ABSTRACT
The need for holding inventories is
invented in any business organization.
The space of the inventory will be properly controlled so that the
object of carrying or maintaining adequate inventory lauds at minimum cost can
be realized.
The study therefore, examined the
system of stock valuation, controlled and management in Emenite Limited.
Considering the nature of the study and the company, a lot of data were
generated from questionnaire administration and proposal interview conducted on
staff of the industry.
Based on the method of data
collection, the researcher found out that the system of inventory control is
adequate in design and effective in operation as regards the determination of
stock levels, which could be attributed to the use of scientific method in
determining the quantity and time to order.
The researcher strongly believe that
proper and accurate recording of the bin cards, thee use of scientific method
in stock level.
TABLE OF CONTENTS
Title page
Approval
page
Dedication
Acknowledgement
Abstract
Table of
contents
CHAPTER ONE
1.1 Background of the study
1.2 Statement of problems
1.3 Purpose of the study
1.4 Scope of the study
1.5 Research questions
1.6 Research hypothesis
1.7 Significance of the study\
1.8 Limitation of the study
1.9 Definition of terms
CHAPTER TWO
LITERATURE REVIEW
2.1
Purchasing procedure
2.2
Receipt of material
2.3
Accounting Treatment
2.4
Stores Routine
2.5
Inventory Control
2.6
Stock cost
2.7
Inventory control Terminology
2.8
Types control system
2.9
Method of valuing material
CHAPTER THREE
3.1
Research Design
3.2
Area of study
3.3
Population of study
3.4
Sample and sampling procedure
3.5
Instruments of Data collection
3.6
Validation of the instrument
3.7
Reliability of the instrument
3.8
Method of Data collection
3.9
Method of Data Analysis
CHAPTER FOUR
4.1
Presentation and Analysis of Data
4.2
Testing of hypothesis
4.3
Summary of Result
CHAPTER FIVE
5.1
Discussion of Result/Findings
5.2
Conclusions
5.3
Implications of Research Findings
5.4
Recommendations
5.5
Suggestions for further Research
References
Bibliography
Appendages/Appendages
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND
OF STUDY
Inventory
valuation, management and control is the system designed by the management of a
firm to control its investment in stock.
This is
found to be in existence in Emenite limited Emene, which produces roofing
sheets and hard boards for ceiling. The
system involves the recording and monitoring of stock levels, knowing when to
place orders and how many orders to be placed.
Effective, efficient and economic inventory helps to check the following
costs:-
1.
Carrying cost which include interest on capital
invested in stock
2.
Storage charged
3.
Store staffing
4.
Material handling cost
5.
Transportation cost
Since
management needs information on inventory as a guide to decision making,
inventory handling should not be placed on the basis of trial and error.
Material
control is an act of -management, which ensures the provision of the required quantity
of inventories of the required quantity at the required time. With the minimum amount of capital tied
up. It embraces stock control procedure,
placing of purchasing, receiving, inspecting, storing requirement and issuing
of stocks.
It is an important and difficult task,
inventories are necessary in order to satisfy ever yawing need of customers and
smooth running of an organisation, most organisation invest in large number of
inventory items, irrespective of the system of storage adopted there must be
place for everything are everything in it’s place for the stock weeping system
to operate efficiently.
Floor space
is very expensive and must be used to the best advantage. It is therefore necessary to build warehouse
for storing materials and provide things for feasible, bins racks and shelves
must be provided.
1.2 STATEMENT
OF PROBLEMS
Problems of stock valuation its
management and control exist in almost all firms except service oriented
organizations. The problems arise form
the fact that most organizations (mainly manufacturing companies) based their
stock control on huma
n judgment
approach rather than applying modern scientific models like recorder levels
which removes entirely all elements of bias in determine stock levels, lead
time provision, Economic order quantity (EOQ) and other relevant inventory
models are conspicuously ignored.
The relative degree of weakness of the
internal control system with respect ot stock, leaves much to be desired
especially in the management and the control aspect of most firms.
Furthermore, indiscriminate placing of
orders bulk over above the economic order quantity (EOG) increase holding
costs.
The total of the invoice price
of the inventory plus other incidental cost associated with ordering and
holding cost give the value of the inventory.
Streamlining these costs and proper valuation of inventories is the
problem. This study is expected to solve
for Emenite limited.
1.3 PURPOSE
OF THE STUDY
This research is conducted to enable
companies with trading and manufacturing orientation to see the effective
models e.g minimum stock level, re-order level, maximum stock level, economic
order quantity (EOQ) etc of inventory control and effect they have folded or
wounded up because of carefree attitude towards stock control.
It is not an overstatement to say that
material cost in all organisation constitute a considerable percentage of
production. Cost of such stores administration in relation to stock control
should not be neglected since such stocks represent an equivalent amount
invested.
Moreover, great reliance should not be
placed on the accuracy of the costing records if conditions under which such
inventories are kept and not under strict control. Hence proper storage conditions must be
maintained in other to minimize inventory losses through pilferage, damage,
deterioration and careless handlings. It
goes without change that for a cost accounting system to be fully effective,
there must be properly designed system of re-ordering materials from the time
order is placed till the materials issued to production or sold. Where stated case is absent, excess stock of
some items is likely to occur consequent unnecessary tying up of capital.
On a more general basis, the overall
purpose of the research is as itemized below:
i.
To evaluate the system of material control with
respect to stock.
ii.
To ascertain how Emenite Limited determines her
re-order point and achieve safety of stock.
iii.
To ascertain as to whether the costs incurred in
maintaining the inventory and the opportunities available.
iv.
To ascertain the modern inventory control techniques
(if any) which the company uses during this period of economic recession (SAP)
v.
To determine whether sales forecast can be made with
relative degree of certaninty.
vi.
To determine a better approach to inventory valuation,
recording and control.
Above
all, to offer useful suggestion on how management can make decisions and
problems associated with inventories.
The
research hypothesis is made to test the reality and correctness of the
questions contained in inventory valuation, management and control in
manufacturing organizations. The
research questions can only be corrected when they have tested and proved to be
corrected.
This work is designed to test the following
hypothesis:-
Ho: The Company
does not use scientific method of inventory like buffer levels maximum stock
level etc.
Hi: The company
uses scientific method of inventory like buffer level, maximum stock level etc.
Ho: There is no
proper security covering handling and storage of stocks.
Hi:
There is proper security covering
handling and storage of stocks
Ho: there is no procedure for receiving
materials ordered.
Hi: There is procedure for
receiving materials ordered
Ho: There are no purposes of inventory
control in Emenite Enugu.
Hi: There are purposes of
inventory control in Emenite, Enugu.
1.4 SCOPE
OF THE STUDY
This research has to do with an
industrial sector known as Emenite limited Enugu.
It relates the activities and operations of the company.
The
research is mainly concerned with the following:-
1.
To investigate and find out if the company keeps
appropriate internal control system in relation to inventory.
2.
To Investigate into the purpose of inventory control
3.
To ascertain if the method of stock valuation can affect
the company’s profit and loss and balance sheets.
4.
To investigate and find out if the company uses the
scientific model of inventory control like the buffer level, maximum stock
level and economic order quantity (EOQ) etc.
5.
To ascertain there are proper security covering
handling and storage of stocker.
It is
strongly believed that the result, findings and recommendations pertaining this
case study will apply to all other related companies in Nigeria. That means any information divulges out of
the specific scope should not be in any way regarded as unnecessary, provided
it serve as an avenue of enlightening other related companies.
1.5
RESEARCH
QUESTIONS
a. Does the
company uses scientific method of inventory like buffer level, maximum stock
level?
b. Is there proper security covering
materials and storage of stocks?
c. Are there procedures for receiving
materials ordered?
d. Are there purpose of inventory control in
Emenite, Enugu?
1.6
RESEARCH
HYPOTHESIS
On the
research.
1. LACK OF
RELATED LITERATURE
The research was able to go through
some of the related literature, but the works are so out dated and are
basically more of theory then practical.
