AN OPTIMAL INVENTORY CONTROL OF RAW MATERIALS AND NETWORK ANALYSIS OF PRODUCTION PLANNING
ABSTRACT
The purpose of this research is to determine the best quantity of raw materials to order and when to order them. It also aimed to determine the completion time in the paint manufacturer. Aka paint industry limited was used as a case study. To finish these, data was gathered from the company and the project network was created. Mathematical models, such as the economic lot size model, were used to determine the optimal quality of raw materials to stockpile. The completion time and expected duration were estimated using the programme evaluation and review technique (PERT) and the critical path method (CPM). With their inventory length, the optimal quantifies for the various raw materials were calculated. Furthermore, the minimum and maximum The production’s expected duration was obtained. A total of 12, 409 buckets is recommended. Water, dolomite, and chemicals yielded 9,475 bags and 70, 372kg, respectively, with inventory lengths of one year for each item. In addition, a total completion time of 59 days and an expected production duration of 84 days were obtained.
TABLE OF MATERIALS
Title page – – – – – – I
Certification – – – – – – – – ii
Dedication – – – – – – – – iii
Acknowledgements – – – – – – – iv
Abstract – – – – – – – – – vi
Table of Contents vii
CHAPITRE ONE
1.0 General Introduction – – – – – – – 1
1.1 Aka Paint (nig) Limited’s Brief History – – 3
1.2 Inventory Issue – – – – 5
1.3 The requirement for an inventory- – – – 5
1.4 Inventory expense – – – – – – – 6
1.5 Inventory management – – – – 7
1.6 Research problem – – – – – 9
1.7 Network motivational goals and objectives
‘- – – 11 analysis in production planning
1.8 Cost and network fundamental definitions – – – 13
1.9 Inventory control decision-making problem – – 13
1.10 Terminology – – – – 14
1.11 Network analysis decision-making problem – – 16
1.12 Networking jargon – – – – – 17
1.13 Study scope- – – – – – 19
1.14 Research limitations – – – – 20
CHAPITRE TWO
2.0 Review of Literature – – – – – 21
CHAPITRE THREE
3.0 Research methodology and data collection – – 32
3.1 Research methodology – – – – – – 32
3.2 Data collection and persecutory measures- – – – 38
3.3 Data gathering 1 – – – – – 39
CHAPITRE FOUR
4.0 Analysis and interpretation of data – – – 48
4.1 Data examination – – – – – – – 48
4.2 Determine the minimum and expected duration.
analysis of networks – – – – – – 48
4.3 Calculation of the optimal amount of raw materials 56
4.4 Interpretation 59
CHAPITRE FIVE
5.0 Final thoughts and recommendations – – 61
5.1 Final Thoughts – – – – – – – 61
5.2 Advice – – – – 63
Bibliography – – – – 65
CHAPTER ONE
1.0 INTRODUCTION
The development and utilization of raw materials is critical to the development and utilization of any firm, particularly in manufacturing. Organizations ensure consistent production and supply of their goods due to improved techniques and technological advancements by storing certain quantities of raw materials as a buffer against unprecedented shortfalls in their supplies.
Certain finished goods stocks are kept on hand to meet unforeseen demand or short-notice orders. Inventory is the stock of raw materials, finished goods, and work-in-process. The best planned and managed businesses survive, and the efficiency of a company’s operation is directly related to its inventory situation.
Inventory control allows organizations to determine when it is necessary to replenish inventory.
Stock physical goods or commodities for specific periods of time. When too much inventory is used, it results in high capital costs, high operating costs, and decreased production efficiency, whereas insufficient inventory results in the firm’s inability to meet demand for its product and, in extreme cases, shut downs if raw material supply drops by half.
A network, according to the Oxford Advanced Learner’s Dictionary, is a system of broadcasting stations that are linked together to broadcast the same programs at the same time. Network analysis is a set of related techniques developed to assist management in project planning and control, as well as scheduling and coordinating various interconnected activities that define a project.
project. Network analysis is the inter – relationship of the various jobs, or tasks, which make up the overall and obvious identify the critical paths of the production in a production of specified duration.
