CHAPTER ONE

INTRODUCTION

1.1    Background of the Essay

This essay is aimed at establishing the importance of production planning and inventory control in an organization with particular emphasis in the consideration on what the subject matter production planning, inventory control is all about to be emphasis in the introduction of the essay.

Basically, production refers to the transformation of raw materials into output, while production planning on the other hands is the determination of the production operation in a manufacturing unit.

Inventory technique is an internal control system that serves to ensure the maintenance of adequate inventory level in an organization. Moreover, inventory control represents the major capital investment in an organization.

The inventories in an organization function or stock record keepings stocks therefore can be seen as finished goods reader for sales. The importance of production planning and inventory control in an organization is to feed the organization with information about the stock of the organization in other to safeguard the organization from the risk of obsolesce of excess purchases of raw materials, it also ensure that the needed raw materials for production operation is constantly viewed or verified to meet the production. It also serves as a basis of which the purchasing as the stock inventory control will provide information about stock that are excess and those are by specification i.e. those are where the organization will likely be running of stocks.

Inventory Control in an organization is an important aspect in the daily life of an organization. This is because inventory control enhances organizational progress. The existing problem in this stock inventory control which instigate this standing to my point of view indirections. That is, it may be too large or too small so if it is large relative to it, the cost of carrying the inventory control will be equally higher than it needs be, while if it is too small, the cost of controlling the inventory will be small. Consequently, the inventory carrying cost include cost include such things as interest on the inventory management, handing cost depreciation and obsolesce.

1.2    Statement of the Problem

The basic significant statement of the essay is aimed at bringing a clear picture and transparent understanding of the essay “Production Planning and Inventory Control in an Organization”, it also embraces the problem facing the production sector, types of production and production planning methods of controlling inventories in an organization.

Furthermore, this essay entails all the necessary inventory techniques available in the management of inventories before and after being stored in the organization and the policies or scheme that will regulate the production activities in the organization.

1.3    Limitation of the Study

In undertaking an academic study, the research is often constrained by many factors ranging from inadequate facilities, this research is not an exemption.

1.           There is infact information which could have helped the researcher in portraying the topic in a wider perspective but due to what some of the management staff of this company termed as “top secret policies” the researcher was limited to make the maximum use of the little information available to him.

2.           Respondents’ unwillingness to respond to questions also posed some problem. Some of them had little or no spare time, while others still claimed that they do not understand the questions.

3.           Lastly, some of the respondents showed a general lack of interest in supply appropriate answers to the questions drawn.

1.4    Definition of Terms

          Inventory Control

Inventory control is designed to support the requisition processing, inventory management, purchasing and physical inventory reconciliation function of inventory management through a set of highly interactive capabilities, the design of inventory control is based on the following key objectives:

a.           To provide information on the availability of stocked items and the status of stoked requisition.

b.           To facilitate timely requisition.

c.            To automatically record and service back orders.

d.           To help minimize inventory management consistent with service objective by passing purchasing decision on usage history.

Inventory is the stock of any item or resource used in an organization. Inventory can exist raw material goods products, component parts, supplier and work in process organization keep inventory for a number of reason including of maintaining independent of operations to meet, the variation in product demand to allow flexibility in the production scheduling to provide a safeguard to variation in raw materials delivery time and to take advantage of economic purchases and order size cost association with inventory include holding or carrying cost set up or ordering cost and shortage order quantity of fixed time period in the fixed order quantity model the same amount of inventory is replenished in each order period. Necessary assumptions include demand is know constant and uniform throughout a period lead times is constant and the price per unit and ordering cost are constant.

Mismanagement of Inventory Record

This is a situation where the stock official fails to take care of their responsibility of managing and controlling record of raw materials and finished goods the ability of manager and control stock of inventory has been tremendously affecting production in an organization.

Different Methods of Inventory Control and Production Planning

Production planning and inventory control has no universal method of planning and production operation and control of inventories.

However, inventory control differs from organization to organization mainly based on the king of production activities involve in the organization. Most firm adopts the scheme that will favour the operation.

Stock Control

A stock control system should keep you aware of the quantity of each kind of merchandize on hand. An effective system will provide you with a guide for what brand it will reduce the number of cost sales resulting from being out of stock of merchandize is popular demand. The system will also locate slow selling articles and help indicated. Locate change in customer preference. The size of your establishment and the number of people employed are determine factor in devising an effective stock control plan can keep control by observation.

Production Planning

Is a border area between management economic (specially manufacturing economy), mechanical engineering, industrial engineer nature and in particular the economical informatics. It is occupied with the operational temporal quantitative and even if necessarily planning, control and coherently with the administration of all procedures, which are necessary with the production of goods and goods, production planning can be divided into two (2) sub range:

a)           Production  program planning

b)           Material requirement planning

a)           Production Program Planning: In production program planning (also primary requirement planning) kind of quantity and manufacturing dates of the finished product (primary requirements) are specified.

b)           Material Requirement Planning: It is requirement how the quantity unit at intermediate products and raw materials are needed for the covering of primary requirement.

Sequence Planning

During the detailed planning one specifies, which machines are assigned to certain orders. Short term task of the production control are to be seen particularly in connection with short term change in order capacity reality.

1.5    Scope of the Study

Production Planning and Inventory Control being a complex and dynamic concept has a wide area of coverage so it is clear that research of this nature cannot hold without problem. As such this work is limited to the area that are relevant to the problem under investigation that is effective production planning and inventory control in an organization.

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