Key Features:
- No of Pages: 61
- No of Chapters: 03
Introduction:
Abstract
A major sources of great concern to manufacturing companies has been the all-important, all pervading recurring issue and question of inventory management. This is understandable; as a dominant constituent of current assets is attributable to the very nature of inventory and the fact that it is among others, a potent tool for cost reduction.
The importance of inventory management as a tool for cost reduction cannot therefore be over emphasized since it has been established to play leading role in the continued efficient and profitable productive existence of any manufacturing organization. For that reason, the trust of this research work is essentially to analysze the importance of inventory management, its problem and solutions and as a tool for cost reduction will Nigerian breweries plc 9th mile corner, near Enugu as a case study.
The data for the research work were collected and collated through the use of questionnaires and personal interviews systematically designed and administered on the respondents. Four department of the company were used for the survey and ninety copies of the research questionnaires were returned. Analysis of the data collected was based on the use of simple percentages.
The research findings shows that effective inventory management enhances efficiency, accountability and reduces cost in Nigeria breweries PLC 9th mile corner. First-in-first-out method of stock valuation was highly favoured.
In line with the objectives of the research recommendations were made, which when properly implemented will help the company immensely. Sequel to the research findings, it is recommended that manufacturing companies should strive to determine the level of stock, the optimum stock to maintain so as to in equilibrium between safety and profitability and thereby reduce cost.
With this adhere to the performance of manufacturing companies in Nigeria will improve tremendously.
Table of Content
CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Significance of the study
1.5 Definition of terms
1.6 References
CHAPTER TWO
2.0 Literature review
2.1 Introduction (the origin of the subject area)
2.2 School of thought within the subject area
2.3 School relevant to the problems of study
2.4 Deference method of studying the problem
2.5 References
CHAPTER THREE
3.0 Conclusion
3.1 Presentation of data
3.2 Analysis of data
3.3 Recommendation
3.4 Conclusion
3.5 References
Introduction
1.1 BACKGROUND OF THE STUDY
“Inventories” and “stock” are used interchangeable in this study.
The most significant component of current asset of majority of predominately large manufacturing companies is constituted by inventories or stock. It has been stated that.
“On an average, inventories are approximately 55% of current assets in public limited companies.
Evidently therefore, the above statements is an affirmation that the greater proportion of the valid, both quantitatively and qualitatively, of what a manufacturing company produces is ascribable to or a factor of the material cost. This element of cost, in other words, represents a large percentage of production cost and as such, special and careful consideration must be given to materials acquisition, storage and usage. Ben. O. Nweke (Collins) (2000) affirmed this much when he asserted that.
“The holding of these ingredients in the from of stock at a reduced cost serves an important management function. Permits continuous production to meet the need of the consumer at a reasonably cost and time”. Different components of stock are raw materials, work-in-progress and finished goods. Raw materials are those basis input materials that are converted into finished goods through the manufacturing process and they include the units of input, which have been purchase and store for future production.
Work-in-progress inventories are semi-manufacturing products. They represent product that need more work before they become finished goods for sale or consumption.
Finished goods inventories are those completely and fully manufactured products which are ready for sale or consumption. The stock of raw materials and work-in-progress facilities production, while stock of finished goods is required for smooth and effective marketing operations. Inventories therefore serve as a link between the production and the consumption of goods.
The motivating factors for holding inventories are generally three and they include the following:
1. THE TRANSACTIONS MOTIVES:
This emphasis the need to maintain inventories to facilitate growth, production and sales operations.
2. THE PRECAUTIONARY MOTIVE:
This necessitates holding of inventories to guard against the risk of unpredictably changes associated with demand and supply force and other factors.
3. THE SPECULATIVE MOTIVE:
This influences the decision to increase or reduce inventory or stock level to take advantage of price fluctuations.
For these various reasons and more such as cost and profit maximization reduction elimination of waste for holding stock or inventories, viable firms always recognize the need to hold inventories.
Nevertheless, this should not be at the detriment of wealth maximization which is the bedrock and main purpose of every profit oriented organization or firm. Consequently, firms are faced with the problems of meeting two conflicting needs namely.
a. Maintaining a large size of inventory for efficient, effective and smooth production and sales operation.
b. Maintaining a minimum investment in inventories to maximize profitability.
Neither excessive investment of inventories nor inadequate investment in inventories are desirable. The former will cause unnecessary tie-up of the firm” funds and loss of profit while the lather will have the consequences of production hold-up and failure to meet delivery commitments or targets.
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