Project Materials

EFFECTIVE PROCUREMENT AND PROFIT MAXIMIZATION IN A MANUFACTURING ORGANIZATION

Chapter one

Introduction

Effective procurement is one of the most important functions of any manufacturing organisation; profit is the excess of return over expenditure in any transaction or service, particularly the excess of selling price of goods over cost or net income for a given period of time. In relation to the aforementioned fact, the term profit refers to the ratio of profit for a particular year to the amount invested or the value of sales.

According to some business experts, distance profit is the compensation received by entrepreneurs for taking on risk in a business enterprise, as opposed to wages or rent.

However, in order to make profit maximisation a reality in any business setup, the management team must be prepared to harness its strength by making the best use of its available resources, which entails utilising every latent and uncultivated avenue for possible investment to combat environmental threats.

Any cost incurred by a corporation can be divided into two categories. Fixed and variable costs. The business incurs fixed costs regardless of output level, including none.

These could include equipment maintenance, rent, labour, and general upkeep. Variable costs fluctuate with output, increasing as more things are produced.

Materials used during production frequently have the most impact on this category. Total cost equals the sum of fixed and variable costs. Revenue is the entire amount of money that enters into the company. This can come from any source, including product sales, government subsidies, venture capital, or personal discovery.

Profit to an economist is defined as the difference between total revenue and total cost, or symbolically as = TR – TC, where TR represents profit.

In light of these considerations, business owners, manufacturers, investors, marketers, and others must ensure the effective validation of marketing tools and techniques through planning, implementation, monitoring, and control in order to achieve an equilibrium between the company(s) available and potential resources and the desire of the consuming populace to maximise profit.

1.2 Statement of Research Problem

Nigerian business organisations envision and implement effective procurement in varied degrees. Taking a broader view of firms’ various industries in Nigeria, one can conclude that many going concerns do not achieve “Effective procurement and maximisation of profit business activities, especially in the area of organisational growth and profit ability level of a firm.”