870
1710

518 140 72520

216 150 32400
1426 145 206770
734 220 161480
734 171 125514
346 257 88922
346 268 92728
4320

2430 1230 2988900

810 475 384750
3240
4050 95 384750

Total Inventory Value 5425113

1% Scrap of inventory 54251

Rent Annual Rent

Warehouse A 16000 192000
Warehouse B 25000 300000
Warehouse C 22000 264000

Annual employee salary 864000

Inventory Holding Sum 1674251

holding cost per unit 116

ordering cost= no of order * cost of placing an order

Table 5: Other Information

39
In table 4, we calculate inventory value by multiplying units into prices of each products.
After this we calculate scrap which is 1% of inventory value this information derived from
interview questions. Then we calculate holding cost (%) that is 2. It is calculated by formula:
Holding cost (%) = inventory holding sum/ total inventory value * 100
Inventory holding sum = employee salary+ warehouses costs + scrap costs
All formulas are given in appendix.
This data is required for calculating EOQ.

Economic Order Quantity

Ghee

8% Dalda Banaspati
Manpasand Banaspati Ghee
16% Zaiqa Banaspati Ghee
43% Pak Pure Ghee

32%

Figure 4: Economic Order Quantity for Ghee's Products

Figure 4 elaborates that dalda banaspati has a highest EOQ demand as compared to other
ghee. Dalda is 44% of total and after dalda, manpasand is demanded product in the category
of ghee, it is about 32% of total. Zaiqa has a demand of 16% and pak pure has an 8%, the
lowest demand pak pure has.

40
 Economic Order Quantity
Cooking Oil

Dalda Oil Pouch 1 ltr

12% Meezan Sunflower Oil
Season Canola Oil 1 ltr pouch
11% 36% Zaiqa Cooking Oil 1 ltr
Manpasand Cooking Oil

15%

25%

Figure 5: Economic Order Quantity for Cooking Oil Products

Figure 5 depicts the comparison of 5 cooking oil brands. Dalda oil has highest EOQ as
compared to other brands. Meezan has 25%, and season is 15%. The lowest EOQ demand of
zaiqa and manpasand is 11% and 12%.

Economic Order Quantity

Pulses

White Channa Daal

Kala Channa Daal
11% 14% Yellow Dal Chana
Yellow Daal Moong
11% 9% Daal Masoor
Daal Mash
Red Beans
16%
23%

16%

Figure 6: Economic Order Quantity for Pulses Products

Figure 6 shows that EOQ demand of pulses, in this yellow channa has highest demand as
compared to other pulses. It is 23% and other pulses like white channa is 14%, kala channa is
9%, yellow moong is 16%, masoor is 16%, mash and beans are 11% out of total.
41
 Economic Order Quantity
Flour & Sugar
Products
Sugar 374

Super Fine Flour 5 kg 167

Nafees Flour 15 kg 289

0 50 100 150 200 250 300 350 400

demand in units

Figure 7: Economic Order Quantity for Flour Products & Sugar

Figure 7 shows the demand of flour and sugar. Nafees flour has a highest demand as
compared to super fine. Nafees EOQ demand is 289 bags and super fine is 167.
Sugar demand is higher than flour. EOQ of sugar is 374. This quantity helps to minimize the
inventory costs.
9.1.3) Safety Stock
The amount of stocks kept in a store to avoid stock out situation.it helps you in dealing with
demand fluctuation.
9.1.3.1) Importance of safety stock
When you run out of stock, safety stock might help you avoid panic. You don't have to rely on
your supplier to deliver fast or turn away a customer because you don't have enough stock if
you have safety stock.
9.1.3.2) Protection against demand spikes
It helps you in dealing with sudden increase in demand or inaccurate demand forecast. It
ensures that highly demanded products should be replenished consistently
9.1.3.3) Buffer stock for longer lead times
Unexpected production or transportation delays, such as a bottleneck at your supplier's end or
a weather-related shipment delay, can cause your products to arrive later than expected, but if
you have safety stock you would have no issue in this regard.

