AN OPTIMAL INVENTORY CONTROL OF RAW MATERIALS AND NETWORK ANALYSIS OF PRODUCTION PLANNING
ABSTRACT
This study is aimed at determining the optimal quantity of raw materials to be ordered for and when best to make the order. It also aimed in determing the completion time in the producer of paint. A case study of Aka paint industry limited was taken. To complete these, data was collected from the company and the project network was drawn. Mathematical models such as economic lot size model were used in determing the optimal quality of the raw materials to be kept on inventory. Programme evaluation and review technique (PERT) and critical path method (CPM) were used in estimating the completion time and expected duration respectively. The optimum quantifies for the various raw materials were calculated with their inventory length. Also, the minimum and the expected duration of the production were obtained. An optimum quantity of 12, 409 buckets 9,475 bags and 70, 372kg were obtained from water, dolomite and chemicals respectively and their inventory lengths were found to be I year for each item. Also, a total completion time for 59 days and expected duration of 84 days of the production were obtained.
TABLE OF CONTENTS
Title page - - - - - - - - i
Certification - - - - - - - - ii
Dedication - - - - - - - - iii
Acknowledgements - - - - - - - iv
Abstract - - - - - - - - - vi
Table of contents - - - - - - - vii
CHAPTER ONE
1.0 Introduction - - - - - - - 1
1.1 Brief history of Aka paint (nig) limited - - 3
1.2 Inventory problem - - - - - - 5
1.3 The need for an inventory - - - - - 5
1.4 Inventory cost - - - - - - - 6
1.5 Inventory control system- - - - - 7
1.6 Problem of study - - - - - - 9
1.7 Motivation aims and objective of network
analysis in production planning - `- - - 11
1.8 Cost and network basic definitions - - - 13
1.9 Decision problem in inventory control - - 13
1.10 Definition of terms- - - - - - 14
1.11 Decision problem in network analysis - - 16
1.12 Network terminology - - - - - 17
1.13 Scope of study - - - - - - - 19
1.14 Limitations of the study- - - - - 20
CHAPTER TWO
2.0 Literature reviews - - - - - - 21
CHAPTER THREE
3.0 Study methodology and data collection - - 32
3.1 Study methodology - - - - - - 32
3.2 Data collection and persecution - - - - 38
3.3 Data collection 1 - - - - - - 39
CHAPTER FOUR
4.0 Data analysis and interpretation - - - 48
4.1 Data analysis - - - - - - - 48
4.2 Calculate of minimum and expected duration
of network analysis - - - - - - 48
4.3 Calculation of optimal quantity of raw materials 56
4.4 Interpretation - - - - - - 59
CHAPTER FIVE
5.0 Conclusion and recommendation - - - 61
5.1 Conclusion - - - - - - - 61
5.2 Recommendation - - - - - - 63
Bibliography - - - - - - - 65
CHAPTER ONE
1.0 INTRODUCTION
The development of any firm more especially in production depends to a very great extent on the development and utilization of raw materials. Because of increased techniques and advanced in technology organizations ensure steady production and supply of their goods by storing certain quantities of raw materials as buffer against unprecedented short fall in their supplies.
Certain stocks of finished goods are maintained in order to meet up with unforeseen demand or short - notice orders. Inventory is referred to as the stock of raw materials finished goods and work- in progress. The best planned and managed enterprises survive and efficiency of a company’s operation is directly related to the inventory situation existing within it.
Inventory control enables organization to determine when it is necessary to stock physical goods or commodities for the purpose of specified periods of time. Amount of inventory results to high capital costs, high operating cost and decreased production efficiency when too much space is used while insufficient inventory leads to inability of the firm to meet up with the demand for its product and in severe case leads to shut downs if there occurs a drop or half in supply of raw materials.
According to Oxford Advanced learner’s dictionary, network is a system of broadcasting stations that link up to broadcast the same programs of the same time. Network analysis is a family of related techniques developed to aid management in planning and control of projects scheduling and coordinating various inter - related activities that define a project. In a production of specified duration, network analysis is inter - relationship of the various jobs, or tasks, which make up the overall and obvious identify the critical paths of the production.
1.1 BRIEF HISTORY OF AKA PAINT (NIG) LIMITED
This Industry was developed through the inspiration of Nze B.C Onuoha. He engaged in car selling and paint making business. Due to his real to reduce human suffering, manufacturing in the year 1994 as a limited liability company. It is located at Enyiogugu in Aboh Mbaise. It has three depots located at 139 Wetheral Road Owerri, opposite Timber market Oguta Road Mgbidi and 45 Aba Owerri Road Aba, Abia State respectively. In 1994, the European commission came and help to introduced the company.
The official opening of the company took place in 1995. the objects clause as stated in the memorandum of association of the company is to produce, sale, import, distribute paints other chemical related items. The company has four major department namely production/ quality control department personnel department, account department and sales/ marketing department.
INDUSTRIAL ACTIVITIES
v Essentially for local Nigeria market – replacement and original equipment
vExports of car paints.
TYPES OF PAINT MANUFACTURED
- Emulsion paints
- Texcote paints
- Gloss paints
- Car paints
To produce these products several raw materials are needed and in different proportions. Some of the raw materials in puts includes methyl ethyl ketone (MEK) toluene resin, petrol, kerosene, ethylene glycol, etc, these products yield different levels of profit to the company and how to make profits as large possible is mystifying to management.
Furthermore, the scarcity of some of these raw materials limits the flexibility of management in production. Other restricting factor as interview disclosed are labour time and demand for the products.
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