ABSTRACT
This study was conducted to highlight the relevance of stock
control: an indispensable tool for effective performance in an organisation ( A
case study of Beta Glass Company Plc, Ughelli)
It is also meant to emphasize the objective of stock control in Beta
Glass Co Plc, Ughelli and other such related establishments. The study cover the general introduction
overview of the topic and statement of problem, objective of the study,
significant of the study, research methodology, limitation of the study and
definition of terms. While chapter two
is literature review which dealt on the historical background of the study,
nature and classification of stock budgeting and material storage and is
followed as chapter three. All our finding
during the course of study were explained in chapter four, these includes the
organisational structure, capitalization of Beta Glass Company Plc, which
further led to the recommendations and conclusion and then followed by
references.
CHAPTER ONE
INTRODUCTION
1.1 Background
of the Study.
Stock is a
system used in a firm’s investment in stock which involves recording and
monitoring of stock level, forecasting future demands deciding when and how
many to order to minimize overall cost associated with stock.
This
emphasize as managerial area of responsibility which focuses production on
material control, procurement quality control and stock handling. Stock control
is thus essential and an activity that is concerned with efficient procurement
and use of material for the attainment of predetermined corporate objectives.
The need
for efficient stock control in the surface increasing cost of material due to
information and over deteriorating economy cannot be over emphasized, stock
constitutes and essential cost element of production in 2 large majorities of
manufacturing industries, stock cost amount for about 65 percentage the total
manufacturing cost of their finished goods.
Quite
obviously, the objective of any business concern among others is maximization
of profit, profit maximization is the result of optional and effect utilization
at available financial and material resources. In essence, corporate success is
increased profit as well as by exploiting opportunities sustained
profitability.
Company’s
procurement function because of paramount important with its outlay account for
high production of total cost of manufacturing operating process, when a large
range of diverse items are required, and tend to scare on unavailable at
critical stage of the production cycle range of spare parts have to be obtained
from important sources and their product cost fluctuation and their
international trade barriers.
1.2 Statement of
Problem.
The major
stock control problem is to maximize profit ability balancing stock investment
cost against what is required to sustain small operation. Raw material stocks
which constitute a vital cost element manufacturing expenditure of any organisation
engaged in manufacturing produce account. (For about 65% the total
manufacturing cost of most industries).
An
increasing high cost of material have been recorded in recent years due to the
worsening economic problem of monitory instability and inflation, this cost of
material could also be attributed to materials mis-administration. Huge sum of
money is lost through various form of procurement fraud large – scale material
pilferages by the store and material users department, in addition losses
through material obsoletes, waste occasioned by mismanagement can lead to
supply disaster of various magnitude. One of such suppliers disasters may stock
out cost, this present a major problem of disruption in operations results of
inaccurate balancing of material procurement with consumption consequences of
this may be in the form of breakdown of machines, loss current sales, premium
payment for rush delivery, loss of goodwill and future sales.
1.3 Objectives
of the Study.
In
carrying out this study of stock central Beta Glass Co. Plc Ughelli, the
following objectives will be achieved;
a. To study
the material control policies and practices by evaluating analytically the
purchasing, material hauling method and various accounting method of costing
material issued by valuation of closing inventory stock.
b. To
investigate so as to identify, the controllable and uncontrollable with
material cost control with a view of determining ways of keeping them within
controllable limits.
c. To
highlight the end and importance of sound scientific approach to stock control
in the face of our deteriorating economy and over increasing cost of stock and
materials.
d. To analyse
the efficiency of their stock holding economic order quantity (EOQ).
1.4 Research
Questions
Research
question enable one to view the essence of literature review to provide the
required foundation for undertaking an empirical study on stock control, answers
are required to the following research questions.
a. How
familiar are you with the activities of the store and materials handling
department and purchase and supplies department?
b. In your own
opinion, what are the functions of the store material holding department and
the purchasing/supplies department?
c. How has the
store/material holding department and the purchasing and supplies department
improved the stock control system of the company?
d. What do you
think is the major cause of inefficiency and ineffective stock control in the
economy?
e. How
efficient is the local purchase order (LPO) committee?
f. What are
the major considerations that are criteria for the selection of a supplier for
an order?
g. How does
stock control play an important role on the profit maximization of the company?
