Inventory Management and Control in a Manufacturing Organization
OBJECTIVE OF THE STUDY
The researcher’s reasons in undertaking the study of the inventory management and control in manufacturing organizations taking a case study of Akara Industries Nigeria Limited, Aboh Mbaise are numerous.
The choice is aimed at representing all other manufacturing companies and to attribute the findings to other institutions and organizations.
A well-planned and effectively controlled inventory can contribute substantially to a firm’s profit because inventories are the life-wire of all organizations. It is however necessary to visualize the purpose of this research as follows:
- To ensure correct quality of stock required.
- To ensure constant supply and flow of material to the operations.
- To ensure that the materials are available at the correct time they are needed.
- To ensure a continuous or steady supply of information for control of production about what to produce in order to keep established level of the organization finished stock.
- Control of obsolescence of stock ensuring that all stocks held by the organization are being used at a regular rate and therefore have not been superseded by a new or redesigned item. The success of the company as a manufacturing one has a great influence on the researcher to know the secret behind this success, since inventory control is concerned with the success over failure of any company.
The loopholes to be filled in the management of stores and inventory need to be taken care of. The researcher feels that through this medium he can suggest the right professional techniques suitable for stores and inventory management and control in all sectors of the economy.
Review of contributors towards the situation of the case study will be narrated to see the attitude of the nation and individuals towards this discipline. Finally, this study will help the organization to recognize the problems and how to resolve them.
CHAPTER TWO
LITERATURE REVIEW
MANAGEMENT OF INVENTORIES
Materials are simply industrial goods that become part of another physical product. They represent the major component of business cost and profitability According to Ramakrishna (2005), on an average, half the sales income in an organization is spent on materials. This implies that to boost a firm’s profit, there is the need to reduce materials cost which leads to a reduction in manufacturing cost. In the cost structure of most of the products manufactured, materials constitute 50% of the total cost, pointing to the need for the proper budgeting and control on cost of materials which is a core objective of Materials Management Efforts are made to minimize the stock of inputs and outputs by proper planning and forecasting of demand of various inputs and producing only that much quantity which can be sold in the market. The inventory cost is not only interest on stocks but also cost of store building for storage, insurance and obsolesce and movement of inputs from place of storage to the factory where the materials have to be finally used to convert them into finished goods. In Japan industries have adopted concept of JIT (Just in Time) and components, materials are received when required for which detailed instructions are given to suppliers. There are many engineering companies who receive components directly at assembly point and that too only for 3-4 hours requirements at a time. Even in case of bulk materials like iron ore, which is imported from abroad, the minimum possible inventory is kept. As against this by and large in India the inventory of coal, raw materials and packing materials is very high and many items become junk or obsolete causing heavy loss to the enterprise. Lack of inventory planning in India has been pointed out by various committees but due to uncertainties in supplies, problem of timely receipt of railway wagons, lack of planning and unreliable suppliers the investment in inventories is quit high. The fluctuation in demand affects inventory of finished product of which cement industry has been a victim many times. The situation in cement industry has been analyzed in this chapter after studying the principles of inventory control and relating it with cement industry.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher will use descriptive research survey design in building up this project work the choice of this research design will be considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design will be suitable for the study as the study sought to investigate the efficacy of inventory management and control in manufacturing organization.
Sources of data collection
Data will be collected from two main sources namely:
Primary source:
These are materials of statistical investigation which will be collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups will be also used.
REFERENCES
- S.E. Bolter, Managerial Finance, (Boston: Hovyhlon Mifflin Co., 1976). American Institute of Certified Public Accounts: According Research and Terminology Bullet New York (1961).
- Black Champion U. Miller, Accounting in Business DecisiionsTheory Method and Use, Englewood Cliffs New Jersey, Prentice Hall, Inc., (1961)
- Venu, Lokudyog (1972). Howard Leslie R., Working Capital: Its Management and Control, London MacDonald and Evan Ltd., 1971.
- L.R. Howard, Working Capital – Its Management and Control, (London : Macdonald & Evan Ltd., 1971).
- R.S. Chadda, Inventory Management in India, (Mumbai Allied Publishes, 1971). Martin K. Star and David W. Miller, Inventory Control, (NJ, Jheary and Phensice, Englewood cliffs, Prentice Hall, 1962).
- P.K. Ghosh and G.S. Gupta, Fundaments of Management Accounting, (New Delhi: National Publishing House, 1979).
- R.S. Chadda provides the following useful guidelines for selective control (Chadda R.S.: Inventory Management in India). P. Hopal Prishan L.M. Sundersan, Material Management-An Integrated Approach, (New Delhi): Prentice Hall and India 1984.
- Buchar, Joseph and Koenisbgerg, Ernest, Scientific, Inventory Management, (New Delhi: Prentice Hall of India, 1966).
- H.J. Wheldon, Cost Accounting and Costing Methods, (London : McDonald and Evans Ltd., 1948).
- Fabrycky WJ, Banks J (1967) Procurement and inventory systems: theory and analysis. Reinhold Publishing Corporation, New York
- Hollier RH, Vrat P (1978) A proposal for classification of inventory systems. Omega 6(3):277–279 Love S (1979) Inventory control. McGraw Hill Book Company, New York