The company was established in 1995. According to the company’s memorandum of association, the company’s objects clause is to manufacture, sell, import, and distribute paints and other chemical-related items. The organization is divided into four major departments: production/quality control, personnel, accounts, and sales/marketing.
BUSINESS ACTIVITIES
v Primarily for the Nigerian market – both replacement and original equipment
Car paints are exported.
MANUFACTURED PAINT TYPES
– Paints in emulsion
– Paints by Texcote
– High-gloss paints
– Automobile paints
Several raw materials, in various proportions, are required to manufacture these products. Some of the raw materials used in puts include methyl ethyl ketone (MEK), toluene resin, petrol, kerosene, ethylene glycol, and others; these products generate varying levels of profit for the company, and how to make them
Management is perplexed by the desire to maximize profits.
Furthermore, the scarcity of some of these raw materials limits management’s flexibility in production. According to the interview, another limiting factor is labor time and product demand.
1.2 PROBLEM WITH INVENTORY
An inventory problem is one that seeks to determine when it is necessary to stock physical goods or commodities in order to meet demand over a specified time period.
This type of problem seeks to determine how much of a commodity to order and when to place the order. Overstocking necessitates a higher investment per unit time but a lower frequency of shortages and order placement. Whereas an understock reduces invested capital per unit time while increasing
the frequency with which orders are placed, as well as the risk of stock running out.
1.3 THE REQUIREMENT FOR AN INVENTORY
A company’s inventory is the totality of its stocks, which include raw materials, partially finished goods and materials, subassemblies, office and workshop supplies, and finished goods.
The primary reason for inventory is that it is physically impossible and economically impractical for each stock item to arrive precisely when it is required. other reasons include
vExpecting normal demand
Taking advantage of volume discounts.
Meeting emergency shortages caused by unforeseen circumstances such as strikes, plant breakdowns, or vehicle breakdowns.
vAbsorbing waste and unpredictability, etc.
1.4 COST OF INVENTORY
(a) Purchase or production cost:
– This is the price per unit.
– This is the cost of purchasing or manufacturing a unit of production per unit. Transportation, clerical, and administrative costs associated with the physical movement of purchased goods are included. As the ordered quantity increases, the commodity’s unit price decreases.
(b) Holding or carrying cost: This is the cost of transporting an item in inventory until it is sold or used. This comprises
I Return on capital invested in stock
(ii) Storage expenses or modifications (rent lighting heating air conditioning etc)
(iii) Insurance protection
(iv) Staffing, equipment maintenance, and operating costs in stores. The cost of holding increases as inventory levels rise.
(c) Cost of stock out or shortage:
– These are the costs of running out of inventory. These are some examples:
I Financial contribution
through the best sale known as stock out
(ii) Future sales are lost because customers go elsewhere.
(iii) Loss of consumer trust
(d) Setup cost: This is the cost of placing an order with an outside vendor for a commodity that is independent of the number of units ordered.
1.5 SYSTEM DE CONTROL D’INVENTION
The overall goal of inventory control is to keep stock levels low so that total costs are kept to a minimum. This could be accomplished through the use of factors.
– When should you order?
– How many should I order?
The two main methods for establishing these are
(a) Reorganize the level system
(b) System of periodic review
(a) The Re-order level system, also known as the two-bin system, has the following characteristics:
I A predefined re-ordering
Each item has its own level.
(ii) The replenishment order quantity is always equal to the EOQ (i.e the Economic Order Quantity)
(iii) When the stock level reaches the replenishment level, replenishment is issued.
(iv) The minimum level is calculated so that management is notified when demand exceeds average, and the butter stock is used accordingly.
(b) System of periodic review This is known as the costant circle system. Its characteristics are as follows:
I Stock levels for all parts are replenished at regular intervals, such as once a week.
Nze B.C Onuoha inspired the development of this industry. He worked in the car sales and paint manufacturing industries. Manufacturing was established as a limited liability company in 1994 as a result of his genuine desire to alleviate human suffering. It is located in Aboh Mbaise at Enyiogugu. It has three depots in Abia State, which are located at 139 Wetheral Road Owerri, opposite Timber Market Oguta Road Mgbidi, and 45 Aba Owerri Road Aba. The European Commission came to help introduce the company in 1994.
The formal
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