Inventory Control over the Firm Performance

Topics: Inventory, Inventory control system, Manufacturing Pages: 17 (5620 words) Published: December 23, 2012
1.0 Introduction.
The chapter for this study includes the background of the organization and problem/study, statement of the problem, research objectives, research questions, significant of the study and scope of the study. 1.1Background of the study

Inventory control involves the coordinating of materials availability, controlling, utilization and procuring of materials. Inventory control is the direction of activities with the purpose of getting the right inventory in the right place at the right time and in the right quantity and it’s directly linked to production function of any organization which implies that the inventory management system operated will affect the profitability of an organization directly and indirectly. (Koumanakos P.D 2008) also according to Rajan(2012) inventory management is concerned with determination of optimum level of investiment for each components of inventory and the efficient use of components and operation of components and the operation of an effective control and review of mechanism. the main objective of inventory management are operational and financial. Inventory is a term that has been explained in various ways by various scholars, Inventories are stocks of the product a company is manufacturing for sale and components that make up the product. They are raw materials, work-in progress and finished goods and they constitute various forms of inventory in a manufacturing firm. Inventories are the stocks of materials or finished goods which a company keeps in anticipation of demand or consumption (W, Donald 2003) Also inventories are also called idle resource of a company. inventories represent those items which are either stocked for sale or they are in the process of manufacturing or they are in form of materials which are yet to be utilized.. W.Donald insisted that inventories are the stock of materials or finished goods which a company keeps in anticipation of demand or consumption. According to kotler P 2002) in the past, inventory management was not seen to be necessary. In fact excess inventories were considered as indication of wealth. Management by then considered overstocking beneficial .But today firms have started to embrace effective inventory control. Consequently, there is the need for to undertake effective control with the aims of maintaining sufficient stock of raw materials in the period of short supply and anticipate price changes, minimizing carrying cost not only that but also with the aim of ensuring a continuous supply of materials in order to facilitate easily production Inventory control is the means by which the correct quantity is made available as and required .it is true that inventory control is greatly practiced by manufacturing firms than in services firm There is the need for the firm to have proper control of inventory. In most of developing country like Tanzania has been facing with the problem of inventory control if we compare with developed countries like South Africa(Coca-Cola company).mostly of them does not perform well due of having poor inventory control. The study is conducted so as to suggest ways that Coca cola kwanza can do in order for an organization to perform well due to better inventory control techniques. since it is very important for any firm to have effective and coordinated inventory management system because the business environment is rapidlychanging,highly competitive and it drastically affect the performance of the organization. 1.2 STATEMENT OF THE PROBLEM

Every organization needs inventory for smooth running of its activities.. It serves as a link between production and distribution processes. The investments in inventories constitute the most significant part of the current asset/working capital in most of the undertakings. Thus it is very essential to have proper control and management of inventories. The...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Inventory Control
  • Essay about Inventory Types and Firm Performance:
  • Essay on Case Study on Inventory Control
  • Inventory Control System Research Paper
  • Inventory Control Essay
  • Inventory Control Research Paper
  • Inventory Control Essay
  • Techniques for Inventory Control Essay

Become a StudyMode Member

Sign Up - It's Free