INVENTORY PLANNING AND CONTROL IN AN INDUSTRY
ABSTRACT
The inventory planning and control play an important role in manufacturing firms. This research project examines the existing practice as regards the ordering of raw materials their conversion to finished goods through the production process and their marketability for the finished goods.
The primary data were collected through survey methods using questionnaires and personal interviews. The analysis of data collected was carried out using chi-square, simple percentage and to show the rate at which each response occurs. Base on the analysis, the following findings were made, that inventory planning and control problems in manufacturing companies revolves around the determination of the optimum stock level to hold/carryout any point in time. Also inadequate stock leads to production stoppages and loss of scales. I therefore recommended that companies should endeavour to keep accurate records of inventories as a means of effective planning and control. There in need fro proper planning and control in order to achieve maximum output in production.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Inventory represents an important assets and in the largest singles item of cost in every business, accordingly, The success or failure of a concern may depend. Largely upon efficient material purchasing, storage, utilization and accounting, (buyers, C.I and Homes, G.A (1984). It is possible to distinguish three different classes of inventory they are.
Pre- production inventory(raw materials) In- process inventory (Work- in progress) and finished Goods inventory.
Pre- production inventory provides a types of insurance for the company, if difficulties in the future supply of raw materials are expected, this inventory will enable production to continue smoothly. If future cost of raw materials are expected to rise, higher stocks might be held as a rise in price.
Finished good may also be thought of as an insurance, if orders are received they will be able to be supplied immediately from inventory, hence the customer will not have to wait for delivery such insurance and reasons fro holding inventory in times of high interest rates. Consequently, good management of inventory is important to the profit minded enterprise.
Inventory in stock represents a major asset of most industrial and commercial organization and it in that stock are managed efficiently so that such investments do not be come unnecessarily large.
A firm should determine its level investment in stock, if must ensure that stocks are sufficient to meet the requirement of production and sales Secondly, It must avoid holding surplus stock which are unnecessary and which increase the risk. The stock level lies somewhere between these two extremes. The country is currently passing through a period of case where profit is hand by, hence the resources has become more and more vital. Thus methods must be adopted to ensure that funds invested in inventory are not wasted.
Inventory may be defined as being an idea/resource with economic value or as levis suggests” inventory is money temporarily wearing the gives of a casting or a bad bad of chemicals “ it in money on which the company pays, rather than collects interest. Values lessen as physical determination progress while insurance, storage and other cost accumulate. Inventory is money always end angers of devaluation with forces such as design and customer’s preference changes constantly in operation.
