I INVENTORY CONTROL AND PROFIT MAXIMIZAT

INVENTORY CONTROL AND PROFIT MAXIMIZATION IN A MANUFACTURING
COMPANY; A CASE STUDY OF NIGERIA DISTILLERIES LIMITED, SANGO OTTA
OGUN STATE
BY
OPOOLA OLAIDE MARIAM
MATRIC NO: NOU134828614
A PROJECT SUBMITTED TO THE DEPARTMENT OF
ACCOUNTING, FACULTY OF MANAGEMENT SCIENCE, NATIONAL OPEN
UNIVERSITY OF NIGERIA, ABUJA IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF BACHELOR OF SCIENCE (B.Sc. HONS)
DEGREE IN ACCOUNTING
OCTOBER, 2017.
i
DECLARATION
I OPOOLA MARIAM OLAIDE do humbly declare that this research work entitled
INVENTORY CONTROL AND PROFIT MAXIMIZATION IN A MANUFACTURING
COMPANY is as a result of findings from my research efforts, carried out in the Faculty of
Management Sciences, National Open University of Nigeria. It was carried out under the
supervision of Mrs. O.R. Ogunniyi. I further declare that, to the best of my knowledge, this work
contains no material previously published by another person or group except where due
acknowledgement has been made in the text and stands subject to plagiarism scrutiny.
_______________________________________
Name/Signature/Date
ii
CERTIFICATION
This is to certify that this research project entitled INVENTORY CONTROL AND PROFIT
MAXIMIZATION IN A MANUFACTURING COMPANY was carried out by OPOOLA
MARIAM OLAIDE in the Faculty of Management Sciences, National Open University of
Nigeria, Abuja, Nigeria for the award of Bachelor of Science Degree in Accounting.
_____________________ ______________________
Ogunniyi O.R. (Mrs.) Date
B.Sc., M.Sc., FCA
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DEDICATION
This project is dedicated to the God Almighty, for the strength, grace and kindness throughout
my program.
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ACKNOWLEDGEMENTS
The opportunity is sincere, rear and immeasurable that I am favoured above all in the
courses of my study. All adoration is to Allah (S.W.T), my divine guardian and protection.
Appreciation to my amiable supervisor, Mrs. Ogunniyi Olajumoke for her active
involvement and personal inclusion on the research work, God bless your generation. I equally
extend my regards to Prof. Adisa, Director NOUN, Ibadan Study Centre and other members of
staff for their support.
Appreciation to the pillar of my family Mr. Opoola Adekunle and his high motive goal
partner Mrs. Morike Opoola, it is only through your support, reinforcement, advice, prayer,
orientation and et all, I lean on and it really make who I am, may God in his infinite mercy allow
you to eat the fruit of your labour.
Appreciation to the league of siblings that have always proved to be co-operative in all
ramifications, God please is mercy on the entire Opoola family.
I also express my innermost thanks to Mr. Atolagbe, Ojo Aduragbemi who is the brain
behind my success in life and finally to my friends Ayobamitale Kafilat, Ayobamitale Jumoke,
Ikuemola Yetunde, Oyedele Taiwo, Ogundare Oluwatobi, Akande Mariam, Raphael Opeyemi
my course mates Williams Damola, Bolanle, Tijani Damilola, Mariam, Ruth, Bimbola and well-
wishers I say God bless you all.
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ABSTRACT
It has been generally accepted that for any organization to produce and satisfy its
stakeholders, such organization must have good management team that manages the resources of
the organization using some laid down rules. In manufacturing concerns, inventories constitute a
greater proportion of assets. The management of inventories usually involves a lot of problems
which range from the right time to place order to maximization of profits for the stakeholders.
The objective of the study was to determine whether profit is maximized and cost minimized due
to the application of the efficient inventory management. To determine also whether
manufacturing concerns in our country manage inventories effectively by using inventory
management techniques e.g. Economic Lot Size, Just-in-Time etc. Data were collected using
questionnaire method, and were analyzed using chi-square (X2) Pearson product moment,
correlation co-efficient (r) and regression analysis. The result shows that orders were placed at
the right time and right quantity overcoming the setbacks of lead time. The companies also
minimize costs of holding inventories and maximize their profits. The findings also showed that
manufacturing concerns in Nigeria meet the target requirement of their customers, stakeholders,
and the society where they operate. The research recommends that all staff of the manufacturing
concerns should be made to have thorough knowledge of inventory management as this will
enable them to work towards their stock protection and cost minimization. The manufacturing
concerns should also get the recent developed software on inventory management and use it to
update their knowledge of inventory management on regular bases.
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TABLE OF CONTENTS
Page
Title Page………………………………………………………………………………………i
Declaration…………………………………………………………………………………….ii
Certification …………………………………………………………………………………...iii
Dedication……………………………………………………………………………………...iv
Acknowledgements…………………………………………………………………….............v
Abstract ………………………………………………………………………………………..vi
Table of Contents……………………………………………………………………………...vii
List of tables……………………………………………………………………………………x
CHAPTER ONE: INTRODUCTION
1.1 Introduction…………………………………………………………………………....1
1.2 Background to the study………………………………………………………………2
1.3 Statement of the problem……………………………………………………………...4
1.4 Objectives of the study………………………………….………………………...........5
1.5 Research questions……………………………………………………………………..6
1.6 Statement of the hypotheses…………………………………………………………..6
1.7 Significance of the study……………………………………………………………….7
1.8 Justification of the study……………………………………………………………….8
1.9 Scope of the study……………………………………………………………………...8
1.10 Definitions of terms ……………………………………………………………………9
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CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction……………………………………………………………………………11
2.1 Conceptual frame work………………………………………………………………....11
2.2 Theoretical frame work…….…………………………………………………………….18
2.3 Literature on subject matter………………………………………………………………21
CHAPTER THREE: METHODOLOGY
3.0 Introduction……………………………………………………………………….........32
3.1 Area of study……………………………………………………………………………32
3.2 Research design ………………………………………………………………………..32
3.3 Study population…………………………………………………………………….....33
3.4 Sample size determination…………………………………………………………......33
3.5 Instrument for data collection ………………..…………………………………….....33
3.6 Procedure for data collection and data analysis………………………………………34
3.7 Limitations of the study………………………………………………………………..35
CHAPTER FOUR: DATA ANALYSIS, FINDINGS AND DISCUSSION
4.0 Introduction………………………….………………………………………………….36
4.1 Data presentation………………………………………………………………………36
4.2 Data Analysis……………………………………………………………………….......37
4.3 Findings of the study……………………………………………………………………45
4.4 Discussion of the findings………………………………………………………………48
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.0 Summary of findings………………………………………………………………......49
5.1 Conclusion..…………………………………………………………………………….50
viii
5.2 Recommendations..…………………………………………………………………..50
5.3 Proposal for further studies……………………………………………………….......51
References…………………………………………………………………………….52
Appendix……………………………………………………………………………...54
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LIST OF TABLES
4.2.1 Percentage analysis of sex of the respondents………………………………………......37
4.2.2 Percentage analysis of age of the respondents…………………………………………..37
4.2.3 Percentage analysis of marital status of the respondents………………………………..38
4.2.4 Percentage analysis of respondents by educational qualification……………………….38
4.2.5 Percentage analysis of respondents by self-cadre……………………………………….39
4.2.6 Percentage analysis of respondents by working experience…………………………….39
4.2.7 Question one…………………………………………………………………………….40
4.2.8 Question two……………………………………………………………………………40
4.2.9 Question three…………………………………………………………………………..41
4.2.10 Question four…………………………………………………………………………...41
4.2.11 Question five…………………………………………………………………………...42
4.2.12 Question six…………………………………………………………………………….42
4.2.13 Question seven………………………………………………………………………....43
4.2.14 Question eight………………………………………………………………………….43
4.2.15 Question nine…………………………………………………………………………..44
4.2.16 Question ten…………………………………………………………………………....44
4.2.17 Question eleven………………………………………………………………………...45
4.3.1 Testing of hypothesis one……………………………………………………………...46
4.3.2 Testing of hypothesis two……………………………………………………………..47
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CHAPTER ONE
1.1 INTRODUCTION
Every organization has its own purpose of operation and pre-determined goals and
objectives to be accomplished in relation to the organization’s mission and vision statement. The
level at which goals or objectives can be actualized depends on the efficiency and effectiveness
of operation and internal control Mgbonyebi and Umead (2008). . But for the goals of any
organization to be achieved, such entity must observe some stipulated or laid down principles for
its performance. When these rules are followed simultaneously, then the usefulness of such
principle or concept will be achieved. In general term, management has been recognized as the
process of planning , organizing, direct and controlling business operation to ensure that states
predetermined goals and objectives are accomplished Carter (2012). Agagu (2009) defines
management as a process which enables organizations to set and achieve their objectives by
planning, organizing, and control their resources including giving the commitment of their
employees (motivation).
According to Ama (2001) inventory is described as stock of goods a firm is producing for sales
and the components that make up the goods. Hilton (2004) defines inventory as an itemized list
of goods (raw materials, finished goods and work in progress) which forms certain proportion of
organizations’ investment. In recent years, Inventory Management has attracted a great deal of
attention from people both in academia and industries. A lot of resources have been devoted into
research in the inventory management practices of organizations. It represents one of the most
important assets that most businesses possess, because the turnover of inventory represents one
of the primary sources of revenue generation and subsequent earnings for the company. In the
manufacturing companies, nearly 60% to 70% of the total funds employed are tied up in current
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assets, of which inventory is the most significant component Carter (2002). Thus, it should be
managed in order to avail the inventories at right time in right quantity. Inventory can be also
viewed as an idle resource which has an economic value. So, better management of the
inventories would release capital productively. Therefore, from the above definitions inventory is
the totality of all the stock, which includes raw materials work-in-progress and finished goods
said to be the total amount of goods and materials contained in a store or factory at any given
time.
Therefore the aim of this research work is to evaluate how beverage companies as part of
manufacturing concerns have been avoiding wastages in inventory by using efficient Inventory
managements and control techniques like Economics Order Quantity (EOQ), Just-in-Time (JIT),
Quick Response Manufacture (QRM), among others to render efficient services to their
customer, maximize profit, avoid production hold-ups in factories and eliminate risk of liquidity
crunch, etc. to achieve the above objectives and to avoid complex result, Nigeria Distilleries
limited, Sango Otta Ogun state is selected for this research work.
1.2 BACKGROUND TO THE STUDY
Profit is the entrepreneur's reward and in fact, a major motive for doing business. Most often too,
it is used as an index for measuring performance. This paper is undertaken to outline how profit
can be maximized through effective management and control of inventory. It focuses on cost
reductions, adequate supply of materials and proper storage. Inventory management is that aspect
of business activity that deals with planning for purchasing, receiving, handling, storing, and
releasing of materials for use in production with effective control measures. Inventories are
industrial goods that are available for use or sale. Rumelt (2013) has classified materials for use
