inventory management on productivity in an organization

inventory management on productivity in an organization

 

 

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ABSTRACT

This research is on impact of inventory management on productivity in an organization with zarewa aluminum and plastic limited as a case study. Its primary aims is to determine the level of inventory of goods and documented with the organization. It also the aim of the research is to find out the methods of control of goods with a view to eliminate the element of waste and thereby minimize the amount of material purchased from tying down capital stock out. The researcher divided the protect into five chapters. Chapter one forms the general introduction, brief history of zarewa aluminum and plastic limited, statement of general problems, hypothesis, limitations and significance of the study. Chapter two deals with review of related literature. While chapter three deals with the research methodology. Chapter four was used to analyzed and present the data collected in a tabular form. While chapter five deals with the summary, conclusion and recommendations.

 

 

 

 

TABLE OF CONTENTS

Title page                                                                         i

Approval page                                                                 ii

Declaration                                                                      iii

Dedication                                                                        iv

Acknowledgement                                                          v

Abstract                                                                            vi

Table of contents                                                           vii

CHAPTER ONE: INTRODUCTION

  • Background for the study 1
  • Statement of general problem 5
  • Aims and objectives 6
  • Statement of hypothesis 7
  • Rationale of the study 7
  • Scope and limitation of the study 8
  • Historical background of zarewa aluminum

and plastic limited                                                  9

  • Definition of terms 13

 

CHAPTER TWO: LITERATURE REVIEW

2.1     Introduction                                                            16

2.2     Receipt of goods                                                   22

2.3     Stock or (Stores) issues                                       24

2.4     Authorization of issue                                           28

2.5     Stock records                                                        29

2.6     Store-house locations system                             32

2.7     Inspection of incoming goods                              35

2.8     Stock-taking                                                           36

2.9     Perpetual inventory                                               39

2.10   Stock valuation                                                      41

CHAPTER THREE:

3.1     Research methodology                                        46

3.2     Research methods or approaches used            46

3.3     Justification for approaches used                       47

3.4     Instruments or tool used                                       48

3.5     Research population and sample size               49

3.6     Sampling procedures                                           50

3.7     Justification for sampling procedures used

and sample size                                                    50

3.8     Statistical techniques used in

analyzing the data                                                 50

CHAPTER FOUR

4.1     Data presentation and analysis                           52

4.2     Testing of hypothesis                                           67

4.3     Testing of hypothesis using chi-square              68

CHAPTER FIVE

5.1     Summary, Conclusion and Recommendation   72

5.2     Summary of findings                                             72

5.3     Conclusions                                                           74

5.4     Recommendations                                                75

Bibliography

 

CHAPTER ONE

INTRODUCTION

  • BACKGROUND OF THE STUDY

Inventory in the form of raw materials, work in progress and finished goods constitute significant proportion of assets of most organization. But why is it pertinent to keep any eye on these items in other words, why do we engage in inventory management?

Inventory items cost money to acquire, they cost money to store and to look after, which means storage facilities has to be provided so as to make sure that these materials or items do not get spoilt until they are turned into sellable goods, they do not produce money. When stock are held, it means tying down capital that would have been used in other areas, so it all represent cost and should be managed properly to acquire efficiency.

 

We must however, hold stock to meet production needs and sales needs. This is because if we do not hold stocks in sufficient quantities, we stand the risk of running out of stock.

Similarly, if we are short of finished goods, we may disappoint our customers. Inventory shortages in both of these forms will likely lead to loss of customers and money. For the organization not have the above problems, they should strike a balance between carrying too much stock (over stocking) and carrying too little stock (under stocking).

This is essentially the importance of inventory management. Managing assets of all kinds is basically an inventory problem, the same methods of analysis applies to cash and fixed assets as to inventory themselves.

 

First of all, a basic stock must be on hand to balance in flows and outflows of items. The size of the stocks depends on the pattern of flows whether fast moving or regular items, slow moving or irregular items.

Secondly, because the unexpected may occur, it is necessary to have safety stock on hand representing, extra stock to avoid the cost of not having enough to meet current needs.

Thirdly, additional amount may be required to meet future growth needs these are called anticipation stocks, related to anticipation stocks, is the recognition that, these are optimum purchases sizes defined as economic order quantity (EOQ).

 

In borrowing money, for buying raw material for production or purchasing plants and equipment, it is cheaper or more economical to buy more than just enough to meet immediate needs.

Manufacturing firms generally have three kinds of inventories:

  1. Raw material
  2. Work in-progress
  3. Finished goods

 

  • The level of raw materials; inventory is influenced by anticipated production, seasonality of production, reliability of sources of supply and efficiency of scheduling purchases as well as production operations.

 

  • Work in-progress inventory is greatly influenced by the length of the production period, which is the time between planning raw material in production and completing the finished products. Inventory turn over can be increased by increasing the production. One means of accomplishing this is to perfect engineering techniques there by spreading up to manufacturing process. Another means is to buy rather than make them. The level of finished goods inventory is a matter of coordinating production and sales.

 

Holding stock in whatever form cost money. The capital tied down by the stock itself has to be serviced by the payment of interest and the land or warehouse needed for the stock has to be bought or rented. The handling of the securing of the stock and any quality deterioration that occurs also cost money. The sample type of stock control system used in most organizations is two, the bin system of stock control and is of two quantities.

The first quantity is the stock level below which is new order is to be placed. Under this system, the units of stock are held in two: one and two stock is taken from bin as required until this                       bin is empty.

 

More are then order by the quality being determined by the rate of usage or consumption rate; comprehensive inventory, planning and control system have been successfully installed or established in many organizations. The major objectives of inventory management is to discover and to optimum level of investment in the inventory. Inventories may be too high or too low, if too high there are unnecessary carrying cost and risk of obsolescence. If too low, production may be disrupted or sales permanently lost and loss of good will, reputation, and customers to other firms in the same industry.

The optimum inventory level is that which minimize the total cost associated with inventory.

 

  • STATEMENT OF GENERAL PROBLEM

The life blood of any organization both private and public sector is material and this has been neglected long ago by various business concerned. The survival of any business set up depends upon sufficient application of material functions, policies involved and recognition according to the function.

Up till now inventory management has not been able to occupy it rightful position due to one reason or the other. There has been infringement on the right of inventory management personnel. They are often restricted to mere clerical work in many organizations.

 

The lack of recognition for inventory management function in many organizations has caused so many havoc.

For instance where the function is forced to be recognized and established because of the demand to manage the affairs of various…

 

 

 

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