42
9.1.3.4) Prevention against price fluctuations
When the cost of good increases due to sudden change in market (increase in demand, new
government policy, shortage of raw material), and if you have safety stock in this
unpredictable situation, it will be helpful for you.
9.1.3.5) Formula:
The formula for safety stocks is:
Safety Stock= (maximum sale per day x maximum lead time) – (average sale per day x
average lead time)

43
 Table 6: Safety Stocks

9.1.3.6) Interpretation:
From Our Calculation we come to know that there should be 7 units of Dalda Banaspati Ghee
(safety stock) on order to meet demand fluctuation.
For Manpasand Ghee this figure is 8 units and for Zaiqa Banaspati Ghee and Pak Pure Ghee
there should be 2 units available in warehouse.

44
The safety stock for Dalda Cooking Oil, Meezan Sunflower Oil, Season Canola Oil, Zaiqa
Cooking Oil and Manpasand Cooking Oil is 12 units, 8 units, 2 units, 2 units and 5units
respectively, its means that this quantity must be present in warehouse of Hazzzir Online to
meet uncertainties. The safety stock for sugar is16 units and for Nafees Flour (15 kg bag) it is
9 and for Super Fine Flour 5 units must be available in warehouse all the time.
For Black Channa and Yellow Dal Channa the figure is 1 units and 8 units.
For Daal Moong, Daal Masoor, Daal Mash and Red Bean The safety stock is7units, 5units,
1unit and 3units respectively and 4 units of White Channa should be present in warehouse.

Safety Stock
Ghee
Pak Pure Ghee 2

Zaiqa Banaspati Ghee 2

Products

Manpasand Banaspati Ghee 8

Dalda Banaspati 7

0 1 2 3 4 5 6 7 8 9
Safety Stock in units

Figure 8: Safety Stocks for Ghee Products

This figure safety stock of different ghee brands. Highest safety stock of manpasand is 8 units
and then dalda is 7 units and the lowest safety stock of zaiqa and pak pure are 2 units. Both
have same units.

45
 Safety Stock
Cooking Oil
Manpasand Cooking Oil 5

Zaiqa Cooking Oil 1 ltr 2

Products
Season Canola Oil 1 ltr pouch 2

Meezan Sunflower Oil 8

Dalda Oil Pouch 1 ltr 12

0 2 4 6 8 10 12 14
Safety Stock in units

Figure 9: Safety Stocks for Cooking Oil Products

Figure 9 shows safety stock of different cooking oil brands. Highest safety stock of dalda oil
is 12 units and meezan units is 8. After that manpasand has 5 units and both zaiqa and season
has same units that is 2, the lowest safety stock units.

Safety Stock
Pulses
Red Beans 3

Daal Mash 1

Daal Masoor 5
Products

Yellow Daal Moong 7

Yellow Dal Chana 8

Kala Channa Daal 1

White Channa Daal 4

0 1 2 3 4 5 6 7 8 9
Safety Stock in units

Figure 10: Safety Stocks for Pulses Products

Figure 10 depicts the safety stock units for different pulses. The highest safety stock of yellow
channa is 8 units, then yellow monng is 7 units, masoor is 5 units, white channa is 4 units.
The lowest safety stock of kala chana and mash is 1 units. And red beans has 3 units of safety
stock.

46
 Safety Stock
Sugar & Flour

Sugar 16
Products

Super Fine Flour 5 kg 5

Nafees Flour 15 kg 9

0 2 4 6 8 10 12 14 16 18
Safety Stock in units

Figure 11: Safety Stocks for Flour Products & Sugar

Figure 11 shows the safety stock units of flour and sugar. Sugar units are 16, nafees flour
units are 9 and lowest units of safety stock of fine flour is 5.
9.1.4) Reorder Point
It is the specific level at which you need to place an order to avoid running out of stock.
9.1.4.1) Benefit:
Setting a reorder point allows you to optimize your inventory, replace each item stock at the
appropriate time, and fulfil market demand without running out of stock. If you order when
you already have stocks, it will lead to overstock and increased holding cost however, if you
place an order when there are no more available time, you will be unable to make sales for the
period it takes to receive the order.
9.1.4.2) Components:
Reorder point has three variables:
• Lead time: The amount of time it takes your vendor to complete your order (in days).