in manufacture under three headings: (1) Raw materials primarily from agriculture and the
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various extractive industries (2) semi-finished goods that are yet to undergo all the production
processes (3) finished goods that are ready for sale and (4) consumable goods which are used up
during production process. Inventory control as it was pointed out by Koumanakos,
(2008).implies the coordination of materials controlling, utilization and purchasing. It also
involves the purpose of getting the right inventory at the right place in the right time with right
quantity because it is directly connected with the production. According to Pandey (2005)
management through their policies, coordination, decision and control mechanisms must
maximize the return on investment (ROI). The need for inventory control cannot be
overemphasized because it serves as the potent management tool of verifying the arithmetical
accuracy of stock records with physical stock (material in the store) through inventory control
Lemu, (2015).
Efficient inventory management is a delicate balance at all times between having too much
and too little in order to maximize profits. The costs associated with holding stock, running out
of stock, and placing orders must all be looked at, and compared in order to find the rigid
formular for particular business Zanto, (2008). This is because it is impossible to have an
unlimited supply on hand, for different reasons. Many businesses simply do not have enough
money to keep excessively large inventories due to the costs associated with purchasing the
items as well as storing them, and having too many products leads to further losses when they do
not move off the shelves, damages and shortages become inevitable, Star (1962). At the same
time, there are issues with inventory management when there is not enough stock in hand. One
common problem is running out of inventory, which is caused by trying to reduce inventory
costs too much. This is something that no business would like to experience, but it happens to
virtually all of them at a given point in time. Even the largest stores run out of certain products
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from time to time when they sale or use more than they expected. There can be financial losses
when inventory is not available for production and for customers to purchase which tends to
result to the organization’s goodwill being negatively affected due to customers’ dissatisfaction
Ayoade, (1986).
1.3 STATEMENT OF THE PROBLEM
Effective inventory management in supply chain is one of the key factors for success.
The challenge in managing inventory is to balance the supply of inventory with demand. A firm
would ideally want to have enough to satisfy the demands of its customers and avoid lost of sales
due to inventory stock-outs. On the other hand, the firm does not want to have too much
inventory staying on hand because of the cost of carrying inventory Anichebe and Agu, (2013).
According to Dimitrios, (2012) inventory management practices have come to be recognized as a
vital problem area needing top priority. Inventory management practices thus deserve utmost
attention. The reason of carrying inventory management practices is to ensure regular supply of
materials as and when required. Insufficient inventories hamper production process and mitigate
sales volume.
On the other hand, Rajeev (2012) denotes that excessive inventories tie up working capital and
boost up carrying costs. In most organizations, direct materials represent up to 50% of the total
product cost, as a result of the money entrusted on inventory, thereby affecting the profitability
of the organization. The fundamental problem of inventory is overstocking and under stocking of
stocks due to the absence of an effective inventory control system. Overstocking locks up the
capital of the organization and also increase the cost of storage and the risk of stock becoming
obsolete and redundant. Under stocking leads to stock out or nil stock leading to production
bottleneck and for that matter halting organizational operations. The effects of stock out are
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production inefficiency, loss of sales, loss of profit, the cost of employing labor who cannot
produce and the reputational damage that the company will face as a result of the failure to meet
customer needs and requirements. The researchers have therefore found the need to study into
this area and bring to bear how inventory management can affect the productivity and
profitability of an organization
However, this shows that there exists a research gap which still needs to be addressed. The
essence of this research work is to carry out further examination on the effect of efficient and
effective inventory control on the profitability of manufacturing companies in Nigeria. This
study was aimed at contributing to resolving the contending level of inadequacies associated
with the inventory control and profitability in manufacturing companies.
1.4 OBJECTIVES OF THE STUDY
The main objective of this research work is to evaluate the effect of inventory control on profit
maximization of in manufacturing companies in Nigeria using the Nigeria Distilleries limited,
Sango Otta, Ogun State, as a case study.
Other specific objectives of the study
The specific objectives of this research work includes
i. To assess if the company order at the right time and obtain quantities of inventories that
are economical through the use of inventory management.
ii. To ascertain whether the company maximizes their profit for the full benefits of their
stakeholders.
iii. To assess if the organization renders efficient services to their customers through prompt
delivery of their orders at attractive prices.
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1.5 RESEARCH QUESTIONS
For a meaningful research work to be carried out on the useful of inventory management in
manufacturing concerns a number of questions must be answered. The following are therefore,
some of the research questions:
i. Do manufacturing concerns use efficient inventory management techniques such as
economic order quantity (economic lot seize) and just-in-time, among others?
ii. Does economic lot size technique in particular assist manufacturing concerns to hold
sustainable size of inventory, for (efficient and smooth production?
iii. Does efficient inventory management help the manufacturing companies, Nigeria at
large?
These questions will be structured in such a way that the responses will state whether they
strongly agree, agree, or are neutral or disagree in their responses. The answer from these
questions will form the basis of the analysis.
1.6 STATEMENT OF HYPOTHESIS
According to Onu (2006) the validity of a hypothetical statement is subject to verification which
must be based on adequate information on which decisions could be objectively based for either
to accept or reject such hypothesis.
Therefore the following hypothesis will be tested in this research work.
HO1: Inventory control and profit maximization does not help maintain effective use of the
organization resources
H11: Inventory control and profit maximization help to maintain effective use of the organization
resources
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HO2: manufacturing company does not minimize cost of inventories through the use of
economic cost size (EOQ).
H12: manufacturing company minimize cost of inventories through the use of economic cost size
(EOQ).
1.7 SIGNIFICANCE OF THE STUDY
The research work was taken up to show the significance of materials management to aggregate
performances of the organization. Apparently, all organizations, whether service oriented or
good oriented need to pay attention to the essence inventory and inventory management in their
organizations. Consequently, it is clear that the contribution and importance of this study cannot
be over emphasized.
The research work will help the management of the Nigeria Distilleries limited, Sango Otta,
Ogun State.to appreciate areas where improvement is needed in her inventory operations so as to
boost her profitability and consequently increase her shareholders wealth. Indeed, this will in no
little way have favorable effects on the national growth and development of Nigeria
manufacturing sector in particular and economy at large.
The results of this study will also assist in defining new methods/ strategies of materials
management for manufacturing sector in particular so as to avoid the incident of over-stocking
and under-stocking which tends to have adverse effect on their profit maximization.
The results of this study should help scholars, students and upcoming researchers in the conduct
of future research and add more to their review of literature.
Finally he study when conducted would be of immense benefits to the public in general i.e. those
who are able are to come across this research work and also writing to know much about
inventory control and profit maximization in a manufacturing company. It is going to serve as a
7
reference or record purpose and as well as increasing the number of publication in this
concentration.
1.8 JUSTIFICATION OF THE STUDY
The study of this research work is justified based on the need for the effective control and
management of inventory by all levels of organization which will ensure smooth operation and
maximization of profit. The need for this research work can be explained through the unresolved
inherent problems associated with the ordering, holding and control of inventories by
organizations, especially manufacturing companies in Nigeria. This research work will go a long
way providing an insight to the techniques available to manufacturing organizations in the area
of inventory control and management so as to ensure profit maximization.
1.9 SCOPE OF THE STUDY
The scope of this study revolves around the effect of inventory control and management on
profit maximization in manufacturing companies in Nigeria. Many areas such as inventory
management systems, contributions of efficient inventory management towards profitability,
material usage, cost minimization and economy of operation; and the impacts of efficient
inventory management especially as it concerns the area of study etc; are given precise
explanations as time and scope constraints permit the researcher. The Nigeria Distilleries limited,
Sango Otta, Ogun State was used as a case study therefore references relating to the Nigeria
Distilleries limited, Sango Otta, Ogun State was used for discussion and analysis.
1.10 DEFINITION OF TERMS
The following terms or concept, which has been used in this research, would be operationally
defined as follows.
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i. Inventory: is the raw materials, work-in-process products and finished goods that are
considered to be the portion of a business assets that are ready or will be ready for sales
Investopedia (2016)
ii. Management: Minizber (2010) define management as a social process where in the
process consists of planning, control, coordination and motivation.
iii. Inventory control: this is the managerial activity performing to ensure that materials are
sufficient for uninterrupted organizational operational are available both in quality and
quantity-Joseph Adewale Oke (2006).
iv. Economic Order Quantity: (EOQ) A standard formula used to arrive at a balance
between holding too much so little stock.
v. Just-in-time (JIT): This aims to reduce costs by cutting stock to a minimum level.
vi. Quick Response Manufacturing: (QRM) is a companywide strategy to cut lead times in
all phases of manufacturing and office operations university of Wisconsin (2015)
vii. Stock Review: This is a regular review of stock. At every review you place an order to
return stock to a predetermined level.
viii. Inventory Turnover: This simply shows how quickly inventory is being
ix. Obsolete stock: A stock no longer in use i.e outdated
x. Ordering cost: The cost incurred in placing the order up to the point of receiving the
goods into the warehouse.
xi. Overtrading: This is a situation whereby a company performs excessive business
operations than its capital can cope with.
xii. Profitability: This is the ability to sell goods and services above cost and earn reasonable
returns on capital employed.
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xiii. Raw material: These are those inputs that are converted into finished goods through the
manufacturing process.
