CONTROL OF STOCK AND ITS IMPLICATION FOR MANUFACTURING INDUSTRIES (A CASE STUDY OF UNITED NIGERIAN TEXTILE PLC KADUNA)
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CONTROL OF
STOCK AND ITS IMPLICATION FOR MANUFACTURING INDUSTRIES
(A Case Study of UNITED NIGERIAN TEXTILE PLC Kaduna)
ABSTRACT
Control of stock and its
implication for manufacturing industries are very significant in the
operational activities of an organization especially that of processing and
manufacturing concerns, which are profit, oriented. The research direct its
focus on the proper understanding of how effective and efficient application of
stock control techniques will enhance greater productivity in the organization
as well as stimulate economic growth and development. This project review
relevant literature and source it data main from primary sources and analyze
them to warrant an object recommendations, which will be indispensable to policy
maker.
TABLE OF CONTENT:
Cover Page - - - - - - - - i
Title Page - - - - - - - - - ii
Declaration
- - - - - - - - - iii
Approval
- - - - - - - - - iv
Dedication
- - - - - - - - - v
Acknowledgement - - - - - - - vi
Abstract
- - - - - - - - - ix
Table
of Content - - - - - - - - x
CHAPTER ONE: (General Introduction)
1.0
Introduction - - - - - - - 1
1.1 Historical Background of Organization - - - 4
1.2
Statement of
the Problem - - - - - 7
1.3
Research
Question - - - - - -
1.4
Significance of
the Study - - - - - 9
1.5
Objective/purpose
of the Study - - - - 10
1.6
Statement of
Hypothesis - - - - - 12
1.7
Limitation and
Delimitation of the Study - - - 13
1.8
Definition of
Terms - - - - - - 14
CHAPTER TWO: (Literature Review)
2.0
Introduction - - - - - - - 17
2.1 Meaning of Stock Control - - - - - 17
2.2
Standard System
of Control - - - - - 26
2.3
Maximum Stock
Level - - - - - - 28
2.4
Minimum Stock
Level - - - - - - 29
2.5
Reorder Stock
Level - - - - - - 29
2.6
Economic Order
Quantity (EOQ) - - - - 32
2.7
Stock Taking
and Stock Checking - - - - 35
2.8
Types of Stock
Taking - - - - - - 36
2.9
Review of Stock
Levels - - - - - 39
2.10
Importance of
Stock Levels - - - - - 40
2.11
Problems of
Stock Control - - - - - 42
CHAPTER THREE: (Research Methodology)
3.1
Research Design
- - - - - - - 44
3.2
Population
Sampling - - - - - 44
3.3
Sources of Data
- - - - - - - 45
3.4
Statistical
Techniques Used for Data Analysis - - 48
CHAPTER FOUR: (Presentation and Analysis of Data)
4.1 Introduction - - - - - - - 49
4.2 Data Analysis - - - - - - - 49
4.3 Hypothesis Testing - - - - - - 68
CHAPTER FIVE:(Summary, Conclusion and Recommendation)
5.1 Summary of
Findings - - - - - - 73
5.2
Findings - - - - - - - - 75
5.3
Conclusion - - - - - - - 76
5.4
Recommendation - - - - - - 77
Bibliography - - - - - - - 80
Appendix - - - - - - - - 82
CHAPTER ONE
GENERAL INTRODUCTION
1.0 INTRODUCTION
The world of study
is full of discoveries and innovations. Through intensive question and
enquires. The discoveries are used in solving some compound problems either
directly or indirectly.
This
study is focused on stock control and its implication in an organization, with
special reference to the manufacturing industries.
Stock
is an material supplied, received into store house and being shop or issued on
request (Lockyer K. 1984)
Stock
control is the means by which material of correct quantity and quality is made
available as and when required with due regard to economy in storage and
ordering costs, purchase prices working capital.
Stock
control is very important in the public sector, but it is generally considered
to be more important in the private sector, this is because there is a notion
that control is always applied by a profit making organization. The present
economic situation in the country has made it imperative for manufacturing
industries to control its stock scientifically other wise it will affect the
cost of production as well as its profit margin.
There
is no standard system of stock control which can be universally recommended or
applied, each organization adopt the one most suitable to its needs, although
certain principle and practice are more or less common to most them.
Stock
control is very important unit in an organization, which has to be critically
analysed and coordinated however various firms has not been making use of stock
control to their own advantage.
They
tend to have little or shallow view of the stores activities, which in the long
run brings set back to them and resulting to tying down the circulating
capital.
Therefore
adequate method of measuring and checking inventory level is crucial for the
survival or any organization especially the manufacturing concern. Stock
control involves the making of rational decision on the level of stocks that
may be economically needed to meet all requirement for planned production.
