MANAGEMENT IN A MANUFACTURING COMPANYA CASE STUDY OF 7UP BOTTLING COMPANY PLC, ILORIN PLANT, KWARA STATE
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TABLE OF CONTENT
Title page i
Table of contents vi
List of table x
- Background of the study 1
- Statement of research 3
- Research objectives 4
- Research question 5
- Justification of study 5
- Scope of the study 5
- Historical background of the case study 6
- Definitions of terms 8
CHAPTER TWO LITERATURE REVIEW
2.1 Concept of material management 11
2.2 Types of materials 12
2.3 Materials control and handling 13
2.4 Materials handling 14
2.5 Material Movement 16
2.6 Fore casting as an essential 18
2.7 Material requirement planning 19
2.8 Stores function 20
2.9 Stock control 23
2.9.1 Reason why organization hold stock 24
2.9.2 Economic order quantity 28
2.9.3 Purchasing objectives and policies 30
3.0 Introduction 33
3.1 Cooperation organization structure 33
3.2 Cooperate organization structure 34
3.2.1 Population sample 35
3.2.2 Types of data 35
3.2.3 Source and method of data collection 36
3.3 Sampling procedure 37
3.3.1 Scope of data 37
3.3.2 Method of data analysis 38
4.0 Introduction 39
4.1 Result and analysis of data 39
4.2 Calculation of optimal order size for the raw materials 42
4.3 Calculation of optimal numbers of order for the raw materials 45
4.4 Calculation of optimal time between orders for the raw materials 46
4.5 calculation of optimal number of units of production run for
the company product 48
4.6 Calculation of optimal number of runs per year and time
between successive runs 53
4.7 calculation of total inventory cost of raw materials using
economic-EOG model 57
4.8 Calculation of total inventory cost of finished products
using economic order quantity-EOG models. 58
4.9 Calculation of cost saving effect of economic order quantity
-EOG model on inventory of raw materials 59
4.10 Calculation of cost saving effect of economic order
quantity-EOG model on inventory of finished production. 68
SUMMARY CONCLUSION AND RECOMMENDATION
5.1 Summary of findings 77
5.2 Conclusion 78
5.3 Recommendation 79
LIST OF TABLE AND FIGURES
Figure: 3.2. Corporate organization structure 33
Table: 4.2 Material purchase and inventory cost for the year 2009 41
Table: 4.6 Production schedule and finished products inventory cost
for the year 2009 50
1.1 Background to the Study
As a manager in a manufacturing company. It a more necessary than ever to improve tire overall productivity of lire operation ‘while such improvement requires an integrated dint involving all functional areas of the facility specific actions are requited within each functional area one of the functional areas in a manufacturing operation that is critical in the overall productivity of the company is material management The material management involves purchasing supplier management, material handling within the facility and extensive coordination among all functional areas of the facility in conjunction with material management sapiens, Jazayeri (1998).
Once the production process is under way the attention of the operations manager shifts to lire daily activities of material management the daily composes materials purchasing; inventory control and work scheduling;
Material management has a philosophy close to that of a modern marketing. In marketing the organization and its staff has to think in a marketing oriented way for example how will customer react to product change? What well be the effect car sates if we alter the packaging? With material management (he same principle apply the organization arid its entire staff have to consider their decision in relation to bow they will after it the material side of the boniness topics raider material management include purchasing. control, transportation material productions, planning stores, inventory control Beet (2001).
Therefore, the main point of materials management is to satisfy the need to all operating system such an manufacturing production line, promotional activities and physical d or times, it is the operation as the customer manager must work around the system till everything his and needs are satisfied . The material manager organization and it entire staff should however consider their decision in relation to how they will effect the materials side of the business. It is in view of the above stated facts that this study is being carried out using lop Bottling Company PlC Harm plant a manufacturing company to study the issue of material management
1.2 Statement of research problem
The major challenge that materials face is maintain a constituent flow of’ materials for production. There arc factors that inhabit accuracy of inventory which results in production shortages premium freight and often adjustments.
According to the journal of Business logistics (2009) voll 22 part 2. The major issues that all material managers face we incorrect bills of materials, in accurate cycle counts, unreported scrap shipping error, receiving errors and production reporting errors material managers have strived to determine how to manage these issues in the business sectors of manufacturing since the beginning of the industrial revolution.. Although there are on known methods that eliminate the afore mentioned inventory accuracy, inhibitor these are best method available to eliminate the impact up on maintaining an interrupted how of materials for production. Reluctance can be reduced and effectiveness when service point are clustered to reduce the amount of reluctance. An effective materials management program can also revolve island approaches to shipping receiving and vehicle movement solutions can include creating a new central loading location an well consolidation service mean and decks from separate building into one. Developing belier circulation infrastructure also means reevaluating thick delivery and service vehicle routes. Base on above statement that this research seek to examine the Issue of material management and the effect is has on an organization using a manufacturing company as the case study.
