Inventory Management And Control In A Manufacturing Organization

Purchasing And Supply Project Topics

Get the Complete Project Materials Now! ยป



An efficient and effective inventory control and management in any organization is very vital in the survival of such organization. Inventory is defined as “An idle resource of any kinds that possesses economic values, and is classified in many ways thus: production inventories like raw materials, parts and components which enter the firm’s product in the production process. MRO inventories that is maintenance, repair and operating supplies which are consumed in the production process but which do not become part of the product, in process inventories, that is semi-finished products found at various stages in the production operation and lastly finished goods which are ready for shipment.

These inventories require high cost and investment commitments. Most businessmen view inventories and their attendant cost as “necessary evil” hence failing to asses carefully the benefits afforded their company or business by the existence of the inventory.

In a manufacturing company where these inventories are handled, the introduction of a well-planned and effective system or means of controlling these inventories is necessary for profitability and accountability to both the management and shareholders of the company whose interest, objective and aims under which the company or business was established must be protected. It is on this basis that the researcher chose the project topic relevant to manufacturing companies in Nigeria and with Akaraka Industries Nigeria Limited in mind.

In choosing this very topic, the researcher is not claiming any authority in the subject matter neither is he of the view that the topic is over flogged by other researchers. Rather, he is of the view that the topic should be related to present day happenings in the economy, an approach he adopted in the project work.

The project work has been divided into five chapters. Chapter one deals with the introduction of the approach.

Chapter two is a review of related literature on both the general economy and how it has affected the operation of Akaraka Industries Nigeria limited.

Chapter three outlines the methodology and procedure used in gathering the data.

Chapter four deals with analysis of data which simple percentage frequency was used and chapter five is the summary of the work, the conclusion and recommendation.         


Title Page                                                                               i

Approval Page                                                                      ii

Dedication                                                                              iii

Acknowledgement                                                                iv

Abstract                                                                                  v-vii

Table of Contents                                                                 vii-x  

List of Tables                                                                         xi-xii



1.0    Introduction                                                                  1

1.1    Background of the Study                                            2-6

1.2    Statement of problem of the study                                      7                

1.3    Objective of the study                                                 7-9             

1.4    Scope of the study                                                      9      

1.5    Research Questions                                                   9-10

1.6    Research Hypothesis                                                 10-11

1.7    Significance of the study                                            11

1.8    Limitation of the study                                                 11-12

1.9    Definition of Terms                                                      12-15


2.0    Review of Related Literature                                               16

2.1    Introduction                                                                  16

2.1.1Inventory Management and Control                          16-19                           

2.1.2Types of Inventory                                                      19-20

2.2    Reasons for Holding Stock/Inventory                       20-23        

2.3    Inventory Control Policy                                              23-25        

2.4    Meaning of Inventory Control                                     25-27        

2.5    Inventory Control System/Techniques                      28

2.5.1The Cyclical Ordering System                                   28

2.5.2Fixed Order Quantity System                                     29

2.5.3Material Requirements Planning (MRP) System     29    

2.6    Stock levels                                                                  30

2.6.1The Minimum Stock Level                                          30-31

2.6.2The Re-order Level                                                     31

2.6.3Hastening Stock Level / Danger Warning Level      31

2.6.4Maximum Stock Level                                                 32

2.7    Determinants of Stock Levels                                    33-34        

2.8    Use of ABC/Pareto’s Analysis in Management

of Materials                                                                  35-39        

2.9    Economic Order Quantity [E.O.Q]                             40-43        

2.10  Inventory Valuation                                                     43-44

2.10.1        Specific Identification                                        44

2.10.2        First-In-First-Out (FIFO) Method                       44

2.10.3        Last-In-First-Out (LIFO) Method                       45

2.10.4        Weighted Average Method                               45              

2.11  Benefits of Inventory Control                                               46-47        

2.12  The Effect of Non-Maintenance or Inefficient Control of                     Inventory                                                                      47                                                                           



3.0    Research Methodology and Procedures                           48              

3.1    Introduction                                                                  48

3.2    The Research Design.                                                         48-49

3.3    The Questionnaire Design                                         49-51

3.4    Sampling and Selection of Respondent                             51-53                  

3.5    Other Techniques Used                                             53    

3.5.1Observation Technique                                              53-54                  

3.5.2Survey                                                                          54    

3.5.3Data sources                                                               55    

3.5.4Primary sources                                                          55    

3.5.5Secondary sources                                                     55

3.5.6Data analysis method                                                 56              


4.0    Presentation and Analysis of Data                                     57                    

4.1    Introduction.                                                                 57    

4.2    Analysis of Date                                                          57-77        

4.3    Testing of Hypothesis                                                          77-78

4.3.1The Hypothesis                                                           78-79

4.3.2The Second Hypothesis                                             79    

4.4    Discussion of Findings                                                         80-81

4.4.1Raw Material Sourcing                                                81-82

4.4.2Receipt Issue and Documentation                                      83-86                                                                 



5.0    Summary, Recommendation and Conclusion                   87                   

5.1                         Summary                                                                     87-88

5.2                         Conclusion                                                                            88

5.3                         Recommendations                                                     88-94

Bibliography                                                                 95    


Table 3.1             Questionnaire distribution & response profile.

