IMPORTANCE OF PRODUCTION PLANNING AND INVENTORY CONTROL IN AN ORGANIZATION

1.1 Introduction

Production Planning is the lifeblood of any manufacturing firm. It entails finding the delicate tradeoff between satisfying customers and managing suppliers (Bradley, 2017). Inventory is the stock of any item or resource used in an organization. Inventory can exist raw material goods products, component parts, supplier and work in process organization keep inventory for a number of reason including of maintaining independent of operations to meet, the variation in product demand to allow flexibility in the production scheduling to provide a safeguard to variation in raw materials delivery time and to take advantage of economic purchases and order size cost association with inventory include holding or carrying cost set up or ordering cost and shortage order quantity of fixed time period in the fixed order quantity model the same amount of inventory is replenished in each order period.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.

1.2 Background of Study

This essay is aimed at establishing the Importance of Production Planning and Inventory Control in an Organization with particular emphasis in the consideration on what the subject matter production planning, inventory control is all about to be emphasis in the introduction of the essay.

Basically, production refers to the transformation of raw materials into output, while production planning on the other hands is the determination of the production operation in a manufacturing unit.

Inventory technique is an internal control system that serves to ensure the maintenance of adequate inventory level in an organization. Moreover, inventory control represents the major capital investment in an organization.

The inventories in an organization function or stock record keepings stocks therefore can be seen as finished goods reader for sales. The Importance of Production Planning and Inventory Control in an Organization is to feed the organization with information about the stock of the organization in other to safeguard the organization from the risk of obsolesce of excess purchases of raw materials, it also ensure that the needed raw materials for production operation is constantly viewed or verified to meet the production. It also serves as a basis of which the purchasing as the stock inventory control will provide information about stock that are excess and those are by specification i.e. those are where the organization will likely be running of stocks.

Inventory Control in an organization is an important aspect in the daily life of an organization. This is because inventory control enhances organizational progress. The existing problem in this stock inventory control which instigate this standing to my point of view indirections. That is, it may be too large or too small so if it is large relative to it, the cost of carrying the inventory control will be equally higher than it needs be, while if it is too small, the cost of controlling the inventory will be small. Consequently, the inventory carrying cost include cost include such things as interest on the inventory management, handing cost depreciation and obsolesce.

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Importance of Production Planning and Inventory Control in an Organization.

1.3 Statement of Problems

Investigation revealed that the basic significant statement of the essay is aimed at bringing a clear picture and transparent understanding of the essay titled Production Planning and Inventory Control in an Organization; it also embraces the problem facing the production sector, types of production and production planning methods of controlling inventories in an organization.

Furthermore, this essay entails all the necessary inventory techniques available in the management of inventories before and after being stored in the organization and the policies or scheme that will regulate the production activities in the organization.

1.4 Aim and Objectives of Study

The aim of the study is to examine the Importance of Production Planning and Inventory Control in an Organization. In achieving this aim, the following specific objectives were laid out as follows:

1. To find out if production planning and inventory control in an organization profits the organization in the area under review;
2. To analyze the effect of material requirement planning on minimizing inventory cost in the study area; and
3. To evaluate the role of material requirement planning in enhancing customers’ satisfaction in the area under review.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Does production planning and inventory control in an organization profits the organization in the area under review?
• What is the effect of material requirement planning on minimizing inventory cost in the area under study?
• What is the role of material requirement planning in enhancing customers’ satisfaction in the area under review?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: Production planning and inventory control in an organization does not profit the organization
• H1: Production planning and inventory control in an organization profits the organization

1.7 Significance of Study

The findings of the study will help the Management in an organization to assess their production planning techniques and efforts in a bid to ascertain if it yields the desired benefit. Such will enable them to tune remedial or corrective actions for better efficiency and productivity.

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

1.8 Scope of Study

The scope of the research is focused on the Importance of Production Planning and Inventory Control in an Organization using Nigeria Brewery Plc as a reference point. This research is limited to the area that are relevant to the problem under investigation that is effective production planning and inventory control in an organization.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this research work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
4. Lack of Initial Cooperation from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.

1.10 Definition of Terms

Inventory Control

Inventory control is designed to support the requisition processing, inventory management, purchasing and physical inventory reconciliation function of inventory management through a set of highly interactive capabilities.

Stock Control

A stock control system should keep you aware of the quantity of each kind of merchandize on hand. An effective system will provide you with a guide for what brand it will reduce the number of cost sales resulting from being out of stock of merchandize is popular demand.

Production Planning

It is a border area between management economic (specially manufacturing economy), mechanical engineering, industrial engineer nature and in particular the economical informatics.

Inventory

Inventory is the stock of any item or resource used in an organization. Inventory can exist raw material goods products, component parts, supplier and work in process organization keep inventory for a number of reason including of maintaining independent of operations to meet, the variation in product demand to allow flexibility in the production scheduling to provide a safeguard to variation in raw materials delivery time and to take advantage of economic purchases and order size cost association with inventory include holding or carrying cost set up or ordering cost and shortage order quantity of fixed time period in the fixed order quantity model the same amount of inventory is replenished in each order period.