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 As the topic state that is “the need for efficient inventory management in a manufacturing company”.

One major component of this cost in many manufacturing organization that desires the attention of management is the investment in inventories otherwise know as stock. One will then say that really manufacturies companies face inventory management problem of what the researcher tried to analyse and bring possible solution to that effect.

The problem associated with inventory management are unavailability of raw material. The determination of optimal level of stock as well as the discrepancy between policy and practice in stock management.

In carrying out the research work, some research questions were asked such as:

(A)    Does inventory planning involve the determination of such factors as market demand and plant capacity?

(B)     Does the company make policy decision about stock management?

(C)       What benefit are derived from maintaining inventory at their level?

The simple random sampling techniques were used and the methods of data collection used were oral interview company.

Journal textbook and questionnaire which were mostly structured the deportment act as source of data for planning and controlling of more our from the analysis of data gathered was revealed that the company make decision about stock management and also that stock can be allowed to leave the store without requisition being made for it in order to meet up with emergency.

Based on the above analysis carried out, it was also gathered that inadequate information flows rapid inflationary pressure as well as organized storage system are factors that militating against efficient inventory management in the company.

Economic order quantity stock budget minimum stock level are used as means of controlling stock.

The research writer recommends that thee company should set up information flow above inventory management and organize a perfect storage system for the stock.

In order to guide against inflation, market price of valuing inventory is recommended there should be optimum stock level to avoid or over stocking



The objective of most business include survived and growth fulfillment of social responsibility and realization of satisfactory profit.

This level of return enables company to have advantage of business opportunities undertake research and innovation which further make for growth and survival in the long run discharge its social responsibilities and its obligations to the owners.

In order to maintain this status quo, it becomes imperative that positive attempt must be made to minimize the operational cost of the business increase production and boost the face of these products.

However, one of the efficient ways of achieving the most desired efficiency in business operation is through education of operational cost to a tolerance level. One major component of this cost in many manufacturing organization that desires the attention of management is the investment in “inventories” otherwise known as stock. In the most organization, the inventory or stock figures is the largest simple item in the current assets group. Any excess as well as storage of stock can contribute to business failure inventories are the stock product 0 company is manufacturing for sale and the component of stock are raw materials work-in-progress (W.I.P) and finished goods. Raw materials are those input materials that are converted into finished goods through the manufacturing process.

Raw material stocks are those units of input which have been purchased and stored for production. Work-in-progress (WIP) stocks are semi-manufacturing products. They represent products that need more before they become finished products for sales.

Stock of raw materials and work-in-progress facilitate product while stock of finished goods is required to smooth marketing operation.

Considering the large sum of money work-in progress and finished goods it therefore become obvious that those stocks should be managed efficiently in profit position of the firm.

Any jeopardizing its long run profitability and may fail ultimately or the only sure way by which this risk can be avoided in a company is for the company to install a sound management system given the level of inventories needed for the most successful merchandising operation. The objective of operational management in to advice the lowest possible total cost of maintaining these inventories. This mean high labours and plant efficiency in the physical handling of inventories into one out of storage.


A critical look at the trend to business activities over some years in Nigeria will reveal a consistent increase in cost and declaring profitability.

It puzzles one why manufacturing companies in Nigeria have been operating efficiently   whether is because of in availability of raw material ability. But how can we recognize those with seasoned manager and vast market potential for manufacturing of   product in Nigeria.

There is also problem of discrepancy between policy and practice in stock management in the company under study. Stuck or inventories are sometimes allowed out of the stores without proper requisition being made. This is divergence between stock policy which prohibit stock leaving the stock without the proper requisitioned product.


The primary objective of this write up are:

(A)     To highlight the immense importance of efficient stock management in manufacturing companies

(B)   Finding the likely consequence of over stocking and under stocking the manufacturing company and the benefit attribute to having stock at its optimum level.


From the second point of secreting capital inventory in substantially less leaved their receivables and for is usually a less described from collateral from bank loan.

