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1.1 Background of the Study
Inventory is one of the resources that are managed by business organization and it was first recorded in 1601. The need for inventory control cannot be overemphasized as it is a means for improving the performance of manufacturing industries. Inventory can be defined as a record of a business current assets including property owned, merchandise on head and the value of work complete but not sold. And it is classified as a current asset because it can be turned into liquid cash within a short period of time. Inventory has created a great impact on the profitability of the manufacturing firm which resulted to the deep research of this topic, effectiveness of inventory management in a manufacturing company. Inventory plays a major role in the operation of many business and manufacturing companies in manufacturing, inventories of raw materials allow companies to operate independently on their sources of supplies. Day to day operation is not dependent on deliveries from supplies since inventory of the necessary materials in maintained and used as needed. Without inventory control, millions of naira could be lost yearly because of non accountability of inventories and inaccurate checks and balances.
The process of control and management of inventory is a very business. Four or inadequate inventory management can present a serious challenges to the productive capacity of a manufacturing organization. In addition to raw materials and finished goods, many companies also maintain items of assets, property, inventories of work in progress, office supplies, business firms and general operation supplies.
Inventories often constitute the most significant part of current assists of large companies in the public limited companies, inventory are approximately 60% of current assets on the average. The us Bureau of the census stated that inventory and accounts receivable consume the two largest accounts of equal magnitudes and together they comprise almost 80% of current assets and over 30% of total assets for all manufacturing companies in 1982.
Considering the large sum of money that is committed to the inventories of raw materials, work in progress and finished goods, it is therefore of paramount necessity that these inventories be managed efficiently and effectively in order to avoid the jeopardizing of the profit position of the firm in inventory, there is an optimum level, therefore inadequate inventory causes loss of sale and disrupts the production process while excessive inventory level leads to unnecessary carrying cost and obsolescence or spoilage risks. According to Charles T. Horngren (2007), the optimum inventory level has between the inadequate inventories aims at maintaining an optimum inventory level that will be carried at the least cost.
1.2 Statement of the Problem
The problems seen in the course of study are: ineffective management of inventory in the manufacturing company specifically BETA glass plc, the loss on sales or business of the company as a result of insufficient inventories of finished goods, low productively in the manufacturing company as a result of poor inventories model used by the company and poor management, control and supervision of inventories in the manufacturing company.
1.3 Objectives of the Study
The major objectives of this study are to determine the effectiveness of inventory management in a manufacturing company.
The specific objectives of this study are as follows:
1. To determine to what extent the effective management of inventory in Beta Glass plc has caused low productivity in the company.
2. To examine the extent to which insufficient inventory of finished goods cause loss of sales to the company.
3. To identify the degree to which poor inventory modern used by the company has resulted to low productivity in the company.
4. To ascertain whether the company has suffered from poor management and control of inventories
1.4 Research Question
For the purpose of this research, study, the following research questions were formulated;
What are the impacts of effective inventory control on the productivity in Beta Glass Plc?
1. What is the of inventory management in the Nigeria manufacturing company especially Beta glass plc.
2. To what extent has effective inventory control made a significant impact on the manufacturing company?
1.5 Significance of the Study
The significance of this study lies on the fact that with improved inventory control and management in manufacturing companies. It will be significance to manufacturing companies, firms and businesses as it will enable them keep an adequate inventory control and ensure that they do not run out of inventory or have excess inventory which can endanger their liquidity position. It will also help to meet consumer’s demands or quest. It is also important to the government as it will help to reduce waste of inventory. It also help lecturers to really know the importance of inventory control to that they will be able to impact it on their students. This study will also reveal the relevant method to be used in preventing mismanagement; it will also improve inventory control which has led to the mismanagement and unproductivity of materials.
1.6 Scope of the Study
This research work on the effectiveness of inventory management in a manufacturing company is focused on Beta Glass Plc in Delta State.
1.7 Limitation of the Study
Some limitations and factors in this research study are as follows:
1. The time required for the research and the submission of this work is very short and the researcher was unable to go through all manufacturing companies.
2. Financial Constraints: Finance which is the most important resource for this work was not readily available.
3. Limited Exert: Due to the fact that exert is very difficult to get in school, proper research was not carried out and this affected the integrity f the result achieved.
4. Uncooperative attitudes of some of my Respondents: The management of BETA GLASS PLC prohibited its employees from giving information about the company to outriders without adequate permission from the management and even when this permission was obtained at the long run, much vital information were not revealed because they were regarded as the privacy of the company.
1.8 Definition and Terms
Inventory: This is a record of a business current assets. It can also be described as the merchandise or supplies held or in transit as a particular point in time.
Inventory of Raw Materials: They are those materials in their natured forms which are required to be converted into finished goods are fibers, manganese.
Inventory of Work in the Progress: They are those materials which have been converted half way but not yet taken to the nature of a finished product on a particular date.
Spare Parts/Components: They are finished products which are required further input into the production process.
Inventory of Finished Goods: They are the perfectly completed unit which form the output of the production process.
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