• Safety stock: The quantity of excess stock you retain in your inventory, if any, to help
prevent stock outs.

• Daily average usage: The number of sales of that particular item in an average day.

9.1.4.3) Formula:
Reorder Point (ROP) = Demand during lead time (lead time*Average sales/day) + safety
stock

47
 Table 7: Reorder Points

9.1.4.4) Interpretation:
Reorder Point for Dalda Banaspati Ghee, Manapasand Ghee, Zaiqa Banaspati Ghee and Pak
Pure Ghee is 9units, 9units, 3units and 3units and for Dalda Cooking Oil, Meezan Sunflower
Oil, Season Canola Oil, Zaiqa Cooking Oil and Manpasand Cooking Oil reorder point is 15

48
units, 10 units, 3 units, 3 units and 6 units its mean that when we are left with these quantities,
we must place an order to refill the stock.reorder point for White Channa is 6 units.
For Black Channa and Yellow Daal Channa the figure is 2 units and 13 units.
For Daal Moong, Daal Masoor, Daal Mash and Red Bean the safety stock is 10 units, 8units,
2 unit and 4units respectively. For Nafees Flour (15 kg bag) when 10 bags left
stock need to be refill and for super fine flour (5 kg bag) it is 6 bags and reorder point for
sugar is 20 units that is when we are left with 20 units we must place an order so that we
won't run out of stock.

Reorder Point
Ghee

Pak Pure Ghee 3

Zaiqa Banaspati Ghee 3

Products

Manpasand Banaspati Ghee 9

Dalda Banaspati 9

0 1 2 3 4 5 6 7 8 9 10
Reorder Point in units

Figure 12: Reorder Point for Ghee Products

Figure 12 depicts the reorder point of the ghee products. As with highest safety stock units,
dalda banaspati has also highest reorder point units as compared to others. Manpasand also
has same units of reorder point is 9. Zaiqa and pak pure has lowest and same reorder units.

49
 Reorder Point
Cooking Oil
Manpasand Cooking Oil 6

Zaiqa Cooking Oil 1 ltr 3

Products
Season Canola Oil 1 ltr pouch 3

Meezan Sunflower Oil 10

Dalda Oil Pouch 1 ltr 15

0 2 4 6 8 10 12 14 16
Reorder in units

Figure 13: Reorder Point for Cooking Oil Products

Figure 13 shows reorder point of all cooking oil brands that Hazzzir online selling it, the top
one is dalda oil with 15 units, meezan with 10 units in the second number then manpasand
with 6 reorder units. And the lowest are zaiqa and season with 3 units.

Reorder Point
Pulses
Red Beans 4

Daal Mash 2

Daal Masoor 8

Yellow Daal Moong 10

Pulses

Yellow Dal Chana 13

Kala Channa Daal 2

White Channa Daal 6

0 2 4 6 8 10 12 14
Reorder in units

Figure 14: Reorder Point for Pulses Products

50
Reorder point units of pulses are shown in the figure 14. Figure 14 depicts the highest units of
yellow channa are 13, then yellow moong units are 10, daal masoor is 8 units, white channa is
6 units, red beans is 4 units of reorder point. Mash and kala channa has lowest reorder units
are 2. Both have same units.

Reorder Point
Flour & Sugar

Sugar 20
Products

Super Fine Flour 5 kg 6

Nafees Flour 15 kg 10

0 5 10 15 20 25
Reorder in units

Figure 15: Reorder Point for Flour Products & Sugar

Figure 15 shows reorder point of flour and sugar. Nafees flour has highest units as compared
to super fine are 10 and 6. Sugar has 20 units of reorder point.

9.1.5) Demand Forecasting

By using historical data and other information to predict future demand of customers over a
defined period. It can optimize supply decisions by business management and corporate
supply chain.
In table 7, past two years data are given. By historical data, we calculate demand forecasting
of Hazzzir Online products.