Table 3.2             Showing sectorial distribution & return profile.

Table 4.1             Responses showing existence of store unit.

Table 4.2             Responses showing the department in-charge of                                making purchases.

Table 4.3             Responses showing the organizational                                                           Representation of the store unit.

Table 4.4             Responses showing the size of the store house.

Table 4.5             Responses showing the centralized store.

Table 4.6             Responses showing the management of the store                                       department

Table 4.7             Responses showing the classes of materials                                                stored.

Table 4.8             Responses showing the equipment used in storing.

Table 4.9             Responses showing the classification of items

Table 4.10          Responses showing the coding systems used.

Table 4.11          Responses showing the number of store staff                                               employed

Table 4.12          Responses showing the department in-charge of                                stock regulation.

Table 4.13          Responses showing the educational qualification of                                     stock control staff.

Table 4.14          Responses showing the stock items

Table 4.15          Responses showing the receiving procedure used.

Table 4.16          Responses showing the main sources of raw                                                materials supply.

Table 4.17          Responses showing the methods of issuing                                        materials.

Table 4.18          Responses showing the stock control system in                                  use.

Table 4.19          Responses showing the stock control level in use.

Table 4.20          Responses showing the timing of stock                                                          replenishment.

Table 4.21          Responses showing the time of materials issue.

Table 4.22          Responses showing the existence of shift work.

Table 4.23          Responses showing the shift work.

Table 4.24          Responses showing the existence of stock out.

Table 4.25          Responses showing the rate of stock-out.




Advancement in all business activities has brought about the need for efficient inventory management and control.  For the past decade inventories were handled by a clerk in a routine manner.  But in recent times proper attention has been given to it.  As a matter of fact, a well planned and effectively controlled inventory can contribute substantially to the organization’s growth and efficiency.  Inventory control is a vital element in the management of materials.

However, before delving into this plight, it is appropriate to give the definition of inventory control.

According to Baily [1983:73] inventory control is the means by which materials of the correct quantity is made available as and when required, with due regard to economy in storage and ordering cost, purchase price and use of working capital.  It involves the following processes.

[a]     Accessing the items to be held in stock

[b]     Deciding the extent of stock holding of items individually and collectively.

[c]      Regulating the input of stock into the storehouses.

[d]     Regulating the issue of stock from the storehouses.

Therefore, through these process, it is possible to adjust continuously the quantity and value of inventory held to confirm to circumstance at all times.

The functionary name given to the activities in the stores is known as inventory control or stock control. The inventory controller or stock controller takes custody of the day to day movement of stocks.

Inventory procedure includes receipt, storekeeping, issue and balance of stocks.  In practice, the three major functions involve the overall activities that take place in the stores.

Some of the activities are: communication with other department, identification of stores, receipt and inspection, issue and dispatch, stock records, stores accounting, stock control, stock taking and stock checking, storage of equipment and so on.

Inventory control is the clerical control of the movement of goods into and out of the stores, and of the level of inventories in the stores.  Different inventory records are kept to know when inventories fell to minimum, maximum inventory level, and re-order point.  The success or failure of any organization depends largely on efficient system of their inventory control, since inventory control is regarded as a procedure in which appropriate system containing information are fed to various department for recording or action.

Actually different systems are operated in different organizations in controlling their inventories.  Some of these systems work out well while others failed in their purposes.  These systems and other relevant point will be discussed fully in the next chapter.

The researcher could not close the general introduction without giving a brief historical background of the company he is researching on.

Akaraka Industries Nigeria Limited [AINL] was incorporated as a private limited liability company in 1994 under the companies’ allied matters Act of 1990.  The company is an industrial/Agro-chemical industry located at Oboama Enyiogugu Aboh Mbaise along Owerri Umuahia road.  It has her head office at 186 wetheral road Owerri and her factory at Mbaise in Imo State Nigeria.

It was formed mainly to process solid minerals as industrial chemicals and production started with a capacity of 144 tones per day using two machines at its factory in Mbaise along Owerri – Umuahia road.  Each machine has a rated capacity of 3 tones per hour and is capable of pulverizing solid minerals to a more scale of hardness not exceeding 7 and humidity below 6 percent.

The grain size of finished products from the pendulum pulverize may be adjusted in the range of  0.125mm to 0.44mm [equivalent to 120 to 320 mesh per inch] according to customers requirements or specification.

The staff strength of Akaraka Industries Nigeria Limited is about 325 with 75 percent of the total workforce coming from the immediate community.

All raw materials of Akaraka Industries Nigeria Limited are naturally as sedimentary metamorphic and igneous rocks in millions of tones.

Her product range includes:



Get Full Work

Report copyright infringement or plagiarism

Be the First to Share On Social

1GB data
1GB data
1GB data
Inventory Management And Control In A Manufacturing Organization