The effect of stock control profit maximisation in manufacturing company

Thesis Overview

<p> <b><b><b><b><b><b><b><b><b><b></b></b></b></b></b></b></b></b></b></b></p><p><b><b><b><b>INTRODUCTION</b></b></b></b></p><p><b><b><b></b></b></b></p><b><b><b><p><b>1.1 &nbsp; &nbsp; &nbsp; <br></b><b>BACKGROUND<br>OF THE STUDY</b></p><p><b></b></p><b><p>Stock<br>is frozen cash and as such should be given the same if not more priority than<br>liquid cash. Firms need stock in one form or the other in order to carry out<br>its day-to-day activities and as such, the need to have the stock at the<br>required time, quantity, quality and under proper condition can never be over emphasized<br>more often than not, organization hold in order to have ready supply of<br>materials from the store house to guard against future increase in price, enjoy<br>quality discount, prevent shortage of supply from its various sources etc.<br>since the ultimate goals of any business set up is to make profit, then, such<br>profit can only be realized through incurring the least affordable cost while<br>expecting huge returns.</p><p>Inventory<br>is major area of asset deployment which should be required to produce, minimum<br>return on capital investment since it incurs cost so there is a great need to<br>minimize such cost and control stock with respect to its receipt, storage and<br>issue. When an organization is declining on what is to be held in stock, it is<br>of necessity to consider what item are to be used, and produced by the<br>organization in question and then decide which items is stocked. Stock have<br>been noted to be life blood of organization and all such efforts are always<br>made to see that efficient stock control system and equipments are invented to<br>cater for the various items held in stock.</p><p>In<br>order to minimize stock holding cost via efficient stock control measure,<br>experience and qualified staff should be employed to see to such matter. In public<br>sector of the economy today, stock control is nothing to write home about, you<br>find stock idle in the store house, and some are even deteriorated due to lack<br>of storage facilities and staff with the little or no knowledge with regard to<br>store management.</p><p>However,<br>in the private sectors where individual are the owner of the business, the<br>reverse is the case because stock, no matter its form is given attention by<br>well trained stoppers, under the appropriate conditions after all, huge sum of<br>money have been sunk in the acquisition of such stock items and to what much is<br>given much is or will be expected.</p><p>Organization<br>in recent times have been facing one problem or the other which in most cases<br>lead to early liquidation. An<br>investigation have revealed that most often than not, the whole problem<br>normally arises from inefficient management of stocks at one stage or the other<br>both within and out side the organization, you will find improper or lack of<br>inspection facilities, poor and inadequate storing equipments, bad movement of<br>stock, just to mention a few with most of these thing present in organization,<br>there is a great possibilities of such an organization having problem thereby<br>leading to closure.</p><p>Shortage<br>arises due to lack of effective control stock among others, such as<br>deterioration, reducing obsolescence obsolete, pilferage receipt of the wrong<br>specification of stock stoppage in production arising from interior materials<br>into the production term cost thousand or millions of naira. But if stock are<br>been monitored with high accuracy such problem will be satisfactorily reduce or<br>totally controlled.</p><p>According<br>to the stores recently have been make to reduce this cost while still<br>maintaining a high degree of control large firm have introduced a system of<br>analyzing stock by various categories so as to ensure that adequate attention<br>can be paid to important item.</p><p>The<br>main theme of this project is to bring to lime light &nbsp; &nbsp;the<br>performance of beverage industry in Nigeria toward analysis of stocked<br>control procedures with a particular reference to Nigeria Bottling Company<br>(NBC).</p><p>In<br>view of the above, we will have a glance on some specific areas further<br>understanding. Firstly the writer intends to discuss analysis of stock control<br>procedures in beverage industry.</p><p>Stock<br>comprises a major part of a companies current asset, and can be classified as<br>raw material, work in progress (or work in process) and finished goods. Its<br>function are centered on stock management. At time firms could not reach the<br>peak of its operation because of major lapse in the area of stock management,<br>it was examined that the management tend to ignore the aspect of stock control<br>in relation to inventory level mostly, some firm liquidate due to ineffective<br>stock management, which was made known in the introduction part, this problems<br>brings about frequent production interruptions and failure to meet delivery<br>commitment. When a firm experience these, it obviously result to tie-up of the<br>firms funds and loss of profit which could gradually lead to shut down of<br>plant, and it affect the society as a whole (massive retrenchment). In essence<br>stock for smooth production and to ensure the maintenance of holding stock that<br>forms part of the smooth running of the business.</p><p><b>1.2 &nbsp; &nbsp; &nbsp; <br></b><b>STATEMENT<br>OF THE PROBLEM</b></p><p><b></b></p><b><p>In the<br>past, many companies witnessed considerable lapse and increasing changes in<br>management disciplines of stock control an important element in the management<br>of stock.</p><p>1. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Stock management or management of stock is one<br>of the problem business faces.</p><p>2. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>The development of analytical techniques and<br>computer capability now permits more sophisticated analysis of stock problems.<br>These two phenomena have combined to transform stock control into a critical<br>function requiring professional skills.</p><p>Most<br>companies still adopt the oil and crude methods of stock control, the use of<br>guess work and intuition, while others do not even make any attempt to minimize<br>investment in inventory in the name of the pilling?</p><p>Also,<br>companies that stock a strategic number of item do not segregate the high value<br>of stock selective and efficient control these, no doubt have contributed to<br>high operating cost and hence less profit recorded by most manufacturing<br>companies.</p><p><b>1.3 &nbsp; &nbsp; &nbsp; <br></b><b>OBJECTIVE<br>OF THE STUDY</b></p><p><b></b></p><b><p>In<br>studying or explaining the various factors affecting efficient stock control<br>system in the firm under study, the following objective have been recognized<br>and taken into consideration.</p><p>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Determination of whether any relationship exist<br>between total inventory cost and sales?</p><p>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Ascertain the effectiveness and efficiency of<br>the firms stock control system and reduction in operating costs.</p><p>iii. &nbsp; &nbsp; &nbsp; &nbsp; <br>Avoid excessive holding cost e.g. cost of<br>storage, handling, insurance recording and inspection etc.</p><p>iv. &nbsp; &nbsp; &nbsp; &nbsp; <br>Avoidance of unnecessary tie up? of the firms<br>and loss of profit.</p><p>v. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</p></b></b></b></b></b></b> <br><p></p>