Need for effective inventory control in a service organization

Thesis Overview

<p> </p><div><p><em><strong>1.0 INTRODUCTION</strong></em></p><p><em><strong>1.1 BACKGROUND OF STUDY</strong></em></p><p>Effective and efficient inventory control management is a vital aspect of business management that must not be neglected by managers. Recent advancement and technology in business activities have generated the need for inventory management and control. For more than a decade now, inventories were handled by a clerk in a routine manner without applying the techniques of inventory but in recent times proper attention has been given to inventory management and control.It is of utmost importance that inventories be well planned and impaltly controlled in order that it can contribute substantially to the efficient growth of the organization. In the effect of inventory control adequate care is taken in the assessment of the items cum materials to be held in stock decide the extent of stock holding of items individually and collectively and finally regulating the input and issue of stock into and from store cum warehouse. Any management that neglects inventory control will definitely run into costs that will generally reduce its corporate profits. Shortages n inventory will interrupt production and will further lead to losses. On the other hand if then is unintentional excess of stocking of materials in inventories the organizations funds will be tied up in stock instead of using if for other profitable purposes. It is of use factors that any organization will decide on how much and how often to place order in order to minimize the cost involved and equilibrate the total cost resulting from excess stocking and under stocking. Therefore the importance of the effect of inventory control in the services organization cannot be over emphasized.</p><p><strong><em>1.2 STATEMENT OF PROBLEMS </em></strong>Most organization do not realize the essence and need for inventory control mechanism and because of this many of these organizations can not final their feet in business their inability to find their feet in business also include lack of proper inventory system and so such as material inventory control systematically controlled which resulted into excess inventory of hoods teeing up of capital loss through obsolescence and deterioration. At the same time shortages of materials have arises at the time when they are urgently needed and with this operators are delayed. It is based on these problems mentioned above that the researcher dimmed it fit to final out that the problems associated with the effect of INVENTORY CONTROL of the services organization ever, as it applies to the concord Hotel Owerri and also proffer solution through this work.</p><p><strong><em>1.3 OJECTIVES OF THE STUDY</em></strong>Inventories are stock of finished goods and raw materials kept for strategic reasons by organization.Inventories are necessary to run the organization more efficiently by keeping operation at a fair level rate and maintain optimum stock levels. The objectives include determining the following:Who makes inventory decision in the concord Hotel Owerri?What inventory control level is of utmost importance to the concord Hotel Owerri?If the systems in use in the concord Hotel Owerri are working in line with the organization goal? And where this not the case, to help suggest way of improving on their performances.This study will help the concord Hotel Owerri to recognize the problems invent in the management and control inventories in the organization and how to solve the problems. Organization and on how to solve the problems.</p><p><strong><em>1.4 SCOPE OF THE STUDY</em></strong>The researcher concern treated this work in the concord Hotel Owerri due to the problems which are encountered in the course of studying numerous organizations as it regards to finance. Thus this study is limited with the continues of the operations of the concord Hotel Owerri.</p><p><strong><em>1.</em></strong><em><strong>5 SIGNIFCANCE OF THE RESEARCHER </strong></em>This study with be of benefit to the following persons or group of persons.(a) THE GOVERNMENT: The government will be able to know how resources are being managed and controlled in the services organization.(b) THE SERVICES ORGANIZATION: The services organization will be able to know the need for a proper the effect of inventory control.(c) THE INVENTORY MANAGERS: This group of person will be able to identify areas to intensify the effect of inventory control measures(d) THE MAMAGEMENT: They will be in position to unless if the inventory targets or goals of the organization are being achieved.(e) THE RESEARCHER: Any researcher who may so desire to carry out further research on this topic or related topic (f) LIMITATION OF THE STUDY: Even though this work is limited to concord Hotel Owerri the researcher still encountered some problems and constraints in the course of this work which include:FINANCE: Lack of finance limited the areas which the researcher should have concord in the course of this study.TIME: This is also a constraint since the research could not writ or reschedule appointment for the appropriate stuff that is to produce the relevant data due to limited time.LACK OF RELEVANT TEXTBOOKS: This also formed a limitation because most textbooks are outdated and were not able to treat the topic in its totality and also coupled with our poor library system.</p><p><strong><em>1.6 DEFINITION OF TERMS</em></strong>INVENTORY/STOCK: This is an ideal resource of any kind that possesses economic valueINVENTORY CONTROL: This is a managerial technique that tries to maintain enough stock to meet reasonable fluctuations in demand INVENTORY CONTROL SYSTEM: Is an operational system designed to provide minimum inventory service to inventory users at a minimum cost to the organizations management.INVENTORY MANAGERMENT: Is a managerial responsibility that determines and fixes the appropriate level of inventory of an organizationINVENTORY POLICY: This is a plan of action on statement of ideals adopted by an organization that guide the operation of the inventory managerSAFETY/ BUFFER STOCK: This is the minimum stock that is kept to supply the incoming demands if the lead time is delayed.LEAD/PROCURMENT TIME: Is the time internal between the placement and the receipt of an order. ORDERING TIME: This is the period inventories are ordered for replenishment of stockRE-ORDER POINT LEVEL: Is the inventory level at which the order must be madePURCHASE COST: This is the cost incurred in the placement of orders. ABC ANALYSIS: This is managerial techniques that is developed for classifying inventory items in their order of importance.INVENTORY HOLDING COST: Is the cost incurred due to capital/ inventory item being lied up in stock ECONOMIC ORDER QUANTITY (EOQ): This is a system of inventory management used when the stock level of a given item is not sufficient to sustain the production operation until the next schedule review an order is placed replenishing the supply.SHORTAGE COST: It is the cost incurred when an organization runs out materials of a particular inventory. STOCK OUT: It is a term used in the situation whereby an organization runs out of materials of a particular inventory.PILFERAGE COST: Is the cost incurred due to inventory keepers workers staling inventory items from the stock thereby reducing the inventory levelPURCHASE REQUISITION: It is a prepared booklet used by the stock control unit when new quantities of items should be order nextPYSICAL INVENTORIES: This is used to verify balances shown on the perpetual inventory records and to obtain a correct account on all items of inventory that may be on a control systemINVENTORY EVALUATION: Is when management compiles inventory valuation in order to take inventory level decision and also provide data for financial reports to internal and external parties.SPECIFIC IDENTIFICATION: Is a method of inventory evaluation which items of stock specifically identified by particular attributes are assigned their value which have already been knownSTORES REQUISITION VOUCHER: It authorizes the issuance of any class of inventory item from a controlled or storage stock.</p><p></p></div><h3></h3><br> <br><p></p>