THE APPLICATION OF COMPUTER TECHNOLOGY ON THE INVENTORY CONTROL SYSTEM AS A PRODUCTIVITY IMPROVEMENT STRATEGY IN NIYYA FARMS NIGERIA LIMITED KADUNA
ABSTRACT
The primary objective of this research work, the application of computer technology on the inventory control system as a productivity improvement strategy in Niyya Farm Nigeria limited Kaduna is to carry out paper investigation as regards the awareness and reaction of people concerning the project topic, taking Niyya Farm Kaduna as a case study. The write-up center on discussing inventory control system, computer and also the problem of manual inventory control system in an organization. In order to achieve this goal, the researcher uses questionnaire method of data collection to gather information about the subject matter, from general/inventory staff of Niyya Farm Kaduna. Hence the data gathered are presented and analyzed in a tabular form in order to give vivid and clear interpretation. Finally the researcher summaries his findings, draw a conclusion and gave necessary recommendation for Niyya Farm and other companies who have not yet computerized their inventory system.
TABLE OF CONTENTS
CHAPTER ONE
1.1 Background of the study - - - - - - - 1
1.2 Statement of the problem - - - - - - - 3
1.3 Objectives of the study - - - - - - - 5
1.4 Statement of hypothesis - - - - - - - 6
1.5 Significance of the study - - - - - - - 6
1.6 Scope of the study - - - - - - - - 7
1.7 Limitations of the study - - - - - - - 7
1.8 Historical background of case study - - - - - 8
1.9 Definition of terms - - - - - - - - 10
CHAPTER TWO: Literature Review
2.1 Inventory - - - - - - - - - 12
2.2 Inventory control - - - - - - - - 12
2.3 Techniques of inventory control - - - - - 15
2.4 Reason for holding inventory - - - - - - 21
2.5 Computer - - - - - - - - 23
2.6 Computer in manufacturing industry - - - - - 26
2.7 Cost benefit of computerization - - - - - - 30
CHAPTER THREE: Research Methodology
3.1 Research design - - - - - - - - 32
3.2 Research population - - - - - - - 32
3.3 Sample size and sampling techniques - - - - - 33
3.4 Methods of gathering data - - - - - - 33
3.5 Justification for the method used - - - - - 35
3.6 Method of data analysis - - - - - - - 35
3.7 Justification of instrument used - - - - - - 36
CHAPTER FOUR: Data Presentation and Analysis
4.1 Introduction - - - - - - - - 37
4.2 Presentation and Analysis of Data - - - - - 37
4.3 Test of hypothesis - - - - - - - - 48
CHAPTER FIVE
Summary of findings, conclusion and Recommendations
5.1 Summary of findings - - - - - - - 51
5.2 Conclusion - - - - - - - - - 52
5.3 Recommendation - - - - - - - - 52
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE CASE STUDY
The advent of computer technology has boost production of both domestic and industrial activities. Technologically, advance countries are advancing in their research effort to make the global world free for man to live with little or no stress through information technology.
In Nigeria, only few industries are enjoying the benefits of information technology in the area of computer in inventory control system. Among the few industries, not all information that are essential for effective management are documented because the software were developed by foreigners which know little or noting about the socio-cultural background of end users. Apart from this, the cost of inventory of such software is always too high. These set back always prevent them from getting the full benefits of computer in inventory control system but this project tends to develop a more easy and cost effective software that is suitable for Niyya Farms Nigeria limited Kaduna.
Glantier (1999) stated that inventory control is to provide means of exercising close control over the flow of the inventory into production or sales thereby not only preventing loss but also ensuring adequate levels are maintenance. The purpose of these is to focus on the procedures applied to control inventory on a daily basis. It is also a system, which needs to maintain record of both quantities and values, in this aspect, it will be called inventory valuation depending upon physical stock taken combined with valuable base such as unit cost market value.
Confer (2001) defined inventory control as the process of ensuring that stock help by the organization, is supplied to those part of the operation that required the items, that is production, distribution and sales. Engineers bearing in mind the factors of time locations, quality and cost.
