TABLE OF CONTENTS
TITLE PAGE PAGES
CERTIFICATION I
DEDICATION II
ACKNOWLEDGEMENT III
LIST OF TABLE IV
CHAPTER ONE
1.1
BACKGROUND
OF THE STUDY 1
1.2
STATEMENT
OF THE PROBLEM 2
1.3
AIMS
AND OBJECTIVE 3
1.4
SIGNIFICANCE
OF THE STUDY 4
1.5
SCOPE
AND LIMITATION OF THE STUDY 6
1.6
RESEARCH
METHODOLOGY 8
1.7
THE
HYPOTHESIS OF THE STUDY 8
1.8
ORGANIZATION
AND PLANS OF THE STUDY 9
CHAPTER TWO
2.O LITERATURE
REVIEW11
2.1 INVENTORY
CONTROL DEFINITION AND TYPES 11
2.2 IMPORTANCE OF
INVENTORY CONTROL 12
2.3 MATERIAL
PURCHASE 12
2.4 MATERIAL STORAGE 13
2.5 CENTRALIZATION
OF MATERIAL STORAGE 13
2.6 INVENTORY
VALUATION METHOD (MATERIAL PRICING) 14
2.7 STOCK TAKING 16
2.8 BRIEF HISTORY OF
THE ORGANIZATION 17
2.9 COMPUTERIZATION
OF NBC PLC
18
2.10 CALCULATING THE
ECONOMIC ORDERING QUANTITY (EOQ) 19
CHAPTER THREE
3.0 INTRODUCTION 24
3.1 RESEARCH
DESIGN 25
3.2 POPULATION OF
THE STUDY24
3.3 SAMPLE SIZE24
3.4 SOURCE OF DATA
AND DATA COLLECTION INSTRUMENT25
3.5 QUESTIONNAIRE
BASIC ASSUMPTION 26
3.6 STATISTICAL
TECHNIQUES/TOOLS 26
3.7 PROFILE OF THE
CASE STUDY 26
CHAPTER FOUR
4.0 DATA ANALYSIS
AND PRESENTATION 28
4.1 INTRODUCTION 28
4.2 CHARACTERIOSTICS
OF RESPONDENT ANALYSIS 28
4.3 THE HYPOTHESIS
RESULT 33
4.4 DISCUSSION OF
FINDINGS
34
CHAPTER FIVE
5.0 SUMMARY OF INDINGS, CONCLUSSION AND
RECOMMENDATION 37
5.1 SUMMARY OF
FINDINGS 37
5.2 CONCLUSSION 38
5.3 RECOMMENDATION
38
BIBLIOGRAPHY
40
QUESTIONNAIRE
41
CHAPTER ONE
1.1 BACKGROUD OF THE STUDY
A
major problem facing the stock control has affected the growth of business or
company is the determination of an economic order quantity that will minimize
total inventory cost. The purchasing department only orders the amount needed
to attain the maximum stock level whenever stock reaches or fall below the
minimum stock level. While the company fails to realize that the minimum level
does not have to be attained always, it has cost implications whenever stock
falls below minimum level, ordering cost per unit decreases as quantity
increases, however, there will be an increase in carrying cost. Hence, total
cost is not minimized whenever the quantity order is greater than the optimum
required that is the economic order quantity.
The
company is faced with the problem of delayed with regards to local supplies of
its production materials such as sugar, and water bottle soften
carbon(iv)oxide02. even though local supplies constitute only 28% of the total
production material used in most cases, supplies fail to meet the delivery date
upon because they do not know the exact materials required and yet will not
admit ignorance. The high value part of the materials on the one hand and the
financial inability on the part of suppliers initially may not realize the huge
amount of capital involved with the result that they will not supply at
all and fail to inform the company of
their inability to supply.
Consequently,
the company incurs cost in sending remainders and in cancellation of orders
prompt delivery of production material is of primary concern to management.
Delay
in the delivery of these materials will lead to the increment of enormous cost
by the company.
1.2 STATEMENT OF THE PROBLEM
The
importance of stock in any organization can be over emphasized and its control
must be accorded a great attention so as to minimize some of the problems
associated with inventory control. Some of these problems are:
i.
inventory
valuation method are many
ii.
There
are improper record keeping
iii.
The
supply of raw material by contractors is ineffective
iv.
No
policy regarding minimum and maximum stock levels determination
v.
The
company adopts manual inventory control
system
vi.
The
bi-annual stock taking is not enough for effective control.
