Efficient Inventory Control is an important unit in a manufacturing industry and contributes a lot to the growth and profitability of the industry. For production to be effective and continuous there should be efficient inventory control and this will help in cost reduction and boost industry’s income. Therefore, inventory management involves production and sales inventory management in an industry based on the crucial nature of inventory management.
The data used in this research were collected from various sources which include textbooks, Journals, Internet. Questionnaires were also administered to Dangote Cement Company staff and customers so as to obtain the required information. The sample size used was forty five (45) and 45 questionnaires were distributed while forty (40) were properly filled and returned; the responses from the questionnaires were critically analyzed and tested using Chi-Square (x2). Since Efficient inventory control helps to achieve productivity on an organization. Hence Recommendations were made to some selected manufacturing firm which includes: The industry should adopt the scientific method of inventory management i.e. the EOQ model because of the enormous cost serving that would accrue to the firm as EOQ minimizes the balance of between ordering and carrying cost.
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Inventories constitute the most significant part of current asset in a large majority of manufacturing companies indeed, most manufacturing companies required to maintain a large size of inventories ought to amount of funds are committed to them. It is absolutely imperative therefore that inventory ought to be efficiently and effectively managed to prevent unnecessary investment by tying up funds in them. Any manufacturing company which chooses to neglect the management of the inventories may be jeopardizing its profitability in the long run. As well as reducing the efficiency of production, if as a result of stock out production is held up which may also lead to the dissatisfactions of customers and consequent loss of goodwill.
According to Pandey (200L: 884), inventories are stock of products as company is manufacturing for sale and components that make up the product the various forms in which inventories are raw materials, work in progress and finish goods”. Raw material inventory and work in progress inventory represent products need further processing before they become finished goods for sales while finish goods are completely manufacture products which are ready for sale. Raw materials and work in progress inventory facilitate production while finished goods are required for smooth marketing operation.
According to Van Horne (1992:437), inventories forms a link between production and sale of the product, maintaining inventories involves tying up the company funds and also incurring storage cost.
Why do firms maintain inventories?
According to Starr and Miller (1962:17), three motives for holding inventories can be identified, namely:
Basically, firms are faced with two needs in inventory management namely,
Both excessive and inadequate stock of inventories is not desirable. Hence, a proper inventory control modeling should help determine and maintain an optimum level of investment in inventory.
1.2 STATEMENT OF PROBLEM
Inventories comprise or significant proportion of the asset of many business organizations. In view of this, a business organization will be doing well in the area of its stock management if it can meet its material input at the right time and at the lowest possible cost. However, this is often difficult due to the following problems.
1.3 OBJECTIVES OF THE STUDY
This research work intends to find an appropriate means of avoiding or at least minimizing losses due to inefficient stock management practices within manufacturing concerns.
The following shall be carefully examined.
1.4 RESEARCH QUESTIONS
It is widely acclaimed that all active inventory CONTROL leads to cost minimization and profit maximization. There are pertinent questions that need to be asked in order to be sure that suggestion outlined in this work will really help.
1.5 STATEMENT OF HYPOTHESIS
From the above research, we formulate the following hypothesis for the research study;
Ho1 Variations in the level of inventory does not affect the operating cot of a firm.
HO2 There is no relationship between the level of the inventory maintained and the profitability of the firm.
1.6 SIGNIFICANCE OF THE STUDY
In majority of manufacturing companies, inventories stock of goods represent a significant investment funds (Osaze and Anao 1990:98)
As with any other investment, the cost of holding stock must be related to the benefit gained. The findings and recommendations consequent upon concluding this research will be of immense benefit to the manufacturing sector of the economy. It will broaden the knowledge of the impact of the inventory control and management on the profit performance of a business enterprise the findings of this research will also be of great importance to students who will engage in this line of research in future. Financial analysis and the academic society as long as inventory still forms a crucial part of the firms working capital investment. Above all this study will equally be beneficial to other sectors of the economy and enlarge the existing literature on inventory management for practitioners and professionals.
1.7 SCOPE OF THE STUDY
This research work attempts to examine the methods and importance of inventory management in a manufacturing company. In discharging the work we would evaluate its effects on achieving sales target, liquidity objective, cost minimization and enhancement of profit performance of the company.
1.8 LIMITATION OF THE STUDY
This study will be limited to a case study of NICHBEN PHARMACEUTICAL INDUSTRIES. This study was extensively carried out to involve several other enterprises but has been limited to just one company due to the following constraints.
1.9 DEFINITION OF TERMS
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