Project Materials

INVENTORY POLICY AS A TOOL IN THE ATTAINMENT OF ORGANIZATIONAL GOALS

ABSTRACT

Inventories policies in manufacturing companies have been a great help towards the achievement of organisational goals, which aim not only to help the survival of manufacturing industries or to establish them as a going concern, thereby fostering long-term profitability. One of the problems that manufacturing companies typically face is how to maintain and value their inventories, and thus achieve opinion inventory. The importance of inventory policy in the attainment of organisational goals cannot be overemphasised because it has been established to play a1 leading role in the continued efficient and profitable productive existence of any manufacturing organisation. For that reason, the trust of this research work will be essentially to analyse the importance of inventory policy, its problems and solutions, and as a tool in the attainment of organisational goals using Nigeria breweries. The data for the research will be obtained using a questionnaire and personal interviews that have been methodically created and administered based on the responses. The data will be analysed using simple percentages. This study will consist of five chapters. The first chapter covers the study’s introduction, while the second chapter covers the literature review, which includes other people’s perspectives on the subject. Chapter three focused on the process of data collection and the description of the instrument employed, while Chapter four attempted to demonstrate data analysis and interpretation. Chapter five discusses findings, recommendations, and conclusions. Bibliography and questionnaire.

Chapter one

INTRODUCTION

1.1 Background of the Study

Inventory is one of a company’s or business’s most valuable assets, accounting for a significant amount of its entire investment. Inventory is one of the largest controllable assets in a firm.

According to a 1968 survey conducted by the accountant international study group, inventories are typically the largest balance sheet item in a manufacturing and merchandising firm’s financial report, indicated as a percentage of net total assets.

Managing assets of all types is essentially an inventory problem. Inefficient inventory management might lead to an uneven inventory. The company may regularly run out of certain types of inventory while having a plenty of others, such as raw materials, work in progress, and finished goods.

At this stage, it is important to note that a single executive cannot define inventory policy. A sound inventory policy can be obtained through the combined efforts of the films executive committee. This is because inventory policy, which must be set by any organisation, is both complex and crucial.

There is an optimal level of investment for any inventory, including cash, physical plant, and other inventories. A mistake in inventory policy might result in either too much or too little being stored.

If manufacturing and distribution of items were immediate, there would be no need for inventory policy other than to protect against changes.

Inventory must be kept in such a way that consumers can be saved immediately or rapidly enough to avoid switching to another source of supply.

On the other hand, industrial activities cannot run well unless there are inventories of work in progress, direct materials, final items, and supplies.

For the purposes of this study, it is vital to distinguish between inventory records and control and correct store cards with matching balances and physical counts. There may be effective requisition purchasing, receiving, and material handling.

However, even with all of these measures and conscientious staff, inventory control will be insufficient; thus, clerical efficiency is not the only major function that inspection may do.

The primary inventory issue is maximising profitability by balancing inventory investment against what is required to maintain operations.

The challenge of inventory investment policy for non-profit organisations such as hospitals, the armed services, and so on is that profitability can take the shape of minimising costs. In these organisations, inventory management and record keeping are not required or used unless there is a strong inventory policy.

The big question posed by a number of businessmen and executives confronted with the problem and aggravation of attempting to maintain reliable manufacturing operations, give appropriate customer service, and keep investment in inventories and equipment reasonable.

Why are we constantly out of stock? How often should we reorder or change production when sales are uncertain? What capacity level should we set for operations? What are our manufacturing and procurement plans for seasonal sales? The concept of inventory entails the tough task of establishing how large inventory should be.

Some people believe that inventory should be just big enough, but what exactly is ‘big enough’? The problem is exacerbated by the fact that each member of the management group answers his or her queries from his or her own perspective. He or she fails to recognise cost outside of his framework and considers inventory in isolation from other operations.