B. PROBLEM OF STOCK MANAGEMENT DUE
TO INEFFECTIVE STOCK CONTROLL SYSTEM
For
accurate pricing of stock, these has to be an effective means of recording the
movement of stock. This is to say that the recording must be up to date
regarding materials prices. The following are major problem of stock management
due to ineffective stock control system.
i.
Material
are brought at different prices
ii.
These
material becomes unidentifiable from other undesirable from costing point of
view
iii.
Profit
calculation is affected by the pricing method adopted by an organization,
particularly where materials from a large of raw material due to suppliers
cause problem of stock inefficiency management
iv.
Storage:
material like concentrates chemical require fully air conditioned, very cold
room
v.
Ineffective
supply of raw material due to suppliers cause problem of stock inefficiency
management.
vi.
Capital
tied down due to ineffective control system
vii.
Quality
of materials; there may be available found but in absence of materials of the
desired quantity for graded materials, problems ensure.
1.3 AIMS AND OBJECTIVE OF THE
STUDY
Inventory
forms a large proportion of any firms working capital and therefore, there is need
for effective control by management which is like major objective of this study on inventory control
system
i.
To
have a general critical review of managing problems arising from stock control
of the soft drinks industry
ii.
The
Bi – annual stock taking adopted by NBC plc to be used as a case study
industry.
iii.
Ways
of correcting faulty valuation method and at the same time determine the
suitable stock valuation method for the particular circumstances of soft drink
companies Nigeria
iv.
To
check the problem of determining the E.O.Q
v.
To
suggest appropriate policy regarding determination of maximum and minimum stock
levels.
vi.
To
look at possible means of bringing to minimum the huge expenditure on stock
control
vii.
The
effective management of available funds will be the result of effective stock
control system
viii.
Management
information system (MIS) to enhance control system on introduction of computer
ix.
Clerical
operations account for inefficiencies in management control on inventory
x.
To
look at the ways of making maximum and effective use of the seemingly washing
human resources who are not fully utilized in management control system of
stock other implement to efficiency of stock management in organization which
with equally draw attention in this study include
xi.
Fraud
and misappropriation of stock balance (quality) and of pricing (price)
1.4
SIGNIFICANCE OF THE STUDY
Significantly the study is aimed at
achieving the significantly purpose in the NBC plc and in the soft drinks
industry as a whole
i.
To
achieve inventory control function of ensuring that sufficient goods are
retained in the stock to meet all requirements
ii.
The
key to stock control system and efficiency of stock management is in ensuring a
balanced position providing material needed for production, maintaining the
economic level for material of different nature, at the right time and place
yet keeping the cost incurred in so doing to a minimum level.
iii.
The
possibility of carrying unnecessary large stock resulting in obsolesce of stock
items wastage and eventual lost of funds will be tackled
iv.
In
financial management, it is believe that few percentage saving on a large scale
would mean large amount of money high ways of bringing the huge expenditure on stock control system to the
best minimum.
v.
To
provide an insight to student, researchers and other interested persons or
organization on inventory system practiced in real life situation as compared
with the theories of inventory really applies, especially to soft drink
companies
vi.
This
study will highlight the cause of problems encountered in controlling stock in
NBC plc and find suitable solution to eradicate these problems
vii.
To
suggest ways of ensuring continuous supply m of materials to facilitate an
uninterrupted production process
viii.
To
control invest met in stock
ix.
To
attain a high level of efficiency by reconciling the practice with the theory
because the theoretical aspect is a model system on which the practice of
inventory control is based
x.
This
study will reveal the need for the company (NBC PLC) to go computerized
regarding inventory control
xi.
Problems
which arise in the course of inventory control in practice are highlighted and
suggested solution proffered
xii.
It
is hoped that the study will serve a very useful purpose to the ,Nigeria
Bottling companies (NBC PLC) as well as other soft drink have been produced in
the area of inventory control
1.5 SCOPE AND LIMITATION
The
scope of this research work concentrated on three segments, they are: section,
time and area of inventory control in manufacturing company
a. Section
of inventory control: The major section of inventory would be classified into
three ways namely; raw material, work in progress and finished goods.
Raw materials: Material purchased or
produced in either natural or manufactured condition used for production or
operating activities
Work in progress: This project work
will look into the work in progress that has not reached the state of
completion as part or component. There are items which are still incomplete in
the course of production that is they are still under the production process or
part processed materials.
