ABSTRACT
This study examined the impact of stock and management on the productivity of business
organization and was aimed at investigating the impact of stock and management and its
influence on productivity as well as ascertaining the problems and benefit to be gained from it.
The study also attempted to determine the effect of inventory management on organizational
productivity. The method used in collecting data was a survey research method and the sample
size used for the study was Ninety-six (96). One hundred (100) questionnaires were administered
and a total of Ninety-six were returned by the respondents who were chosen from Fan Milk
Nigeria plc. The outcomes of study were presented in tables while chi-square statistical analysis
tool was employed to test the hypothesis formulated in the research. The test result showed a
significant relationship between stock management and productivity and the result also showed
that stock management also has relationship with productivity. This indicated that inventory
management was an important tool that could assist the organization to achieve her numerous
objectives and improve productivity. The research recommended that managers must ensure that
necessary materials are supplied to the department at the right time, so as to ensure effective and
efficient operation in the organization, the store officer must also ensure regular inspection of the
stores especially areas in which materials are stored and handled, to ensure that unused materials
are carefully disposed.
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TABLE OF CONTENTS
Title Page i
Approval Page ii
Certification iii
Dedication iv
Acknowledgements v
Abstract vi
Table of Contents vii
List of Tables ix
CHAPTER ONE: INTRODUCTION
1.1 Introduction 1
1.2 Background to the Study 1
1.3 Statement of Problem 2
1.4 Objectives of the Study 3
1.5 Research Question 3
1.6 Statement of the Hypothesis 4
1.7 Significance of the Study 5
1.8 Justification of the Study 5
1.9 Scope of the Study 5
1.10 Definitions of Terms 5
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction 8
2.1 Conceptual Framework 8
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2.1.1 Concept of Inventory Management 8
2.1.2 Concept of Material Handling 9
2.1.3 Types of Material 10
2.1.4 Concept of Inventory Control and Management 11
2.1.5 Concept of Material Movement 12
2.2 Theoretical Framework 13
2.3 Literature on the subject matter 14
2.3.1 Purposes for Holding Inventory 14
2.3.2 Material Requirement Planning 18
2.3.3 Economic Order Quantity 22
2.3.4 Purchasing Objectives and Policies 23
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Area of Study 25
3.1 Research Design and Sources of Data 25
3.2 Study Population and Determination of Sample Size 26
3.3 Instrumentation 26
3.3.1 Validation of instrument 26
3.3.2 Reliability of instrument 27
3.4 Procedure for Data Collection and Data Analysis 27
3.5 Limitations of the Study 27
CHAPTER FOUR: DATA ANALYSIS, FINDINGS AND DISCUSSION
4.1 Introduction 28
4.2 Data presentation and analysis 28
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4.3 Discussion of Findings 33
4.4 Test of Hypothesis 39
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.0 Summary of Findings 43
5.1 Conclusions 43
5.2 Recommendations 44
5.3 Proposal for Further Studies 45
Reference 46
Appendix 48
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LIST OF TABLES
Table 4.2.1 Distribution of Respondents by Sex 28
Table 4.2.2 Distribution of Respondent by Marital status 30
Table 4.2.3 Distribution of Respondent by Age 31
Table 4.2.4 Distribution of Respondents by Qualification 32
Table 4.3.1 Response to table 4.3.1 33
Table 4.3.2 Response to table 4.3.2 33
Table 4.3.3 Response to table 4.3.3 34
Table 4.3.4 Response to table 4.3.4 34
Table 4.3.5 Response to table 4.3.5 35
Table 4.3.6 Response to table 4.3.6 35
Table 4.3.7 Response to table 4.3.7 36
Table 4.3.8 Response to table 4.3.8 36
Table 4.3.9 Response to table 4.3.9 37
Table 4.3.10 Response to table 4.3.10 37
Table 4.3.11 Response to table 4.3.11 38
Table 4.3.12 Response to table 4.3.12 38
Table 4.3.13 Response to table 4.3.13 39
Table 4.4.1 Test statistics 39
Table 4.4.2 Test statistics 40
Table 4.4.3 Test statistics 41
Table 4.4.4 Test statistics 42
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LIST OF FIGURES
FIGURE TITLE PAGE
4.1.1 Sex Distribution of the Respondents 29
4.1.2 Age Distribution of the Respondents 30
4.1.3 Marital Status of the Respondents 31
4.1.4 Educational Qualification of the Respondents 32
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CHAPTER ONE
1.1 Introduction
The creation of management within the procedure of purchasing and storing activities is nothing
but to see that the store department which houses the purchasing section achieves it goals. The
manner with which materials are handled can have serious effect on thecompany that is, if
materials of complex nature or high values are mis-handled this could lead to damage or
deterioration of materials which may render them useless by the user’s department and also
constitutes a great loss to the organization so to avoid this, materials should be handled in the
best manner.