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 Annual 2-year 3- year
Demand Forecasting
Ghee
Dalda Banaspati 675 685 680
Manpasand Banaspati Ghee 374 380 377
Zaiqa Banaspati Ghee 94 85 89
Pak Pure Ghee 23 15 19

Cooking Oil
Dalda Oil Pouch 1 ltr 923 940 932
Meezan Sunflower Oil 445 451 448
Season Canola Oil 1 ltr
pouch 154 143 148
Zaiqa Cooking Oil 1 ltr 86 79 82
Manpasand Cooking Oil 103 98 100

Pulses
White Channa Daal 518 525 522
Kala Channa Daal 216 211 214
Yellow Dal Chana 1426 1377 1401
Yellow Daal Moong 734 723 729
Daal Masoor 734 722 728
Daal Mash 346 335 340
Red Beans 346 333 339

Flour
Nafees Flour 15 kg 2430 2429 2430
Super Fine Flour 5 kg 810 798 804

Sugar 4050 3867 3959

Table 8 : Demand Forecasting

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 Demand Forecasting
Ghee
800

700
675 685 680
600

500
Demand in units

400
374 380 377
300

200

100
94 85 89
0 23 Pure 19
15 Ghee
Ghee Dalda Banaspati Manpasand Zaiqa Banaspati Pak
Banaspati Ghee Ghee

Products
Annual Demand 2-year 3- year Forecasting

Figure 16: Demand Forecasting for Ghee Products

Figure 16 depicts demand forecasting of ghee, in year 1 dalda has 675 units demand, 2 year is
685 units on the basis of 1 and 2 years data and 3rd year demand can be 680 units. In year 1
manpasand has 374 units demand, 2 year is 380 units, on the basis of 1 and 2 years data and
3rd year demand can be 377 units. In year 1 zaiqa has 94 units demand, 2 year is 85 units, on
the basis of 1 and 2 years data and 3rd year demand can be 89 units. In year 1 pak pure has 23
units demand, 2 year is 15 units on the basis of 1 and 2 years data and 3rd year demand can be
19 units.

53
 Demand Forecasting
Cooking Oil
923 940 932
Demand in units

445 451 448

154 143 148

86 79 82 103 98 100
Dalda Oil Pouch 1 ltr Meezan Sunflower Season Canola Oil 1 Zaiqa Cooking Oil 1 Manpasand Cooking
Oil ltr pouch ltr Oil
Products

Annual Demand 2-year 3- year Forecasting

Figure 17: Demand Forecasting for Cooking Oil Products

Figure 17 shows demand forecasting for cooking oil of different brands. Dalda oil has 923
units in 1st year, 940 units in 2nd year and third year demand forecast is 932 units. Same in
case other cooking oils we calculate demand of 3rd year. In year 1, meezan demand is 445
units, year 2 is 451 units and year 3 can be 448 units. Season canola has 154 units in 1st year,
143 units in 2nd year and third year demand forecast is 148 units. In year 1, zaiqa demand is 86
units, year 2 is 79 units and year 3 can be 82 units. In year 1 manpasand has 103 units
demand, 2 year is 98 units, on the basis of 1 and 2 years data and 3rd year demand can be 100
units.

54
 Demand Forecasting
Pulses
1600
1400
1426 1401
1377
1200
1000
Demand in units

800
600 734723729 734722728

400 518525522
200 346335340 346333339
216211214
0
White Channa Kala Channa Yellow Dal Yellow Daal Daal Masoor Daal Mash Red Beans
Daal Daal Chana Moong

