CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Advancement in all business activities has brought about the need for efficient inventory management and control. For the past decade inventories were handled by a clerk in a routine manner. But in recent times proper attention has been given to it. As a matter of fact, a well planned and effectively controlled inventory can contribute substantially to the organization’s growth and efficiency. Inventory control is a vital element in the management of materials.
However, before delving into this plight, it is appropriate to give the definition of inventory control.
According to Baily [1983:73] inventory control is the means by which materials of the correct quantity is made available as and when required, with due regard to economy in storage and ordering cost, purchase price and use of working capital. It involves the following processes.
[a] Accessing the items to be held in stock
[b] Deciding the extent of stock holding of items individually and collectively.
[c] Regulating the input of stock into the storehouses.
[d] Regulating the issue of stock from the storehouses.
Therefore, through these process, it is possible to adjust continuously the quantity and value of inventory held to confirm to circumstance at all times.
The functionary name given to the activities in the stores is known as inventory control or stock control. The inventory controller or stock controller takes custody of the day to day movement of stocks.
Inventory procedure includes receipt, storekeeping, issue and balance of stocks. In practice, the three major functions involve the overall activities that take place in the stores.
Some of the activities are: communication with other department, identification of stores, receipt and inspection, issue and dispatch, stock records, stores accounting, stock control, stock taking and stock checking, storage of equipment and so on.
Inventory control is the clerical control of the movement of goods into and out of the stores, and of the level of inventories in the stores. Different inventory records are kept to know when inventories fell to minimum, maximum inventory level, and re-order point. The success or failure of any organization depends largely on efficient system of their inventory control, since inventory control is regarded as a procedure in which appropriate system containing information are fed to various department for recording or action.
Actually different systems are operated in different organizations in controlling their inventories. Some of these systems work out well while others failed in their purposes. These systems and other relevant point will be discussed fully in the next chapter.
The researcher could not close the general introduction without giving a brief historical background of the company he is researching on.
Akaraka Industries Nigeria Limited [AINL] was incorporated as a private limited liability company in 1994 under the companies’ allied matters Act of 1990. The company is an industrial/Agro-chemical industry located at Oboama Enyiogugu Aboh Mbaise along Owerri Umuahia road. It has her head office at 186 wetheral road Owerri and her factory at Mbaise in Imo State Nigeria.
It was formed mainly to process solid minerals as industrial chemicals and production started with a capacity of 144 tones per day using two machines at its factory in Mbaise along Owerri – Umuahia road. Each machine has a rated capacity of 3 tones per hour and is capable of pulverizing solid minerals to a more scale of hardness not exceeding 7 and humidity below 6 percent.
The grain size of finished products from the pendulum pulverize may be adjusted in the range of 0.125mm to 0.44mm [equivalent to 120 to 320 mesh per inch] according to customers requirements or specification.
The staff strength of Akaraka Industries Nigeria Limited is about 325 with 75 percent of the total workforce coming from the immediate community.
All raw materials of Akaraka Industries Nigeria Limited are naturally as sedimentary metamorphic and igneous rocks in millions of tones.
Her product range includes: