Abstract
Production planning and control is simply the analysis
involved in transforming raw material or components into finished products,
integrated synergistically to reduce waste in time and finance with maximum
obtainable profit. With reference to services (intangible), production is the
discharge of a function with some degree of utility, which for goods (tangible)
production is viewed as the fabrication, interchange and re-use of physical
objects through machines, human resources and any other pertinent applicable
tools (Bartak, 1999).
This research project
is thus a search for impact of production planning and
control on operational cost of manufacturing industry in Nigeria in seven up
bottling company.
Chapter one of the study lays a
theoretical framework for subsequent chapters. Following the general
introduction, the problem statement and the objective of the study which
provided basis for the significance of the study and the hypothesis were
stated. The limitation of this study were also highlighted.
In the literature
review as contained in chapter two, works of various authors, international and
local journals were reviewed to elicit views on the impact of production planning and control on operational
cost of manufacturing industry in Nigeria in seven up bottling company.
Chapter three, research methodology,
description of population and sampling procedure for data collection were
discussed. Methods of questionnaire design, determination of sampling size and
questionnaire distribution were also highlighted.
Chapter four was based on analysis of
data collected. This chapter was sub-divided into data analysis, hypothesis
testing and summary. Percentage table, figure and narration were carefully
employed for proper understanding and testing of hypothesis.
Finally, chapter five was divided into
summary of findings, recommendation and conclusion.
The outcome of this study will therefore educate the manager
of industries and other stakeholders in the manufacturing sector on ways by
which production planning and control can drastically reduce the operational
cost in an industry.
TABLE OF
CONTENTS
Title Page - - - - - - - - - i
Approval Page - - - - - - - - ii
Declaration - - - - - - - - iii
Dedication - - - - - - - - - iv
Acknowledgement - - - - - - - v
Abstract - - - - - - - - - vi
Table of Contents - - - - - - - vii
CHAPTER
ONE – INTRODUCTION
1.1 Background of the Study - - - - -
1.2 Statement of General Problem - - - -
1.3 Objective of the Study - - - - - -
1.4 Research Questions - - - - - -
1.5 Hypothesis
- - -
- - -
- - -
1.6 Significance of the Study - - - - -
1.7 Scope of the Study - - - - - -
1.8 Definition of Terms - - - - - -
CHAPTER
TWO – REVIEW OF RELATED LITERATURE
2.1 Introduction - - - - - - - - -
2.2 Theoretical Framework - - - - - - -
2.1.1 Inventory theory - - - - - - - - - -
2.2 Conceptual Framework- - - - - - - - -
2.2.1 Concept of production planning- - - - - - -
2.2.2 Concept of production control- - - - - - - -
2.2.3 Impact of production planning and control- - - - - -
2.3 Empirical review of literature- - - - - - - -
2.4 Summary- - - - -
- - - - - -
CHAPTER
THREE – RESEARCH METHODOLOGY
3.1 Introduction - - - - - - - - -
3.2 Research Design - - - - - - - -
3.3 Area of the Study - - - - - - - -
3.4 Population of Study - - - - - - - -
3.5 Sample size and Sampling Techniques - - - - -
3.6 Instrument for Data Collection - - - - - -
3.7 Validity of the Instrument - - - - - - -
3.8 Reliability of the Instrument - - - - - -
3.9 Method of Data Collection - - - - - - -
3.10 Method of Data Analysis - - - - - - -
CHAPTER
FOUR – DATA PRESENTATION AND ANALYSIS
4.0 Introduction - - - - - - - - -
4.1 Data Presentation and Analysis - - - - - -
4.2 Characteristics of the Respondents - - - - -
4.3 Data
Analysis - - - - - - - - -
4.4 Testing Hypothesis - - - - - - - -
4.5 Summary
of Findings - - - - - - - -
4.6 Discussion of Findings - - - - - - -
CHAPTER
FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Introduction - - - - - - - - -
5.1 Summary - - - - - - - - - -
5.2 Conclusion - - - - - - - - - -
5.3 Recommendations - - - - - - - -
References
- - - - - - - - - -
Appendix - - - - - - - - - -
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
Production
planning and control is simply the analysis involved in transforming raw material
or components into finished products, integrated synergistically to reduce
waste in time and finance with maximum obtainable profit. With reference to
services (intangible), production is the discharge of a function with some
degree of utility, which for goods (tangible) production is viewed as the
fabrication, interchange and re-use of physical objects through machines, human
resources and any other pertinent applicable tools (Bartak, 1999).