xiv. Re-order Level: It is a fixed point between minimum and maximum stock levels where
requisitions are raised for new purchases.
xv. Shortage cost: These are costs incurred when customers demand cannot be met because
the stock is exhausted.
xvi. Under trading: This is a situation whereby a company has much fund than necessary.
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CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
Series of literature have been written discussing that the effect of inventory control and
management on the operation and profit maximization in manufacturing organization across the
world. Ahmed, (2014) established that inventories in manufacturing organizations or otherwise
require effective control both physical and financially. Inventories are required by organizations
for sale or manufacturing process, thereby contributing to the smooth running of the business
operation in relation to its mission and vision statement. One of the problems facing
manufacturing companies is the growing trend towards the higher cost of materials and services
and constant shut down of factory, which erode business profit Eneje, Nweze, and Udeh,
(2012). This research focuses on how business firm can attain profitability through effective
management of inventories. The objective of this paper is to identity problems of material
management, which if corrected can result in profitability. The paper also examines and outlines
the roles and benefits of materials management.
2.1 CONCEPTUAL FRAMEWORK
2.1.1 CONCEPT OF INVENTORY MANAGEMENT
Inventory management is the art and science of maintaining stock levels of a given group of
items incurring the least cost consistent with other relevant targets and objectives set by
management Jessop, (1999). It is important that managers in organizations ensure adequate and
effective inventory controlling order to ensure that the objective of satisfying production
processes and customers’ needs are accomplished at minimum cost. Drury (2004) asserts that
inventory costs include holding costs, ordering costs and shortage costs. Holding costs relate to
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costs of having physical items in stock. These include insurance, obsolescence and opportunity
costs associated with having funds which could be elsewhere but are tied up in inventory.
Ordering costs are costs of placing an order and receiving inventory. These include determining
how much is needed, preparing invoices, transport costs and the cost of inspecting goods.
Shortage costs result when demand exceeds the supply of inventory on hand. The costs include
Opportunity costs of making a sale, loss of customer goodwill, late charges and similar costs.
2.1.2 CONCEPT OF INVENTORY CONTROL AND TECHNOLOGY
Carter and Price (2013), assert that information is the life blood of all organizations. An
inventory manager needs information technology in order to succeed in his work. Computers can
assist in stock control in calculating the optimum amount of stock to hold and dispatch in order
to satisfy the user requirements. The computer can do this by comparing inventory variables
(stock levels, demand and delivery dates).The electronic data interchange (EDI) is a system
which enables direct communication between organizations without any human intervention.
This technology has revolutionized inventory management. EDI is the name given to the
transmission and receipt of structured data by the computer system of trading partners, often
without human intervention. The international data interchange association defines EDI has "the
transfer of structured data by agreed message standards from one computer system to another, by
electronic means (Jessop, 2014). Electronic point of sales (EPOS), is another technology used in
inventory management. The purpose of EPOS is to scan and capture information relating to
goods sold. An EPOS system verifies checks and provides instant sales reports, charges
transactions and send out intra-and inter-store messages. The (EPOS) technology allows
substantial cost savings and gives "real time" information on sale of goods, patterns of stores
traffic, and popularity and profitability of every line carried. It enables stock to be limited to
12
demand, reduces the risk of obsolescence and deterioration of stocks, reduced chances of theft
and provides information to buyers. This leads to improved customer service and hence
improved financial performance Lysons, (2012).
Over the last decade, our world has changed dramatically due to the growing phenomenon of
globalization and revolution in information technology. There is tremendous demand on
companies to lower costs, enlarge product assortment, improve product quality, and provide
reliable delivery dates through effective and efficient coordination of production and distribution
activities. To achieve these conflicting goals, companies must constantly re-engineer or change
their business practices and employ information systems Mahesh, (2006). Inventory management
has always been an area of scrutiny for organizations. This has become a central focal point as
trends from the supply chain arena have indicated that substantial operating cash can be freed
with leaner and more efficient handling of inventory. As organizations examine the state of their
inventory, they often find that visibility across locations and warehouses are inadequate, stock
levels are inconsistent, demand is uncertain, and communication between stocking locations or
warehouses may be minimal or non-existent. Among other things, the lack of an integrated
interaction between peripheral systems and materials managers leads to unnecessary purchasing
and overstocking Sharma, 2000).
The concepts of “materials management,” “physical distribution management,” and “logistics
management” are the primary inventory organizational tools which have been used successfully
in the past and will be used increasingly in the future to achieve closer coordination and control
of a firm various materials activities. In general materials management is concerned with
bringing materials from outside of an organization to the point of production and moving in
processes. If we distinguish between the operational function of customer service and the
13
resultant goal of customer value and satisfaction, this discussion leads us to conclude the
consequences of materials management are lower costs and improved customer value and
satisfaction to achieve competitive advantage. Industry reports support this contention
Performance Management Group, (2001).
The fast developing and technologically changing environment has placed before the inventories
manager a tremendously challenging task and responsibility. The task is really herculean when
we recognize the importance of materials, equipments and components per annum that go into
the production channels. The challenges become tough because the money tied up in inventory
or materials and equipment are enormous. In fact, in many organizations big and small, materials
form the largest single expenditure item. According to Richard and Nicholas, (1995) an analysis
of the financial statements of a large number of private and public sector organizations indicates
that materials account for nearly 60% of the total expenditure. Consequently, the importance of
materials management lies in the fact that any significant contribution made by the materials
manager in reducing materials cost will go a long way in improving the profitability and rate of
return on investment. Such increase in profitability, no doubt, can be affected by increasing sales.
While most of the writing and discussion on materials management is on acquisition and
standards, much of the day to day work conducted in materials management deals with quality
assurance issues. Parts and materials are tested, both before purchase orders are placed and
during use, to ensure there are no short or long term issues that would disrupt the supply chain.
This aspect of material management is most important to the heavily automated industries, since
failure rates due to faulty parts can slow or even stop production lines, throwing off timetables
for production goals (Mentzer, 2001).
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2.1.3 CONCEPT OF LEAN INVENTORY AND PRODUCTION MANAGEMENT
Lean is a philosophy of business that means doing things as simply and cheaply as possible while
providing superior quality and fast service. Over-production or over-stocking leads to increased
inventory and money sitting idle. Inventory means any goods that are being held for any length
of time, inside or outside the factory. In the Lean system, inventory is regarded as a symptom of
a sick factory. Lean production principle was pioneered by Womack, (2015), and this principle
was linked with reduced inventories. The argument is that as inventory is reduced there will be
profit improvement due to interest saving as well as a reduction in storage fees, handling and
waste. This savings have been estimated by literature to be in the range of 20-30%. A Lean
inventory management system allows a distributor to meet or exceed customers’ expectations of
product availability with the amount of each item that will maximize the distributor’s net profits.
In a Lean system, inventory is regarded as a sign of a sick factory that is in desperate need of
some type of treatment. The ideal goal for a company should be to have an inventory as close to
zero as possible. Effective inventory management allows a distributor to meet or beat their
customers’ expectations of product availability while maximizing their profits.
2.1.4 CONCEPT OF LEGAL POLICIES AND ISSUE INVENTORY CONTROL
The National Agency for food and Drug Administration Control (NAFDAC) Is the regulatory body
of the Nigeria food and Drug industries. The mandate of the Agency on Drink responsibly campaign
is for Citizenry to take measure on drug used for healthy Nigerian, its specific roles are to: Co-
ordinate the activities of individuals and organization within the country; facilitate the equitable
access to the benefits and resources of the industry by all interested parties, formulate and implement
overall polices and plans for materials to the factory and distributions of finished goods. If inventory
management is not adequately maintained, production cannot meet the aspirations of customers
15
which are loss of revenue to the organization. Lawson (2012) views that the most effective
measurement systems assess performance in the entire length of the organization's profit
maximization. Business profitability is a justification of its good performance and loss is a
justification of poor performance. Profits are an indication of good performance: A higher percentage
of the return on assets shows how profitable a company's assets are generating revenue.
2.1.5 CONCEPT OF JUST-IN-TIME (JIT)
Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota
Production System (TPS) is a methodology aimed primarily at reducing flow times within
production system as well as response times from suppliers and to customers. Its origin and
development was in Japan, largely in the 1960s and 1970s and particularly at Toyota. JIT is a
Japanese management philosophy which has been applied in practice since the early 1970s in
many Japanese manufacturing organizations. It was first developed and perfected within the
Toyota manufacturing plants by Taiichi Ohno as a means of meeting consumer demands with
minimum delays. Taiichi Ohno is frequently referred to as the father of JIT. Toyota was able to
meet the increasing challenges for survival through an approach that focused on people, plants
and systems. Toyota realized that JIT would only be successful if every individual within the
organization was involved and committed to it, if the plant and processes were arranged for
maximum output and efficiency, and if quality and production programs were scheduled to meet
demands exactly. JIT manufacturing has the capacity, when properly adapted to the organization,
to strengthen the organization’s competitiveness in the marketplace substantially by reducing
wastes and improving product quality and efficiency of production. Just-in-time inventory
control has several advantages over traditional models. Production runs remain short, which
means manufacturers can move from one type of product to another very easily. This method
16
reduces costs by eliminating warehouse storage needs. Companies also spend less money on raw