1.2 Background to the Study
Stocks are vital to the successful functioning of manufacturing and retailing organizations. They
may consist of raw materials, work-in-progress, spare parts/consumables, and finished goods. It
is not necessary that an organization has all these stock classes. But, whatever may be the stock
items, they need efficient management as, generally, a substantial share of its funds is invested in
them. Different departments within the same organization adopt different attitude towards stocks.
This is mainly because the particular functions performed by a department influence the
department’s motivation. For example, the sales department might desire large stock in reserve
to meet virtually every demand that comes. The production department similarly would ask for
stocks of materials so that the production system runs uninterrupted. On the other hand, the
finance department would always argue for a minimum investment in stocks so that the funds
could be used elsewhere for other better purposes, (Vohra, 2008).
Inventory represents an important decision variable at all stages of product manufacturing,
distribution and sales, in addition to being a major portion of total current assets of many
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organizations. Tock often represents as much as 40% of total capital of industrial organizations.
It many represent 33% of company assets and as much as 90% of working capital, (Sawaya Jr.
and Giauque, 2006). Since inventory constitutes a major segment of total investment, it is crucial
that good inventory management be practiced to ensure organizational growth and profitability.
According to Temeng et al (2010), historically, however organizations have ignored the potential
savings from proper inventory management, treating inventory as a necessary evil and not as an
asset requiring management. As a result, many inventory systems are based on arbitrary rules.
Unfortunately, it is not unusual for some organizations to have more funds invested in inventory
than necessary and still not be able to meet customer demands because of poor distribution of
investment among inventory items. Based on the above analogy, therefore this paper evaluates
the inventory management on the productivity of business organization in, with respect toFan
Milk Plc., Ibadan.
1.3 Statement of Research Problem
The major challenge that material manager face is to maintain a constituent flow of materials for
production. There are factors that inhabit the accuracy of stock which results in production
shortages premium freight and often adjustments.
According to the journal of Business logistics (2009). The major issues that all material
managers face are incorrect bills of materials, in accurate cycle counts, unreported scrap shipping
error, receiving errors and production reporting errors material managers have strived to
determine how to manage these issues in the business sectors of manufacturing since the
beginning of the industrial revolution. Although there are no known methods that eliminate the
afore-mentioned inventory accuracy, inhibitor there are best method available to eliminate the
impact up on maintaining an interrupted flow of materials for production. Reluctance can be
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reduced and effectiveness when service point are clustered to reduce the amount of reluctance.
An effective material handling program can also revolve island approaches to shipping, receiving
and vehicle movement solutions can include creating a new central loading location as well
consolidating service areas and docks from separate building into one. Developing better
circulation infrastructure also means reevaluating thick delivery and service vehicle routes. Base
on above statement that this research seek to examine the issue of material management and the
effect it has on an organization using a manufacturing company as the case study.
1.4 Objectives of The Study
The main objective of this study is to examine the impact of stock management and productivity
of a business organization. The specific objectives are:
i. To determine the effect of inventory management on organizational productivity.
ii. To evaluate the nature of correlation between inventory management and
organizational profitability.
iii. To examine the level of efficiency and product improvement in material management.
iv. To proffer useful suggestions and ideas on how to effectively manage materials in an
organization (Sander 2002).
