CHAPTER ONE

INTRODUCTION

1.1 Background of the study

This research paper was conducted on the assessment of the inventory control and management system in the case of Batu Tannery plc. The research provides academic knowledge of conducting research and to give solutions for the Batu Tannery plc affecting inventory control and management system of the Batu Tannery plc .Inventory is the stock of any item or resource in Batu Tannery plc where as inventory management is the process of reducing inventory cost, keeping inventory from under or over stocking and determining order and recorder points in order to achieve organizational goals. Most studies show that in the company constitutes the major category of assets on the balance sheet.  (A.K. Data , 2001).

Inventory mostly defined by the stock of any items or resources used in an organization and also we can say that Inventory is the tangible goods to be sold and the supplies necessarily to administer the service. Inventory management is important for the successful oppression of most business and there supply chains. Operations marketing and finance have interest in good inventory management. Poor inventory management hampers operations Diminished customer satisfaction and increase operation costs.

Inventories are classified in many ways. Some are production inventories maintenance repair and operating supplies inventories in process inventories and finished goods inventories.Althogh inventories are classified in many ways, the following classification is covenant for use in further discussion of the topic.

The main objective of this study is to assess the inventory control and management system in the case of Batu Tannery plc (J.P saxena ,2003).

An organization may have different type of inventories which are produced inside the company or purchased from any firms The Tannery stock different leather, chemicals supplies, maintenance parts row hide and skin and finished leather s. These materials are obtained from purchasing by the Tannery budget. Some problems with the current system of tannery are stated below problem on forecasting future material need which in turn leads to shortage in some items where as surplus on other. The tannery has no clear and centralized recordings on inventory management and control system. The storage space is very limited which forced the tannery to carry small amount of stock there are factors that affect the effectiveness of an organization inventory control and management system.

Inventory control and management system functions the integrated process that operation, the firms and the value chains inventory policy The reactive, or pull distribution channel. An alternative philosophy is planning through the productivity schedules products movement and allocation thought the channel according to demand and product availability. Generally poor inventory control and management system are overstocking, under stocking bad issuing system and absence of stock taking are the main causes.

1.2. Statement of the problem

Over stocking is storing materials over the needed quantity. And it may result in damage of materials because of limited place to keep it. Under stocking on the contrary is maintaining small number of material below the demand of the Tannery it has negative impact on the over work of the Tannery to achieve its goals goal. Bad issuing sometimes also sends the materials from store without keeping the requisition of user department. If the materials at certain area can not be controlled it is difficult to properly record incoming and outgoing materials.

This research assesses to review questions discussed below.

What is the strength of the existing inventory control and management system?

What is the weakness of the firms inventory control management system?

Did the Tannery have inventory control and management system professionals?

What type of inventory control and management system the Tannery used?

What factors affect effective inventory control and management system the Tannery?

What are tools and techniques of inventory control and management system?

What inventory costing method is used by the Tannery?

What type of stock taking system the Tannery uses?

How can the Tannery determines the re-order level and order level?

1.3. Objectives of the study

The study has general and specific objectives.

1.3.1. General objectives

The General objectives of this study are to investigate how Batu Tannery manage and control its inventory.

1.3.2. Specific objectives of the study

The following are specific objectives of study

Ø  To identify the types of inventory control systems applied by Batu Tannery plc.

Ø  To examine how inventory control and   management system and function is critical for the firm

Ø  To investigate how the existing inventory management system of the Tannery support the management and financial accounting practice of the firm.

Ø  To find out whether the production, customer and workers.  Are satisfied with availability the row hide and skin, chemicals, maintenance of these equipments.

1.4. Research Questions

1.      What are the current statuses of production and inventory control and management system of organizations?

2.      What is the company is facing due to lack of effective inventory control and management system?

3.      To what level of inventory in implementation of inventory control and management system?

1.5. Significance of the study

The research is believed to have the following importance.

The study will show the overall inventory control and management system of the tannery.

The study will suggest solutions for the problem related to inventory control and management system function in tannery

It enables employees of inventory control and management system evaluates themselves.

It will indicate the strengths and weakness of the firm inventory control and management system.

1.6. Scope of the study

The researcher selected Batu plc inventory management and control system on row hide and skin, chemicals, maintenance materials and finished goods in cost effective manner.

It is difficult to study in depth each and everything that are related with the title under the study The interest of this research is exclusively delimited to assess the information about handling of the materials and inventory management and control its problem hence, the study is confined to the inventory control system of

Batu tannery   plc.

1.7. Limitation of the study

The study is estimated encounter the following constraints

The company managers who concern the study many not be volunteer to respond the needed information in depth.

Complexity of inventory system is to the difficulty of gathering information.

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