1.3 Research Objective
- To examine the level of efficiency and product improvement in material management
- To investigate whether the material management practice permit high stock turnover validation.
- To proffer useful suggestions and ideas on how to effectively manage materials in an organization (sander 2002)
1.4 Research Questions
- To what extent does material management contribute to an organization performance’
- Does specification on materials have any (positive or negative) on the effective materials management.
- To what extent does effective materials handling help in the enhancement of un interrupted production?
1.5 Justification of the Study
A research of this native is significant in sense that the urea of material management is one that requires constant research. it is belief that the study will throw light on the essence and importance of material management in an organization and the choice of 7ups bottling company as my case study is due to the fact that it is a large scale manufacturing company which the setup provides far the study of this nature.
1.6 Scope of the Study
This research study centred on materials management in a manufacturing company. It covered such mean as storage. transportation procurement materials handling planning control & value engineering etc. the research is also intended to cover a specified period of time range firers 2009-2011 also information are going to be drawn within the domain of 7up Bottling company plc. Ilorin
1.7 Historical Background
Seven up bottling company, Plc, (SBC) was founded by a Lebanese in 1959 and on October 1st 1960, production of carbonated soft drinks began at the first plant, then located at Ijora Lagos On the 1st day of production, the company sold a total of 24 crates of its product m other words, a total of 576 bottles were sold. Although the number didn’t win the company any award, it certainly was a significant accomplishment of the company.
In order to create a favourable climate for her smooth operation, the company had to become involved with the community. SBC, PLC was the first to introduce wreathing in Nigeria by sponsoring the late and great Mike Bamidele who won a world little SBC, Plc was involved in the first miss Nigeria beauty competition, which has continued to grew in sine and importance over the years.
Till date the company sponsors many sporting and special activities, amongst which are the Pepsi football academy, Pepsi professional football league, seven up premier basket ball, Miranda school programme since these are the other brands types of the company (Pepsi & Mirinda).
The company was quoted in the Nigerian stock exchange (NSE) and went public in 1984.
The greatest period of growth for SBC Plc. Began in the early 80’s with the Ibadan plant 1980, Ikeja a plant in 1981, the Kano plant in 1985 the Aba plant in 1989 the acquisition of John bolt soft drinks with the Kaduna plant in 1989, Benin plant in 1992 and Enugu plant in 2002 making the total number of depots sow to be 37 several depots and dealers in alt parts of the country. The present range of products include seven up (up) Pepsi Mirinda orange, and the lastest of its range of products is Mirinda fruit, which was lauched in the year 2002 and then mountain dewin 2008.
Source: Personnel and Administrative Department of Seven up Bottling Company Plc. Ilorin Plant.
1.8 Definition of Terms and Concept
There are numerous terms and concepts associated with material and inventory management it is considered most appropriate to define some of these terms and concept.
- Inventory Management: This is the part of operation management concerned with discoursing and maintaining the optimum level of inventory investment It is concerned with policymaking on inventing planning and inventory control.
- Inventory Control: This involves regulation of quantities of materials or inventory on hand in such away as to ensure the meeting of current needs of the organization while avoiding excess stock the calculation being based on the rate of withdrawals time necessary of replenishment.
- Inventory: This lathe stock of any item or resources used in as organization. It includes input such as human equipment, financial and raw material.
- Inventory System: These are set of policies and controls that monitors levels of inventory and determines what levels of should be maintained when stock should be replenished and bow large orders should be.
- Re order level: This is the quality level that automatically triggers a new order it is the stock Level at which farther replenishment order should be placed.
- Maximum stock: This is the most desirable beyond which stock should nut be allowed to rise.
- Re order Quantity: This is the replacement order.
- Stock out: when are item of stock is required but available then there is a stock out of that item.
- Safely stock: An amount of stock in excess of average inventory held in a cushion against a stock out alive to usage or uncertainty of lead time.
- Holding/caring Cast: These includes the cost for storage facilities handling insurance, pilferage, obsolescence, depreciation, taxes and the opportunity cost of capital obviously high holding cost tend to favour low inventory and frequent replacement.
- Ordering cost: These include certain clerical costs incurred in preparing orders delivery and material handling costs such casts usually represent a fixed amount ft order placed regardless of the quality ordered.
- Stock valuation:- This is the method of assigning value to items of stock of a company. ft helps company management to make inventory level decision. They use different method Like Last in first out (LIFO) first in first out (FIFO).
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