materials because they buy just enough to make the products and no more.
There are strong cultural aspects associated with the emergence of JIT in Japan. The Japanese
work ethic involves the following concepts.
i. Workers are highly motivated to seek constant improvement upon that which already
exists. Although high standards are currently being met, there exist even higher standards
to achieve.
ii. Companies focus on group effort which involves the combining of talents and sharing
knowledge, problem-solving skills, ideas and the achievement of a common goal.
iii. Work itself takes precedence over leisure. It is not unusual for a Japanese employee to
work 14-hour days.
iv. Employees tend to remain with one company throughout the course of their career span.
This allows the opportunity for them to hone their skills and abilities at a constant rate
while offering numerous benefits to the company
2.1.6 CONCEPT OF MATERIAL (INVENTORY) RECEIPT AND STORAGE
One important aspect of receipt of inventories is to check the good supplied and to ensure they
conform to specification as contained in the purchasing order Rihinde, (2005).). Damaged and
sub-standard materials are rejected thereby preventing the firm from incurring unnecessary cost
and thus promoting profitability. The effect of inferior materials to both the machine and the
profitability of the firm must be borne in mind as they cause production held up which may
result into substantial losses to the firm. This involves a careful handling of the stock and
maintaining of an accurate control over them. Handling of material is one of the activities
17
perform by materials management and can be an effective tool for saving cost and holding up
profit. Storage of materials depends on the nature and how they are used in the manufacturing
process Mentzer, (2001). Coal and iron ore are usually stored one ground Liquids. Such as
chemicals, paints and oils are kept in tanks. Profits can be achieve if managers effectively
manage issues relating to stores location, layout and equipment inspection, protection of stores,
issues to production, stock records and disposal of obsolete Johnston, (1993). Storage goes hand
in hand with store recording. Good record keeping can detect theft and pilfering early enough. It
shows how much materials are in the store and when to place order. The issue of materials from
store to production department must be properly authorized and recorded.
2.1.7 MATERIALS MANAGEMENT AND QUALITY CONTROL DEPARTMENT
In assurance of product quality, it is very important that the two departments cooperate and relay
useful information to each other. According to Marta (2008) quality control department usually
inform materials management on the best method to be applied to incoming materials and also
the criteria for acceptance and rejection of materials that are substandard. Quality control can
equally advise materials management on condition under which some items should be stored to
avoid deterioration in quality. The issue of quality control cannot be overlooked in inventory
management. Most organizations could not accomplish their pre-determined goals and objectives
ineffective quality control and management Koumanakos, (2008).
2.2 THEORETICAL FRAMEWORK
This will give an evaluation of the research by other scholars and will help make logical sense of the
relationship between inventory management and profit maximization in beverage manufacturing
companies.
18
2.2.1 THE THEORY OF ECONOMIC ORDER QUANTITY
The theory of Economic Order Quantity (EOQ) is a generalized principle used by organizations to
ensure that inventories are ordered and kept at a minimum cost which tends to contribute reasonably
to high level of profit maximization Jaber, (2009). The Economic Order Quantity (EOQ) is the
number of units that a company should add to inventory with each order to minimize the total costs of
inventory such as holding costs, order costs, and shortage costs. The EOQ is used as part of a
continuous review inventory system in which the level of inventory is monitored at all times and a
fixed quantity is ordered each time the inventory level reaches a specific reorder point. The EOQ
provides a model for calculating the appropriate reorder point and the optimal reorder quantity to
ensure the instantaneous replenishment of inventory with no shortages. It can be a valuable tool for
small business owners who need to make decisions about how much inventory to keep on hand, how
many items to order each time, and how often to reorder to incur the lowest possible costs. EOQ
model was presented originally by Ford W. Harris, in a paper published in 1913 Magazine of
Management, (Harris, 1913). Many researches were made on the base of this model. Economic order
quantity (EOQ) is an equation for inventory that determines the ideal order quantity a company
should purchase for its inventory given a set cost of production, demand rate and other variables.
Dave plasecki (2014) defines Economic Order Quantity as an accounting formula that determines the
point at which the combination of order cost and inventory cost are the least. Economic Order
Quantity is the number of units that a company should add to inventory with each order to minimize
the total cost of inventory, such as holding costs, ordering cost and stock out costs. (EOQ) is used as
part of continuous review system in which the level inventory is monitored at all times and fixed
quantity is ordered each time the inventory reaches a specific reorder point Lysons, (2015).
19
Muckstadt, (2014) discussed that EOQ model was determined by minimizing the total annual cost
incurred by the company by virtue of its ordering cost and caring costs.
The expression for total annual cost is:
EOQ = 2DCo/Ch
Where
EOQ = Economic Order Quantity
D= Annual demand
Co = Cost per order
Ch = Holding cost per unit in a year
2.2.2 THE THEORY OF ECONOMIC PRODUCTION QUANTITY MODELS
Economic Production Quantity model (EPQ) determines the quantity a company or retailer
should order to minimize the total inventory costs by balancing the inventory holding cost and
average fixed ordering cost. Economic Production Quantity model ensures that inventory costs
are minimized so as to ensure profit maximization. EPQ model was developed by E.W. Taft in
1918 Taft, (1918). This method is an extension of the EOQ model. The classical economic
production quantity model (EPQ) has been widely used. Numerous research efforts have been
undertaken to extend the basic EPQ model by releasing various assumptions or adding new so
that the model conforms more closely to real-world situations. Recently, re-work activities have
attracted considerable attention because of the reduction of the natural resources and the rise in
the cost of raw material.
2.2.3 THE THEORY OF JOINT ECONOMIC LOT SIZING MODELS
This class of inventory models is commonly referred to as joint economic lot sizing (JELS)
models. The objective of these models is the development of a jointly coordinated buyer-seller
20
inventory strategy that is more beneficial the organization to ensure cost minimization and profit
maximization. One of the first attempts was made by Lam and Wong (1996), extending the
existing model of Dolan. They applied fuzzy mathematical programming to solve the joint
economic lot size problem with multiple price breaks.
2.2.4 THE THEORY OF JUST IN TIME
When first developed in Japan in the 1970s, the idea of just-in-time (JIT) marked a radical new
approach to the manufacturing process. It cut waste by supplying parts only as and when the process
required them. The old system became known (by contrast) as just-in-case; inventory was held for
every possible eventuality, just in case it came about. JIT eliminated the need for each stage in the
production process to hold buffer stocks, which resulted in huge savings. JIT has other advantages
too. It involves the workforce much more directly in controlling their own inventory needs, and it
allows a variety of models to be produced on the same assembly line simultaneously. Before its
introduction, assembly lines had been able to cope with only one model at a time. To produce another
model required closure of the line and expensive retooling. (JIT) can lead to dramatic improvements
in a manufacturing organization's return on investments, quality and efficiency Goddard, (2001). It
emphasizes that production should create items that arrive when needed, neither earlier nor later.
Quick communication of the consumption of old stock, which triggers new stock to be ordered, is key
to (JIT) and inventory reduction.
2.3 LITERATURE ON THE SUBJECT MATTER
The term inventory control refers to the quantities of physical items of materials that are held in
store. The businessman occupies a strategic role in which inventory control is one. McCarthy (2015)
explains that inventory control and profit maximization in a manufacturing company has obligation to
improve its positive effect on society and its negative effects, being socially responsible sometimes
21
require difficult tradeoffs. The items of stock are component spare parts, work-in-progress, packaging
materials such as wrapping paper, rake, straw, and metal container such as boxes, crates, bottles, crap
etc. Also residue are kept in store, such residue may be used materials part arising out of
manufacturing process or other activities for example, engine oil, ashes, sawdust, rags, obsolete
machinery etc. Inventory also includes standard supply items and finished products. Lovis and David
(2013) also explained the supply of goods and jobs for costs, wages, and hours of work and for
entrepreneurship in free enterprise system, as it relate to profit in an entrepreneurship. Peter and
Shepherd (2013) define entrepreneurship as the process of creating and managing a business into
profitable ventures within an organizational environment. Profit can be referred to as the excess of
income over expense associated with the production and sales of goods or services. The profit
motivates the seller's primary aims. Moreover, the above mentioned stock and many other materials
used by an organization are kept in the stores; therefore, stock should be looked very carefully and
well protected, counted and checked as its represent asset of an organization.
There have been numerous attempts to explain financial performance of companies in the fields of
strategic management, accounting, finance, marketing and management science. Naturally each of
these areas concentrates on different explanatory variables and therefore this study limits the survey
to papers that are perceived as immediately relevant. In the U.S., Sanghal (2005) studied the effect of
excess inventory on long term stock price performance. The study estimated the long-run price effects
of excess inventory using 900 excess inventory announcements made by publicly traded firms during
1990-2002. Roumiantsev and Netessine (2005) investigated the association between inventory
management policies and the financial performance of affirm. The purpose of the study was to assess
the impact of inventory management practices on financial performance. They used conventional firm
specific variables (inventory levels, margins, and lead times) as explanatory variables. They found no
22
evidence that smaller relative levels are associated with financial performance as measured by return
on assets. Eckert (2007) examined inventory management and role it plays in improving customer
satisfaction. He found a positive relationship between customer satisfaction and supplier partnerships,
education and training of employees, and technology. In Greece, Koumanakos (2008) studied the
effect of inventory management on firm performance in manufacturing firms operating in three
industrial sectors in Greece, food textiles and chemicals were used in the study covering 2000 – 2002
period. The hypothesis that lean inventory management leads to an improvement in a firm’s financial
performance was tested. The findings suggest that the higher the level of inventories preserved
(departing from lean operations) by a firm, the lower the rate of return. In conclusion, most of the
studies reviewed concentrated on conventional firm level variables such as inventory levels, demand
and lead time. Mgbonyebi and Umeadi (2008) carried out a research on the association of inventory
control in enhancing business growth in Nigeria a survey of five selected manufacturing companies in
port Harcourt metropolis. They made use of simple percentage and chi-square. The analysis revealed