Peter (2003) defined inventory control as the making of decision on the level of stocks that may be economically needed to meet all requirements for planning production.
Demsy A. (2001) defined inventory, as activities required keeping the facility in a built condition in order to have its original productive capacity. Inventory activities are a major coat factor in most industries, affecting both returns on capital and production throughout (commission). Inventory management system makes equipment and facilities available at least cost. It makes sure that every facilities in perfect condition to meet its production capacity. It is obvious that down time has to be kept at minimum and a good inventory management system helps to accomplish that at minimum possible cost.
However, the essence of the use of computer in inventory control is to utilize large investment in inventories effectively and to facilitate efficient operation of the organization.
It is basic that scientist allover the word has completely bypassed the stone age syndromes and are now basking in the Euphoria of the computer age, which is a product of technology and ceaseless research. It is also a fact to mention that all sphere of life have been affected by the current computer revolution ranging like a wild fire. This project work is to present a comceptional and practical approach to inventory control system in Niyya Farms Nigeria limited using computer since inventory requires an accurate and constant record keeping.
1.2 STATEMENT OF THE PROBLEM
The quality of inventory control has been a major determining factors in the success or failure of competing organization.
The use of manual system showed many symptoms of poor control. Boxes set on the ware house shelves collecting dust and then joined by more of the same item even though the old inventory never moved, one item would be stored in five different places and re-ordered when one of the bin is empty.
Uncounted product/part lots were easy targets for pilfering by employees. A warehouse filled up, when extra spaced was leased no one could keep track of what was in which building.
Once a year, operation was shut down for the tedious and almost unmanageable task of taking a physical inventory. Figuring out what the goods on hand were actually worth became a paper chase for invoices and purchase orders, and finally, not very educated guess.
Inventory control has proven to be one of the clearest examples of the problem of automation. Often inventory control programme have been plagued by two short comings on one hand, inventory packages have been too sophisticated, because of the many accepted methods of controlling inventory, packages have laundry lists of conflicting mathematical formulas understood neither by the users of the system, nor by the programme. The dozens of reports produced not only failed to provide an understandable picture of the current inventory, but made the situation worse by miscalculating or misnaming commonly used indicators. On the other hand, packages have been too simple. Common occurrences often stumped the system. For example due to a physical miscount, there may have been more of an item than was listed by the computer when the item was sold to customer, the computer would reject the transaction because, in theory, miscounts never happen. There was not enough of the items in stock according to the Computer to fill the orders whether because of an inadequate manual system or a poorly automated one, expanding organization have seen their profits margin eaten away by the many different costs of an uncontrolled inventory, that is what this project is made to eliminate.
1.3 OBJECTIVES OF THE STUDY
The objectives of the research work is to find out:
1. How inventory control system can be used to achieve a smooth operation for manufacturing industry
2. How the use of computer inventory control system can be used to ensure a good human relationship to customers, by making product available at the right time.
3. How the use of computer inventory system can be used to take hedge against long or uncertain lead time.
4. How the use of computer inventory control system can be used to take advantages of the economy of large scale quality.
5. How the use of computer inventory control system can checkmate frauds and hackers
6. How the use of computer inventory control system can reduce time wastage for report preparation on management request.
1.4 STATEMENT OF HYPOTHESIS
The hypothesis formulated for this study is
Ho: The computerized inventory control system does not enhance efficiency.
Hi: The computerized inventory control system does enhance efficiency.
1.5 SIGNIFICANCE OF THE STUDY
This research project or work is embarked upon as part of the requirement for the award of Higher National Diploma in production and operation management in management studies department of Kaduna Polytechnic.
It will help to widen the knowledge of the researcher in the area of this topic, the application of computer technology on the inventory control system as a productivity improvement strategy in a manufacturing firms
This research work is being conducted in other to appreciate the importance of computer in effective inventory management.
This project can also serve as a standard for future reference in academic pursuits of many people
This project can also serve as an insight for companies that have not computerized their inventory system.