The important of this study to NBC in particular is to find solution to this processing problem. How much can the business afford to invest in stock or inventories without adverse financial effects on the company profitability since company of this type have some operation need more investing too much on stock means that there will be little or no funds to meet up the expenditure on these operation union for there is need for the manufacturing company to invest wisely on stock.

This study will also help the manufacturing companies to good against risk of losses through the following:

(A)           Deterioration and evaporation- material which can easily deteriorate   and evaporation should be used for storage to preview deterioration and evaporation.

(B)            Change in taste of fashion- care should be taken not to our stock items that can easily be rendered useless due to fashion change as this can result to higher importation the stock holding can be ascertained through the change in price of stock. Stocks are built if the price anticipated to be high. Similarly, any expected fail in the price will be the management to reduce the stock.


(i)   Does manufacturing companies appreciate the importance of efficient inventory management?

(ii)    Does overstocking introduce unnecessary carrying and ordering cost typing up of capital?

(iii)   Is inventory management of any important to a manufacturing company?


Noal (1881) defined hypothesis as a proposition put toward as a basis for reasoning a supporbution formulated from proved data and presented as a temporal explanation of experience as a science in order to establish a basis for the future research.

To come up with a useful result the following hypothesis were formulated efficient in production is not a function

Ho1          of efficient stock management

Ho2          Efficiency inventory management is a major tool for cost reduction and increasing profitability

Ho3          Inventory planning involves the determination of such factor as market demand and plant capital


In this research work some technical words which are purely related to the used for easy comprehensive explanation of these work are given below.

ORDERING COST:ordering cost usually consists of clerical cost of preparing a purchase order or production order and special processing and receiving cost relating to number of order processed.

CARRY COST: Carry cost of a desired rate of return on the investment in inventory and cost of storage. Breakage obsolesce determination insurance and personal property taxes.

ECONIMICAL ORDER QUANTITY: Inventory order quantity is that size of inventory that win result in minimum total annual cost at the item in question

RE-ORDER LEVEL: This is the point of level that automatically higher on new order. It is dependent on expected usage during lead time

LEAD TIME:   This is the in oval between placing an order and receiving delivery

SAFETY A QUANTITY OF GOOD:  Anything to kept or stored for use as the need arise especially a quantity of raw material work in-progress, Finished goods or supplies.

STOCK CONTROL: Activity process or study of ensuring that quantities of stock eg raw material supplied or finished goods such that satisfactory service level is maintained for all stock-keeping unit while holding cost are minimized.

STOCK HOLDER:  A term or a person who has a specific type of stock (e.g wholesaler that has stock of particular manufacturing goods)

STOCK HOLDING COST: The cost incurrent for a time eg the rent of storage space the stock level (inventory level) the magnitude of the stock of something.

STOCK OUT: A stock of having no stock keeping unit.

STOCK CARD: This is the card made for each item of inventory held.

STOCK TAIXINA   Measuring the quantity of items of stock that a enterprise has in order to obtain accurate list of it.

STOCK TURNOVER: The ration of the sale revenue of a firm for a period of the average value of its stock-in-trade or stock of finished goods during that period.

VALUE ANALYSIS  Considering of the function of all the part of the design of one firm product to see whether the change in national manufacturing methods or design with increase the product value to the firm.

OB-SOLENCE: The decline in value of the asset through external caused such as technological charge or change in demand.


 Adekunle Tunde (1986) the art of working capital managemenT   Seminar paper. Durbar Hotel unpublic shed p.4

 Braise J.T.M 91986)      inventory management: Then student account vol.6 Journal of association of student Account university of science andTechnology p.9 port Harcourt

 Lester e. Heitgir serge material   (1985)managerial accounting  London; mac Book Company 22nd edition

 Prof.smith (1985) control of stock level: Student newsletter (ACA) September p.13 Opp. Cit p. 195

 Ibekwe o.u (1954)          modern business management: Ibadan new African publishing Co. limited 1st edition p.399