significant relationship between inventory control and business growth. Little attempt was made to
capture the perceptions of managers about the impact of inventory management practices on firm
financial performance. Agus and Noor (2006) did measure the perception of managers about the
impact of inventory management practices on financial performance of manufacturing firms in
Malaysia. Eneje, Nweze and Udeh (2012) did measure effect of efficient inventory management on
profitability of breweries in Nigeria. However, circumstances in Nigeria could be different from those
in Ghana. This study seeks to investigate the impact of inventory management practices on financial
performance of manufacturing firms in Nigeria.
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2.3.1 EVALUATION OF KINDS OF INVENTORIES AND METHODS OF CHECKING
INVENTORIES
In manufacturing concerns different kinds of inventory materials are used in order to produce
and sell to the customers the products that they require. These material inventories are the raw
materials, Work-in-Progress and Finished goods.
According to Ama (2001), the forms of inventories in a manufacturing firm include raw
materials, work-in-progress and finished goods. Raw materials are those basic input materials
that are converted into finished product through the manufacturing process. Work –in-Progress
(W.I.P) are those partly manufactured goods or products that represent product that require
further job before they become finished goods.
Pandy (2008), states that finished goods inventories are those completely manufactured products
which are ready for sale. He also added that they are those ones needed for easy marketing
operations.
Horngren and Sundem (2001), posit that the classes of inventories include: Direct materials
inventory which are materials on hand awaiting use in the production process. Work-in-progress
inventories are goods that undergo the production process but inventory are those fully
completed but not yet sold.
According to Nweze (2000), stocks (otherwise known as inventories) are items of value held for
use or sale by an enterprise and usually comprise: raw materials and supplies used in production,
Work-in-progress and finished goods.
Stocks from the above statements of the various authorities are of three categories namely-the
raw materials, the work-in-progress and the finished goods. It is vital that manufacturing the
level of inventories they hold very carefully.
24
Some of these methods used to check inventories are the perpetual inventory control, actual
counting method look it over method, re0order level and periodic review methods, among others.
Lucey (2009), states that the basic prerequisite is that stock movements (issue and receipts) are
accurately recorded, and the most frequently used methods are Bin Cards, Stock record cards and
perpetual inventory system.
According to Nweze (2000), the two systems of stock taking are generally in use namely: Perpetual
and Periodic. Perpetual inventory checking method is that in which complete data recorder kept on
each item of inventory and additions and subtractions are made with order or transaction. Here, there
is an inventory balance plus a receipt of sale minus the actual sale to reflect the quantity at hand.
Actual counting method is used to check inventories. It is used to actually court inventory item by
item. Looking it over method is such in which the items of inventories are not properly and actually
counted from time to time and is always full of errors because it is hard to pinpoint the inventory
levels, the item that need to be ordered, and that which the firm is overstocking.
a) Re-Order Level System
The recorder level system which is also called the two BIN systems is such in which a
predetermined re-orders level of stock is set for each item of inventory. When the stock level
falls to the re-order level, a replenishment order is issued. The replenishment re-orders quantity
is at times economic lot size (economic order quantity). It should be noted that this method of
checking inventory is also called two BIN systems because the stock is segregated into two bins.
Stock initially drawn from the first bin and a replenishment order issued when it becomes empty
from the second bin. Most of the organizations operate the re-order level which triggers off the
required replenishment order. The mathematical illustration bellows can help to show how re-
order level system is used.
25
An efficient organization uses the following data on a particular inventory to check its inventory
levels by using it, the maximum and minimum levels of inventory, the re-order level are
determined.
Normal usage - 220 units per day
Minimum anticipated usage - 100 units per day
Maximum usage - 280 units per day
Lead time 50-60 days
EOQ (Economic Order Quantity)
(Previously calculated) - 10,000 units
(i). Re-order level = maximum usage x maximum lead time
= 280 x 60 units
= 16,800 units
(ii). Minimum level = Re-order level – Average usage for lead time
= 16,800 – (220 x (50 + 60/2)
= 16,800 – (220 x 55) units
= 16,800 -12,100 units
= 4,700 units
(iii). Maximum level = Re-order level + EOQ –(minimum anticipated usage x minimum lead
time)
= (16,800 + 10,000) – (100 x 50) units
= 26,800 - 5000 units
= 21,800 units
Source: Ama (2001)
26
The three levels: re-order, maximum and minimum are usually entered on a record card and
comparisons made between the actual inventory and the control levels each time an entry is
made on the card. The re-order level shows when stock should be replenished, the minimum
level tells management on when demand is above average and needs careful watching.
Maximum level warns management that demand is at minimum and that inventory level is likely
to rise above the desired maximum.
This method of checking inventory has its merit which is the ability of being responsive to
changes in demand and generates automatically replenishment order at the appropriate time by
comparing inventory levels against re-order level.
However, where many different types of stock are used jointly for production different items
may reach re-order level at the same time thereby overloading the re-order system.
b) Periodic Review System
Periodic inventory review system is just like physical courting method in which stocks are cross-
checked and updated from time to time.
Ama (2001), states that periodic review system is such in which stock level for all parts are
reviewed at fixed intervals, for instance, every week, month or year. Where necessary a
replenishment order quantity which is variable quantities ordered at fixed intervals and he EOQ
is not previously calculated but is based on demand, the present inventory level and the lead-
time.
Periodic inventory review system as a method of checking inventories has the following merits;
27
1. All inventory items are reviewed periodically so that there is more chance of outdated
items to be eliminated
2. Economics in placing order may be gained by spreading the purchasing firms load more
evenly.
3. Because orders will always be in the same sequence, there may be production economics
due to more efficient production planning being possible and lower set up cost.
4. Because orders will always be in the same sequence, there may be production economics
due to more efficient production planning being possible and lower set up cost.
5. Large quantity discounts may be obtained when a range of inventory items is ordered at
the same time from a supplier.
Nevertheless, this method of checking inventory is less responsive to change in consumption, if
the rate of usage changes shortly after review, stock out may occur before the next review.
Unless, demands are reasonably consistent, it is somewhat difficult to set appropriate periods for
review.
Lastly, manufacturing concerns use these methods to check and supervise the levels of their
stock in order to avoid over-stocking or running out of stock as all these could tell much on the
performance of the organization.
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2.3.2 BASIC TYPES OF INVENTORY MANAGEMENT TECHNIQUES IN
MANUFACTURING CONCERNS
The aim of a manufacturing concern to the manage its inventories are as follows: To establish
and maintain an adequate inventory level at a minimum cost, to reduce the cost of managing
inventory, to ensure the production is not interrupted due to lack of inventory and that
inventories are not used through excess stock by fixing re-order and stock levels and to minimize
overstocking and under-stocking.
Lucey (2009), defines inventory management or control as; the system used in a firm to control
the firm’s investment in stock. The system typically involves the recording and monitoring off
stock levels, forecasting future demands and deciding when and how many to order. The overall
objective of inventory management is to minimize, in total, the costs associated with stock.
In order to achieve the objective of inventory management, the organizations determine the
optimum level by
The ordering costs on the order hand are the cost of placing for replenishment stocks or
inventories. It is believed that when bulk quantities of stock are ordered, the ordering cost will
reduce but holding cost will also increase.
According to Luecy (2009), ordering costs includes: Transport costs, the set-ups and tooling
costs associated with production run, the clerical and administrative costs associated with the
purchasing, accounting and goods received.
According to Hilton (2004), ordering costs are the following: Receiving cost (e.g. unloading and
inspection), clerical costs of preparing purchase orders, transportation costs and the sum spent
finding suppliers and expediting order
29
However, the holding costs include: Deterioration, theft spoilage or obsolescence costs of storage
space (e.g. warehouse), forgone interest on working capital tied up in inventory and security
Shortage costs includes: Loss of quantity discounts on purchase, disrupted production when raw
materials are unavailable, lost sales resulting from dissatisfied customers, idle worker and extra
machinery setups.
Ama (2001), enumerated inventory out-costs as follows: Labour frustration over stoppages, extra
costs associated with urgent and often small quantity replenishment purchases, lost contribution
through the lost sale, cost of production stoppages caused by inventory out of work-in-progress
of raw materials, loss of customers goodwill and loss of future sales because of customers going
elsewhere.
Therefore, when all the above cost elements are considered, the question will be how will
inventory management method minimize them in order for the organization to thrive?
The answer is by using the order quantity of inventory that minimizes the cost of procuring and
holding inventory. This stock order is called economic order quantity, EOQ or economic lot size
(ELS).
2.3.3 PROFIT MAXIMIZATION THROUGH EFFICIENT INVENTORY
MANAGEMENT
Organizations have limited resources and this always pose problems to the extent of result
normally achieved. According to Copland and Dascher (2009) as cited in Nweze (2000) common
organizational goals include: maximization of profit or achieving satisfactory levels of
performance (profit satisfaction), achieving contained growth or ensuring the survival of the
organization among others.
30
To maintain profitability, the most important requirements are preventing wastage of time and
raw materials, not leaving the machine capacity idle and underutilization of labour force.
Specifically, the major asset in the enterprise which affects efficiency of operations is inventory.
Both excess of inventory and its shortage affect the productive activity and the profitability of an
organization.
In order to maximize profit, manufacturing concerns always try to reduce both holding costs and
ordering costs by using optimum order quantities called economic order quantity or lot size.
According to Fe News Services (2008), the holding costs such as interest on capital invested in
inventories, insurance cost, obsolescence, wastage resulting from storing inventories, and costs
attributed to not holding the inventories such as re-ordering cost, lost sales cost, lost production
cost, orders not executed, customers dissatisfaction and threat to lose the market share, burden of
fixed costs and wage payment to idle workforce and underutilized machine capacity have the
capacity to reduce profit of a manufacturing concern when not handled properly.
