Inventory Management and Sales Revenue Maximization

A mid-term report for the BDM capstone Project

Submitted by

Name: Hitesh Binjrawat

Roll number: 22f2001255

IITM Online BS Degree Program,

Indian Institute of Technology, Madras, Chennai

Tamil Nadu, India, 600036

Contents

1 Executive Summary 1

2 Proof of Originality 2

3 Meta Data 2-3

4 Descriptive Statistics 3-4

5 Analysis Process 4-5

6 Results and Findings 5-8

1 Executive Summary
This report consists of careful analysis of data collected from Mahesh Kirana Store. Data is
collected from 5 August to 6 September. Primarily data consists of two tables one for tracking
the inventory and other for details of the products. Inventory table contains records of each
product on a daily basis, it has information about stock at time opening, inwards, outwards
and stock at time of closing. Products table contains information about the products like name
of product, cost price and selling price.

The objective of the mid term report is to find which products contribute more to sales and
which products contribute more to revenue and to analyse the sales trend over the month on a
daily basis. To achieve this task I have used Combo Charts, Line Charts, Bar Charts and Pie
Charts. Charts are a great means to draw insights from data and provide a more clear picture,
if used properly.

Bar chart is used to visualise the average days of inventory of each product. Pie chart is used
to get the proportion of contribution of each product in generation of revenue. Combo chart is
used to draw a Pareto chart of both sales and revenue. Line chart is used to visualise the trend
of sales over the month.

At the end of the report we can find which groups of products contribute more to sales and
which group of products contribute more to revenue. After knowing this the shopkeeper can
focus more on revenue generating products and try to increase the sales of revenue generating
products thus maximising revenue.
2 Proof of Originality of Data
Images of the shop:

Link of drive for letter, video and images: ProofOfOriginality

Raw Data Link: ShopData

Processed Data: DataProcessed

3 Metadata
For understanding movement stocks the following data is collected:

Date: It stores the date on which data was recorded.

Name: It contains the name of the product.

Opening: The quantity of each product at the time of opening of the shop on a particular day.
Inwards: It contains the quantity of each product that came inside the particular day (products
purchased).

Outwards: It contains the quantity of each product that went outside the shop on that
particular day (products sold).

Closing: It contains the quantity of each product remaining at time of closing the shop.

Products table contain the following fields:

Name: Name of the product.

Selling Price: The price at which item was sold.

Cost Price: The price at which item was purchased.

4 Descriptive Statistics
Considering all the products combined and conducting descriptive analysis on a daily basis
can be useful.

Opening

Average: 467.9, median: 448, Standard Deviation: 117.5, Min:261, Max: 723

Inwards

Average: 187.2, median: 144, Standard Deviation: 128.7, Min: 0, Max: 571

Outwards

Average: 197.7, median: 196, Standard Deviation: 49.3, Min: 128 , Max: 374

Closing

Average: 457.4, median: 441, Standard Deviation: 109.1, Min: 261, Max: 679

Although these descriptive statistics do not give much information about product detail , there
are other things such as what was the average, median, Standard Deviation, Min and Max of
total products purchased, sold, opening stock in the month on a daily basis. This helps in
understanding overall distribution of sales, purchase, opening and closing. Giving a brief idea
of the shop.
 Fig 3.1 Screenshot of primary Data Collected

5 Analysis Process/Method
Data is collected from 5 August 2024 to September 6. I have used Google sheets for the
majority of my analysis. First of all, data is thoroughly analysed and there were no significant
outliers and missing values on raw data. Then the raw data was converted into various pivot
tables to extract Sales and Purchase data of each product on a daily basis. (Outwards column
implies Sales Data while Inwards column implies Purchase Data).

Descriptive statistics helped in understanding the distribution of data. My analyses are mostly
made with the help of bar charts, line charts and pie charts. Sales volume pareto chart is the
combination of bar chart and line chart. It helped in visualising which products have more
sales and which products have lesser sales along with cumulative percentage contribution in
sales of prior products.

Pie charts are the one of the best ways to represent the proportion which adds up to 1 or
100%. Here the pie chart is used to depict the percentage contribution of each product to the
revenue.

Average days of inventory is represented with the help bar chart. Here the goal is to know for
how many days inventory of each item would last if no products are purchased. This would
give us understanding how often a product must be purchased in what quantity. Average days
of inventory is calculated by using formula Average of Opening Stock divided by Average
sales of that item i.e (Average Opening/Average Sales).

To analyse sales over time, line charts are the most appropriate tool to visualise. It effectively
illustrates trends and changes over time, allowing in easy identification of patterns. At last I
have used the Revenue Pareto chart to see which group of items contribute more to the
revenue. It gives us a basic understanding of the most revenue generating product and least
revenue generating product. Thus focus more on revenue generating products without
compromising sales of lesser revenue generating products.

6 Results and Findings

Here are some of the graphs and pictorial representations which have been used for problem
solving.
Fig 6.1 Sales volume Pareto chart

Fig 6.2 Revenue Proportion Chart

Fig 6.3 Average number of days of inventory of Each Product

Fig 6.4 Analysis of Sales Trend

 Fig 6.5 Revenue Pareto Chart

● From the volume pareto chart it can be inferred that products like Parle Biscuit,
Chocolate, Namkeen, Rusk have higher sales on the other hand products like
ToothBrush, Ghee, Garam Masala have lesser sales. About 44% of products
contribute to 80% of sales.
● Although Ghee is among the few selling products, there is a significant contribution
of Ghee in generating revenue, almost about 21.1% of total revenue. It's quite
significant compared to the number of sales it has. It's due to the higher selling price
of ghee.
● Average days of inventory for most of the products falls between 1 to 3. So, if a
significant amount of concentration is not made on improving average days of
inventory then it might lead to the problem of stockout. So efforts must be
● Although there are many fluctuations in sales trends (fig 6.4) , there is only one
significant spike that can be seen on 4th of September. This spike is due to chocolate
sales due to the occasion of Teachers’ Day where school students bought chocolates
in bulk quantity.
● From the revenue pareto chart (Fig 6.5) it can be inferred that, out of these 18
products 27% of products contribute to nearly 60% of revenue while nearly 50% of
products contribute to 80% of revenue.
● Meat masala, Garam masala, ToothBrush are the least revenue generating products.