INVENTORY MANAGEMENT AND THE PERFORMANCE OF MANUFACTURING COMPANIES

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The research work titled: Inventory Management and Performance of Manufacturing Companies (A study of Unilever Nigeria Plc) L.B.N, it is aimed at examining the extent of efficiency so far. Data were generated using the questionnaire, personal interview and e-mail. Upon presentation, and analysis, the formulated hypothesis were tested using the chi-square statistical tools. The findings so far are as follows.

Description

ABSTRACT

The research work titled: Inventory Management and Performance of Manufacturing Companies (A study of Unilever Nigeria Plc) L.B.N, it is aimed at examining the extent of efficiency so far. Data were generated using the questionnaire, personal interview and e-mail. Upon presentation, and analysis, the formulated hypothesis were tested using the chi-square statistical tools. The findings so far are as follows.

Inventory management helps to increase the performance of a manufacturing company. Again, existence of fund and other financial misnormal has adverse effect on the profitability performance of the company. Also the findings reveled that there are factors inhibiting inventory management in Nigeria such  recommendations made were as follows: there should be proper scrutiny of personnel names before approving salary vouchers. Adequate and reasonable degree of independence should be given to the company in order to encourage efficiency.

There should be proper remuneration and other work incentives to the employees particularly the management staff.

 

TABLE OF CONTENTS

Title page                                                                      i

Approval page                                                               ii

Dedication                                                                   iii

Acknowledgement                                                        iv

Abstract                                                                      vi

Table of Content                                                          vii

CHAPTER ONE

1.0. Introduction                                                               1

1.1. Background of the Study                                            4

1.2. Statement of the Problem                                          7

1.3. Purpose of the Study                                                9

1.4. Research Question                                                  10

1.5. Research Hypothesis                                               12

1.6. Significance of the Study                                          13

1.7. Scope of the Study                                                  14

1.8. Limitation of the Study                                             14

1.9. Definition of the Study                                              15

CHAPTER TWO

2.0  Literature Review                                                     18

2.1  Introduction                                                             18

2.2  Objectives and Classification of Stock                        21

2.3. Reasons for Holding Inventory                                    24

2.4. Determination of Inventory Size                                  25

2.5. Cost of Inventory Systems                                         26

2.6. Inventory Control Techniques                                      28

2.7. Economic Order Quantity (EOQ) Model                      33

2.8. Method of Stock Taking                                             42

2.9. Inventory Valuation Methods                                       44

2.10. Inventory Management and Financial Performance      45

2.11. Different Types of Inventory, Different Effects               46

2.12. Operation Speed and Business performance              46

2.13. How to Reduce inventory.                                         48

CHAPTER THREE

3.0. Research Design and Methodology                             52

3.1. Introduction                                                              52

3.2. Research Design                                                      52

3.3. Sources/Methods of Data Collection                           53

3.4. Population and Sample Size                                      54

3.5. Sampling Technique                                                  55

3.6. Validity and Reliability of Measuring Instrument            56

3.7. Method of Data Analysis                                            57

CHAPTER FOUR

4.0  Presentation and Analysis of Data                             58

4.1  Introduction                                                             58

4.2  Presentation of Data                                                58

4.3  Analysis of Question                                                64

4.4  Test of Hypothesis                                                   68

4.5  Interpretation of Result(s)                                         73

 

CHAPTER FIVE

5.0  Summary, Conclusion and Recommendations           73

5.1  Introduction                                                            74

5.2  Summary                                                              74

5.3  Conclusion                                                            75

5.4  Recommendations                                                 76

References                                                                  79

Appendix (ies)                                                             80

 

CHAPTER ONE

1.0.  INTORDUCTION

Inventory is defined  as a stock of items kept on hand by an organization for use to meet customers demand. Virtually every type of organization maintains some forms of inventory. For example, a departmental store carries inventory of the retail item it sells and every family household will maintain inventories of food, clothing, medical supplies, and  personal hygiene products.

 

Inventory planning and control is essential for any organization to survive. This is because of the fact that in its absence, unexpected fluctuation will occur putting the organization into damage. Fluctuation will result in either unexpected shortage or surplus of inventory when required, situation that do not favour the organization.

 

Inadequate inventory when required gives rise to stoppage of  production, loss of sales orders and finally loss of profits. On the other hand, surplus inventory gives rise to increase in carrying and shortage costs. Hence, the use for inventory, planning and control is to balance material inventories so that actual will conform to plan.

 

According to Nworji (1999:112) “Inventories are stocks of a product of a company that is manufacturing for sale while finished goods are completely manufactured products which are ready for sale.

Jannis, (2003:437) maintained that “inventories forms a link between production and sale of a product”.

Therefore, any manufacturing company, which chooses to neglect the management of its inventory may be reducing the efficiency of production, as a result of production held ups, which may also lead to the dissatisfactions of customers and consequent loss of goodwill.

Below are reasons why firms maintain inventories.

  1. Economic: A manufacturing firm carries stock of raw materials so that they will be available when needed. It cannot have materials and processed on demand because the expenses and time delays would be prohibitive.
  2. 2.  Customer satisfaction: Every  retail and wholesale firm carries inventories of goods for sale, without such inventories it would loose sales to competitors able to immediately supply customers demand, which of course cannot be perfectly predicted.

3. Convenience: Every household carries an inventory of food, it would be extremely inconvenient to stop at the store for every meal.

  1. Maintenance of operational capability: In order to keep equipment operational, without excessive downtime, an inventory of spare parts  must be available for the spot repairs.
  2. Seasonal factors: Some food products are harvested only at certain times of the year. If they are to be distributed at other times of the years, they must be processed and stored.

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