COST REDUCTION USING COMBINE-COST-MATRIX IN A MANUFACTURING INDUSTRY – A CASE STUDY

A case study has been carried out in one of the manufacturing unit engaged in the business of design, manufacturing, and installation of sugar plant equipment having customers in India and abroad. The annual budget highlighted the high capital cost of holding huge inventory. A new approach using selective inventory control results in noticeable annual savings. High priority items are identified by using combined cost matrix of ABC and VED analysis. Moving average forecasting technique is employed to predict future demand for next production cycle. The analysis helps in reducing inventory capital up to 11 Lacks using above strategy without disturbing production.