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The Impact Of Inventory Management And Control On Performance
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Inventories constitute the most significant part of current events of a
large majority of companies in Nigeria and indeed many other part of the
world. Because of the large size of inventories maintained by firms, a
considerable amount of fund is required to be committed to them.
Therefore, the efficient and effective management of inventories becomes
imperative in order to achieved unnecessary turnover or to minimized
the cost associated with keeping inventories. The neglect of inventory
management and control by a firm will amount to jeopardizing its long
run profitability and may even cause the firm to fail ultimately.
Inventory
is defined as the stock of any item or material used in an
organization. Therefore, an inventory management is the set of policies
and control that monitor levels of inventory and determines the
following:-
i. What level should be maintain
ii. When stock should be replenished.
iii. How large order should be
However, inventory can include input such as human resources, financial, equipment e.t.c and output such as parts or component.
It
is possible for a company to reduce its level of inventories to a
considerable degree without any adverse effect on production and sales
by using inventory planning and control techniques.
The reduction in
excessive inventory carries a favourable impact on company profitability
(Pandey 1999) in doing this however, care should be taken to avoid
under stocking which directly affect production causing stoppage, loss
of sales, loss of good will. etc.
Inventory forms a link between
production and sales of a product. A manufacturing company must maintain
a certain level of inventory in the form of raw materials, work in
progress and finished goods. Raw materials inventory gives the firm
flexibility in its purchase, without it, a manufacturing company must
exist on a hand-to- moth basis buying raw materials in keeping with its
production schedule. Work-in- progress are items of stock that are
subjected to further processing to produced the finished product.
finished goods inventory allows the firm flexibility in its production
scheduling and in its marketing thus there is on incentive to maintain
large stocks of all three types of inventory.
In an inflationary
environment like Nigeria, there is the need to adopt a realistic
inventory valuation method in order to give correct value of inventory
in the profit and loss account and in the balance sheet which would have
otherwise show an appropriate financial position of the organization
and thus negating the purpose of accounting which is the provision of
accurate financial information to investors, shareholders, management,
government and her agencies and other related interested parties in
order to assist them in taking decision about the organization.
It is
in view of this that the need arises for an appropriate management and
control measure to maintain the most accurate level of stock that will
assist management of the organization carryout business in such a way
that it does
not portray the organization in bad shape.
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ABSRACT - [ Total Page(s): 1 ]This research work is an attempt to look into the impact of inventory management and control on performance using a manufacturing company. It was conducted using Tower Galvanized Products (GTP) Ltd Kaduna. The research work was carried out with the intention of examining the pit falls of manufacturing companies in carrying out necessary management and control of their inventories. For this purpose the study was divided into five chapters. Chapter one introduced the research topic, the objectiv ... Continue reading---