Finished goods: There, we would look into
items, which had undergone production process. This constitute product awaiting
sales or dispatch.
b. Time
of inventory purchase/lead time for
delivery; material is the corner
store of any production process, without material, the bottling (production)
process can not take place. This is because material serve as the input which
is change during the production process and becomes output. In order to obtain
an out put of the derived quality materials of appropriate quality and
specification should a supplying department, very necessary. The
irresponsibility of this department amongst other include negotiation for good
price quality material of the right specification timely delivery fall which
are crucial.
According
to Owler and Brown- the buyer in a
manufacturing to business has considerable responsible and is large
concern much money can be lost shred by his department. He required a good
technical knowledge of constant torch with market prices, report and market
tendencies and have a working knowledge of con
Tract law and procedure, together
with a practical understanding of the principle of economic laws. With regard
to price the supply functional/department
has to make sure that the price at which it is buying the material is the most.
REASONABLE: Represents a balance
between price quality and delivery time (lead or procurement time) the
reasonable price can also be achieved by taking advantage of bulk purchasing.
The purchasing action has to ensure that the three factor (price quality and delivery time)
are thoroughly considered and weighted in order to achieved an optimum result.
C.
Are
of Inventory control: In this area, stores department function and responsible
will examined economically material identification receipt and inspection issue
and dispatched and store accounting economy. It will be the responsibility of store
to manage store economically in order to avoid breakage, whether or absorption
of moisture by material ,and ensure maximum efficiency.
Material
identification:- Then store will expect to prepare a code, adopt material
specification and introduce a degree of standardization which will according to
the senior store office is aimed at:
i.
Preventing
duplication of item
ii.
Simplification
of material recording and control
iii.
Simplifying
of ,mechanical recording
Receipt and inspection- This ,means a
process of accepting from all source, all material equipment and part used in
the organization and inspection, the examination of incoming consignment to see
that the material is required one, and if it will be good for the job.
LIMITATION OF THE STUDY
In
carrying out this project, I was faced with some limitations ,and constraints
such limitation and constraint includes:
I.
Time
available for the research work: The time given to exceed the project is not
much and considering the fact that the research is time consuming and needed
enough time.
II.
Finance
in acquiring text books, journals and other materials on stock control are
limited
III.
Convenience:
Undertaking a project is not commodious, it is time consume and materials.
1.6 RESEARCH METHODOLOGY
This chapter deals with various
methods used in collecting the data needed for the purpose of this study, this
includes design data collection and identification of population determination
of sample size, questionnaire assumption and secondary source of data, which
consist of questionnaires, interview and observation and information collected
from secondary source of data are books, magazine and journals.
1.7 HYPOTHESIS TEST
A
hypothesis is some testable believe or opinion, hypothesis testing is the
process by which the believe is tested by statistical methods. When hypothesis
is tested, there are only four possible result that are obtainable, they are:
a. We
do not reject a true hypothesis is correct decision
b. We
reject false hypothesis- correct decision
c. We
reject true hypothesis- correct decision known as a type of I error
d. We
do not reject false hypothesis.
In correct decision known as type II
error hypothesis testing is also known as a significance testing.
REPLACED QUESTIONNAIRE FOR
HYPOTHESIS TESTING
For
the purpose of this research, two hypothesis were formulated and shall
accordingly be tested in chapter four.
These hypothesis are
i. That
the determination of the
* EOQ
*Computerized inventory control
system will enhance efficiency of stock management, growth and cost reduction.
ii. That
the policy adopted by the company regarding inventory level determination is the
best for the particular circumstances.
1.8 ORGANIZATION AND PLAN OF THE
STUDY
The
project is broken into five chapters, and each chapter carried a significant
role to the meaningful and completion of this project. The chapter goes thus:
Chapter
one, comprises of the introduction aspects of the project which are background
of the study, statement of the problems, aims and objectives, significance of
the study, scope an d limitation of the study and organization and plans of the
study.
Chapter
two dealt with the literature review of the study which talks about inventory
control definition, type of inventory, importance of inventory control,
material purchase, material receipt and inspection, material storage
centralization vs decentralization of material storage, inventory valuation
method material pricing, stock taking continuous stock taking, brief history of
the organization, social responsibility through sport development and computerization
of NBC PLC.
Chapter
three contains the research methodology data collection, questionnaires
Chapter
four deals with data analysis where test were carried out to prove reliability
of the data gathered.
Response testing of hypothesis and
gives a comprehensive summary, finding
an d of the treatise and recommendation to the management of Nigeria Bottling company plc.
Reference: are given at the end of
chapters.
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