Assessment of inventory management

Topics: Inventory, FIFO and LIFO accounting, Costs Pages: 81 (10129 words) Published: December 24, 2014
CHAPTER ONE
INTRODUCTION

1.1

Background of the Study

Resources are scarce; profit making organization should know how to utilize these resources effectively and efficiently. The inventory control section of a company is responsible for these activities, in order to continue the operation of the organization through out the year they have to use the rules and principles to handle different kinds of materials. Since it improves inventory handling activities with in the organization, it will help to avoid utilization of resources for un authorized purpose and also helps to maintain necessary material when it is needed for production and selling. It facilitates the interaction of different departments with in the organization. For instance, the marketing department will continue it selling activities if products are available when they are demanded by the market. Availability of production is also entirely dependent on timely supply of raw material and supplies.

In addition appropriate inventory management avoids un necessary carry cost and shortage of materials by indicating inventory level. It helps to avoid costs incurred when the price of material increases due to shortage of material and shortage of transportation.

This study was made to asses weather the Anbessa Shoes S.C manages its inventory based on scientific method and to know how proper inventory control maximize quality of product and profitability. The company engages in the production of shoes it used leather, sole as a raw material. The company imports raw materials from abroad and purchase from local market. The reason why I selected the company for my study is easy to get information.

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1.2

Background of the Company

Anbessa Shoe S.C was established in 1939 ad started production of shoes at the time when such conveniences were not widely known among the general populace of the country Its establishment was apparently in response to increased demand for shoes, which must have been triggered by the presence of sizable Italian occupation army that invaded the country.

The main factory premises and administration office are conveniently located in center of Addis Ababa, Lideta Kefle Ketema. The factory has one branch production unit known as MANPO Branch in Eastern part of Addis Ababa.

Anbessa has from time to time made renovation of old equipment and installation of new advanced machinery. This as enable the factory to increase its capacity following the implementation of expansion project, the designed production capacity of the company has now reached 4500 pair of shoes per day in 8 hours shift.

The two major markets are the local market and the export market which the company is recently embarked on. It uses its 17 retailing shops which are founded across the country in selected major towns t distribute its products for local market. Though the major markets have been dominated by local market share for the past many years, due to the export oriented market is taking the helm over the local. It uses a whole sale for distributing its products to the international market. The main export destination of the company is Italy through which it covers the European market. Anbessa has accomplished a lot for the past few years and motivating results has also been achieved since the government of Ethiopia has also made export market its priority. Anbessa is getting all support it needs to export its products.

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Anbessa has designed and put in effect an expansion project with the aim to changer its all manufacturing facilities with new machineries and plant facility lay out so tat it can produce export standard finished shoe using its full capacity.

The company have now a newly established factory employing state – of – the art technology with a product capcity of 3000 pairs of export standard leather foot wear na d1500 pair for local market

The company now producing world class model using he best technology...

Bibliography: -
A.K DATTA (1987), Materials management and inventory control.
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A.K DATTA, (2003), Material Management, 2nd edition.
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A.K DATTA, (2004) Material Management 3rd edition.
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Jossop and Morison (1998) “Stores and Storage Management.”
Sundareson
(1997)
BERHANU DEJENE
JANUARY, 2010
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