ABSTRACT
This project was undertaken to establish analytically the need and importance of sound scientific approach to stock control and cost control, in the face of our deteriorating economy and ever increasing cost of material. A case study of Beta Glass Plc. Ughelli was conducted.
The review of literature was comprehensive in chapter two. The significance of efficient materials budgeting and planning, Value Analysis (VA) and Value Engineering (VE) in cost-control was delineated. A typical is purchasing procedures and principles, although particularly suitable for a manufacturing organisation was also highlighted in the literature review.
The storage of supplies and stores control which is an integral aspect of stock cost control was considered in section 2.5 of the literature review. A detailed discussion of stock control methods dealing with quantitative models for materials planning and control was carried out under section 2.5.02 and section 2.5.03 various stock valuation methods were extensively discussion under accounting for stock in section 2.6.
The procedures and method of the study adopted in this research work, was highlighted under the research methodology in chapter three. Primary data were generated through the use of questionnaires and personal oral interview. Secondary data were obtain from journals, monographs of the international federation of purchasing and materials management (IFPMM), the institute of purchasing and supplies (IPS), the institute of Chartered Accountant of Nigeria (ICAN) and textbooks relevant to the need of the
The analysis of the data collected was carried out in four. The various sectors involved in stock control and cost control was empirically evaluated with particular regard to their functions, effectiveness and short comings.
In the light of the general findings and lapses, some recommendation were suggested to enhance the efficiency and effectiveness of stock control and cost control.
CHAPTER ONE
1.1 INTRODUCTION
Stock control is the system used in a firms investment in stock, which involves recording and monitoring of stock level, forecasting future demands and deciding when and how many to order to minimize over all cost associated with stock.
This emphasis as managerial area of responsibility which focuses on production on material control, procurement quality control and stock handing. Stock control is thus essentially an activity that is concerned with the efficient procurement and use of material for the attainment of predetermined corporate objectives.
The need for efficient stock control in the face increasing cost of material due to information and our deteriorating economy cannot be over emphasized. Stock constitutes an essential cost element of production in 2 large majority of manufacturing industries, stock cost account for about 65pccentage of the total manufacturing cost of their finished goods.
Obviously, the objective of any business concern among other is the maximization of profit. Profit maximization is the result of optional and efficient utilization at available financial and material resources. In essence, corporate success is measured by increased profit as well as by exploiting opportunities for sustained profit-ability.
Company’s procurement function becomes of paramount importance when its outlay account for high proportion of the total cost of manufacturing and operating process, when a large rang of diverse items are required, and these tends to be scare or unavailable at critical stage of the production cycle ,large ranges of spare parts have to be obtained from important source and their price / cost fluctuation and other international trade barriers.
On positive note, stock control has an important role with regards to profit maximization.
1.2 STATEMENT OF PROBLEMS
The major stock control problem is to maximize profitability by balancing stock investment cost against what is required to sustain smooth operations. Raw material stock which constitutes a vital cost element in manufacturing expenditure of any organization engaged in manufacturing process account for about 65% the total manufacturing cost of most industries.
An increasing high cost of material have been recorded in recent years due to the worsening economic problems of monetary instability and inflation, this high cost of material could also be attributed to material misadministration.
Huge sum of money is lost trough various forms of procurement fraud, large scale materials pilferages by the store and material users department in addition losses through material obsolescence, wastes occasioned by mismanagement and inaccurate balancing of material acquisition with usage also account for high cost materials. Beside, the increased material cost misadministration can lead to supplies disaster of various magnitudes. One of such supplies disaster may be stock —out cost, this present a major problem of disruptions in operations as a result of inaccurate balancing of materials procurement with consumption. The consequences of this may be in the form of breakdown of machines, loss of current sales, premium payment for rush delivery, loss of goodwill and future sales.
1.3 OBJECJIVE OF STUDY
In carrying out this study of stock control in Beta Glass Co. Plc, Ughelli, the following objective will be achieved.
(1) To study the material\stock control policies and practices by evaluating analytically the purchasing procedures, material handing methods and various accounting method of costing material issued by valuation of closing inventory stock.
(ii) To investigate, so as to identify the controllable and uncontrollable variables associated with material cost control with a view o f determining ways of keeping them within controllable limits.
(iii) To highlight the need and importance of sound scientific approach to stock control in the face our deteriorating economy and ever increasing cost of stock and materials.
(iv) To analyze the efficiency of their stock holding using economic order quantity (E 0 Q).
1.4 SIGNIFICANCE OF STUDY
Stock control is even more necessary for Nigeria firm especially in period of economic deteriorate on and ever increasing cost of materials consequently causing the folding up of a lot of firm.
Stock constitute a major part of the company’s investment, these is need therefore to control stock because of more than half the company’s incomes used to purchase stock production. Hence there is need to have effective stock control so as to avoid shortage of stock for production and at the same time to much stock which will result in wastage and high holding cost.
The major problem faced by the manufacturing firms as regard stock, that of determining optimum level of stock and evaluation of management policies for ordering stock. unfortunate little or no attention have been given to need for value analysis (V A) cost analysis and purchasing research of material to evolve a more scientific approach and innovation to improve efficiency and effectively talking of inflationary threads.
This research work therefore is intended to fill the gaps that have existed and create aground for future research with attempt to offer practicable suggestion on stock control in Beta Glass Co Plc, Ughelli and to hope that the suggestion we be of benefits to the company and other manufacturing firms. It will go long way to enhance interest in new approaches, concepts and philosophies aimed at better cost — control over material.
1.5 SCOPE OF STUDY
This research work is committed to cover the following area.
(i) To evaluate analytically the procurement stock controls policies and practices of Beta Class Co. Plc. The purchasing procedure of the organization was examined.
(ii) A methodical study for the stores department was particularly carried out on its organization, it various stock control methods as well as its stock level analysis.
(iii) The cost accounting section involvement in stock control and materials accounting system was examined with regard to methods of costing materials issued, stores control ledgers and stock taking and checks.