Hence, the researcher was unable to finalize works than can be used to
match the practical demands of the research study.
Like the system of functions of stock
controlling unit of the stock department of an organisation cannot be found in
any text.
2. ATTITUDE
OF RESPONDENTS
The knowledgeable respondents who are
mainly top managers of the very few companies the research visited are not
always available and if available are not easily accessible to provide the
necessary information required. In addition, some who are ever accessible, deem
the information too secret to be divulged probably for fear of selling their strategies
to competitors.
3. INADEQUATE
FINANCE
The research faced a lot of financial
constraints due mainly to the fact that the continuous fall in the value of the
Naira has made the budgeted sum for the research work so insufficient that is
affected the extent of data collection, all the places mapped out to be visited
were not covered due to inadequate finance.
4. TIME
CONSTRAINTS
The fact that the study had to be
undertaking along side with normal lectures the effort of the researcher, more
often then not the researcher had to ignore some lecturers in other to meet up
with appointments in connection with the study.
In spite of the above-mentioned
constraints, the researcher still was able to carry out on objective study to
arrive at a logical conclusions.
1.7 SIGNIFICANCE
OF THE STUDY
Inventory control in modern business
period, such as a month quarterly, semi-annually and annually. Inventories
compromise a significant portion of the assets of many companies, hence, the
valuation and presentation inventories have a considerable effect in the
determination and presentation of the financial position and the result
operations of those enterprises.
The study makes it crystal clear why
it is necessary for companies and individuals to control their inventories such
reason as to minimize carrying, regulate the quantities of stock on hand etc.
Also, by
this study an opportunity is created for existing and spective businessmen,
employers and employees to benefit form the modern inventory control
techniques.
Finally, to any user of this research,
the readers, it will improve a reat part, their theoretical and practical
knowledge about inventory valuation, control and management.
1.8 LIMITATIONS
OF THE STUDY
This research work faces a number of
problems which includes; financial problem attitude of respondents, time
constraint and lack of high cost of printing materials, lack of related
literature.
The above constraints are hereunder
explained to show the influence of each.
1.10 DEFINITION OF TERMS
1. INVENTORY:-
It is stock of products the company deals on or manufacturers and components
that makes up the product.
2. CONTORL:- This is
the act of selling performance (expected) and monitoring actual performance
against standardâ€.
The primary concern in the management
of stock control must be to provide the right goods in the right condition at
the right price in right place at the right time.
3. INVENTORY
CONTROL:- The regulation of quantities of materials o hand in such a
way as to ensure current needs which avoiding excess reserves, stock, the
calculation being based on the rate of issues and time necessary for
replenishment.
4. SAFETY
STOCK:- This is the
quantity of stock added to the expected demand (quantity) during the lead time
to take care of fluctuations in demand and lead time variations.
5. CARRYING
COST:- This is the cost of inventory storage handling and insurance
together with required rate of return in invested inventory. This cost includes floor-space, racks, bins,
security quid’s, maintenance etc.
6. ORDERING
COST:- These are entire cost of acquiring materials stock. .
Generally their are costs which are incurred in requisitioning purchase
ordering, transportation, receiving, inspecting and storing.
7. STORE
PRECORDS CARDS:- These are cards for each item in the stock and they
show names of products, quantities
received, issued, balance and prices.
8. BASE
STOCK:- It is the minimum quantity of raw materials or other goods,
without which they the company cannot operate their plaints or conduct their operations.
It is at times treated as being fixed assets, which is under constant renewal
by charged to revenue.
REFERENCES
Lanar L. J.
(1976) Purchasing and Material Management Test and Case
George town home wood
illumining Irwih Doresy Ltd.
Batty J.
(1978) Advance Cost Accounting USA,
Maldranld and Evans Ltd. 2nd
Edition.
Miller G.
J. (1979) Material Management who needs them. U.S.A. Harvard
Business
Review. July.
Inanga
E.L.(1982) Principles of Accounting Nigeria Heinemann press pg. 15.
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