CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

A critical review of the financial statement of most companies would review the substantial amount normally held on inventory.

Inventory refers stock of items used within the production system or the operation of business coming among which are: raw materials, semi finished (working – in progress) and finished goods of a given company.

Inventories are stack of goods that are maintained by a business in anticipation of some future demands such demands could be for products manufactured by the company or supplies used in the transformation process.

In other words, investment are current asset and relate to a specific accounting period, their use should be as mush as possible, be regulated within the period to which  they relate.

The type of inventories kept by a firm depends on the firm in question, the business operation, financial resources and other factors. Inventory control system must always maintain a sufficient amount of material and supply to meet the demand of the production unit being out of stock and item may course idle time and production re-scheduling management is the function in business of making decision and hence of what to determine and follow how resources are used and what is produced.

     It is a management responsibility to define the nature of organization.

The availability and quality of those inventories, is therefore a parameter to determine their efficiency.

Their investment in inventories is usually so high that proper and continuous reliance on them. The stock in an investment which repress out some equivalent amount in cash from which profit or margin is expected. However where the stock does not attract a profit due to the stock lying follows in the stock therefore this recognition of the afore said, that the topic is chosen.

COST BENEFIT ANALYSIS AND INVENTORY CONTROL

IN NIGERIA MANUFACTURING COMPANY

Though the term inventory control may have different meaning to different meaning to different users, more often, the term is usually construed to mean materials controller stock control . 

Generally, inventory control is the system that ensures the provision of the required quantity material at the required time with the minimum amount of material costs.

It is appropriate or relevant to know that high level of service and production cannot be provided unless there is an efficient inventory management and facilities, inventories must serve as butter between production, transportation and consumption.

In conclusion on inventories as cussion help to absorb planning error and unforeseen fluctuation in supply and demand and to facilitate smooth and marketing function.

1.2 STATEMENT OF THE RESEARCH PROBLEM

There are many if what is in handing of inventories some of the more significant cast are interest charge storage cost, handing cost, insurance cost, obsolescent cost and space utilization cost inventories load to loss of sales and customers good will.

Obviously, manufacturing companies as a whole, are passing through a temperature period as a result of the prevailing state of the economy the survival of any company depends on how effectiveness and efficient the company’s strategies nearly all manufacturing concerns are aiming at providing goods and services to customer at the least possible cost in order to generate maximum profit.

However, it was realized that without keeping the necessary level of inventory the manufacturing concern might spend too much in keeping excess inventory, of loss customer as a result of keeping excess low level of inventory necessaries the need to venture in to studying inventory (as an integrate arm of production) Uni-Lever Brothers Nigeria Plc produced by the company shows the strength of the organization this implies that the company must have been keeping a form it an inventory level, even when the economy was bad that is, when  getting raw materials was a problem, Uni- Level Brothers has been moving on well, that makes the company a special one and studying this inventory management is a worth while experience. Since inventory cost do affect profitability companies are confronted with the problem of:

1. Audit carrying obsolete goals in stock.
2. Maintain adequate liaison between the production control purchasing and marketing department.       
3. Try to maintain effective inventory control to avoid over large orders replenishment orders out or phase with production.

1.3 JUSTIFICATION FOR THE STUDY

The main purchase of the study is to have a close examination and assessment of the inventory control technique adopted by the inventory in determining the performance as a whole.

Every manufacturing industry maintains some form of inventory for survival and continuity purpose. The current economy situation makes inventory control a must for any business organization.  It also necessitates the fact for making rationale decision in order to guide against having excess or insufficient level of inventory.

Uni-Level brothers Nigeria Plc is one of the leading firms in the household industry in Nigeria today.  It therefore means that the company uses large amount of stock because the current economic situation manifested by the difficulties associated with getting foreign exchange needed to import some of its raw materials is not in the firms favour. It is as a result of this problem that this study becomes very important the management stands of gaining immensely the result of these findings.

1.4 OBJECTIVES OF THE STUDY

It is aimed at knowing the structure of inventory management and the administration of stock as it obtain in Uni-Level brothers Nigeria Plc that is, the aim of this study is to examine the material management and inventory control of named company.

The motive behind this study is to evolve a decision that will bring or prune the series of cost that may be incurred.  This will maintain stock levels so that the combined cost, ordering cost, holding cost, stock out cost are put to the bearest minimum, without having negative effect on the organization.  This study has the following as the principal objectives.

To study the inventory management strategy of inventory and stock control system that will help in keeping stock records (stock information).

1. Stores layout i.e. space utilization and location of individual product.
2. Analyze the benefits to be received from effective and efficient control of inventory and effect of poor control system.
3. Cost of material handling in terms of delivery to customer and the cost of receipts from the National Warehouse (Central Depot).
4. To identify the procedures and process of inventory management of finding the strengths and weakness of the company and making relevant recommendation as to how the weakness can be reduce and improve on the strengths.

1.5      SCOPE OF THE STUDY

The study shall examine the cause of the problem of abandoned capital assets in relation to inventory and stocking.  The necessary information needed are supplied by the inventory records and financial data kept by the company.  It is important to state that this study will implore the use of deterministic quantity.

The study provides information about inventory control in legal depot, which headless mostly finished goods of the study also cover the input and output level ignoring all work-in-progress will in turn be controlled.

1.6      LIMITATIONS OF THE STUDY

There are many constraints envisaged from the research, these include the followings:

1. The research work is limited to a manufacturing concern
2. Time limitation, within which to carryout research works
3. The data provided by the manufacturing outfit concerned might be adequate and incredible.
4. Other limitation attitudes in the course for souring primary data through personal interview and observation.