This Fe News Service (2008), states thus: economic order quantity or lot order size of inventories
is suggested to reduce the costs associated with acquiring and carrying the inventories. The size
of the order should be such which ensures the desired level of inventory at minimum acquisition
and carrying costs.
However, costs reduction due to application of sound inventory management principles resulted
in very significant increase in net income (profit). This is achieved as stated earlier by using
optimum stock quantity that gives more turnovers to keep sales on as customers demand.
Inventory management is also about balancing the two opposing cost factors for optimum
profitability.
31
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INRODUCTION
Research methodology according to Udo, (2013) is a systematic process of collecting,
presenting, analyzing and interpreting data for the purpose of arriving at dependable Solutions to
human problems. This chapter gives the methodology employed in this study, involving a
discussion of data collection analysis techniques. This chapter presents the research design,
methods of data collection and techniques analysis of data to be used in the study. Effort is made
to describe different tools or techniques employed while analyzing the work. The research
focuses on the effect of effective inventory control on the profit maximization of manufacturing
companies in Nigeria a study of Nigeria Distilleries limited, Sango Otta Ogun state.
3.1 AREA OF STUDY
The area of study covered by this research work centered Nigeria Distrilleries Limited, Sango
Otta, which is a manufacturing industry. Nigeria Distilleries Limited is located in Sango-Ota,
Ado/Otta, Ogun. The company is mainly produces Alcoholic Drink, Beverages, Liquor and
offering spirits, Wines. With over fifty-six (56) years of experience, they have earned their place
as Nigeria’s foremost distilleries because they distill world-class brands, which continually
satisfy their customers. Nigeria Distilleries limited was incorporated on 6th March (1961) with
the mission to offer the best brands to the market thirsty for top quality wine and spirits.
3.2 RESEARCH DESIGN
This research is carried out using some techniques such as the use of questionnaires and personal
interview and consulting some textbooks. The research design used was to focus on the need for
32
efficient and effective inventory control in among manufacturing companies in Nigeria a study
of Nigeria Distilleries limited, Sango Otta Ogun state.
3.3 STUDY POPULATION
Population is described as the entire member of object that needs to be studied. The considered
in this research work was both the senior and junior staff of Nigeria Distilleries limited, Sango
Otta Ogun state. The population size was 1, 200 as at the time this study was carried out
3.4 SAMPLE SIZE DETERMINATION
To determine the sample size on the total population of 1, 200, the researcher used Taro Yamani
formula is shown below
n = N/ 1 +N (e) 2
Where
n = the desired sample size
N= Population size
e =margin of error
1 = constant/unity
n = 1, 200/ 1+1,200 (0.1)2
= 1,200/ 1+1,200 (0.01)
= 1,200/ 1 + 12
= 1, 200/13
n = 92
3.5 INSTRUMENT FOR DATA COLLECTION
There are many sources or instrument of data but in this study which is purely analytical, two
instruments for data collection which is primary and secondary data or sources were used. The
33
instrument used for primary source of data collection by the researcher was questionnaire and
personal interview.
3.5.1 Questionnaires: The researcher designed a well-structured and multiple choice
questionnaires for the staffs of Nigeria Distilleries Limited. The questionnaires were personally
administered by the researcher. The questionnaires were distributed and collected immediately to
avoid loss in transit and close-ended questions were asked for simple and direct responses which
the respondents could not easily avoid. Out of fifty questionnaires that were sent to the field, all
were returned.
3.5.2 Personal interview: Another instrument employed in the process of this study was
interview. This is a means of which data are collected verbally by asking question from the staff
of Nigeria Distilleries Limited. This was carried out to gain an insight into the feelings and belief
of those interviewed in order to obtain accurate information.
3.5.3 Secondary Sources: secondary data was used in this research work to support the data
obtained from the primary sources so as to gain more information on the subject. The sources of
secondary data used include journals, text books and internet.
3.6 PRODURE FOR DATA COLLECTION AND DATA ANALYSIS
The data gathered from the fieldwork will be presented in a tabular form and interpreted using
simple percentage approach. . The result will be analyzed using simple percentage in order to
summarize the data collected and remove unnecessary details so as to depict a degree of
homogeneity.
In statistical testing of hypothesis, the Chi-square (X2) test of hypothesis was employed in
analysis the data collected.
34
3.7 LIMITATIONS OF THE STUDY
There were a lot of challenges and difficulties right from the point of deciding on the appropriate
research topic, during the course of the research assignment. Some of these constraints include
financial difficulty. It was not too easy raising funds for the research work.
Another challenge includes the administration of questionnaires and administration of interview.
The respondents were reluctant to accept the completion of the questionnaires. Some of the
respondents were busy going about their daily duty and could not devote enough time for the
interview process.
35
CHAPTER FOUR
DATA ANALYSIS, FINDINGS AND DISCUSSION
4.0 INTRODUCTION
In this chapter, the research presented both the quantitative and qualitative data collected during
the field work. These data include the response from the interview conducted by the researcher,
the personal observations, the information elicited with the questionnaire and other relevant data
collected from the manuals supplied by the beverage company of study.
The analysis of the findings followed a systematic approach of providing answers to each of the
research questions. The result and discussion of the findings in the study are presented to reflect
the general evaluation of the usefulness of inventory management in manufacturing concerned. It
is also aimed at establishing in particular the efficacy or other wise of the techniques in
minimization of costs for more productivity in the manufacturing sector.
4.1 DATA PRESENTATION
Responses in tabular form
The response of the respondents as elicited from the questionnaire were presented in a tabular
form as shown below and at the end, the total scores for each class of the responses and their
percentage s were determined
36
4.2 ANALYSIS OF GENERAL CHARACTERISTIC OF THE RESPONDENTS.
Section A: Personal Data of Respondents
Table 4.2.1 Percentage Analysis of Sex of the Respondents
SEX ACTUAL RESPONSE PERCENTAGE (%)
FEMALE 34 37
MALE 58 63
TOTAL 92 100
Source: Fieldwork (2017)
This easily indicates that the male has the highest response of 63% against 37% of female.
Table 4.2.2 Percentage Analysis of Age of the Respondents
AGE RESPONDENT PERCENTAGE (%)
20-30 30 33
31-40 50 54
41-50 12 13
TOTAL 92 100
This Analysis indicates that most respondent fall between 31-40 while others have a total of 54%
37
Table 4.2.3 Percentage Analysis of Marital Status of the Respondent
MARITAL STATUS RESPONDENTS PERCENTAGE (%)
MARRIED 49 53
SINGE 33 36
DIVORCE 10 11
TOTAL 92 100
This Analysis indicate that the marital status of the respondents 49(53 %) are married 33 (36%)
are single while 10 (11%) are divorced
Table 4.2.4 Percentage Analysis OF Respondent by Educational Qualifications
QUALIFICATION RESPONDENT PERCENTAGE (%)
B.sc/ HND 50 54
ND/NCE 28 30
SCHOOLCERT. 14 16
OTHER _ _
TOTAL 92 100
This Analysis shows that majority of the respondent have 54% (B.sc / HND) and (school cert)
have 16% while (ND /NCE/HSC) have 30%
38
Table 4.2.5 Percentage Analysis OF Respondent BY Self –Cadre
SELF-CADRE RESPONDENT PERCENTAGE%
TOP MANAGEMENT 10 11
MIDDLE STAFF/ LEVEL 25 27
JUNIOR STAFF 57 62
TOTAL 92 100
This indicates that 11% are Top management staff, 27% are junior staff and 62% are the Middle
staff.
Table 4.2.6 Percentage Analysis of Respondent Working Experience
WORKING EXPERINCE RESPONDENTS PERCENTAGE (%)
BELOW 5YEARS 9 10
5-10YEARS 38 41
10YEARS AND ABOVE 45 49
TOTAL 92 100
Table above shows the working experience of the respondent 9(10%) are below 5years, 38(41%)
are 5-10years 45(49%) are 10years and above.
39
SECTION B: QUESTIONS BASED ON THE RESEARCH WORK
TABLE 4.2.7
QUESTION ONE: Is there any positive relationship between the inventory control and profit
maximization in a manufacturing company?
RESPONDENT FREQUENCY PERCENTAGE (%)
YES 72 78
NO 20 22
TOTAL 92 100
The above table shows that 78% of the respondent agreed to the statement that there is positive
relationship between the inventory control and profit maximization in a manufacturing company.
TABLE 4.2.8
QUESTION TWO: Does inventory control and profit maximization help to maintain and
effective use of organization resources?
YES 92 100
NO - -
TOTAL 92 100
The table above shows that 100% of the respondents agreed that inventory control and profit
maximization helps to maintain the effective use of organization resources.
40
TABLE 4.2.9
QUESTION THREE: Is there any significant relationship between inventory control and profit
maximization in a manufacturing company?
YES 79 86
NO 13 14
TOTAL 92 100
The table above shows that majority of the respondent agreed that there is significant relationship
between inventory control and profit maximization in a manufacturing company.
TABLE 4.2.10
QUESTION FOUR: For inventory control system preparation, do think there should be
someone responsible for setting up operations?
YES 64 70
NO 28 30
TOTAL 92 100
The table above shows that 70% agreed that there should be someone responsible for setting up
operation while 30% disagreed.
41
TABLE 4.2.11
QUESTION FIVE: Have you ever been involved in inventory control and profit maximization
in a manufacturing company before?
YES 72 78
NO 20 22
TOTAL 92 100
The table above shows that 78% of the respondents agreed that they are involves in the
preparation of inventory control and profit maximization while 22% were not involved.
TABLE 4.2.12
QUESTION SIX: How do you cope with the industrial policy problem in your company?
FAVORABLE 56 61
UNFAVORABLE 36 39
TOTAL 92 100
From the table above, 61% of the staff agreed that they were favor with industrial policy, while
39% disagreed with the policy
42
TABLE 4.2.13
QUESTION SEVEN: Does the management satisfy the need of for inventory control and profit
maximization in your company?
RESPONDENT FREQURNCY PERCENTAGE (%)
YES 76 83
NO 16 17
TOTAL 92 100
From the table above, 83% responded that the management satisfy the need for inventory control
and profit maximization in the company while 17% disagreed.
TABLE 4.2.14
QUESTION EIGHT: Is there any training on inventory control and profit maximization
available for employee in your company?
YES 68 74
NO 24 26
TOTAL 92 100
The table above shows that 74% of the respondent agreed that there is training opportunity on
inventory control and profit maximization for employee in the company while 26% disagreed
that there is no training opportunity.
43
TABLE 4.2.15
QUESTION NINE: Does manufacturing company do minimize the cost of inventories through
the use of economic lot size (EOQ)
YES 72 78
NO 20 22
TOTAL 92 100
The tables above shows that 78% of the respondent agreed that manufacturing company do
minimize cost of inventories through the use of economic lot size (EOQ)
TABLE 4.2.16
QUESTION TEN: Do you agree in your opinion that the company should continue with the use
of flexible budgeting technique? If not recommend your own technique
FLEXIBLE 92 100
- - -
TOTAL 92 100
From the above table, 100% agreed that the company should continue with the use of flexible
budgeting system.
44
TABLE 4.2.17
QUESTION ELEVEN: Is there any problem being face in the implementation of inventory
control and profit maximization in your company?
YES 58 63
NO 34 37
TOTAL 40 100
From the above table,63% agreed that there is no problem being faced in the implementation of
inventory control and profit maximization in the company while 37% disagreed that there is
problem being faced.
4.3 FINDINGS OF THE STUDY
The findings of this research work will be based on Testing of Hypothesis using Chi-Square
method.
Hypothesis which are stated in the statement of hypothesis in chapter one will be tested using
