research tends to examine the impact of quality control on the organization
performance with reference to Guinness Nigeria Plc.
research design was adopted and simple random sampling technique was employed
in the selection of respondents.
four respondents were drawn from the population
of staff of Guinness Nigeria Plc.
the data collected from the respondents were presented on table in
percentile. Two hypotheses were formulated and tested with the use of Chi-square
analysis. The analysis resulted to rejecting the two null hypotheses and
accepting the alternate hypotheses thereby concluding that an Increase in the
level of inventory maintained by a firm will increase its operating cost. Also
in Increase in the level of inventory will impair the liquidity of the firm.
were proffered to Guinness Nigeria Plc.
TABLE OF CONTENT
of the Study
of the Problem
of the study
of the Study
1.6 Scope and
Limitations of the Study
Joint Stock Company
and Theories Relevant to the Study
Literature Based on such of the
Relevant Variable of the Model/Theory
Different Environment Condition
Background of the Organization
Oil and Gas and Refining in Nigeria
of Research Question and Hypotheses
3.4 Sample of
of Data Collection
and Data Use
PRESENTATION ANALYSIS AND INTERPRETATION
Characteristics and Classification
and Analysis of Data According
FINDINGS, CONCLUSION AND RECOMMENDATION
Drawn from the Findings
for Further Studying
OF THE STUDY
manufacturing companies such as in the brewery industry, inventories
constitutes over sixty percent of the cost of production, showing the impact of
quality control of these companies. Inventories constitute the most significant
part of current assets of a large majority of companies.
is a member of Diageo plc, the worlds leading premium drinks business with an
outstanding collection of beverages and alcohols brands across spirits, wine
and beer categories such as Johnnie Walker, Smirn off, JYB Baileys, Diageo is a
global company, trading in over 180 markets around the world.
Nigeria Plc is a foremost brewery and leader in the manufacturing sector of the
economy. From little beginnings through trade importation and distribution in
the 1940s and 1950s, the company built its brewery in Ikeja in 1962 to satisfy
the astronomical demand for the product. Significantly, the brewery was the
very first out of the British Isles and,
indeed, the third Guinness brewery in the world.
their portfolio includes acclaimed market leaders such as our flagship brand,
Guinness Stout; Malta Guinness, the preferred Malt drink, Harp Larger Beer,
noted for its distinct taste and value; Satzenbrau, the final word and Gordon's
Park, an exotics ready to drink product.
the discharge of its corporate responsibilities, Guinness Nigeria over the years has
consistently focused on major support for the provision of good health care,
water for rural communities, and support for sporting activities, education and
philanthropy. Our eye Hospitals in Lagos, Kaduna and Onitsha,
for instance, remain the bedrock of our commitment to the well being of
Nigerians. The facilities enjoy annual subventions from the company in addition
to new maintenance for the structures.
the company through its brands supports various sporting activities throughout
the country, such as the annual Malta Guinness National Handball Competition,
the Premium Handball Tourney in Nigeria,
the Kaduna Polo and the very popular Lagos State Principals Cup Football
Competition. Guinness Stout supports the Intra-Club Table Tennis Tournament
while the company suppo several Golf competitions, such as Ewekoro Blue
Elephant and the Benin Club's Annual Tourneys.
company, which neglects the management of inventories will be jeopardizing its
long-term profitability and may not succeed eventually. Therefore, there is
every need for an effective quality control that involves the minimizations of
a set of costs that increases with larger inventory holdings with a set of
costs that decreases larger order size. Statement of Accounting Standard (SAS 4)
defined stock (otherwise referred to as Inventories) as items of values held
for use or sale by enterprises and usually comprise of raw materials and
supplies used in production, work-in-progress and finished goods.
could also be defined as an idle stock that awaits usage, consumption or sale.
It is called idle because it is not yet consumed or used for the purposes in
which it was held. The various forms in which -inventories exists in
manufacturing company are:
These are those primary materials purchased or produced in natural or
manufactured condition. They could be those units that purchased and stored for
(W-I-P): These are partly finished goods and materials, subassemblies etc,
held between manufacturing stages.
These are completed products ready for sale or distribution.
the purpose of this study, another category of Inventory will be recognized.
BULK materials, terms often used to describe materials not in limits from
material not measurable expect to weight of volume e.g. sorghum.
OF THE PROBLEM
carry out inventory analysis to know the optimum stock of items to be held per/time,
to avoid the problems of over or under stocking and consequently minimize the
total the impact of quality control organization performance.
the marvels of computers, automation and scientific management, the
manufacturing process does not still function quickly enough to avoid the need
for inventories. Inventories must be maintained so that the customers are
serviced immediately or attest quickly enough so that he does not turn to
another source of supply. In addition, production cannot flow smoothly without
are the most volatile current assets. This makes it the most difficult task to
Auditors to verify. When they are not well accounted for, the whole Financial
Statement for that period would not show true and fair view of the operations
of that company. Inventories are subject to perish, due to evaporation,
deterioration, obsolesce etc and thinking of excessive stock-in-store, they
could be stolen and wasted by workers erroneous.
summary, the firm is faced with two conflicting:
maintain a large size of inventory for efficient and smooth production and
maintain a minimum investment in inventories to maximize profitability.
Therefore, the major problem is to obtain an optimum level that lie between
excessive and inadequate inventories.
