The Effect Of Inventory Management In The Viability Of A Company A Case Study Of Steel And Nails Manufacturing Industry

THE EFFECT OF INVENTORY MANAGEMENT IN THE VIABILITY OF A COMPANY

A CASE STUDY OF STEEL AND NAILS

MANUFACTURING INDUSTRY

TABLE OF CONTENTS

TITLE PAGE                                                                          II

APPROVAL                                                                            III

DEDICATION                                                                        IV

ACKNOWLEDGEMENT                                                       V

TABLE OF CONTENTS                                                        VI

LIST OF ILLUSTRATIONS/TABLES                         

CHAPTER ONE:

1.1            INTRODUCTION                                                         1

1.2            THE STATEMENT OF THE PROBLEM                     1

1.3            THE NEED FOR THE STUDY                                    3

1.4            THE PURPOSE OF THE STUDY                                5

1.5            RESEARCH HYPOTHESIS                                         5

1.6            THE SCOPE OF THE STUDY                                     6

1.7            RESEARCH METHODOLOGY                                   6

1.8            LIMITATION OF THE STUDY                                   7

1.9            ORGANIZATION OF THE STUDY                                      8

1.10       OPERATIONAL DEFINITION OF TERMS                 9

CHAPTER TWO:

2.0            INVENTORY CONTROL AND INVENTORY VALUATION12

2.1     NATURE OF INVENTORY                                         12

2.2     INVENTORY CONTROL                                             16

2.3     ACQUISITION AND ISSUE OF MATERIALS           40

2.4     BASIC INVENTORY CONTROL SYSTEMS              43

2.5     FACTORS THAT AFFECT INVENTORY CONTROL

 SYSTEMS 49                                                                       

2.6     INVENTORY CONTROL METHODS                         49

2.7     INVENTORY VALUATION SYSTEMS                     

2.8     INVENTORY VALUATION METHODS                              53

2.9     FACTORS AFFECTING INVENTORY VALUATION         DECISIONS                                                                  57

2.10   THE CONCEPT OF VIABILITY                                  60

CHAPTER THREE

3.1            SELECTION OF DATA                                                         62

3.2            COLLECTION OF DATA                                             64

3.3            TOOLS OF DATA ANALYSIS                                    66

3.4            RELIABILITY OF DATA                                             67

CHAPTER FOUR: DATA PRESENTATION ANALYSIS

4.1            DATA PRESENTATION AND ANALYSIS                68

4.2            HYPOTHESIS TESTING                                             86

CHAPTER FIVE:

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1            SUMMARY                                                                  100

5.2            CONCLUSION                                                              101

5.3            RECOMMENDATION                                                           102

BIBLIOGRAPHY                                                                             107

APPENDICES                                                                        109

CHAPTER ONE

1.1     INTRODUCTION:

          The viability of an organization ca be enhanced through an effective and efficient management of material resources.  Inventory control is a notable measure in managing material resources.  Management of resources covers every action taken from the procurement of the resources to their disposal.  Firms take certain measures towards preventing their stocks from being in shortage, pilferage and waste some of the measures are very effective while other are not.

          In consideration of the scarcity raw materials, their exorbitant costs of procurement and management in the present prevailing economic condition, if is imperative for firms to do away with the rule of thumb’ approach of inventory control and adopt the scientific approach.  It is on the basis of this that the need for this study lies.

1.2     THE STATEMENT OF THE PROBLEM

          The goal cot every business entity is to maximize wealth.  Wealth maximization is achieved when the interest of the shareholders are met.  The interest of the shareholders can be met only when the business entity makes profit.  Profit is said to have been made when the total revenue exceeds the total cost and expenses incurred.  Effect five inventory controls are important factors in keeping the total cost of maintaining inventories at a minimum and help to increase return on the investment.

          Many organizations do not adequately control their inventory making it possible for losses [through shortage of stock pilferage, waste of materials etc.) to pas unnoticed.  The stores department is often neglected equivalent amount of (illiquid) cash.

          Unplanned flaw of materials is determined to efficient operation.  Production stoppages resulting from stock out have innumerable negative effects (costs).  They lead to loss of man-hour, disappointment of customers and possible loss of goodwill.

          Few manufacturing firms use scientific approach of inventory control.  Many fall back on the rule of thumb.  This is reasonably inaccurate.  It leads in to over-stocking or under stocking over stocking entails incurring high storage spaccs  and stock loss

          On the other hand, under-stocking may result to panic buying and diction delay and loss of sales revenue which gives rises to be of profit and goodwill or even penalty payment where there is a conduct to maintain regular supplies.

          Stock losses could occur when inventories are not properly accounted for.  This may be due to type of inventory system used, the method of valuation of unused of unsold inventories at the end of valuation period and the managerial efficiency in adopting an  acceptable inventory.  Control when most required.

          This study will look in to the nature and external of solving their problem.

1.3     THE NEED FOR THE STUDY,

          Many companies are making looses while others are winding up.  These gives rises to the people through that, there is inability to manage resources effectively in Nigeria.  This is because these things are happening in the midst of abundant resources Ringin viewing as above stated that prudent management for our financial, materials and human