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IMPACT OF EFFICIENT INVENTORY PLANNING AND CONTROL IN GOVERNMENT ESTABLISHMENTS

ABSTRACT

Countless efforts have been made by the government to identify whether government establishment effectively utilize inventory planning especially in its ministries. This research project was therefore undertaken to study. The impact of efficient inventory planning and control in government establishment, using ministry of works and transport as a case study. The purpose is to ascertain whether efficient inventory planning has significant effect in the growth and development of government establishment. Two sources of data were used. They are primary and secondary sources. Questionnaires were used as a research instrument to make up for the available data the other two sources. Chi square (X2) test was used for the Hypothesis testing. However the analysis shows that efficient inventory planning has a significant effect in the growth and development of government establishment. The analysis also shows that effective and efficient inventory planning in government establishment. Based on the findings, the researcher recommended that to ensure effective and efficient planning of inventory, stocks should be properly controlled by the personnel that is in charge of the store. This will enhance production and profitability.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

An efficient and effective inventory planning in any organisation is very vital in the survival of such and organization. Meig’s et al (1998) defines inventory as the aggregate of those items of tangible personal property which are held for sale in the ordinary course of business, and in process of production of goods and services to be available for sale. Hone (1988) defines inventories
as those resources that help in forming the link between the production and sales of a product. The Webbstor’s Third Dictionary defines stock as money on property servicing as capital stock alone, cannot produce a desire good rather it has relationship to the financial with the financial planning.An efficient and effective inventory planning and control as the name implies is an alternative term for stock control, common in the U.S.A and some public authorities for the quantities of stock and or its value held by the authority (Compton and Jessip, 1995). The management of inventory is thus an attempt to match supply and demand at a particular time and so forms part of a capacity management strategy. A number of approaches have been developed towards the management of inventory including MRPI and MRP II.
Inventory management is defined by slack (1995) as the stored accumulation of materials resources in a transportation system.

According to slack (1995) all organizations will carry some inventory or stock of goods at any one time. This can range from items such as stationery to machinery parts and raw materials. The main focus of inventory management is usually on resources that one being transported, e.g raw materials, purchased components or customers in a service operation. Usually, the type of inventory management system employed by an organization is determined by the nature of its demand for goods services.

1.2 STATEMENT OF THE PROBLEM

Inventory planning is very importance for the success of any government establishments particularly in Imo State ministry of works and transport. A major problem facing any government establishment is the determination of an economic order quantity that will minimize total inventory cost. Through research is has been established that cost government establishment have failed to achieve their objectives due to lack of proper planning of inventory.
It is then the purpose of this research work to address these issues by providing answer to the following questions:

1. What type of inventory control technique is suited for the government establishment.

2. What type of ordering and carrying cost do government establishments incur.

3. What are the consequences of improper inventory planning in government establishment?

1.3 OBJECTIVE OF THE STUDY

This study which focuses on inventory planning and control in government establishments is directed towards achieving the following objectives:

(i) To identify whether government establishment efficiently and effectively utilized inventory planning.

(ii) To examine whether inventory planning has a significant influence on the growth of government.

(iii) To enumerate the benefits derivable from proper inventory planning by government establishment in Imo state.

(iv) To identify whether government establishment in Imo state have specific department purely dedicated to inventory planning and control.

1.4 SCOPE OF THE STUDY

The scope of this work will be restricted to ministry of works and transport Owerri. The research work would look into the pattern of inventory control technique they adopt, the type of ordering and carrying cost they incur and their general attitude and treatment of the practices of stock planning. The study will also intend to control the work in progress items. Furthermore, the study will cover the standard, method use in carrying and holding stock. Lastly, we also seek to make recommendations that will assist in improving the inventory control and also carry out some activities like reviewing the past relevant literature and test of hypothesis formed in order to determine the validity.

1.5 RESEARCH QUESTION

This study will answer the following research question.

(i) Do government establishment effectively and efficiently use inventory planning.

(ii) Does inventory planning have a significant influence on the operations of government establishment?

(iii) What benefits are derivable from proper inventory planning in government ministries?

(iv) Do government establishments have departments specifically dedicated to inventory planning and control?

1.6 HYPOTHESIS

The researcher tends to work with the following hypothesis:

HO: There is no effective and efficient inventory planning and control in government establishments.

HI: There is effective and efficient inventory planning and control in government establishments.

HO: Efficient inventory planning and control has no significant effect in the growth and development of government establishments.

HI: Efficient inventory planning and control has significant effect in the growth and development of government establishments.

1.7 THE SIGNIFICANCE OF THE STUDY

This study has numerous significance to the society, companies and government establishments and their academia at large. Firstly, the study will educate the general public on the importance of inventory planning and control in government establishments. In this vein, it will elaborate on the relevance, inventory planning and control can play towards organisational growth, reduction in corrupt practices and activities and proper management of resources to enhance increased performance. Secondly, the study will serve as an eye opener to government and private establishment by providing them with relevant literature, methods and procedure used in contemporary inventory planning and control management.

Furthermore, the study by providing government and private establishment with relevant method of inventory planning and control, will enable the nations policy makers to device better ways of managing investments in Nigeria. Finally, the study will provide ample literature to students of higher institution particularly those interested in contemporary findings related to inventory planning and control.

1.8 LIMITATIONS OF THE STUDY

Inventory control and planning like other managerial functions has its peculiar problems. It could be internal or external. The external problems can originate when the management fails to understand the roles inventory planning play in the ministry. If the work of the store manager is specified, there would be improvement in the store department, but if otherwise is the case, it then means that the job of the store keeper may be shifted to another department. This may lead to mismanagement due to inadequate knowledge pf both quantity and quality.

While the internal problems may appear inform of customer attitude to product produced by the ministry. Quantity control is based on customers demand for example, the quantity demanded in a week will determine if the store keeper will order for more materials with the hope that more product will be demanded by the upper week and where such is not ordered as expected, it will lead to overstocking of materials items which may determine before they are used. This may eventually lead to lose of profit. It is been regarded as the limitation to inventory control management.

OPERATIONAL OF DEFINITION OF TERMS

Inventory: Is the quantity of materials or merchandise Owned by the firms that will be sold to customers in Owned by hr firm that will be sold to customers in one form or the other. 

Control: is concerned with the guidance of the internal operation of the business to produce the most satisfactory profit at the lowest cost. A dictionary of accountants (Kalior:1973) Defined it as the control of merchandise materials goods in progress, finished goods and suppliers on hand by purchasing and physical method. 

Inventory planning and control: It is an act of ensuring that an organisation maintains a balance flow of materials bearing in mind it strength and weakness and other environmental factors. Te environmental factors are external factors which the organisation must submit itself to because they are the uncontrollable factors which the origination cannot control.

CONTROL: It is a process by which an organization come out with activities, procedure that enables it not to hold were them what is necessary and at the same time not to hold less than what is necessary.

INVENTORY REDUCTION: This is to determining what is required, its requirement or determine the machine and materials that are needed or required, i.e to reduced the necessary materials that would be used which is the quantity required

PRODUCTION PLANNING AND CONTROL: It is the process that has to do with planning of the input resources going into the production of good and services that will be acceptable to man.

PRODUCTION CONTROL: This is the necessary steps taken to ensure that plans are going accordingly as planned by company expected performance with actual performance.

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