From
the stores point of view, one of the major important thing is to keep the
incoming material as nearer as possible to the machine shops and assembly shops
that will be used daily. To avoid a disruption of production process that may
ultimately result in low productivity, low sales and low profit, shortage of
materials should be avoided.
In
other words, every organization should as a matter of importance, know its
quantity and its economic order quantity.
More
also, proper and adequate stock control regulates the delivery of excessive
materials, hence if left unchecked, it will pile up the ware house the
production area, apart from the fact that the excess of deliveries tie up too
much capital here the emphasis should be on the manufacturing schedule and
everything is regulated by that, in respect to some manufacturing firms that
deals with expensive or bulky material or components the flow has to be
regulated and managed hour by hour and their demand high degree of
understanding cooperation and efficiency.
Therefore,
if as effective and efficiency system of the control is implemented by any
manufacturing company as well as any other organization, a huge amount of money
and time will adequately by saved.
1.1 HISTORICAL BACKGROUND OF UNITED NIGERIAN
TEXTILE PLC.
United Nigerian Textile Plc was incorporated in Nigerian on
7th May, 1964 for the purpose of producing printed textile
materials. The company, which operates one of the biggest and most efficient
textile mills in Nigeria, commenced operation at the beginning in 1965.
Initially, United Nigerian Textile Plc (UNT PLC) was a
finishing plant importing gray, cloth as its main raw material. But following
the federal government policy on background integration, in June 1967, the
company installed both spinning and wearing facilities in produce gray both
from locally grown cotton in its determination to expand its operation again in
1967, the company acquired a controlling interest in Zamfara Textiles Industry
Limited (ZTIL) by this decision UNT PLC was assured of steady supply of gray
buff for its highly efficient finishing plant, which at the time, was the only
plant producing highly sophisticated wax print in the country and indeed, in
west Africa.
In 1976 UNT Plc. UNT Plc conceived the idea of establishing
a textile factory to produce material quite different from the conventional
products of both Kaduna (UNT Plc) and Gusau (ZTIL) factories. This was
successfully in corporate and established in 1977 at Funtua Textile Limited
Under the company’s policy of even spreads. Funtua Textile Limited (FTL) is now
producing high quality bed sheet, pillow cases and cotton/ Polyester fabrics.
In 1980, UNT PLC brought of NORSPIN and own its
premises a subsidiary company (UNITEX
LIMITED) and an association company (SUPERTEX LIMITED) was set up. Unitex
Limited is spinning plan, which produce yarn for the sole consumption of UNT
PLC. Supertex Limited is a finishing plant producing wax prints. Although
Supertex has been closed down in May 2004.
UNT Plc is now a group of four companies spread over three
neighboring state, Namely Kaduna, Katsina and Zamfara, with its product being
distributed through out the country. Its expansion and modernization programmes
have made the group the biggest employers of labour among all the textile
industries in the country and of course the target in terms of production
capacity.
For the future, the industry will continue to seek to
improve the quality of its products increase efficiency and as well keep
abreast of modern advances in technology.
1.2 STATEMENT OF THE PROBLEM
Malpractices exist in the store section, especially in the
areas of theft and fraud, because of the small nature of some of the materials
but high in value, therefore, such things can easily be pilfered if proper
control is not adopted.
Consequently, stock administration and control has been
facing a lot of challenges of over and under stocking pilfering and other
happenings that are posing a threat to the operation of stock activities have
been persistent. Until an organization devices means through which stock
activities and stock control and its implication can effectively be handled,
the stock administration and its control will continue to suffer some defeat.
Stock control and its importance came into limelight during the industrial
revolution in Europe, the revolution resulted in scarcity of raw material and
component parts, this led to many manufacturer devising ways of controlling and
holding stock, until when needed.
This research work is therefore intended to show case the
modern proven methods of ordering holding and dispensing stock and its control
organization such that stock and stock control will be an hitch free task.
These problems are not limited to single organization rather it is a universal
problem still facing of affecting many organization. In all organizations, money
is spent in acquiring materials and for lack of proper control, these materials
are lift lying down uncared for. This is because the management pays little or
no attention to the control of stock. They do not see stock control as a
contributing factor to profitability or an aid in achieving the organizational
goal.
This research work attempt to evaluate the stores section
of the manufacturing concern with the aim of making useful suggestions and
recommendation on possible way or strategies that can be adopted in enhancing
an unproved effective and efficient stock control.
Stock control and its importance came into limelight during
the industrial revolutions in Europe, the revolution resulted in scantly of raw
materials and component in parts, this led to many manufacturers devising ways
of controlling and holding stocks unit when needed.
1.3 SIGNIFICANCE OF THE STUDY
This research is
written in anticipation to be of immense value to many individual, group,
private organization and government entailment.