Products

Annual Demand 2-year 3- year Forecasting

Figure 18: Demand Forecasting for Pulses Products

Figure 18 depicts demand forecasting of pulses, in year 1 white channa has 518 units demand,
2 year is 525 units on the basis of 1 and 2 years data and 3rd year demand can be 522 units. In
year 1 kala channa has 216 units demand, 2 year is 211 units, on the basis of 1 and 2 years
data and 3rd year demand can be 214 units. In year 1 yellow channa has 1426 units demand, 2
year is 1377 units, on the basis of 1 and 2 years data and 3rd year demand can be 1401 units. In
year 1 yellow moong has 734 units demand, 2 year is 723 units on the basis of 1 and 2 years
data and 3rd year demand can be 729 units. In year 1 masoor has 734 units demand, 2 year is
722 units on the basis of 1 and 2 years data and 3rd year demand can be 728 units. In year 1
mash has 346 units demand, 2 year is 335 units on the basis of 1 and 2 years data and 3rd year
demand can be 340 units. In year 1 red beans has 346 units demand, 2 year is 333 units on the
basis of 1 and 2 years data and 3rd year demand can be 339 units.

55
 Demand Forecasting
Flour & Sugar
4500
4000
3500
3000
2500
Demand in units

2000 4050 3867 3959

1500
2430 2429 2430
1000
500 810 798 804
0
Flour Nafees Flour 15 kg Super Fine Flour 5 Sugar
kg

Products

Annual Demand 2-year 3- year Forecasting

Figure 19: Demand Forecasting for Sugar and Flour Products

Figure 16 depicts demand forecasting of flour and sugar, in year 1 nafees flour has 2430 units
demand, 2 year is 2429 units on the basis of 1 and 2 years data and 3rd year demand can be
2430 units. In year 1 super fine has 810 units demand, 2 year is 798 units, on the basis of 1
and 2 years data and 3rd year demand can be 804 units. In year 1 sugar has 4050 units demand,
2 year is 3867 units, on the basis of 1 and 2 years data and 3rd year demand can be 3959 units.

9.2) Survey Response:

We have conducted this survey in order to get better insight of the problem and what should
we do in order to provide the best possible solution to the Hazzzir Online. Responses analysis
are given below:

56
 Figure 20: Gender

All the employee who filled the survey are males because in Hazzzir Online there are men in
sales department.

Figure 21: Income

67% of the employees have salary ranging from 15000-45000 and 17% ranges from 45000to
75000 and remaining have higher than 75000 salary.
57
Survey Questions:
Question no 1: Would you prefer manual record system or computerized system?

Question no 1's Response

17%

Manual System
Computerized System

83%

Figure 22: Question 1 Response

In response to the first question there are 83% of the employee in sales department who really
want their system to be computerized in order to increase efficiency but there are only 17% of
employee who want to retain their manual system because they are used to it and they resist
change.
Question no 2: Is there a proper layout plan of the inventory storage facility?

Question no 2's Response

17%
Proper layout plan
yes
no

83%

Figure 23: Question 2 Response

In this response we get to know that according to 83% of employee there is no proper layout
of warehouse and everything is placed randomly in warehouse which have created cluttered

58
and effect the functioning of employees. Some product get missed and everything is so much
uneven that it takes too much to find the required stock.

Question no 3: Are tags placed on goods after they are placed in storage indicating details of
shipment?

Question no 3's Response

17%

33%
yes
no
tags are placed only after order

50%

Figure 24: Question 3 Response

Accordingly to only 17% employees the inventories are tagged but 50% says that there is no
tag on the inventory and 33% says that there is no label no tag on the inventory but once the
order has taken then new basket is created and then tagged are placed with all details related
to the shipment.

Question no 4: Are there controls in place ensuring all inventory leaving the premises have a
valid invoice?

59
 Question no 4's Response

Ensuring inventory invoice

Yes
No

100%

Figure 25: Question 4 Response

All employees confirm that is a proper check and balance and there should be proper valid
invoice of inventory.

Question no 5: Do you recalculate safety stock level on a regular basis to ensure they are up-
to-date?

Question no 5's Response

17%
Safety stock up-to-date on regular
basis

daily
weekly
monthly
yearly

83%

Figure 26: Question 5 Response

According to 17% the safety stocks are up-to-date after year but 83% says that stock is
updated after every month.

Question no 6: How to you deal with expired products?

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 Question no 6's Response

dealing with expired products

discard expires products
sell expired products

100%

Figure 27: Question 6 Response

100% of the employee assures that Hazzzir Online discard the expired product, it do not sell
the expired product once the product gets expired Hazzzir Online discard it.

