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
Table of Content vii
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
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
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
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
5.0 Summary, Conclusion and Recommendations 73
5.1 Introduction 74
5.2 Summary 74
5.3 Conclusion 75
5.4 Recommendations 76
Appendix (ies) 80
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.
- 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. 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.
- 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.
- 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.