CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND
TO THE CASE STUDY
The advent
of computer technology has boost production of both domestic and industrial
activities. Technologically, advance countries are advancing in their research
effort to make the global world free for man to live with little or no stress
through information technology.
In
Nigeria, only few industries are enjoying the benefits of information
technology in the area of computer in inventory control system. Among the few
industries, not all information that are essential for effective management are
documented because the software were developed by foreigners which know little
or noting about the socio-cultural background of end users. Apart from this,
the cost of inventory of such software is always too high. These set back
always prevent them from getting the full benefits of computer in inventory
control system but this project tends to develop a more easy and cost effective
software that is suitable for Niyya Farms Nigeria limited Kaduna.
Glantier (1999) stated that inventory
control is to provide means of exercising close control over the flow of the
inventory into production or sales thereby not only preventing loss but also
ensuring adequate levels are maintenance. The purpose of these is to focus on
the procedures applied to control inventory on a daily basis. It is also a
system, which needs to maintain record of both quantities and values, in this
aspect, it will be called inventory valuation depending upon physical stock
taken combined with valuable base such as unit cost market value.
Confer (2001) defined inventory
control as the process of ensuring that stock help by the organization, is
supplied to those part of the operation that required the items, that is
production, distribution and sales. Engineers bearing in mind the factors of
time locations, quality and cost.
Peter (2003) defined inventory
control as the making of decision on the level of stocks that may be
economically needed to meet all requirements for planning production.
Demsy A. (2001)
defined inventory, as activities required keeping the facility in a built
condition in order to have its original productive capacity. Inventory
activities are a major coat factor in most industries, affecting both returns
on capital and production throughout (commission). Inventory management system makes equipment
and facilities available at least cost. It makes sure that every facilities in
perfect condition to meet its production capacity. It is obvious that down time
has to be kept at minimum and a good inventory management system helps to
accomplish that at minimum possible cost.
However,
the essence of the use of computer in inventory control is to utilize large
investment in inventories effectively and to facilitate efficient operation of
the organization.
It is
basic that scientist allover the word has completely bypassed the stone age
syndromes and are now basking in the Euphoria of the computer age, which is a
product of technology and ceaseless research. It is also a fact to mention that
all sphere of life have been affected by the current computer revolution
ranging like a wild fire. This project work is to present a comceptional and
practical approach to inventory control system in Niyya Farms Nigeria limited
using computer since inventory requires an accurate and constant record
keeping.
1.2
STATEMENT
OF THE PROBLEM
The
quality of inventory control has been a major determining factors in the
success or failure of competing organization.
The use of
manual system showed many symptoms of poor control. Boxes set on the ware house
shelves collecting dust and then joined by more of the same item even though
the old inventory never moved, one item would be stored in five different
places and re-ordered when one of the bin is empty.
Uncounted
product/part lots were easy targets for pilfering by employees. A warehouse
filled up, when extra spaced was leased no one could keep track of what was in
which building.
Once a
year, operation was shut down for the tedious and almost unmanageable task of
taking a physical inventory. Figuring out what the goods on hand were actually
worth became a paper chase for invoices and purchase orders, and finally, not
very educated guess.
Inventory
control has proven to be one of the clearest examples of the problem of
automation. Often inventory control programme have been plagued by two short
comings on one hand, inventory packages have been too sophisticated, because of
the many accepted methods of controlling inventory, packages have laundry lists
of conflicting mathematical formulas understood neither by the users of the
system, nor by the programme. The dozens of reports produced not only failed to
provide an understandable picture of the current inventory, but made the
situation worse by miscalculating or misnaming commonly used indicators. On the
other hand, packages have been too simple. Common occurrences often stumped the
system. For example due to a physical miscount, there may have been more of an
item than was listed by the computer when the item was sold to customer, the
computer would reject the transaction because, in theory, miscounts never
happen. There was not enough of the items in stock according to the Computer to
fill the orders whether because of an inadequate manual system or a poorly
automated one, expanding organization have seen their profits margin eaten away
by the many different costs of an uncontrolled inventory, that is what this
project is made to eliminate.
1.3
OBJECTIVES
OF THE STUDY
The
objectives of the research work is to find out:
1.
How inventory control system can be used to achieve
a smooth operation for manufacturing industry
2.
How the use of computer inventory control system
can be used to ensure a good human relationship to customers, by making product
available at the right time.
3.
How the use of computer inventory system can be
used to take hedge against long or uncertain lead time.
4.
How the use of computer inventory control system
can be used to take advantages of the economy of large scale quality.
5.
How the use of computer inventory control system
can checkmate frauds and hackers
6.
How the use of computer inventory control system
can reduce time wastage for report preparation on management request.
1.4
STATEMENT
OF HYPOTHESIS
The
hypothesis formulated for this study is
Ho: The
computerized inventory control system does not enhance efficiency.
