EVALUATION OF STOCK AND CONTROL SYSTEM

EVALUATION OF STOCK AND CONTROL SYSTEM  (ECONOMICS PROJECT TOPICS AND MATERIALS)

CHAPTER ONE

1.1INTRODUCTION

Stock can be defined as goods available for sale, distribution or use and goods kept by a trader or shopkeeper. There are varieties of inventories existing in a manufacturing company. The inventory includes:

·                    Raw materials

·                    Work in progress

·                    Finished goods

According to Omolehinwa (1985) raw materials is defined as the items of materials that have not been processed at all by the relevant manufacturing department but will be used later as part of the inputs for the output of the firm.

John Nwafa (2005) says that what is raw materials to one company or organisation may be a finished product to another organisation. Work-in-process, also know as work-in-process are the items for which work has started, in the manufacturing process but not yet completed for sale. It is valued by adding the cost of raw materials consume so far with the labour cost and other manufacturing cost incurred on the items semi-process (known as overhead expenses) up to the end of the accounting period.

While finished goods are manufactured goods or are manufacturing good completed and being held for safe, they are valued by adding up the direct material and direct labour consumed and the overhead cost adsorbed by the finished units still to be sold.

Formally called materials control, the stock control history dated back to the 18thcentury’s industrial revolution are in Europe. At the nascent stage, the benefits of stock control and valuation procedures was not greatly appreciated because most of the industries were just beginning to develop industrially. Hence, stock control system comes along with the expansion of manufacturing industries. And this was significantly enhanced by the awareness of production cost, reduction and profit maximization.

However, starting from the Second World War period, the importance of raw materials and work-in-progress on the production process was felt. This subsequently led to the discovery of various means by which improvement could be brought to stock control and valuation system. Thereby eventually increasing the production level of goods by reducing the production costs.