This research embarked upon in writing
of this project topic: the Impact of inventory Control System on Organizational
Performance in private and public corporation, a case study of intercontinental
Distillers Limited (IDL) is the Central Gospel of the truth contain herein.
Inventory control system is an
organizational adopted ways of controlling the business stock activities in the
aim of meeting customer’s expectation and exceeding them operationally in the
aim of reducing errors, waste, and scraps in order to maximize organizational
profit. The problem encountered during investigation was time wasted seeking
for an appointment with the company top strategists, stressful walking going
from one library to another in the course of searching for materials for the
project as books on inventory are said not to be common around. There was some financial constraint along the
line due to lots of money spent on transportation.
TABLE OF CONTENTS
of Contents vi
Background of the Study 2
Statement of Problem(s) 3
Purpose of the study 4
Research Questions 5
Statement of Research Hypothesis 5
Scope of the Study 6
The significance of study 6
Limitation of the study 7
Definition of Terms 9
Historical Background 11
Background of Intercontinental Distillers Limited (IDL) 12
Structure of Intercontinental Distiller Limited 14
Relevant variables of the model of
Order Quantity (EOQ) 16
of EOQ 17
of Inventory Control 18
of stock and Records Keeping 18
of materials 19
Return Note (MRN) 19
Transfer Note (MTN) 20
of Stores 20
3.0 Brief outline of the chapter 22
3.1 Research Design 22
3.2 Area of Study 23
3.3 Population of study 23
3.4 Sample of Study 23
3.5 Sampling Technique 23
3.6 Instrumentation 24
3.6.1 Design of Questionnaire 24
3.6.2 Administration of Questionnaire 25
Encountered on Questionnaire Administration 25
3.6.4 Statistical Tools Applied 25
3.6.5 Validity of Research Instrument 27
3.7 Procedure for Data Collection 28
3.8 Procedure for Data Analysis 28
ANALYSIS (HYPOTHESIS TESTING) AND INTERPRETATION 29
4.0 Brief Introduction of the chapter 29
4.1 Respondents characteristics and
4.2 Analysis of Questionnaire 32
4.3 Analysis of Research Questions 45
4.4 Decision Rule of Result 47
Summary of Study 49
Summary of Findings 49
Suggestion for further studies 53
In the past years in Nigeria, business
system were usually a wasted and installed with the objective of getting work
done by the cheapest, quickest and unscientific method available.
The prime objective of every business
is to achieve result whether means justifies the end or not.
Today, whilst these objectives have
not been lost sight of it has been realized, the establishment of a system
whish tends to affect and automatically corrected the system is imperative. It
has revealed that the establishment by piece meal methods of uncoordinated work
processes ultimately neither efficient nor cheap.
Inventory control is vital element in
the successful operation of any business enterprise whether the form is just
beginning or is already producing and distributing goods to its customers, a
planned and controlled approach to the problem involved is essential.
Therefore, inventory control is an
element of management tasks which involves the measurement and regulatory of
stock activities performance of the enterprise (both raw materials and finished
goods) to make sure that the objectives of the enterprise and the plans devised
to attain them are accomplished efficiently and economically.
1.1 BACKGROUND OF THE STUDY
Inventories refer to stock of items
used within the production system or in the operation of business among which
are: raw materials, work in progress and finished goods.
Also, inventories are current assets
and relate to a specific accounting period in which their use should be much as
possible be regulated to the period to which they relate.
It is common to loose some of them by
way of obsolescence, theft, physical deterioration and damage. Owing to all,
these assets must be well managed to ensure that only the required quantities
are in hand and that they are well stored and safety transferred into and
within the organization.
Therefore, control and management of
inventories is a crucial factor in the success or failure of both manufacturing
and non-manufacturing organizations. For example, insufficient inventory can
seriously disrupt the production distribution circle that is so crucial to
survival of all manufacturing organizations. On the other hand, excessive
stocks can cripple a firm cash flow and thus endanger its liquidity positions.
As such the idea of a business organization is therefore to strike a balance
between carrying too much stock and carrying too little. This is the essence of
Therefore, it is in recognition of
this fact that the researcher chooses this topic THE IMPACT OF INVENTORY CONTROL SYSTEM ON ORGANIZATIONAL PERFORMANCE.
1.2 STATEMENT OF PROBLEM(S)
success or failure of any manufacturing organization is a function of the management
and control of resources available for it under normal production
The frequent management review programme
pervading the whole sectors of Nigerian economy has seriously affected the
The problems posed by these incessant
review programmes tend to inhibit continuity in the corporate policies of such
Therefore research has shown that the
causes of these review programmes can be traced to the under listed as the
statement of problem of the study:
Lack of the needed expertise within the
Inability of policy makers to establish
and facilitate and inventory management and control system.