1.5 Research Questions
The following questions shall guide the study:
1. To what extent does inventory management contribute to an organization performance?
2. Does specification on materials have any impacton the material management?
3. To what extent does material handling help in the enhancement of un-interrupted
production?
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4. Does forecasting for material requirement help the organization to have smooth
operations?
5. Does stock taking and proper stock checking essential for material management?
6. Does materials management contribute to the success of an organization?
1.6 Statement of the Hypothesis
The Following Hypothesis are Formulated?
Hypothesis One
Ho: Gender is not significantly related towhom is responsible for the effective store control,
stock holding and assessment of goods.
H1: Gender is related towhom is responsible for the effective store control, stock holding and
assessment of goods.
Hypothesis Two
Ho: Age does not determine effective material management which contributes to the success of
an organization.
H1: Age determines the effective material management which contributes to the success of an
organization.
Hypothesis Three
H0: Inventory management does not significantly impact organization performance.
H1: Inventory management significantly impact organization performance.
Hypothesis Four
H0: Specification on material does not significantly impact material management.
H1: Specification on material significantly impact material management.
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1.7 Significance of the Study
The result of this research when concluded will be of great benefit to the following: Companies
in the beverage industry especially Fan Milk Plc.The findings and the recommendation will asset
production managers to find better ways to manage their inventory. The findings and
recommendation can also be used as a stepping stone to other researcher in the areas for further
research work.
1.8 Justification of The Study
A research of this nature is significant in the sense that the impact of stock management and
productivity of business organization requires a constraint research. It is belief that the study will
throw light on the essence and importance of stock management and productivity of business
organization and the choice of selecting Fan Milk Nigeria plc. As my case study.
1.9 Scope of the study
This research study centered on materials handling in a manufacturing company. It covered such
areas as storage, transportation procurement, materials handling planning control and value
engineering. The research is also intended to cover a specified period of time and also
information are going to be drawn within the domain of Fan Milk Plc.
1.10 Definition of Terms
There are numerous terms and concepts associated with material handling. It is considered most
appropriate to define some of these terms and concept.
1. Inventory Management: This is the part of operation management concerned with
maintaining the optimum level of inventory investment. It is concerned with policy
making on inventing planning and inventory control.
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2. Holding/carrying Cost: These include the cost for storage facilities, handling, insurance,
pilferage, obsolescence, depreciation, taxes and the opportunity cost of capital obviously
high holding cost tend to favour low inventory and frequent replenishment.
3. Ordering cost: these include certain clerical costs incurred in preparing order delivery
and material handling costs, such costs usually represent a fixed amount for order placed
regardless of the quality ordered.
4. Stock valuation:- This is the method of assigning value to items of stock of a company.
It helps company management to make inventory level decision. They use different
method like last in first out (LIFO) first in first out (FIFO).
5. Inventory Control: This involves regulation of quantities of materials or inventory on
hand in such a way as to ensure the meeting of current needs of the organization while
avoiding excess stock, the calculation being based on the rate of withdrawals and the time
necessary of replenishment.
6. Inventory: This is the stock of any item or resources used in an organization. It includes
input such as human, equipment, financial and raw materials.
7. Inventory System: These are set of policies and controls that monitors levels of
inventory and determines what levels of should be maintained when stock should be
replenished and how large orders should be.
8. Re order level: This is the quality level that automatically biggers a new order it is
the stock level at which further replenishment order should be placed.
9. Maximum stock: This is the most desirable beyond which stock should not be allowed
to rise.
10. Re order Quantity: This is the quantity of the replenishment order.
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11. Stock out: when an item of stock is required but is not available, then there is a stock out
of that item.
12. Safely stock: An amount of stock in excess of average inventory held in a cushion
against a stock out alive to usage or uncertainty of lead time.
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