The Impact of Inventory Management and Control
Abstract
CHAPTER ONE
AIM OF THE STUDY
The aims and objectives of this research work are to take a general look at inventory management as a tool for enhancing profitability in manufacturing organization.
The project is also aimed at providing information on how effective inventory management can enhance profitability.
Furthermore, the project is geared towards analyzing how issues of inventory is done as well as its inspection and stock taking in the organization and how it affects inventory management. The project also tends to reveal to the management of the organization their proper implementation of inventory can reduce wastage cost and filferages will be minimized.
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
This chapter is aimed at reviewing relevant literature on the management and control of inventory in a manufacturing company. Inventories generally are important in almost every business. Because of their importance only a few or no manager can escape the need to manage and control them
In recent years, inventory management has been seen as a tool for profit maximization of many companies. The management is aimed at better means of recording filling or displaying information and at a better ways of doing the necessary clerical work.
However, as the business grows, the task becomes more complex. Procurement decision which is a continues exercise also becomes complex. In order to avoid obsolescence or deterioration of inventories a decision making process must be employed before production and/or sales are undertaken. This necessitates the forecasting of production and sales before establishing target inventory levels which makes inventory management a more difficult task. The importance of inventory management errors cannot therefore, be over emphasized because in the establishment of inventory levels can lead to either a loss in sales and profit or liquidity problems.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, consideration is focused on the research methodology employed in the study, the choice of the research design and consequently, the nature of the data that will be collected to determine the possible insight into the phenomenon under study. There are various methods of data collection but the method relevant to this study is primary source of data. However, instruments constructed are checked empirically before it will be used in the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter will cover the presentation and analysis of the data collected though the methods and instruments discuses in chapter three. Effort was make by the researcher to spell out the possible things that the reader might come across and also how data was gathered. The presentation is in tabular form.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
This study examine the impact of inventory management and control in manufacturing company with reference to Natec aluminium company Nigeria limited Akwa ibom. The research questions that guided the study were what are the various nature of inventory and why do organization keep them? How does the company determine the optimum level of stock to maintain? How are stock valued? How appropriate is the inventory valuable methods in use by the company given the present inflationary situation.
A survey method was used for this study. The population consider of all the staff of Natec aluminium company Nigeria limited Akwa ibom out of the population of 215 staff a sample of 50 was selected for the study. A questionnaire development by the researcher base on 5 point scale was used, for the study. Mean scores and frequencies were used to analyzed the data base on the research question. Result shows proper inventory management and control minimize cost and help the organization to increase their profit.
After the analysis of data certain findings were made.
- an efficient inventory management and control is in effect in the company. Adequate control is needed because each class of its inventory is important as they facilitate production (WIP) are required for smooth marketing operations.
- It was also discovered that in other to avoid running out of stock. The company makes adequate planning and takes precautions such high order quantity
- There is a capital tying down as a result of inventory increase in holding and carrying cost. it was base on these findings that recommendation were drown.
CONCLUSION.
Inventory is of utmost importance in the operations of manufacturing organization and are crucial to the operation of production systems.
Without inventories organizations especially the manufacturing firm cannot achieve a smooth production flow, obtain reasonable utilization of machine efficient material handling and maintenance. Based on the forgone analysis the researcher can conclude that there is a link between efficient inventory management and control and turnover.
Both excessive and adequate inventories are not desirable. To this effect most manufacturing companies have been able to strike a balance between maintaining a large size of inventories for efficient and smooth production and sales operations and maintaining a minimum investment in inventories to maximize profitability.
The re-order quantity and period are very important points to take note of. Improper management of inventories will affect production and consequently turnover. It is therefore, very crucial for manufacturing companies with the objective of profit maximization and cost reduction to adopt and maintain an effective inventory control system.
RECOMMENDATION
After a critical evaluation and analysis of the existing policies procedures and practices of inventory management and control in manufacturing companies. It is the view and hope of the researcher that making convincing recommendations would help the management of the company to a large extent improve the practice of inventory management and control if the following are adhered to;
- Since the company cannot source its raw materials locally that imported materials should be managed as efficiently as possible to maximize productivity and hence profitability. This can be achieved by minimizing scrap production. Scrap production arises as a result of abnormality in moulding due to worn out rollers. To avoid this therefore, the machines should be put in good condition for smooth and difficult production.
- It was discovered that the spare parts of the mill hence require importation. Also it is not possible to stock all the spare parts that cause stoppage of production. An inquiry into what effort has been put in to alleviate this problem of spare parts supply revealed that local production of spare parts was embarked upon but the ones produced were not of a standard quality and were very expensive it is therefore, recommended that the company should carry out a detailed research on how to improve the quality of locally produced spare parts at a reasonable lower cost.
- The company inventory management and control system is not computerized. It is recommended that the company should computerize their inventory management and control system because computers have credible speed and accuracy in processing data thus to ensure flexibility and efficiency.
- Considering the high demand rate of the company’s product and the excess utilized capacity in the firm, in the area of production the company should set up production i.e increase its capacity utilization.
By virtue of this study, it is recommended that Tower Galvanized product Nigeria Limited should do all they can to maintain efficient management and control of their inventories this invariably bring about the safeguard of their inventory and increased turnover.
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