It will also facilitate efficient inventory operations of organizations.
1.6 SCOPE OF THE STUDY
This project work spell out in details the use of computer in inventory control, and the need to computerize inventory in manufacturing organization.
It also takes a look at the general utilization of items in the manufacturing industries, and how inventory control system will aid in vital decision making. a case study of Niyya Farms Nigeria limited Kaduna shall be used to aid the reader in having a clearer picture of inventory and to appreciate the significance of this project work.
1.7 LIMITATIONS OF THE STUDY
The limitation of this research work has being traced to the following via:
1. The financial aspect here refers to the shortage of the necessary finance to carryout the research work, so money has to be managed.
2. Time factor is also one important limitation of this project, as there was no enough time for this research work.
3. Lack of proper information from the company. The company Niyya Farms Nigeria Limited Kaduna, were reluctant in given adequate information, instead of given hard copies of facts and figures, they only read it out to the writer.
1.8 HISTORICAL BACKGROUND OF CASE STUDY
Niyya Farm is an agricultural outfit with a mandate of incorporating modern agricultural techniques with our traditional subsistent farming system. Established some 16 years ago, it is located at KM 60 Kaduna – Abuja expressway at Gadan Mallam Manmman in Kachia Local Govt. Area of Kaduna State.
Farm covers an estimated area of 3,500 hectares of land of which 2,000 hectares has been cleared and being cultivated for various arable and cash crops. Niyya Farm is an integrated outfit with three basis operation sections. Arable crop and irrigation sections, poultry and large animal sections. The crops cultivated include Maize, Soya Beans, Water Melon, Guava, Oranges, Mangoes and Passion fruit to mention few.
The farm population is currently put at 150 after rationalization with the introduction of more mechanization. To increase its production the management introduces dry season farming to cultivate crops that are in demand during dry season. With an area of 200 hectares under irrigation, the farm has an all years farming season. The farm with its dam has a steady supply of water to carry out its activities all year around. To further boost its operation, the farm has in place a fruit/nectar processing plant with an installed capacity of 3 tones per day. The dairy plant can process 3,000 litres of fresh milk per day into various products such as cheese, butter, pasteurized milk, ice cream and others.
The livestock (Large animals) section has both exotic as well as local herds of cattle and these are the main supply of fresh milk to the dairy plant. The proprietors of the establishment over time realized the increasing demand for poultry products in and around the farm locality and consequently ventured into large-scale poultry production. The current population of birds on the farm is about 20,000 and of these, there are breeders (layers and broilers parent stock) and commercial laying birds. The hatchery located in Kaduna South Industrial.
Layout is the biggest and most modern in the Northern part of the country. The Hatchery has an installed capacity of 102,000 eggs and can produce 35,000 – day – old chicks (D.C.O) per week.
Niyya Farms have been a source of employment for the local inhabitant and renders farm extension service to the local farms thereby boosting their yield in food production. The vast potential of such an organization can be realized where resources (Human and Material) are properly, adequately allocated and encourage to attain high productivity and sustained growth.
1.9 DEFINITION OF TERMS
These are special words that are used in stock control system. The guideline to the keyword:
a. Stock: The inventory of goods of a merchant or manufacturer
b. Stock out: a situation in which inventory is depleted before orders on hand can be completed or customer demand fulfilled.
c. Stock number: This is the number that is given to each stock for quick identification; it may also be referred to as stock code.
d. Product name: This is a unique name given to each product by which it is being identified.
e. Brand name: it is the name that is given to each product for easier accessing
f. Selling price: This is the cost at which item is sold plus the overhead
g. Cost price: It is the initial cost of purchasing goods.
h. Description: This is for identifying a product and to distinguish it form a similar ones
i. Re-order level: The available stock level at which an inventory replenishment order is initiated.
j. Quantity received: This described the quantity of items being received.
k. Quantity sold: it is the quantity of product sold in a period of time.
l. Computer: Computer is an electronic machine that accept input, process it and give output which can be stored for future use.