1.5 Significance
of the Study.
Stock
control is even more necessary for Nigeria firms especially in period of
economic deteriorate on every increasing cost material consequently resulting
in the folding up of a lot of firms.
Stock
constitutes a major part of the economy’s investment, these in need therefore
to control stock because more than half of the company’s income used to
purchase stock production. Hence, there is need to have effective stock control
so as to avoid shortage of stock for production and at the same time, too much
stock which will result in waste and high holding cost.
The major
problem faced by a manufacturing firm as regard stock, the way of determining
optimum level of stock and evaluation of management policies for ordering stock
unfortunate little or not attention have been given toned for values analyses
(VA) cost analyses and purchasing research of material to evolve a more
scientific approach and innovation to improve efficiency and effectively taking
of inflationary threads.
This
research work therefore is intended to fill the gaps that have existed and
create a ground or future research will attempt to offer practicable suggestion
in stock control in Beta Glass Co.Plc Ughelli and to hope that suggestion will
of benefit to the company and their manufacturing firm. It will go a long way
to enhance interest in new approach, concept and philosophies aimed at better
cost control over material.
1.6 Scope of the
Study.
This research work is committed to cover the following:
i. To
evaluate analytically the procurement stock control policies and practices of
Beta Glass Co.Plc Ughelli. The purchasing procedure of the organisation was
examined.
ii. A
methodical study for the stock department was particularly carried out on its
organisation, its various stock control method as well as its stock level
analysis.
iii. The cost
accounting section involvement in stock control and rational accounting system
was examined with regard to method off costing ledgers and stock taking and
checks.
1.7 Limitation
of the Study.
This study was limited by the following factors.
a. The
bureaucratic redemption involved in obtaining data that was cumbersome series
for approval had been granted before certain form of data were released. Even
the deterring approvals to carryout the research study, the difficult of
eliciting the necessary co-operation of those in place of relevant information
were experienced. Some of those approached declined for fear of giving out
secret information about the organisation. Other assumed this study to be fact
finding exercise into their fraudulent practices and mismanagement, as such
declined respond.
i.
Unwillingness to reach to questionnaires.
ii. Also to an
appreciable extent, the study was limited by the values aspect which could not
ready to determine by statistical analysis.
1.8 Definition
of Terms.
a. ABC
analysis, a basic technique of stock control, which classified stock according
to monetary valves. Stock item are this categorized as:
i. A- Item:
High values item for which careful control is needed.
ii. B- Item:
Moderate value item.
iii. C- Item:
Low value item.
b. Bin card: A
store record showing maximum and minimum quality to be held in – stock and re –
order level.
c. Carry Cost:
Cost incurred in maintain inventories including storage, insurance and cost of
find invested in stock.
d. Current
Asset: These assets which can be, converted into cost within an accounting year
or within the operation cycle.
e. FIFO (First
in First Out): Material are issued which assumes that material are issued from
orders stock and according price.
f. Values
Analysis (VA): It is an organized creative approach to identify unnecessary
cost items, it tries to reduce cost and possible, ultimately eliminate these
necessary component of cost which have no functional utility to these item
concerned.
g. Stock Out Cost:
Losses through idle capability cased by non availability of material.
h. New
Controllable Cost: Cost that cannot be affected by the action of decision of
individual.
i. Material
Requisition Planning (MRP): A system of planning for availability of stock in
time, which pre – supposes that lead time for all stock items are known and can
be supplied to the system at least as estimate.
j. Re-Order
Point: The stock level where an order must be placed to provide adequate lead
time to ensure delivery in time. A replenishment order is made where stock
research re – order point.