The objectives of production planning can be summarized and
is to provide the capacity and production to meet agreed or projected demand,
ensure timely and positional availability of materials and components,
provision of a steady flow of work through all departments, provide a balanced
work between various departments involved in production operation, make
available adequate manufacturing instructions to enable proper management, and
supervision and records and Provide adequate information to arrest failure and
delay (Pounds, 1999).
Planning is a continuous process which involves decisions or
choices, about alternative ways of using available resources with the aim of
achieving a particular product at some time in the future (Silver, Pyke &
Peterson, 1998). The relatedness of production planning to effective operation
in any organization has been indicated and recognized as enhancement to
organizational output and reduced operational cost.
For
many manufacturers the task of meeting the ever rising demand and customer
expectations and lowering operational costs in an environment of more products,
more complexity, more choice and competition is placing great stress on the
effectiveness of their planning of activities in the production process
(Pounds, 1999). Organizations have already adopted solutions with vary degrees
of planning and controlling capabilities. Yet, operation executive acknowledge
that these same systems are becoming out dated, lacking the speed, flexibility
and responsiveness to manage their increasing complex production environment.
Effective
production planning and controlling is vital to the success of every
manufacturing business. Regardless of the industry, finding the best way to
purchase, allocate and utilize the production resources to efficiently satisfy
the customers while minimizing operational costs is a constant challenge
(Banjoko, 2005). But, without the right production planning and control, it is
near impossible.
The
process of production planning is central to the success of any manufacturing
company. In general terms, the production planning process involves generating
a plan to satisfy customers in a manner that results in a reasonable profit.
The specifics of the production plan should vary company to company, and
industry to industry. Production planning is an important part of the process
for manufacturing firms. The organization of production relies in general on
the implementation of a certain number of basic functions, among which the
control function plays an essential role. Magee (2006) emphasized the
interrelationships between these two important production management
activities. Irrespective of organizational status, it is generally recognized
that production planning and control, are closely interrelated. In theory,
problems are frequently classified according to type of problems, example
distribution, queuing or sequencing. However, real industrial problems often do
not fit into rigid categories. Production control is a unifying problem closely
related to other areas within an organization such as sales, cost control, purchasing,
capital budgeting and inventory management (Pounds, 1999).
Control
is the establishment of starting and finishing dates for productive activities
(Rago, Huisman & Wagelmanss, 2003). Under certain conditions, control may
also determine the sequence of operations and/ or the assigned workload on
certain equipment. For example, as the size of the control matrix increases,
(i.e., more orders to be assigned to a larger array of machines) the number of
possible combinations of routings increases exponentially.
Control
concerns the allocation of limited resources to tasks over time. McKay, Kenneth
& Vincent (2006) explained “Production control is concerned with the
allocation of resources and the sequencing of tasks to produce goods and
services. Although allocation and sequencing decisions are closely related, it
is very difficult to model mathematically the interaction between them.
However, by using a hierarchical approach, the allocation and the sequencing
problems can be solved separately. The allocation problem is solved first and
its results are applied as inputs to the sequencing problem. The resource
allocation problem can sometimes be solved using aggregate production planning
techniques. However, the accomplishment of the control function should not
generally imply that rank orders have been set or specific machine loads
determined. The term control is often used to describe the sequencing
situation. Control should be reserved for procedures which give the time of
arrivals units requiring service. Sequencing is defined as determining the
order in which items are processed. The control of complex activities,
particularly when job process times are short, does not explicitly determine
the order of work for manufactured items. Control–sequencing problems are,
therefore, concerned with determining both the time that the order processing
is completed and the rank order, that is, the sequence of order processing.