1.3 PURPOSE OF THE STUDY
main purpose of this study includes:
To appraise the various sources of
supply available to a firm so as to select the best or right source(s)
To evaluate the necessary skills for
stores staff and to consider various opinions on the location and layout of
To examine various stores and to
evaluate the skills required of the operators
To examine various stock level, evaluate
how to derive these levels and the principle underlie each level
To appraise the various principles
connected with the movement of stock within an organization
To highlight the disparities in stock
taking and how to bridge the gap
To examine various limitation to
effective stock control and how to minimize the limitation.
the above purpose to be achieve, the researcher hopes to determine the
Constituents of the cost applied to goods sold and goods on hand at the end of
inventory measurement procedure of deteriorating goods whose values are less
than their cost and to use the matching principle of cost with revenue to
determine the periodic profitability of the firms under study.
1.4 RESEARCH QUESTIONS
of the relevant research questions applicable to the effectiveness of Inventory
control system includes the following:
Does your organization place a great
emphasis on store management?
Does your organization experience stock
out of materials or products?
Does an effective inventory control
system contribute to mass production?
What factor enhances stock control
policy in your organization?
inventory control and continuous or constant production have a relationship in
1.5 STATEMENT OF RESEARCH HYPOTHESIS
Effective inventory control has no
relationship whatsoever with constant production in an organization.
Effective inventory control has a
relationship with constant production in an organization.
1.6 SCOPE OF THE STUDY
attempt has been made to objectively touch those key areas considered important
in stock control. To this end, many establishment that keep materials for one
purpose or the other will find the work useful.
The scope of the study then covers:
delivery of stock to stores and proceeds
logically up to stock taking at the end of the year
The stores planning and layout are also
a project or research suppose to cover a wider scope than this and most especially
the topic chose which suppose to include more functions especially purchasing
However, due to insufficient time,
coupled with financial constraint and look warm attitude on the part of
respondent, this research scope will be limited to the listed above.
1.7 THE SIGNIFICANCE OF STUDY
significance of this study includes the following:
To bring into focus of management (both
the potentials and substantial) the relevance of stock control for any
successful manufacturing company
To reveal the technicalities involve in
keeping of stocks and therefore the need to employ the service of an experience
To make a recommendation as to the
appropriate tools to apply to have effective stock control. More so, this will
provide a penance to the issues of poor store-keeping which lead to:
Much capital tied down, lead to
Stock-out cost lead to loss of scale and
To review the implication of:
Capital tied down
Under or over stocking of materials
To review the risk of loss due to:
Spillage, theft, breakages etc
Deterioration and obsolescence
Provide solution for the location stores
To provide other information and
explanation as may be necessary for management to plan and maintain effective
stock control in order to achieve an uninterrupted production in the company.
1.8 LIMITATIONS OF THE STUDY
Certain limitations that were
encountered in the course of this study include the following:
1.8.1 COST IN TERM OF:
- A lot of time was spent seeking for appointment with the company to
management managers for the case study in dealing with the given study work to
- Fund was not enough for certain requirements of the study such as
transportation to the head office at Ikeja, Lagos. Purchase of stationeries,
printing and binding of materials for the research work. The reason for this is
evident in the ever increasing general price of goods and services in the
1.8.2 AVAILABILITY OF DATA
data was not made available for the case study due to policy of confidentiality
maintained in keeping some of the data needed. More so, it was difficult to
gain the attention of the personnel concerned as they had to give priority to
their finding duty.
1.9 DEFINITION OF TERMS
control is the utilization of stock of items used within the production system
or the operations of business in an orderly and efficient manner, ensure
adherence to management policies, safeguarding the assets and secure as far as
possible the completeness and accuracy of the inventory records among which
a) RAW MATERIALS: -
Materials of the appropriate quantity and specification required for the
production of goods.
b) WORK-IN-PROGRESS: -
Materials which are still under processing.
c) FINISHED GOODS: -
Materials that has been processed and is in conformity with the set standard.
STOCK LEVEL: - Level below which stocks should not be
normally allowed to fall.
STOCK LEVEL: - Level above which stocks should not
normally be allowed to rise beyond or above.
LEVEL: - Level at which to initiate the purchase order for
fresh supplies of materials.
QUANTITY: - Quantity of the replenishment order.
OR PROCUREMENT TIME: - Period of time between ordering
STOCK: - Materials which presently are in no demand.
STOCK: - Materials for which are no longer in demand.
TURN OVER: - Ratio of cost of materials consumed to the
average stock held during the period.