OF THE STUDY
to Pandey, I.M. , the aim of inventory management is to avoid excessive
and inadequate levels of inventories and to maintain sufficient inventory for
the smooth production and sales operation. More so, the objective of material
management is to avoid the economic consequence of over stocking and under
study will attempt to achieve the following:
investigate and know whether the various
techniques adopted in Inventory Management and how it help in minimizing the
total cost of production involved in holding inventories and the production
process as a whole with respect to Guinness Nigeria Plc.
ascertain whether the company (Guinness Nig. Plc) operates a sound accounting
system inventory control system.
know, if this records can be relied upon to get detailed information as to the
size of inventories (including inventories in transit) maintained by Guinness
discover the techniques adopted in the recording and documentation process and
if there are loopholes in order to suggest possible corrective measures.
know if there are cases of scrap materials defective and obsolete stocks and
how these are dealt with in valuation, recording, sales and in relation to the
total cost of production.
know if there is maintenance -of an effective link between various departments
associated with each class of materials or storage of production, industry lapse
and suggest corrective measures.
know if standards are set for materials acquisition, valuation and pricing.
Identify any variance from actual and the implication of such variance.
OF THE STUDY
result of the time and cost constraints, of this study will be limited to the
impact of quality control on organization performance in Guinness Nigeria Plc
only as well as information gathered from secondary source of data.
Financial report of five years will be used fro the purpose of this study i.e.
2000 - 2009. More so, it will cover all section of departments in the company
with a particular attention to its accounts section, stores, production
department, and issuing department.
order to ascertain the extent to which Guinness Nigeria Plc has fully employed
the tools of inventory management the following questions were asked.
1 How much shortage should be allowed?
is the optimum quantity of items to order each time?
should order be made?
level should stock get down to [safety stock] before requisitions is placed?
questions and more were answered on the course of conducting a research on
quality control organizational. success in Guinness Nigeria Plc.
study will attempt to show that:
Ho: An increase in the level of inventory
maintained by a firm will not increase its firm operating cost.
Hi: An Increase in the level of inventory
maintained by a firm will increase its operating cost.
Ho: An increase in the level of inventory will not
impair the liquidity position of the firm
Hi: An Increase in the level of inventory will
impair the liquidity of the firm.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
research would focus on the activities of Guinness Nigeria Plc., towards the
impact of quality control on organization performance. The research covers the
office at Oba Akran, lagos.
the course of conducting this research work it is expected that the following
will constitute impediments to the effective conduct of the study
a) Time constraint within which the study must
b) Financial constraint
c) Inaccessible and inadequate data
I believe the above limitations will in no way affect the reliability and
validity of the research study.
is a situation where an organization or company has insufficient materials
required for production.
stocking is a term used to describe a situation where a business organization
maintains more that necessary materials at any given time.
COST: The various cost associated with inventory. They include,
a. Ordering Cost: This is used in case of
raw materials (or supplies) and includes the entire costs of acquiring raw
b. Holding Cost: There are cost incurred
for maintaining a given level or inventory at a given level in store.
c. Shortage Cost: These are the costs
incurred when management runs out of stock, when the items are demanded.
d. Economic Order Quantity (EOQ): This is
the basic inventory mode. It is the quantities of materials an organization
will purchase at a given time in order to enjoy economic of scale i.e.
transaction cost, bulk discount, ordering cost, holding cost etc. It could also
be defined as the quantity to order at any given in order to have a balance
effect of the variation cost of associated with inventory.
e. Lead Time: Lead-time which is sometimes
referred to as procurement time is the period between ordering of the materials
components and goods and the time this arrived in the organization.
f. Reorder Level: This is the point at
which it is essential to initiate purchase requisition for fresh supplies of
the materials. This point will be higher than the minimum stock level but lower
that the maximum stock level.
Minimum Stock Level: The
minimum stock level is the level below which stock should not be normally,
allowed to fall as established by management. It is arrived at after
considering lead time and average usage. It leads to stock out. If not
or Buffer Stock: Safety stocks are some minimum or buffer
inventory held as cushion against unexpected increase in use and or delay in
i. Maximum Stock Level: Maximum stock
level is the level above which stock should not normally be allowed to rise or
is the planned level of inventory above which management will consider it as
j. Free Stock: This is the physical stock
plus all outstanding replacement order less unfilled requirements.
k. Physical Inventory: A systematic count
of all goods, on hand followed by the application of unit prices to the
quantities counted and development of a value for ending inventories.
I. Store: Is a place specifically
maintained for the purpose of keeping items purchased to be used later and
those manufactured for sales.
m: Hedging: Hedging is the process of
entering into future contracts to sell the commodity or some product derived
from the commodity at a certain price or to engage in a transaction that
partially/fully reduces prior risk exposure.
n. Internal Control: This is the whole
system of controls, financial or otherwise established by management in order
to carry on the business of an organization in an orderly and efficient manner,
ensure adherence to management policies, safeguard the assets and secure as far
as possible the completeness and accuracy of the records. The individual
components of internal control system are known as "Control" of
o. Ratio: A ratio is defined as the
indicated quotient of two mathematical expressions "and as "the
relationship between two or more things". In Financial analysis a ratio is
used as an order or yardstick for evaluating the financial position and
performance of a firm.
Okoye, A. E. (1997): Cost Accounting:
Management Operational Application United Press,
Campsey, B. S. and Eugene, F. Brigham (1989)
Introduction to Financial Management (2nd edition) Bryda Press, ORLANDO
Pandey, I. M (1993): Financial Management (6th
edition) Vikas Publishing House PUT..... India
Owler, I. W. J. and Brown (1980): Wheldon's
Cost Accounting and Cost Method (4th edition) Macdonald and Evans Limited
Consultative Council of Accounting Bodies
Statement of Accounting Standard on stock (SAS
Lucey, T. (1996): Management Accounting
Printed by Ashford by Colour Press (4th edition)