Abstract

The purpose of this study was to find out the impact of inventory management/control on cost and profitability of a manufacturing firm using Guinness depot Limbe Mile 2 as a case study. This research was guided by research objective thus, to discover how inventory is management in a company can impact cost and profit of the firm, to establish how inventory theories are measured. The researcher used questionnaire as a tool for data collections to secure answers from the respondents in line with the research topic and objective.

The research reveals the impact of inventory management on cost and profit exist in the depot. The management of inventory is carry out by staffs of the company.

The studies identified area where more consideration is to be taken as such recommendations made include increase in warehouse and the should be a two-way passage for entry and exit to avoid traffic congestion, material handling equipment should be increase as whereas the security level.

Lastly the use of credit card bank transfer for purchasing instead of bank deposit. Use of supply chain measurement or metrics such as inventory turnover, cycle time, and fill rate should be used to track supply chain performance and dedicating positions for managing inventory hence reduce cost and increase profit management in the depot.

CHAPTER ONE

INTRODUCTION

This piece of work is targeted to give the students necessary theoretical and practical competences to successfully manage inventory in a merchandise or service providing business.it should be noted that inventory is one of the biggest asset of an organization, which if not properly manage will inflate on cost t management of the organization. Inventory is the stock of any item held in an organization, the aims is to have the right amount, the right place, the right time, the right cost.

1.1 Background to the studies

Recently almost all organizations use computer systems of one sort or another to help managed their business. Most of them also have a good deal of cash tied up in inventory, from which they need to get a good return on the ongoing investment. But before the 19th century, people produce, buy, and warehouse goods or products in small quantities. There was little knowledge about inventory control or management. The used of electronica machines such as, computer, universal product code or bar code reader was absent, rather they practice manual counting, storage and selection of goods in their warehouse, on daily basis where stokes were counted and recorded manually

Before the industrial revolution suppliers had to write down purchases and keep eye on how item were to be sold, as a result they didn’t forecast future market for their stock and even if they did, they may either be stock out or over stock, over certain period of time by so doing increasing cost and reducing profit.

During the early days’ period not necessarily the middle age that is the period of industrial revolution, whereby work done by hand was transform to machine, the increase in production led to high quantity of raw transform in to semi-finish, and finished goods, man could no longer store or control the stock both in the raw material and finish good. Due to the increase in raw materials and subsequently production, the application of the inventory management system/control took it course. (Miller,2010), the first modern check-out system was designed by a team at Harvard University in the early 1930s push card that corresponded with catalogue items were in used. Push cards was used to read stocks by a computer and pass the information to the stock room which would bring the item up front to the waiting customers. As an automated system, the machines could generate billing records and manage inventory.

Management of inventory in business systems Due to technological advancement, problems of inventory control has escalated progressively with an increase in the ability of a firm to produce goods faster in multiple designs, variations and greater quality (Letinkaya and lee, 2000) As a result inventory management, from the mid-1980’s production planning and scheduling has become the obvious strategic benefit (Larrson et al., 1995)

1.2 Problem Statement   

Inventory is the stock of any item held in an organization. The aim is, naturally to have the right amount, in the right place, at the right time and the right cost. In other words, inventory covers all the goods and materials that an organization owns or hold and to which a business intends to add value before selling.

The impact of inventory control on cost and profitability on a manufacturing firm has post a great threat in recent year on manufacturing firm since must firm concentrate on profit margin at the expenses of the stock level, this have led to either over stocking or out of stock thereby coursing an impact to the firm which is proportionate to increasing or reducing the profit margin of the firm. Also anticipated demand for customers, the rate of deterioration of product, uncertainty of demand, seasonal nature of product has influences the inventory level as a result of Inappropriate inventory control technics.

This and more reasons, it’s important to research on the control of inventory management and it impact on profitability and cost in this organization, if everything been equal inventory is the back born of any organization which they may either be buying or selling goods or services.

The cost and profitability of this firm has been in a fluctuating state over the year because of the lack of prepared inventory control majors to help control the flow of inventory levels at various stages of production in the firm. Similar research has been carried out by F Kakeeeto, M Timbirimu, Pastor’s kiizah, KO Olutayo   2017 on the impact of inventory control on cost and profitability of a manufacturing firm.

1.3 Research Questions/ Hypothesis

1.3.1 Main question

What are the inventory management policies and objective?

1.3.2 Specific questions

1. What are the contemporary software solutions for effective techniques for inventory management?
2. How often financial review of inventory management are analysis?
3. what type of inventory are in stock and the contemporary procedures for purchasing?

1.4 Research Goals/Aim/Objective of the study

1.4.1 Primary objectives

1. To examine the impact of inventory management on cost and profitability t on a manufacturing firm.
2. Secondary objective
3. To understand how inventory management is applied in various environment such as distribution, wholesale and retail.
4. To develop a business perspective of inventory management and control in a professional portfolio of technical skills.