TABLE
OF CONTENT
Title page i
Certification ii
Dedication iii
Acknowledgment iv
Table of contents vi
List of table x
CHAPTER
ONE
1.1
Background of the study 1
1.2
Statement of research 3
1.3
Research
objectives 4
1.4
Research question 5
1.5
Justification of study 5
1.6
Scope of the study 5
1.7
Historical background of the case study 6
1.8
Definitions of terms 8
CHAPTER
TWO LITERATURE REVIEW
2.1 Concept
of material management 11
2.2 Types
of materials 12
2.3 Materials
control and handling 13
2.4 Materials
handling 14
2.5 Material
Movement 16
2.6 Fore
casting as an essential 18
2.7 Material
requirement planning 19
2.8 Stores
function 20
2.9 Stock
control 23
2.9.1 Reason
why organization hold stock 24
2.9.2 Economic
order quantity 28
2.9.3 Purchasing
objectives and policies 30
CHAPTER
THREE
3.0 Introduction 33
3.1 Cooperation
organization structure 33
3.2 Cooperate
organization structure 34
3.2.1 Population
sample 35
3.2.2 Types
of data 35
3.2.3 Source
and method of data collection 36
3.3 Sampling
procedure 37
3.3.1 Scope
of data 37
3.3.2 Method
of data analysis 38
CHAPTER
FOUR
4.0 Introduction 39
4.1 Result
and analysis of data 39
4.2 Calculation
of optimal order size for the raw materials 42
4.3 Calculation
of optimal numbers of order for the raw materials 45
4.4 Calculation
of optimal time between orders for the raw materials 46
4.5 calculation
of optimal number of units of production run for
the
company product 48
4.6 Calculation
of optimal number of runs per year and time
between
successive runs 53
4.7 calculation of total inventory cost of raw
materials using
economic-EOG
model 57
4.8 Calculation
of total inventory cost of finished products
using
economic order quantity-EOG models. 58
4.9 Calculation
of cost saving effect of economic order quantity
-EOG
model on inventory of raw materials 59
4.10 Calculation
of cost saving effect of economic order
quantity-EOG
model on inventory of finished production. 68
CHAPTER
FIVE
SUMMARY
CONCLUSION AND RECOMMENDATION
5.1 Summary
of findings 77
5.2 Conclusion 78
5.3 Recommendation 79
References 82
LIST OF TABLE AND FIGURES
Figure:
3.2. Corporate organization structure 33
Table:
4.2 Material
purchase and inventory cost for the year 2009 41
Table:
4.6 Production
schedule and finished products inventory cost
for the year 2009 50
CHAPTER
ONE
INTRODUCTION
1.1 Background to the Study
As a manager in a
manufacturing company. It a more necessary than ever to improve tire overall
productivity of lire operation ‘while such improvement requires an integrated
dint involving all functional areas of the facility specific actions are
requited within each functional area one of the functional areas in a
manufacturing operation that is critical in the overall productivity of the
company is material management The material management involves purchasing
supplier management, material handling within the facility and extensive
coordination among all functional areas of the facility in conjunction with
material management sapiens, Jazayeri (1998).
Once the production
process is under way the attention of the operations manager shifts to lire
daily activities of material management the daily composes materials
purchasing; inventory control and work scheduling;
Material management has a
philosophy close to that of a modern marketing. In marketing the organization
and its staff has to think in a marketing oriented way for example how will
customer react to product change? What well be the effect car sates if we alter
the packaging? With material management (he same principle apply the
organization arid its entire staff have to consider their decision in relation
to bow they will after it the material side of the boniness topics raider
material management include purchasing. control, transportation material
productions, planning stores, inventory control Beet (2001).
Therefore, the main point
of materials management is to satisfy the need to all operating system such an
manufacturing production line, promotional activities and physical d or times,
it is the operation as the customer manager must work around the system till everything his and
needs are satisfied . The material manager organization and it entire staff
should however consider their decision in relation to how they will effect the
materials side of the business. It is in view of the above stated facts that
this study is being carried out using lop Bottling Company PlC Harm plant a
manufacturing company to study the issue of material management
1.2 Statement of research problem
The major challenge that
materials face is maintain a constituent flow of’ materials for production.
There arc factors that inhabit accuracy of inventory which results in
production shortages premium freight and often adjustments.
According to the journal
of Business logistics (2009) voll 22 part 2. The major issues that all material
managers face we incorrect bills of materials, in accurate cycle counts,
unreported scrap shipping error, receiving errors and production reporting errors
material managers have strived to determine how to manage these issues in the
business sectors of manufacturing since the beginning of the industrial
revolution.. Although there are on known methods that eliminate the afore
mentioned inventory accuracy, inhibitor these are best method available to
eliminate the impact up on maintaining an interrupted how of materials for
production. Reluctance can be reduced and effectiveness when service point are
clustered to reduce the amount of reluctance. An effective materials management
program can also revolve island approaches to shipping receiving and vehicle
movement solutions can include creating a new central loading location an well
consolidation service mean and decks from separate building into one. Developing
belier circulation infrastructure also means reevaluating thick delivery and
service vehicle routes. Base on above statement that this research seek to
examine the Issue of material management and the effect is has on an
organization using a manufacturing
company as the case study.
1.3 Research Objective
§ To
examine the level of efficiency and product improvement in material management
§ To
investigate whether the material management practice permit high stock turnover
validation.
§ To
proffer useful suggestions and ideas on how to effectively manage materials in
an organization (sander 2002)
1.4 Research Questions
§ To
what extent does material management contribute to an organization performance’
§ Does
specification on materials have any (positive or negative) on the effective
materials management.
§ To
what extent does effective materials handling help in the enhancement of un
interrupted production?
1.5
Justification of the Study
A research of this native
is significant in sense that the urea of material management is one that
requires constant research. it is belief that the study will throw light on the
essence and importance of material management in an organization and the choice
of 7ups bottling company as my case study is due to the fact that it is a large
scale manufacturing company which the setup provides far the study of this
nature.
1.6 Scope of the Study
This research study
centred on materials management in a manufacturing company. It covered such
mean as storage. transportation procurement materials handling planning control
& value engineering etc. the research is also intended to cover a specified
period of time range firers 2009-2011 also information are going to be drawn
within the domain of 7up Bottling company plc. Ilorin
1.7 Historical Background
Seven up bottling
company, Plc, (SBC) was founded by a Lebanese in 1959 and on October 1st
1960, production of carbonated soft drinks began at the first plant, then
located at Ijora Lagos On the 1st
day of production, the company sold a total of 24 crates of its product
m other words, a total of 576 bottles were sold. Although the number didn’t win
the company any award, it certainly was a significant accomplishment of the
company.
In order to create a
favourable climate for her smooth operation, the company had to become involved
with the community. SBC, PLC was the first to introduce wreathing in Nigeria by
sponsoring the late and great Mike Bamidele who won a world little SBC, Plc was
involved in the first miss Nigeria beauty competition, which has continued to
grew in sine and importance over the years.
Till date the company
sponsors many sporting and special activities, amongst which are the Pepsi football
academy, Pepsi professional football league, seven up premier basket ball,
Miranda school programme since these are the other brands types of the company
(Pepsi & Mirinda).
The company was quoted in
the Nigerian stock exchange (NSE) and went public in 1984.
The greatest period of
growth for SBC Plc. Began in the early 80’s with the Ibadan plant 1980, Ikeja a
plant in 1981, the Kano plant in 1985 the Aba plant in 1989 the acquisition of
John bolt soft drinks with the Kaduna plant in 1989, Benin plant in 1992 and
Enugu plant in 2002 making the total number of depots sow to be 37 several
depots and dealers in alt parts of the country. The present range of products
include seven up (up) Pepsi Mirinda orange, and the lastest of its range of
products is Mirinda fruit, which was lauched in the year 2002 and then mountain
dewin 2008.
Source:
Personnel and Administrative Department of Seven up Bottling Company Plc.
Ilorin Plant.
1.8 Definition of Terms and Concept
There are numerous terms
and concepts associated with material and inventory management it is considered
most appropriate to define some of these terms and concept.
1.
Inventory
Management: This is the part of operation management
concerned with discoursing and maintaining the optimum level of inventory
investment It is concerned with policymaking on inventing planning and inventory
control.
2.
Inventory
Control: This involves regulation of quantities of materials
or inventory on hand in such away as to ensure the meeting of current needs of
the organization while avoiding excess stock the calculation being based on the
rate of withdrawals time necessary of replenishment.
3.
Inventory:
This lathe stock of any item or resources used in as organization. It includes
input such as human equipment, financial and raw material.
4.
Inventory
System: These are set of policies and controls that monitors
levels of inventory and determines what levels of should be maintained when
stock should be replenished and bow large orders should be.
5.
Re
order level: This is the quality level that
automatically triggers a new order it is the stock Level at which farther
replenishment order should be placed.
6.
Maximum
stock: This is the most desirable beyond which stock should
nut be allowed to rise.
7.
Re
order Quantity: This is the replacement order.
8.
Stock
out:
when are item of stock is required but available then there is a stock out of
that item.
9.
Safely
stock: An amount of stock in excess of average inventory
held in a cushion against a stock out alive to usage or uncertainty of lead
time.
10.
Holding/caring
Cast: These includes the cost for storage facilities
handling insurance, pilferage, obsolescence, depreciation, taxes and the
opportunity cost of capital obviously high holding cost tend to favour low
inventory and frequent replacement.
11.
Ordering
cost: These include certain clerical costs incurred in
preparing orders delivery and material handling costs such casts usually
represent a fixed amount ft order placed regardless of the quality ordered.
12.
Stock
valuation:- This is the method of assigning value to items of stock of a
company. ft helps company management to make inventory level decision. They use
different method Like Last in first out (LIFO) first in first out (FIFO).
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