chi-square(X2) static.
The acceptance and rejection rule remained as stated in chapter three of this research work. In
testing the hypotheses, question two and nine were used and these procedures were adopted as
shown below
The formula is x2 = £ (fo-fe) 2/fe
Where FO = Frequency observed
£ = Summation
Decision Rule of chi-square (x2)
45
i. Accept Ho if x2 calculated is greater than x2 tabulated and reject Hi
ii. Accept Ho if x2 tabulated is greater than x2 calculated and reject Hi
4.3.1 Testing of Hypothesis one
Ho: Inventory control and profit maximization does not help to maintain effective use of the
organization resources?
Hi: Inventory control and profit maximization help to maintain effective use of the organization
resources?
OPTION FO FE FO-FE (FO-FE)2 £(FO-FE)2∕ X2CAL
FE
YES 92 46 46 2116 46 92
NO _ 46 -46 -2116 46
TOTAL 92 92 - 92
Fe = 92/2
Fe = 46
X2 = £ (fo-fe) 2/fe
X2 = 2116/46
X2 = 46
x2Tabulated = (n-1) at degree of freedom 0.05
= (2-1) at degree of freedom 0.05
= 1 at 0.05
= 3.841
46
Decision Rule: Since x2 calculated is greater than x2 tabulated, reject Ho. It can therefore be
concluded that inventory control and profit maximization help to maintain effective use of
organization resources
4.3.2 Testing of Hypothesis Two
Ho: Manufacturing Company does not minimize cost of inventories through the use of economic
cost size (EOQ).
Hi: Manufacturing Company minimizes cost of inventories through the use of economic cost
size (EOQ).
OPTION FO FE FO-FE (FO-FE)2 £(FO- X2CAL
FE)2/FE
YES 78 46 32 1024 32 64
NO 14 46 -32 1024 -32 _
TOTAL 92 _ _ 2048 _ _
Fe = 92/2
Fe = 46
X2 = £(fo-fe)2/fe
X2 = 2048/46
X2 = 46
X2 = tabulated = (n-1) at degree of freedom 0.05
= (2-1) at degree of freedom 0.05
= 1 at 0.05
= 3.841
47
Decision Rule: Since x2 calculated is greater than x2 tabulated which means we accept Hi and
reject Ho. It can therefore be concluded that manufacturing company minimize cost of
inventories through the use of economic cost size (EOQ).
4.4 DISCUSSION OF THE FINDINGS
The research actually revealed the following findings.
i. The company maximized profits through more sales and cost reduction due to the use of
efficient inventory management techniques.
ii. The inventory is one of the most essential assets of manufacturing concerned and a lot of
capital invested in it.
iii. The research shows that EOQ and other inventory management models assist and reduce
companies cost of investment in inventories.
iv. The inventory models help the company to maintain hitch-free production and thereby
remove all process wastes by making inventories of raw materials to be available at all
time.
The customers of the organizations patronize them very well due to the nature of service
rendered to them as there was no report of out of stock syndrome.
48
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.0 SUMMARY OF FINDINGS
In the course of this research, we have examined in detailed the scope of inventory
control as an important management tool that is carried out in the store department of any
organizations. Strategies for stock taking and stock checking as interrelated concept in store
management were extensively discussed. The role and importance of inventory control towards
the manufacturing concern were highlighted.
Research methodology analysis and interpretation of data collection from Nigeria Distilleries
Limited, Sango Otta were embodies.
Through effective and efficient inventory control, Nigeria Distilleries Ltd, had over three years
been able to minimize cost of holding stocks, and labor frustration, maintain customer’s goodwill
through steady and adequate supply of their demands and is able to meet demand in variation of
production.
Notwithstanding, there are some lapses in the store department of the Nigeria Distilleries Ltd, as
there is hardly any business organization without weakness in one way or the other in any of its
department. As regards this, we notice that the arrangement of some stock items are such that
there is no free cross to the items to facilitate easy checking and issue from the rack and shelves.
In addition, stocking arrangement of bulky and heavy items is not done in such a way that makes
counting easy. Also access to store is not strictly restricted to the store department staff only.
The safety procedure of the store needs to be looked at the roof of the forklift used in the stores
has been removed and forklift drivers were not provided with helmet. This could be dangerous in
case of accidental fall of stock operation.
49
5.1 CONCLUSION
Inventory management has really assisted manufacturing concern in coordinating their
inventories and their overall performance.
The organizations have put on record reduction of cost of their inventories and that of production
thereby increasing their total revenues and general profitability. As a result of this, the
organization pay high dividends to their shareholders and cause imperative prices of their shares
at the stock exchange market, thereby attracting more potential investors to themselves.
Quality, they say is bedrock of successful operations, Nigeria Distilleries Ltd, has recorded a
huge success over the years, which could be attributed to its and expansion. The contribution of
Nigeria Distilleries Ltd, on live economy is of remarkable importance. This includes
employment opportunity for over 1000 Nigerians and also contributing to the revenue of Federal
and State Government throughout the various taxes.
5.2 RECOMMENDATIONS
The validity of any project work rest on the suggestions or recommendations it offers. It is on
this fact that it is considered imperative and appropriate to make following suitable suggestions
to the management of the Nigeria Distillates Ltd, which will is no small measure improve the
quality of inventory in the company and it will go a long way to become result oriented
approach.
- The arrangement of stock item should be made in such a way that there is free access to
every item to facilitate easy checking and issue from the rack and shelves. To this end,
items of similar nature must be kept in the same area. A good stock keeping require that
the stock keeping arrangement of bulky items should be done in such a way that it makes
issue and counting possible and easy access to the store should be strictly limited to store
50
department staff and on no account, should customers and staffs of other department be
allow to take a delivery of their purchase from the store. Delivery should endeavor to
have the roof of forklift should be replaced and provide the forklift drivers with helmet to
cover heads during operations.
- Furthermore, the management should organize training for store staff especially the
junior ones who are mostly school certificate holders. If it is carried out, will no doubt
boost the skill and improve the conduct of their duties.
- Finally, the store department should be made tidy at all times. Materials not required
should be disposed of to create enough space for new order.
5.3 PROPOSAL FOR FURTHER STUDIES
This research work has revealed that a lot of gains accrue from efficient inventory
management by Nigeria Distilleries Ltd. However, the manufacturing concern will perform
better and compete effectively with other counterparts in this era of globalization and
internationalization if the following reasons are considered.
i. Fund for research work both in the areas of manufacture and other sectors of the
economy should be reserved.
ii. Update recent developed software on inventory management on regular basis.
iii. All staff should be made to have the thorough idea or knowledge of inventory
management
iv. Adequate study and understanding of the holding cost by all the staff of manufacturing
companies handling inventories so, as to keep watch over it all times.
51
REFERENCES
Ahmed, J.A. (2014), Research methodology fundamentals: Titles publishers. Ibadan.
Ama, G.A.N. (2001), Management and cost Accounting current Theory and practice. Anambra
Copelan, R.M and Dascher, P.E. (2009), Management Accounting. 2nd ed., In: Nweze (2000), Profit
Planning: A Quantitative Approach. M’cal Communication International, Enugu. Current
Theory and Practice, Aba: Amasoa Financial Perspective.
Eneje, C. Nweze, A. and Udeh, A. (2012), Effect of efficient inventory management on
profitability: evidence from selected brewery firms in Nigeria,
Goddard, W.E. (2001). JIT/TQC—identifying and solving problems. Proceedings of the 20th
Electrical Electronics Insulation Conference, Boston.
Harris, F.W. (1913). How Many Parts to Make at Once, Factory. the Magazine of Management.
Hilton, R.W. (2004), Management Accounting: McGraw Hill Inc. USA
Horgren, T.C and Sundren, G. (2001). Introduction to Management Accounting. 8 Edition.
Johnston R (1993). Cases in Operation Management, London Pitman Publishing.
Joseph D. (2002). Just-in-time Inventory: A financial perspective, Theory and concept/Beyond
JIT.
Koumanakos, D.P. (2008). The effect of inventory management on firm performance
International Journal of productivity and performance Management.
Lam, S.M., and Wong, D.S. (1996). A Fuzzy Mathematical Model for Joint Economic
Lemu, T. (2015). The Role of Materials Management in Economic Development, Lagos
Lucey, T. (2009), Costing. DP Publication Ltd. London.
Mgbonyebi, D. C. and Umeadi, A. (2008). Impact of Inventory Control in Enhancing Business
Growth in Nigeria,
52
Nweze, A.U (2000), Quantitative Approach to Management Accounting. Computrer Edge
Publishers, Enugu.
Onuocha, B.C (2006) Fundamental of Business management in Nigeria. Aba:
Pandy, I.M. (2008), Financial Management. Vikas Publishing House Pvt. Ltd. New Delhi.
Popoola, E. (2009), Principles and theories of management, Gak tech. printers. Lagos
Richard, B. C. and Nichola,s J. A. (1995), Production and Operations Management, USA
Rihinde P (2005), Operation Management, Onitsha: Zemi Publishing House Ltd.
Sharma, S. C. (2000), Materials Management and Materials handling, Nai sarak Delhi: Khanna
Publishers.
University of Wisconsin-madison (2015), Quick Response Manufacturing (QRM).
Zanto, B. (2008). Purchasing and Supply Management, Kaduna: Timo Books.
53
APPENDIX
RESEARCH QUESTIONNAIRE
Dear Sir/Ma,
A research analysis is being carried out on “Inventory control and profit maximization in
a manufacturing company (A case study of Nigeria Distilleries Limited, Sango Otta, Ogun
State), which is your company.
All information given will be treated in strict confidence and used for academic purpose
only, please read the questions carefully and make the use of appropriate boxes to the best of
your knowledge/ability. Short observation is also required where necessary.
Thanks
Yours Faithfully
Opoola, Olaide M.
NOU134828614
54
SECTION A: (Tick where applicable)
1. Name: ___________________________________________________
2. Sex: Male ( ), Female ( )
3. Age: 20 – 30 ( ), 31 – 40 ( ), 41 – 50 ( ), 51 and above ( )
4. Marital Status: Single ( ), Married ( ), Divorced ( ), Widowed ( )
5. Educational Qualifications: BSC/HND ( ), ND/NCE/HSC ( ), School Cert. ( ), Others ( )
6. Years of Experience: 0 – 5 ( ), 6 – 10 ( ), 11 – 15 ( ), 16 – 20 ( )
7. Nationality: Nigerian ( ), Non-Nigerian ( )
SECTION B: Research Questions
1. Is there any positive relationship between the inventory control and profit maximization in a
manufacturing company? Yes ( ), No ( )
2. Does inventory and profit maximization help to maintain an effective use of organization
resources? Yes ( ), No ( )
3. Is there any significant relationship between inventory control and profit maximization in
your company? Yes ( ), No ( )
4. For inventory control system preparation, do you think there should be someone responsible
for setting up operations? Yes ( ), No ( )
5. Have you ever been involved in inventory control and profit maximization in a
manufacturing company before? Yes ( ), No ( )
6. How do you cope with the industrial policy problem in your company?
7. Does the management is satisfy the need of your inventory and profit maximization in a
company? Yes ( ), No ( )
55
8. Is there any training opportunity available for employee in your company? Yes ( ), No ( )
9. Does manufacturing company do minimize cost of inventories through the use of economic
lot size (EOQ? Yes ( ), No ( )
10. Is there any problem being faced in the implementation of inventory and profit maximization
in your company? Yes ( ), No ( )
11. Do you agree in your opinion that the company should continue with the use of flexible
budgeting techniques? If not recommended.
56

