CHAPTER ONE
INTRODUCTION
The importance of accurate stock control in an
Organization cannot be over emphasized no matter how diligent the job of
control (computerized or manual). Some discrepancies are bound to occur. The
system is operated by people, and people sometimes make mistakes.
Every inventory item should be physically counted and
checked against its balance at least once a year. This verification of the
quality balance is subsequently adjusted to match the actual count, for this
reason, most companies created on inventory short hand over account to cater
for such discrepancies, this account is eventually close into the manufacturing
overhead account. The researchers will also highlight some of the ways of
conducting the stock control in one of this ways of conducting the stock
control exercise.
The physical inventory can be conducted in one of
these ways:
i.
Fixed
annual inventory: many companies take
physical inventory every year at the close of the financial period.
ii.
Continuous
Inventory: at the beginning of each year, some
firms divide the inventory period into fifty two equal groups to be physically
counted without interrupting the production operation or up setting store room
activities.
iii.
Low
point Inventory: some companies take
physical inventory regulatory. i.e. whenever the stock level of an item reaches
lowest point.
All these three methods are widely used in the
selection of the most appropriate that one depends largely upon conditions in each
individual business. The fixed annual inventory can be troublesome because it
is a major task which must be accomplished in a short period of time. However,
it is ideal seasonal business or business that completely closes down for an
annual rotation.
The continuous inventory approaches possess two major
advantages. It can be planned and worked into scheduled activities without a
shut down. It can be conducted in an orderly manner, this approach also
facilitate efficient utilization of store personnel. The low point approach
minimizes the required inventory work because of the small quantities of
materials involved allied product which meet the changing need of it’s customers
through the employment of highly trained personnel’s and the utilization of up
to date technology while ensuring optimum returns to its shareholders.
A five man board of director whose wealth of
experience and expertise span various factors of the Nigeria economy shapes of the
policy frame work of the company. Lubcon is endowed with highly talented and
technically proficient personnel’s who have in the best tradition equipped and
exposed to the demands of both local and global lubricant market. This was
achieving through the company human resources policy and programmes.
1.1 STATEMENT OF THE PROBLEM
The problem facing the stock control is as follows:
i.
Poor layout: The layout
without the store area, create difficulties in location and identification of
materials in the store.
ii.
The attitudes of the
checkers are not reporting to appropriate quarters in case of any fraudulent
act discovered that affects the stock control exercise.
iii.
Records: there are no
proper recording issues and balances.
iv.
Accountability: there is
no proper report on the receiving and issuing of stock as well as proper documentation
on movement of stock within Organization, thus, proper account for stock cannot
be maintained.
1.2 OBJECTIVES OF THE STUDY
The following are the objectives for carrying out this
work:
1. To
find out companies (using Lubcon Oil) can control the level of the stock,
preservation materials handling and the other stock operations.
2. To
find out how the function of the store related to the other departments of the
company (Lubcon Oil).
3. To
find out how the nature and various types of materials handling equipment employed
by store and relative effect on work efficiency.
1.3 SIGNIFICANCE OF THE STUDY
The primary significance of this research work is to
fulfill one of the Obligations which serve as one of the pre-requisites for the
partial fulfillment of the Award of National Diploma in all Business Administration
awarded by the Purchasing and Supply Department, Kwara State Polytechnic,
Institute of Finance and Management studies (IFMS), Kwara State Polytechnic,
Ilorin.
1.4 SCOPE AND COVERAGE
This research work is to cover broad area as in State
operation with regard to the control aspect of stock in the Organization.
It entails the following specific area which the researcher
would like to emphasized upon, special attention will be paid to the various
documents that is being used in the stores department different categories of items
hold in the store, through the scope will be limited to Lubcon Oil limited
owing to financial and times constraints.
1.5 LIMITATIONS AND CONSTRAINTS
The limitation and constraints encountered during the
course of writing this project work are as follows: one of the major problems
faces by the researcher was of transportation, distribution of questionnaires,
conducting personal interview and to collect back the questionnaire from respondents.
Another factor encountered was the problem of obtaining
necessary research materials which include text books, journals or magazines on
stock control and record aspect, some of the library visited did not haves
enough information materials hence this only scarcity information was available.
1.6 HYPOTHESIS FORMULATION
These are the strong assumption which comprises null (Ho)
and alterative hypothesis (H1) which are set to examine the validity of the
objectives and ideas generated in the research work.
A. H1:
effective stock control and supplier quality improvement of the practice contributed
to the profit margin in a manufacturing industry.
H0:
effective stock control and supplier quality improvement of the practical does
not contribute to profit margin in a manufacturing industry.
B. H1:
poor management of materials within the store creates difficulties in location
and identifications of materials in the stores and thus affects the control of materials.
H0:
Poor managements of materials within the store creates difficulties in location
of materials but do not affect identification.
1.7 DEFINITION OF TERMS
i.
Stock
control: represents the clerical control of
movement of materials into and out of the stores and of the level of the stock
in the store as all times with due regard to the economy in storage as well as
on ordering of cost, purchasing price agreed and the level of the Organization
working capital.
ii.
Store:
is any space reserved and equipped for
holding stock waiting for dispatch to other departments or customers for
further processing or future use.
iii.
Obsolescent:
this is the term used to describe the
stock that will soon be out of use or valueless to the organization that has it
in store.
iv.
Obsolete:
this is the stage of which in the stock
becomes completely worthless to the Organization.
v.
Scrap:
at this stage is sold off for any value in
its own right.
vi.
Redundant:
this is when the stock is completely
useless to both the owner and any other Organization.
vii.
Maximum
stock level: this is the level above which stock
should not normally allowed rising.
viii.
Minimum
stock level: this is the level below which the
stock should not normally to fall. If stock goes below or falls below the level,
there is a danger of storage or supply which may result into stoppage of
production or operation.
ix.
Re-order
level: this point between the maximum and minimum
stock level at which time is essential to initiate purchase requisition for
fresh suppliers of materials.
x.
Economic
order quantity: this is the order size (Quantity)
that can be brought at which both the cost of holding stock and the costs of
ordering stock are giving a minimum total cost.
xi.
Stock
taking: is the complete process verifying the
quantity balances of the entire range items hold in stock.
xii.
Blind
stock taking: This is the name giving to the system
where by the person taking stock is given no prior information abdouts the
vocabulary numbers, description, stock records balance etc and is not allowed
or given access to stock record cards or bin cards.
xiii.
Counting
Scales: to avoid the needs for counting individual
large numbers of small items such as nuts and bolts. Use may be made of country
scales. The scale are so design that one article placed in one pan will balance
several times its own weight in the other pan.
xiv.
Stock
Certificate: irrespective of whether stock taking
is carried out by the period or by the continuous method at the end of the
financial year. The stock certificate is signed by senior member of the management.