Production
control has three goals or objectives. The first involves due dates and
avoiding late completion of jobs. The second goal involves throughput times;
the firm wants to minimize the time a job spends in the system, from the
opening of a shop order until it is closed or completed. The third goal
concerns the utilization of work centres. Firms usually want to fully utilize
costly equipment and personnel. Often, there is conflict among the three
objectives. Excess capacity makes for better due – date performance and reduces
throughput time but wreaks havoc on utilization. Releasing extra jobs to the
shop can increase the utilization rate and perhaps improve due date performance
but tends to increase throughput time.
Vollman,
William & Clay (1997) noted that the production control is derived from the
production plan; it is a plan that authorized the operations function to
produce a certain quantity of an item within a specified time frame. In a large
firm, the production control is drawn in the production planning department,
whereas, within a small firm, a production control could originate with a lone
production controller or even a line supervisor.
Operational
costs are expenses associated with the maintenance and administration of a
business on a day-to-day basis. The operational cost is a component of
operating income and is usually reflected on a company’s income statement.
While operational costs generally do not include capital outlays, they can
include many components of operating a business including accounting and legal
fees, bank charges, sales and marketing costs, travel expenses, entertainment
costs, non-capitalized research and development expenses, office supply costs,
rent, repair and maintenance costs, utility expenses, salary and wage expenses.
The
Seven-Up bottling company Plc is one of the largest independent manufacturer
and distributor of the well-known and widely consumed brands of soft drinks in
Nigeria. The brands are Pepsi, 7UP, Mirinda, Teem and Mountain Dew, which is
produced and marketed in all its present 9 manufacturing plants. The company
also markets its products through its over 200 distribution centres that is
also call depots spread over the nooks and crane of Nigeria. The workforce is
currently in the neighbourhood of 3500 employees. A Lebanese Mohammed El-khalil
who came to Nigeria for the very first time in 1926 founded the company.
Mohammed is the father of the company's current chairman Faysal El-Khalil. The
company metamorphosed from a very successful transport business [El-Khalil
Transport] in a bid to diversify the then largest transport company in the entire
West of Africa. On October 1st 1960, the exact day the great country Nigeria
won her independence, Nigerians also experienced the birth of a soft drink
giant as the first bottle of 7Up rolled out from the factory located in Ijora.
Since then, the company continued to grow in the leap and the bound.
1.2 STATEMENT OF THE PROBLEM
Jain and Aggarwal (2008) state that,
every manufacturing activity requires resource input in terms of men,
materials, money and machines. They went further to state that in any business
that produces a product or service production activity must be related to
market demands as indicated by the continuous stream of customers' orders. It
follows therefore that for maximum effectiveness, this must be done in such a
way that customers’ demands are satisfied, but at the same time production
activities are carried on in an economic manner. However, the researcher is of
the opinion that the process of developing this kind of relationship between
market demands and production capability must be the function of production
planning which has been described by several researchers as the
predetermination of manufacturing requirements of such things as available
basic materials, detailed equipments, production runs, order priority, money,
man and production process within the scope of the enterprise for efficient
production of goods to match its sale requirements. Control can be effected
principally through the management of workflow, inventories and backlogs, and
changing levels of operation (Winston, 2004). It is on this note that the
researcher is examining the impact of production planning and control on
operational cost of manufacturing industry in Nigeria with specific focus on
the Seven up bottling company.
1.3 OBJECTIVES
OF THE STUDY
The
general objective of this study is to examine the impact of production planning
and control on operational cost of Seven up bottling company in Nigeria while
the following are the specific objectives:
1. To
examine the effect of production planning and control on operational cost of
Seven up bottling company.
2. To
examine the effect of production planning and control on profitability of Seven
up bottling company.
3. To
examine the effect of production planning and control on organizational
effectiveness and productivity of Seven up bottling company.