Hi: The
computerized inventory control system does enhance efficiency.
1.5
SIGNIFICANCE
OF THE STUDY
This
research project or work is embarked upon as part of the requirement for the
award of Higher National Diploma in production and operation management in
management studies department of Kaduna Polytechnic.
It will
help to widen the knowledge of the researcher in the area of this topic, the
application of computer technology on the inventory control system as a
productivity improvement strategy in a manufacturing firms
This
research work is being conducted in other to appreciate the importance of
computer in effective inventory management.
This
project can also serve as a standard for future reference in academic pursuits
of many people
This
project can also serve as an insight for companies that have not computerized
their inventory system.
It will
also facilitate efficient inventory operations of organizations.
1.6
SCOPE OF
THE STUDY
This
project work spell out in details the use of computer in inventory control, and
the need to computerize inventory in manufacturing organization.
It also
takes a look at the general utilization of items in the manufacturing
industries, and how inventory control system will aid in vital decision making.
a case study of Niyya Farms Nigeria
limited Kaduna shall be used to aid the reader in having a clearer picture of
inventory and to appreciate the significance of this project work.
1.7 LIMITATIONS
OF THE STUDY
The
limitation of this research work has being traced to the following via:
1.
The financial aspect here refers to the shortage of
the necessary finance to carryout the research work, so money has to be
managed.
2.
Time factor is also one important limitation of
this project, as there was no enough time for this research work.
3.
Lack of proper information from the company. The
company Niyya Farms Nigeria Limited Kaduna, were reluctant in given adequate
information, instead of given hard copies of facts and figures, they only read
it out to the writer.
1.8 HISTORICAL
BACKGROUND OF CASE STUDY
Niyya Farm
is an agricultural outfit with a mandate of incorporating modern agricultural
techniques with our traditional subsistent farming system. Established some 16
years ago, it is located at KM 60 Kaduna – Abuja expressway at Gadan Mallam
Manmman in Kachia Local Govt. Area of Kaduna State.
Farm
covers an estimated area of 3,500 hectares of land of which 2,000 hectares has
been cleared and being cultivated for various arable and cash crops. Niyya Farm
is an integrated outfit with three basis operation sections. Arable crop and
irrigation sections, poultry and large animal sections. The crops cultivated
include Maize, Soya Beans, Water Melon, Guava, Oranges, Mangoes and Passion
fruit to mention few.
The farm
population is currently put at 150 after rationalization with the introduction
of more mechanization. To increase its production the management introduces dry
season farming to cultivate crops that are in demand during dry season. With an
area of 200 hectares under irrigation, the farm has an all years farming
season. The farm with its dam has a steady supply of water to carry out its
activities all year around. To further boost its operation, the farm has in
place a fruit/nectar processing plant with an installed capacity of 3 tones per
day. The dairy plant can process 3,000 litres of fresh milk per day into
various products such as cheese, butter, pasteurized milk, ice cream and
others.
The
livestock (Large animals) section has both exotic as well as local herds of
cattle and these are the main supply of fresh milk to the dairy plant. The
proprietors of the establishment over time realized the increasing demand for
poultry products in and around the farm locality and consequently ventured into
large-scale poultry production. The current population of birds on the farm is
about 20,000 and of these, there are breeders (layers and broilers parent
stock) and commercial laying birds. The hatchery located in Kaduna South
Industrial.
Layout is
the biggest and most modern in the Northern part of the country. The Hatchery
has an installed capacity of 102,000 eggs and can produce 35,000 – day – old
chicks (D.C.O) per week.
Niyya Farms
have been a source of employment for the local inhabitant and renders farm
extension service to the local farms thereby boosting their yield in food
production. The vast potential of such an organization can be realized where
resources (Human and Material) are properly, adequately allocated and encourage
to attain high productivity and sustained growth.
1.9 DEFINITION
OF TERMS
These are
special words that are used in stock control system. The guideline to the
keyword:
a.
Stock: The inventory of goods of a merchant or
manufacturer
b.
Stock out: a situation in which inventory is depleted
before orders on hand can be completed or customer demand fulfilled.
c.
Stock
number: This is the number that is given
to each stock for quick identification; it may also be referred to as stock
code.
d.
Product
name: This is a unique name given to
each product by which it is being identified.
e.
Brand
name: it is the name that is given to
each product for easier accessing
f.
Selling
price: This is the cost at which item
is sold plus the overhead
g.
Cost
price: It is the initial cost of
purchasing goods.
h.
Description: This is for identifying a product and to
distinguish it form a similar ones
i.
Re-order
level: The available stock level at
which an inventory replenishment order is initiated.
j.
Quantity
received: This described the quantity of
items being received.
k.
Quantity
sold: it is the quantity of product
sold in a period of time.
l.
Computer: Computer is an electronic machine that accept
input, process it and give output which can be stored for future use.