APPRAISAL OF INVENTORY CONTROL IN A MANUFACTURING COMPANY.

TABLE OF CONTENTS

CHAPTER ONE

1.0    Introduction 

1.1    Background to the Study 

1.2    Statement of Problem 

1.3    Objectives of the Study 

1.4    Research Questions 

1.5   Statement of Research Hypothesis 

1.6    Significance of the Study 

1.7    Scope of the Limitations of the study 

1.8    Historical Background of Seven-up Bottling Company

1.9    Definition of Key Terms 

CHAPTER TWO - Literature Review

2.0    Introduction 

2.1    Meaning of Inventory Management 

2.1    Control 

2.2    Inventory Record Keeping Procedures 

2.2.1 Bin Card

2.2.2 Materials Requisition Note

2.2.3 Materials Returned Note

2.2.4 Materials TransferNote

2.3    Inventory Control Method

2.3.1 Perpetual Inventory Method

2.3.2 Periodic Inventory Method

2.3.3 Physical Inspection Inventory

2.3.4 Just-In-Time (JIT)

2.4    Inventory Costs

2.4.1 Holding Costs

2.4.2 Ordering Costs

2.4.3 Stock-Out Cost

2.4.4 Purchase Costs

2.5 Control of Stocks Levels

2.5.1 Maximum Stock Level

2.6.2 Minimum Stock Level

2.6.3 Re-order Level

2.6 Control Models

2.7.1.1 Economic Order Quantity (EOQ)

2.7    Economic Order Quantity

2.8    Analysis of Inventory Control System in Seven-up Bottling Company PLC.

2.8.1 Ordering Procedure

2.8.2 Receipt Procedure

2.8.3 Recording Procedure

2.8.4 Material Issues

2.8.5 Materials Returns

2.8.6 Stock Taking

CHAPTER THREE - Research Methodology

3.0    Introduction 

3.1    Research Approach 

3.2    Research Design 

3.3    Restatement of Research Questions 

3.4    Statement of Research Hypothesis 

3.5    Population of Study 

3.6    Sampling Techniques 

3.7    Sample Size 

3.8    Method of Data Collection 

3.8.1 Question Design

3.9    Data Analysis Techniques 

3.9.1 Chi-Square 

3.9.2 Sample Percentage 

3.10 Limitation of Methodology 

CHAPTER FOUR - DATA PRESENTATION AND ANALYSIS

4.0    Introduction

4.1    Presentation and Analysis of Data 

4.1.2 Table 

4.1.3 Table 

4.2    Inventory Cost Reduction 

4.2.1 Table

4.2.3 Table

4.2.4 Table

4.3.1 Table

4.3.2 Table

4.4    Testing of Hypothesis

4.4.1 Chi-Square (x2) Method

4.4.1.1 Hypotheses Indicating Relevant Question in Questionnaire

4.5    Contingency Co-efficient

4.6    Research Finding 

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1

Summary

5.2

Conclusion

5.2

Recommendations

5.2

Bibliography

5.2

Questionnaire

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

In the real sense of economic development, the efficiency and effectiveness of a nation's economy rests viably on its ability to meet with the demands of the populace of such an economy.

In order words, the effectiveness of an economic is vested on the manufacturing sector. This is because, the indices by which the development and progress of an economy is measured is predicated on the goods and services so produced by the out fits in such a sector which could either be consumed locally or be exported for exchange of foreign currency.

Furthermore, the distinguishing factor between productive and unproductive economies lies in the production capacity in relation to the importation capacity which directly affects the economy. However, the afore-mentioned positive outcomes/results are based on the" effective management of the manufacturing industry in terms of its capital (Financial resources) ,inventory, labour (Human resources) among other things, so as not to bring about negative results such as costs resulting from overstocking, loss resulting from capital tied down and loss goodwill as a result of stock outages.

1.2     STATEMENT OF THE PROBLEM

Inventory plays an essential role in any organization. The larger the inventory size, the easier it is to reduce costs of purchasing, manufacturing and shipping as well as provide prompts customer's service. However, a larger inventory stock requires a higher investment of money, higher carrying cost such as storage handling risk of obsolescence and data processing. These costs must be balanced off against any advantages in holding inventory.

The study tends to look at certain problematic issues in manufacturing companies as Seven- Up Bottling Plc it relates to inventory management. Such issues are:

1.    Stock are managed, that the level of stock held are neither more than nor less than requirement for a given season.

2.    Most companies fail to appreciate the role inventory management plays in the survival of their business.

3.    Accurate information on the cost of stock is necessary for management control of working capital requirement.

1.3     OBJECTIVES OF THE STUDY

The main objective of this study is to conduct appraisal of inventory control in a manufacturing company.

Specifically, the study intends to:

i.             Present inventory control system in the selected company.

ii.           Examine the checks and balances in the inventory control system.

iii.        Determine the effects of the organization's inventory control system on the operating expenses and profit levels of the organization.

iv.        Ascertain the effectiveness and efficiency of the organization's inventory control system.

v.           Make suggestions for improvement to bring about further enhancement of efficiency in the company's inventory so as to improve the overall performance.

1.4            RESEARCH QUESTIONS

i.              Will effective inventory control minimize total inventory cost in a manufacturing company?

ii.           Will high inventory control lead to reduction in the profit of manufacturing company?

iii.        Will effective inventory control prevent frequent stock out in a manufacturing company?

iv.        What are the sources and quality of raw materials that are available to sevenup Bottling Company PIc?

v.           How long does it take to procure the raw materials?

vi. What storage techniques do the organizations use in storing their raw materials?

vii. Identify the inventory management practices and policies that are being used by the organization?

viii. What are the inventory management problems of the organization?

1.5     STATEMENT OF RESEARCH HYPOTHESIS

For the purpose of this study, the hypotheses available are as follows;

i.                  Ho: Effective inventory control would not minimize total inventory cost in a manufacturing company.

Hi: Effective inventory control would minimize total inventory cost in a manufacturing company.

ii.     Ho: High inventory cost would not lead to a reduction in the profit of a manufacturing company.

Hi: High inventory cost would lead to a reduction in the profit of a manufacturing company.

1.6     SIGNIFICANCE OF THE STUDY

Inventory is an essential tool in any manufacturing organization. It constitutes a large proportion of the total operating cost and has direct effect on operational smoothness and profit level of an organization.

It is hoped that, this study would provide useful information that will enhance management ability to carry adequate inventory at a minimized cost.

Also, it will serve as a reference point for future researchers who wish to probe further into efficient management of inventory in the manufacturing sector of the economy.

1.7     SCOPE AND THE LIMITATIONS OF THE STUDY

This research intends to cover various processes involved in controlling and managing inventory in Seven-Up Bottling Company.

1.8     HISTORICAL BACKGROUND OF SEVEN-UP BOTTING COMPANY NIG. PLC

Seven-Up Bottling Company Nig. Plc was incorporated as a private limited liability company on the 25th day of June, 1959 the company was until 1979 wholly owned by the El-khail family. It was converted to a public limited liability company on the 27th of December, 1978 and listed on the main board of the Nigerian Stock E