THE EFFECT OF STOCK CONTROL PROFIT MAXIMISATION IN MANUFACTURING COMPANY

THE EFFECT OF STOCK CONTROL PROFIT MAXIMIZATION IN MANUFACTURING COMPANY
(A STUDY OF NIGERIAN BOTTLING COMPANY LIMITED, KADUNA)

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ABSTRACT

This project is centered on the importance of stock control and management in business organization to enable the research obtain relevant materials and information for the purpose of analysis and conclusion personals interviews and the use of questionnaire were employed together, information from various department in Nigerian Bottling Company Kaduna. The use of text books to review related literate was also employed. The study also evaluate the extent the company complies with accepted methods or (models) like economic order quantity, re-order level, safety stock etc. the essence of this study have been to study the problems. The researcher reveals that for erective control of stock, the company has a department solely responsible for inventory control thereby reducing the operational cost of the business. It also facilitate easy and maintenance of all documents. It was also discovered that the company does not apply scientific method of economic order quantities to determine re-order level or quantities. Based on the findings, it was recommended that the organization should introduce the use of computer to enable it keep proper and up to date stock record at all times. It was recommended that the entire system should be made to involves all functional managers directly affected by the stock control system, will facilitate on understanding of the system and its effective implementations.

 

 

TABLE OF CONTENT

CHAPTER ONE
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of the problems 5
1.3 Objectives of the study 6
1.4 Formulation of hypothesis 7
1.5 Significance of the study 7
1.6 Scope of the study 9
1.7 Limitation of the study 9
1.8 Historical background of the firm 9
1.9 Organizational structure of the study 10
1.10 Definition of terms 11

 

CHAPTER TWO
2.0 Review of Related Literature 12
2.1 Introduction 12
2.2 Definition of Basic concept 15
i. Stock Control 15
ii. Profit Maximization 18
iii. Manufacturing industry 24
2.3 Necessity for holding stocks 26
2.4 Authorization of stock issues 27
2.5 Effects of over stocking and under stocking 30
2.6 Advantages of efficient stock control systems 32
2.7 Setting up inventory control 32
2.8 Inspection and receipt of incoming stock 34
2.9 Responsibility for stock control 35
2.10 Economic order quantity (EOQ) 42
2.11 The formula approach 42
2.12 Requirement of material control method 48
2.13 Training of store keepers. 49

 

CHAPTER THREE
Research Methodology
3.1 Introduction 51
3.2 Method of Data collection 51
3.3 Problems of Data collection 52
3.4 Types of data 53
i. Primary data 53
ii. Secondary data 54
3.5 Population of study 54
3.6 The study sample 55
3.7 Description of the questionnaire 55
3.8 Research instruments 56
3.9 Method of testing the hypothesis 57

 

CHAPTER FOUR
4.0 Data presentation analysis and interpretation 58
4.1 Introduction 58
4.2 Presentation of data 58
4.3 Analysis of data 60
4.4 Testing of hypothesis 67
4.5 Summary of findings 67

 

CHAPTER FIVE
5.0 Summary, Conclusion and Recommendation 71
5.1 Summary of the study 71
5.2 Conclusion and Recommendation 72
5.3 Recommendations concluding remark 73
Bibliography 75
Appendix I 76

 

 

 

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Stock is frozen cash and as such should be given the same if not more priority than liquid cash. Firms need stock in one form or the other in order to carry out its day-to-day activities and as such, the need to have the stock at the required time, quantity, quality and under proper condition can never be over emphasized more often than not, organization hold in order to have ready supply of materials from the store house to guard against future increase in price, enjoy quality discount, prevent shortage of supply from its various sources etc. since the ultimate goals of any business set up is to make profit, then, such profit can only be realized through incurring the least affordable cost while expecting huge returns.

 

Inventory is major area of asset deployment which should be required to produce, minimum return on capital investment since it incurs cost so there is a great need to minimize such cost and control stock with respect to its receipt, storage and issue. When an organization is declining on what is to be held in stock, it is of necessity to consider what item are to be used, and produced by the organization in question and then decide which items is stocked. Stock have been noted to be life blood of organization and all such efforts are always made to see that efficient stock control system and equipments are invented to cater for the various items held in stock.

 

In order to minimize stock holding cost via efficient stock control measure, experience and qualified staff should be employed to see to such matter. In public sector of the economy today, stock control is nothing to write home about, you find stock idle in the store house, and some are even deteriorated due to lack of storage facilities and staff with the little or no knowledge with regard to store management.

 

However, in the private sectors where individual are the owner of the business, the reverse is the case because stock, no matter its form is given attention by well trained stoppers, under the appropriate conditions after all, huge sum of money have been sunk in the acquisition of such stock items and to what much is given much is or will be expected.

 

Organization in recent times have been facing one problem or the other which in most cases lead to early liquidation. An investigation have revealed that most often than not, the whole problem normally arises from inefficient management of stocks at one stage or the other both within and out side the organization, you will find improper or lack of inspection facilities, poor and inadequate storing equipments, bad movement of stock, just to mention a few with most of these thing present in organization, there is a great possibilities of such an organization having problem thereby leading to closure.

 

Shortage arises due to lack of effective control stock among others, such as deterioration, reducing obsolescence obsolete, pilferage receipt of the wrong specification of stock stoppage in production arising from interior materials into the production term cost thousand or millions of naira. But if stock are been monitored with high accuracy such problem will be satisfactorily reduce or totally controlled.

 

According to the stores recently have been make to reduce this cost while still maintaining a high degree of control large firm have introduced a system of analyzing stock by various categories so as to ensure that adequate attention can be paid to important item.

 

The main theme of this project is to bring to lime light the performance of beverage industry in Nigeria toward analysis of stocked control procedures with a particular reference to Nigeria Bottling Company (NBC).

 

In view of the above, we will have a glance on some specific areas further understanding. Firstly the writer intends to discuss analysis of stock control procedures in beverage industry.

 

Stock comprises a major part of a companies current asset, and can be classified as raw material, work in progress (or work in process) and finished goods. Its function are centered on stock management. At time firms could not reach the peak of its operation because of major lapse in the area of stock management, it was examined that the management tend to ignore the aspect of stock control in relation to inventory level mostly, some firm liquidate due to ineffective stock management, which was made known in the introduction part, this problems brings about frequent production interruptions and failure to meet delivery commitment. When a firm experience these, it obviously result to tie-up of the firms funds and loss of profit which could gradually lead to shut down of plant, and it affect the society as a whole (massive retrenchment). In essence stock for smooth production and to ensure the maintenance of holding stock that forms part of the smooth running of the business.

 

 

1.2 STATEMENT OF THE PROBLEM
In the past, many companies witnessed considerable lapse and increasing changes in management disciplines of stock control an important element in the management of stock.
1. Stock management or management of stock is one of the problem business faces.
2. The development of analytical techniques and computer capability now permits more sophisticated analysis of stock problems. These two phenomena have combined to transform stock…

 

 

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