CHAPTER I: Introduction

1.1            Background of the Study

It is a fact in materials management that continuity in production or provision of services on constant flow of required inventory. However, the question confronting the materials management remain, how much shall be ordered when the quality available is less than required to meet production demand or the quantity is less than order point and how best to plan and control the quantity of inventory needed at a given time.

The focus of the materials manager is to reduce the two extreme ends of the spectrum, that is excessive (surplus) stock and adequate stock (stockout). The level of stock or inventory to be purchased or carried by an organization will depend on a number of issue, such as level of consumption, bulk purchase, discount, reliable, delivery dates, difficulty in matching supply with demand, speculation (availability or scarcity) and the company’s policy it is this prevailing dynamic circumstance that gives rise to the need for inventory planning for product availability. Inventory planning however, an enormous task that requires an astute combination of intelligence of what is actually happening to demand and that of what we expect to happen (forecasting).

A closer look at organization annual balance sheet, it shows that assets account for between 60-70% of materials held in stock; yet proper attention, is hardly given to this aspect of management stacks and left at the mercy of the unqualified individuals.

Inventory planning is itself has been explained as the determination of the quantity and quality required of a material, components, points and services ordering, control receiving, inspection and storage of the right material and the efficiency utilization of these materials to achieve organization’s objective. In this study a general understanding of inventory planning shall be considered as well as issue such as inventory control its importance to the organization, stock maintenance, material handling quality control and product availability among others.

1.2     Statement of the Problems

Organizations in their effort to satisfy consumers demand for their product needs always to keep stocks of inventory at all times, since no organization can survive without keeping stock and ensuring constant flow. The problem that emerges from this is that of how best to ensure optimum supply without overstocking and understocking. Inventory planning and control is argued to be an effective way of overcoming these two extremes.

Kaduna Refinery and Petrochemical Company however has been using these approaches in its effort of maintain stock and constant flow of their products, yet it has continuously experienced acute shortage of supplies. The question that arises here is that, what techniques are employed by the organization’s expediting network in ensuring that products needed arrives on time, and how effective is the inspection techniques of the organizations it is an obvious hat most of the problems that associated with inventory planning is lack of professionalism and misapplication store responsibility that is shortcoming has a big challenges to the entire organization. Above all the study is an to find solution to those problem as it arise.

1.3     Objective of Study

i)                   To determine the needs for inventory planning and control.

ii)                To determine the techniques used in inventory planning.

iii)              To determine how to establish constant flow of material in an organization.

iv)              To determine who is responsibility for inventory planning in the organization.

v)                To determine the significance of inventory planning in material availability.

1.4     Significance of the Study

The research is significant in many aspects, first the researcher will benefit immensely as it is a basic requirement in partial fulfillment for the award of Higher National Diploma (HND) in the department of Purchasing and Supply, Kaduna Polytechnic. It will contribute to existing knowledge as student can use it as a reference and understanding of inventory planning of serve as a consultation by other researchers who may likely carry out the same research or part of it work. It is also of the significance to the to the industry under study whom may likely want to carried out similar research.

1.5     Scope of the Study

The work will be limited to inventory planning and it effect on products availability, the researcher did not intend to go beyond the department under study, the research will be conducted at KRPC within the following departments, Material Management Department (MMD) operation departments and maintenance department. These are traditional department that usually in needs of material at KRPC located at Kachia Road, Kaduna. The researcher will use 10% of 200 populations across three department to justify her work.

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