I INVENTORY CONTROL AND PROFIT MAXIMIZAT

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INVENTORY CONTROL AND PROFIT MAXIMIZATION IN A MANUFACTURING

COMPANY; A CASE STUDY OF NIGERIA DISTILLERIES LIMITED, SANGO OTTA

OPOOLA OLAIDE MARIAM

MATRIC NO: NOU134828614

A PROJECT SUBMITTED TO THE DEPARTMENT OF

ACCOUNTING, FACULTY OF MANAGEMENT SCIENCE, NATIONAL OPEN

UNIVERSITY OF NIGERIA, ABUJA IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF BACHELOR OF SCIENCE (B.Sc. HONS)

INVENTORY CONTROL AND PROFIT MAXIMIZATION IN A MANUFACTURING

MAXIMIZATION IN A MANUFACTURING COMPANY was carried out by OPOOLA

MARIAM OLAIDE in the Faculty of Management Sciences, National Open University of

Ogunniyi O.R. (Mrs.) Date

B.Sc., M.Sc., FCA

Appreciation to my amiable supervisor, Mrs. Ogunniyi Olajumoke for her active

staff for their support.

you to eat the fruit of your labour.

ramifications, God please is mercy on the entire Opoola family.

wishers I say God bless you all.

to the application of the efficient inventory management. To determine also whether

manufacturing concerns in our country manage inventories effectively by using inventory

update their knowledge of inventory management on regular bases.

CHAPTER ONE: INTRODUCTION

1.2 Background to the study………………………………………………………………2

1.3 Statement of the problem……………………………………………………………...4

1.4 Objectives of the study………………………………….………………………...........5

1.5 Research questions……………………………………………………………………..6

1.6 Statement of the hypotheses…………………………………………………………..6

1.7 Significance of the study……………………………………………………………….7

1.8 Justification of the study……………………………………………………………….8

1.9 Scope of the study……………………………………………………………………...8

1.10 Definitions of terms ……………………………………………………………………9

2.1 Conceptual frame work………………………………………………………………....11

2.2 Theoretical frame work…….…………………………………………………………….18

2.3 Literature on subject matter………………………………………………………………21

CHAPTER THREE: METHODOLOGY

3.1 Area of study……………………………………………………………………………32

3.2 Research design ………………………………………………………………………..32

3.3 Study population…………………………………………………………………….....33

3.4 Sample size determination…………………………………………………………......33

3.5 Instrument for data collection ………………..…………………………………….....33

3.6 Procedure for data collection and data analysis………………………………………34

3.7 Limitations of the study………………………………………………………………..35

CHAPTER FOUR: DATA ANALYSIS, FINDINGS AND DISCUSSION

4.1 Data presentation………………………………………………………………………36

4.2 Data Analysis……………………………………………………………………….......37

4.3 Findings of the study……………………………………………………………………45

4.4 Discussion of the findings………………………………………………………………48

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 Summary of findings………………………………………………………………......49

5.3 Proposal for further studies……………………………………………………….......51

4.2.1 Percentage analysis of sex of the respondents………………………………………......37

4.2.2 Percentage analysis of age of the respondents…………………………………………..37

4.2.3 Percentage analysis of marital status of the respondents………………………………..38

4.2.4 Percentage analysis of respondents by educational qualification……………………….38

4.2.5 Percentage analysis of respondents by self-cadre……………………………………….39

4.2.6 Percentage analysis of respondents by working experience…………………………….39

4.2.7 Question one…………………………………………………………………………….40

4.2.8 Question two……………………………………………………………………………40

4.2.9 Question three…………………………………………………………………………..41

4.2.10 Question four…………………………………………………………………………...41

4.2.11 Question five…………………………………………………………………………...42

4.2.12 Question six…………………………………………………………………………….42

4.2.13 Question seven………………………………………………………………………....43