CHAPTER ONE
GENERAL INTRODUCTION
INTRODUCTION
- BACKGROUND OF THE STUDY: THE NATURE AND SCOPE OF STOCK MANAGEMENT.
The project brings to light the meaning and essentials of inventory management and how they may be used to improve the working capital of a business. Many business decisions can be taken only in respect of knowing the cost involved. Decision under the management of a company finance are basically those involving capital investment decisions on the one hand and short term decision on the other hand. While short-term decision incorporate within its framework, the concept of working capital long-term capital and cash flow generated from such capital investment are undoubtedly essential for maintaining the liquidity of the firm. Inventory management can assist in improving the working capital of a business by providing the data necessary to arrived at the best decisions. Obviously, there are many definitions as many authors will view it, these authors may view it from different perspective in attempt to justify their satisfactory among the various definitions are the following:
Inventory is the totality of those items of tangible property, which are held for sale in the ordinary course of business or held in the process of production, for such sales of currently been available for sale inventory is a general term describing goods which are normally held in house and store gang, the bulk of these goods are usually intend for use in connection” with production or operation activities. But the term inventories cover finished products awaiting dispatch to customers, scrap and package and purvey return to suppliers.
Inventories are caution to absorb planning errors and fluctuation in supply and demand to facilitate smooth production and marketing operation. It may be classified as raw materials, work-in-progress and finished goods.
Management: Among the various definitions are; Management is a social progress entailing a body of knowledge, about managing and managing is the process of planning, organizing, directing, coordinating men, machines, and achievement of objectives”
“Herold” describe it as “the process of getting things done through people and with people”
E.I.F Breach” in his own opinion defined “management as social process entailing responsibilities for the effective and economics planning and regulation of the operations of their enterprise in fulfillment of s given purpose or task. With this we know that management is the body of knowledge about managing.
Therefore inventory management can be defined as the functions which include the development and administration of policies, system and procedure which will minimize total cost relating to inventory decision and related functions, such as purchasing, production, marketing service requirement etc.
Inventory management is almost the same in many organizations although, techniques adopted may differ according to business conditions. The top must carry out the basic functions management such as planning, organizing, staffing, controlling and directing which helps in policy making and establishment limits for keeping inventory.
The basic principles brings the stores of the company is the goods requisitions signed by authority concerned.
- STATEMENT OF THE PROBLEM
It is no gain saying that the Nigerian economy is in stage where it is extremely difficult for most firms to survive so much that a high level of uncertainty pervades the business sector regarding the continuity of the future operation of the affected firms. Continuation of this trend does nothing but spells dooms as the collapse of most business concern is but a matter of time. No matter how well established or large a corporation’s capital based may be without due regard being paid to working capital there is a bound to be a resultant adverse effect on the operations of firm in question. The management of inventories is as importance for the company’s short term financial situation as the management of cash and again a balance has to be found.
- JUSTIFICATION OF THE STUDY
The study will enable the management of the Nigerian Bottling Company to know whether to produce raw materials locally or to import.
It will also help the firm’s resource order to increase the shareholder’s wealth as in the theory of finance it will as well enlighten the entire management team and especially financial managers on the importance of effective planning, management and control of inventories so as improve the working capital of the company.
The research work will also enable management to develop correction measures to reverse any unfavorably development in the management of company inventories.