Question no 7: How do you determine ordering frequency?

Question no 7's Response

33% determining ordering frequency

on the basis of sales

purchase in bulk

67%

Figure 28: Question 7 Response

According to 33% of the employee orders are placed on the basis of demand but 77% says
that we don’t determine the ordering frequency we just buy in the bulk in order to be
benefitted from discounts from the supplier.

Question no 8: Which method is being used for inventory management?

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 Question no 8's Response

33% method for inventory management

Just-In-Time
ABC Analysis
No specific

67%

Figure 29: Question 8 Response

According to 33% of the employee there is no proper method being used in the firm to
manage the inventory but 77% says that in Hazzzir Online products are categorized on the
basis of sales.

Question no 9: What are the products placed in warehouse?

According to the response we get to know the products stored in warehouse are flour, sugar,
pulses, ghee and oil. Other products are sent directly from the Super-mart to the customers as
they have contract with those marts.

9.3) Findings:
• They place order in a bulk without knowing exact demand of a product.

• Manual system is being used by Hazzzir Online. Hazzzir Online Do create online
invoice and also two hard copies, one for record and other one which is provided to
the customer on delivery. And keep everything manual.

• There is no physical verification, maintenance of store and no proper inspection.

• Inventory is counted after 15 days so they are unable to refill their stock when
necessary.

• They are using ABC analysis but as they count their inventory after 15 days so they
are unable to meet increasing demands of customers.

62
• They don’t count their safety stock due to which they have to face situation like stock
out and overstock.

• There is no rack in the store, everything is placed randomly.

• Some of the stock is lost or missing.

• 9-They don’t forecast sales.

• Hazzzir Online dump the expired or obsoleted products.

• Stocks in warehouses are not tagged until the separate basket is created when the order
has been received.

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Chapter 10:

10) Warehouse Layout Designing:

There is no proper layout in the warehouse of Hazzzir Online, everything is placed
randomly which will increase the effort and time.
• There should be proper Racks and bins in the warehouse.
• All the stocks and racks should be labelled where products have to be placed in
order to increase efficiency.
• The product should be placed on the basis of the expiry dates like (FIFO needs to
be used) so the product that are bought first need to be sold first.
• The product with high demand must be placed in area which is easily accessible.
• Product which are likely to be lost should be placed in the front.
• Heavy bags (flour, sugar) should be placed at the rear end.
• In warehouse, unnecessary things need to be removed and every place should be
specific for its product to be placed and warehouse needs to be cleaned. Every day
before leaving nothing (packing material and waste) should not be left anywhere.
• Counting period of stock should be reduced to week which will help to keep the
record of inventory and also identify if the stock is stolen or not.
• Before placing an order to the supplier must assess the available space left in the
warehouse so it will help to avoid clutter in the warehouse.

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Chapter 11:

11) Conclusion and Recommendations:

11.1) Conclusion:
Inventory Management is high essential to run successful business because when the firm
track its inventory on regular basis it can minimize your many errors related to stocks and if
the firm has good inventory management system, it will help the firm to accurately forecast
the demand and to cope up with many uncertainties.
It avoid the situation like overstock and stock out as both have their own consequences and
but with proper tracking of inventory firm can reduce many costs like handling cost.it help the
firm to get better insight about the sales trend and firm will keep stock accordingly which
enhance the inventory turnover and ultimately the profits of the firm.
We are providing the inventory management solution to the Hazzzir Online as the firm want
to increase its profitability and it lags in the area of inventory management as it is unable to
meet the demand and face problems like stock out and out of stock. Firm just order in the bulk
because the firm think that ordering in a bulk will reduce cost but firm is ignoring the other
associated factors
And in this time period of Covid-19 when the firm has opportunity to increase its profitability
we are providing solution to Hazzzir to improve its inventory side which will increase
efficiency of its operation and ultimately the profitability of the firm.
In our project we initially use primary data (interviewing the employees so that we can get
what is the exact problem and what are the areas where we can bring improvement) and the
other is secondary data (sales data of last years) we have used the figures of our secondary
data and calculated Economic Order Quantity, Safety Stock, Reorder point for Hazzzir
Online. So that Hazzzir Online can improve its efficiency by knowing when to order, what to
order and how much to order.
Warehouse of Hazzzir Online is too much cluttered as they have placed everything randomly
without defining proper position for every product. Due to which effort while searching for a
product increases and extra space also covers which increases the storage cost, furthermore
many products got missed.so we have given some points in this regard in order to improve the
working condition in warehouse and placement of inventory in the warehouses (layout).

