CHAPTER ONE
1.0 INTRODCUTION
1.1 BACKGROUND OF THE STUDY
The need for effective and efficient inventory control. 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 a recent time, proper attention has been given to inventory management and control.
In the effect of inventory control adequate care is taken in the assessment of the items cum materials to be hold in stock, decide the extent of stock holding of items individually and finally regulating the input and issue of stock into and from store cum warehouses. Any management that neglects inventory control will definitely run into costs that will generally reduce its corporate profit. Shortages in inventory will interrupt production and will further lead to losses. On the other hand if there is unintentional excess of stocking of materials in inventories, the organization’s funds will be tied up in stock instead of using it for profitable purposes. It is of these fact 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 modern enterprises cannot be over emphasized.
The brief history of ABC transport, associated bus company limited operation of ABC transport commenced operation in road passenger transportation on February 1st 1993, as an off-shoot of rapid identities with a view to running a model road transportation system in Nigeria. In March 2003, capital alliance private equity (GAPE) acquire 30% shares of ABC transport with the acquisition, capital alliance (Nigeria) because stake holders in ABC transport, a partnership that repositioned the company for greater performance. ABC Transport Operates luxury bus services according to transportation, its services are specially designed for distinguishing. Evers who would otherwise use our services. The operations within Nigeria is carried out in ultra modern terminals with considerable languages in various cities like Lagos (Jibpwu and Estac), Aba, Owerri, Port-Harcourt, Abuja, Enugu, Okene, Onithsa and Umuahia etc. ABC buses are double with the company’s trademark the reindeer. The choice of the render as the company’s trademark. Symbol was made after a careful study for peculiarities of the animal, which is strong fast and moves in hard. For the company’s trademark achievement in transportation, ABC transport was adjudged the best transporters in Nigeria by the chartered institute of transport Nigeria and has since their consistently won the national bus operator of the year award along with other accolade s by renowned bodies.
1.2 STATEMENT OF THE PROBLEMS
Most organizations do not realize the essence of importance of maintaining an efficient and need for inventory control mechanism and because of this, many of these organizations cannot find their feet in business. Some of the factors that contributed to their inability to find their feet in business also include, lack of proper inventory of loads, tieing 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 with the effect of inventory control of the modern enterprises even as it applies to the ABC transport and also profer solutions through this work.
1.3 OBJECTIVES OF THE STUDY
Inventories are stock of finished goods and raw materials kept for strategic reasons by organization. Inventory are necessary to run the organization more efficiently by keeping the operation at a fair level, rate and maintain optimum stock levels. The objectives include determine the following; who makes inventory decision in the ABC transport? If the systems in use in the ABC transport are working in line with the organizations goal? And where this is not the case, to help suggest ways of improving on their performances, this study will help the ABC transport to recognize the problems invent in the management and control of inventories in the organization and on how to solve the problems.
1.4 RESEARCH QUESTIONS
The following research questions will be used for the project.
(a) Does ABC transport patronage reduce risk of transport adulterated passengers.
(b) Does the ABC transport provide variables than general company.
1.5 SIGNIFICANCE OF THE STUDY
This study will 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 modern enterprise.
(b) The Modern Enterprise: The modern enterprises will be able to identify areas to intensify the effect of inventory control measures.
(c) The Management; They will be in position to access if the inventory target or goals of the organization are being achieved.
(d) The Researcher: Any researcher who may so desire to carry out further research on the topic or related topic.
1.6 SCOPE OF THE STUDY
The researcher concentrated this work in the ABC transport due to the problems which are encountered in the course of studying numerous organizations as it regard to finance. Thus, this study is limited within the continues of the operations of the ABC transport.
1.7 LIMITATION OF THE STUDY
Even though this work is limited ti the ABC transport, the researcher still encountered some problems and constraints in the case of this work which includes:
Finance: Lack of finance limited the areas which the researcher should have covered in the course of this study.
Time: This is also a constraint since the researcher could not wait or schedule appointment of the appropriate staff 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.
1.8 DEFINITION OF TERMS
Inventory/stock is an idle resource of any kind that posses economic value:
Inventory control: Is a managerial technique that tries to maintain enough stock to meet reasonable fluctuation in demand.
Inventory control system: Is an operational system designed to provide maximum inventory service to inventory users at a minimum cost to the organization’s management.
Inventory Management: Is a managerial responsibility that determined and fixes the appropriate level of inventory of an organization.
Inventory policy: Is a plan of action on a statement of ideals adopted by an organization that guide the operation of the inventory manager.
Lead/procurement time: Is the time internal between the placement and the receipt of an order.
Ordering time: Is the period inventory level at which the ordered for replenishment of stock.
Re-order point level: Is the inventory at which the order must be made.
Re-order quantity: Is the number of inventory unit that is to be ordered at a point in time.
Purchase cost: Is the period costs incurred in the placement of orders.
Material requirement planning (MRP): The approach that calculates production materials requirement weekly/several operating periods in advantages of the actual need.
ABC analysis: It is a managerial technique that is developed for classifying inventory items in their order of importance.
Inventory holding cost: Is the cost incurred due to capital inventory items being tied up in stock.
Economic order quantity (EOQ): The size quantity of order that minimizes the total inventory costs.
Cyclical ordering system: Is a system of inventory management used when the stock level of a given unit us not sufficient until the next schedule review an order is placed replenishing the supply.
Shortage cost: Is the cost incurred when an organization runs out of materials.
Stock Our: Is a term used in the situation whereby an organization runs out of material of a particular inventory.
Inventory deterministic model; Is a basic technique used in arriving at the economic order quantity under condition of certainty.
Pilferage cost: Is the cost incurred due to inventory keepers/workers stealing inventory items from the stock there by reducing the inventory level.
Purchase question: Is a prepared booklet used by the stock control unit when new quantities of times should be ordered next.
Physical inventories: Is used to certify balances whom on the perpetual inventory records and to obtain a correct on all items of inventory that may be on a control.
Inventory Evaluation: Is when management complies inventory evaluation in order to make inventory level decision and to provide data for financial reports to internal and external parties.
Specific identification: Is a method of inventory evaluation which items of stock specifically identify by particular attributes are assigned value which have already been known.
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