EFFECT OF INVENTORY CONTROL ON PRODUCT QUALITY IN THE CADBURY NIGERIA COMPANY

EFFECT OF INVENTORY
CONTROL ON PRODUCT QUALITY IN THE CADBURY NIGERIA COMPANY

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CHAPTER
ONE
1.0     INTRODUCTION
1.1     Background of the study
Inventory control is pivotal
in effective and efficient organization. It is also vital in the control of
material and goods that have to be held [or stored] for later use in the case
of production or later exchange activities in the case of services. The
principal goal of inventory control involves to balance the conflicting
economics of not wanting to have too much stock. There by having to tie up
capital so as to guide against the incurring of costs such as storage,
spoilage, pilferage and obsolescence and, the desire to make items or goods
available when and where required [quality and quantity wise] so as to avert
the cost of not meeting such requirement.
          Inventory problem of too great or too
small quantities on hand can cause business failures. If a manufacturer
experiences stock-out of a critical inventory system, production halts could
result. Moreover, a shopper experts the retailer to carry the item wanted, if
an item is not stocked when the customer thinks it should be, the retailer
losses a customer not only on that item but also on many items in the future.
The conclusion one might draw is that effective
inventory control can make a significant contribution to a company’s profit as
well as increase its return on total assets. It is thus the control of this
economics of stockholding, that is appropriately being refers to as inventory control.
The reason for greater attention to inventory control is that this figure, for
many firms is the largest item appearing on the asset side of the balance
sheet.
          Essentially, inventory control, within
the context of the foregoing features involves planning and control. The planning
aspect involve looking ahead in terms of the determination in advance:
(i)      What
quantity of items to order; and how often do we order for item to maintain the
overall source – store sink coordination in an economically efficient way.
(ii)     How
often [periodically] do we order for item to maintain the overall stock
coordination in an economically efficient way.
          The control aspect, which is often
described as stock control involves following the procedure set up at the
planning stage to achieve the above objective. This may include monitoring
stock levels periodically or continuously and deciding what to do on the basis
of information that is gathered and adequately processed.
          Inventory to a manufacturing concerns
means:
(a)     Raw Material: Materials, sub assemblies
from other plants or purchases from suppliers, which are used to manufacture
final products.
(b)     Goods in Process: Also called work
in process are the uncompleted goods or goods that are skill in the process of
completion. They are also goods in transit from raw materials to the final
products.
(c
)     Finished Goods: They are
already completed products.
(d)     Supplies Inventories: They are fixed
assets of the company, the activities of manufacturing firms includes.
      
i.           
Purchase of raw
materials
    
ii.           
Conversion of raw
materials into the final products
 
iii.           
Sales of the
final product to the consumers, the retailers and the wholesalers. In all
cases, inventory control performs the functions of separating all the prominent
successive activities or stage in the manufacturing and distribution process.
This claudicates that the chief activity is to make use of inventories to
successfully perform their respective operations and on the other hand,
inventory has to pass through these operations in order to attain the primary corporate
objective.
In between is exercise, a lot
of decisions are to be made by different operational sections in the plants.
Decisions like what to invest, when to invest, how to invest on inventory and
its corresponding level. Other decisions include pricing the store issue on
inventories firm:-
 i.                 
Purchasing of raw
materials section to the store house.
ii.                 
Warehouse of raw
materials to the factory
iii.                 
Warehouse of
finished goods to sales.
          It is in this regard that it becomes
necessary to examine the relevance of inventory control to decision making,
that is the relationship between decision – making and inventory control with
particular emphasis to unilever plc.
1.2     Statement of the problem

Some of the manufacturers of house hold products, like
Unilever Plc, P2 industries e.t.c Aj Seward Limited, VAC Limited, and Dally
heed industries are presently undergoing difficulties especially in the area of
inventor functions and managerial policies. The evaluation techniques of
inventory issues and pricing techniques of supplies, since these are certain
cost benefit rations to be associated with every unit of inventory the firm
maintains, this fact calls for a decision to be made on what quantities
purchases and manufactured items should be kept in stock certain criteria are
to be evaluated by good control so that it can make good decision on its
inventory policy. This will definitely facilitate a sound and reliable decision
on the

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