65
11.2) Recommendations:
• Hazzzir Online must use FIFO as the firm faces the problem related to expired product
which increase the cost. So if the firm first sale what is bought first it is most likely,
that firm will get rid of this problem.

• Hiring and training a person who is reliable so that lost or stolen stock should be
reduced.

• While placing an order only monetary benefit should not be considered but also look
at the demand of the products and other factors.

• Regular inspection of the warehouse.

• For keeping records use excel sheet or other computerized software as it is convenient
and easy method to save data. Also there is no chance of human errors.

66
References

• https://core.ac.uk/download/pdf/148366218.pdf

• https://www.academia.edu/26003928/Final_Year_Project_On_Inventory_Managemen
t_System_Submitted_By

• https://pvgiomnsk.com/wpcontent/uploads/pdf/aicte/inventory_management_techniqu
e.pdf

• https://www.slideshare.net/hemanthcrpatna/inventory-management-5441890

• https://www.myaccountingcourse.com/accounting-dictionary/ordering-costs

• How to calculate safety stock – with formulas and examples - Unleashed Software

• Flipkart (slideshare.net)

• Flipkart Supply Chain Management | Online Shopping | Retail (scribd.com)

• Walmart’s Inventory Management - HYPERLINK "http://panmore.com/walmart-

inventory-management"Panmore HYPERLINK "http://panmore.com/walmart-
inventory-management" Institute

• Fully automated Warehousing strategy Hold no inventory or warehouse FULLY |

Course Hero

• Supply Chain Management: Flipkart's inventory management (cmuscm.blogspot.com)

• Organized Chaos: Behind The Scenes of Amazon’s Inventory Management System

(logiwa.com)

• Inventory Management Proposal | Inventory | Data (scribd.com)

• DARAZ SWOT.docx - SWOT ANALYSIS SWOT analysis is basically a framework

which identifies and analyzes both internal and external factors of a company or |
Course Hero

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Appendix

Before using Inventory Management Techniques After Using inventory Management Techniques Dif erence Percentage

Labor cost 864000 432000 -432000 -50.00%

Scrap 54251 27125.565 -27125.435 -50.00%
Inventory holding cost 1674251 1215125.565 -459125.435 -27.42%
Additional ordering cost 10000 -
Lost sales 271255.65 -
2873757.65 1674251.13 -1199506.52 -41.74%

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 Annexure

We calculate the difference of market price and Hazzzir Online by this formula:
Difference Formula= Market price - Hazzzir price

We calculate holding cost/unit by this formula.

Inventory holding sum = warehouse A's cost + warehouse B's cost + warehouse C's cost + salary of employees in warehouse + 1% scrap of inventory value
Inventory Holding sum= 192000+300000+264000+864000+54251 = 1674251

holding cost% (I) = inventory holding sum/total inventory value

Holding cost% = 1242251/5425113 = 2%
holding cost is 2% of inventory value

holding cost per unit = inventory holding sum/ units

holding cost per unit (H)= 1674251/14486 = 116

cost per order = 2000

EOQ = √ (2 x S x D / H)
EOQ = √ (2 x 2000 x 14486/ 116) = 707

Safety Stocks = (maximum sale x maximum lead time) – (average sale x average lead time)

Reorder Point (ROP) = Demand during lead time (lead time*Avg sales/day) + safety stock

Demand Forecasting = sum of demand of years/ no. of years

Above all formulas are using in this project for Data Analysis.

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Plagiarism Report

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