The
work will also increase the knowledge of then personnel staff of the
organization under study especially the stores section with regards to how to properly manage materials in the store
so that too much lasted expenses would not be incurred by the organization as
if will ultimately results in low profit margin of the organization.
The
suggestion that will arise from finding of this study will made the policy
makers, researchers and even the general public in a more enlightened position
to either serve as a reference or increase their knowledge in formulating
policies that would bring about rapid and meaningful development of their
various organization particularly manufacturing sector.
Further
effective management of material and inventory is one of the major factor
contributing to the over all success of the organization, hence this work will
reveal some of the problems hindering the effectiveness of store activities and
if the suggestions taking into consideration will definitely contributes to the
economic well being and the overall success of the organization.
1.4 OBJECTIVES OF THE STUDY
The main rational of
writing this research is to enable the researcher, the stock managers and the
business studies students to find solution to the continuous problem
encountered in controlling stock in their various field of operation.
For
instance, in the manufacturing industries by poor management of stock has been
prevalent there by reducing the profit margin of organization.
Stock
control involves the making of decision on the level of stock that may be
economically needed to meet all requirement for planned production.
One
of the most important thing is to keep the incoming materials as nearer as
possible to the amount the machine shops and assembly shop will use, why
regularly shortage must be avoided or else production lines may have to stop
and at the same time too much must not be delivered, other wise, it will pile
up the ware house, the production area, apart from the fact that the excess of
deliveries will tie up too much capital.
This
study allows the researcher on opportunity to examine the organization’s stock
control system and implication more closely in order to understand the nature
of the problem with a view of suggesting possible solution to them.
The
research work is also to help us to see for ourselves, stores activities that
are being carried out in manufacturing industry.
Finally,
it is also hoped that it will constitute a source for assisting future students
to obtain preliminary understanding of the subject matter covered by this work,
as it will be a reference for further research work.
1.5 STATEMENT OF THE HYPOTHESES
The following
hypotheses are tested in the course of this study.
HYPOTHESES
H 0: That
the use of stock controls system will not improve the company’s efficiency.
H 1: That
the use of stock controls system will improve the company’s efficiency.
1.6 LIMITATIONS AND DELIMITATION OF THE STUDY
These
are circumstances that limit ones effort in performing a giving task in
conducting a study of this nature, there
must be some hindrance which stand as limitation encountered below.
The
initial experience of the researcher showed research like this needs enough
time for collecting of fact and other relevant information on stock control and
its implication.
Another limitation
to this research was that most of the staff under the stores section were semi
literates. Also the uncooperative attitude of some staff of the store house
often due see the research work as the means of bringing to light any fraud
committed by them in the course of their duties as stores officers therefore
tended to give scarcity information when approached.
The most difficult
constraint, which the study suffered from, was that of time constraints.
Yet the researcher
was able to complete the job within reasonable framework.
1.7 DEFINITION
OF TERM
v
Maximum Stock Level:
Is the amount expressed in the unit of issues, above which the stock should not
be allowed to exceed.
v
Minimum Stock Level:
This Is the amount expressed in the unit of issues, above which the stock of
any commodity should not be allowed to fall.
v
Reorder Level:
Is also considered as the unit of issues at which ordering action is indicated
in time before material could fall below the minimum level.
v
Stock Taking:
The process of verifying the quantity balance of items holds in stock by
comparing the physical and the record.
v
Review Of Stock:
In order to keep abreast of changing condition after stock has been
established, review of stock would be conducted at a reasonable interval.
v
Economic Ordering Quantity
(EOQ): Is the mathematical formula needed or employed by many
organization to established the most economic amount to order for any item held
in stock.
v
Control by Value:
It uses price in controlling the value of stock, the whole stock held are
measured in monetary terms and stock control as on of the tools used.
v
Control:
Is an element of managerial task that involves the management of stock held in
stores houses to make sure that the objective of the enterprises or firm are
accomplished efficiently and economically.
v
Inspection: Is
the means of examining the incoming consignment for the right quality and
quantity.
v
Discrepancy:
The differences between record and physical quantity after stocktaking.
v
Continuous Stock Taking:
This is the method whereby stock taking continuously through out the year, in
accordance with the predetermined programmes so that each item is physically
verified at least once in the year.
v
Hastening Stock Level:
This is the amount expressed in the unit of issues at which it is estimated
that hastening action is necessary to request suppliers to make early delivery.
v
Two Bin System:
This system is a simple and direct method of stock control. The two bins
contain the same items and of equal quantities.
v
Investigation of
Discrepancies: This process after the stock taker and
the storekeeper have agreed that a discrepancy exists, the procedure depends on
the nature and value of the discrepancy.
v
Obsolete: This
is where an item is no longer usable by the organization concerned due to the
changes in operational technique or production.
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