Contribution Of Inventory Control Practices To The Sustainability Hotel Establishment In Awka

Project and Seminar Material for Business Administration and Management BAM

Contribution Of Inventory Control Practices To The Sustainability Hotel Establishment In Awka


Abstract


This study is on contribution of inventory practices to the sustainability hotel establishment in Awka. The total population for the study is 200 staff of Nike Lake resort, Awka, Anambra state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up managers, secretaries, cashiers and junior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Chapter One


1.0 Introduction

1.1 Background of the Study

Hospitality entails cordial reception, kindness in welcoming guests and strangers. Singh (2007) defined hospitality as reception and entertainment of guests, visitors or strangers with liberality and goodwill. Stocks are stores of goods and materials that are held in a hospitality organization, they can be a nuisance, necessity or a convenience (Arington, 2006). Stock can come in various forms such as raw materials, work−in−progress, finished goods and goods ready for sale (Levis, 2009). The managers of hospitality establishments are challenged by paper based system and manual processes to view and control their establishments’ inventory. Ineffective administration and mismanagement of resources in hospitality establishments affect the needed quality delivery, customer care and service which as well have adverse effect on the sustainability of an establishment. Inventory control represents the physical control and the movement of materials into and out of the storage areas, and it shows how much is needed to be ordered (Bim. 2003). Inventory control eliminates overstocking, resulting to too great a tie up of capital losses due to obsolescence or depreciation. Likewise, stock control eliminates under stocking of materials which results to inadequate follow up on delivery premises. Inventory control ensures that each item delivered from the store is properly accounted for, and any form of pilferage or wastage, is discovered at an early stage. The essence of practicing inventory control is not to be overlooked; the qualifying factor here is that, stock must be maintained just high enough to meet demands and also a constant supply of materials to be available as at when needed. The stock control process focuses attention on factors related to time utility, supply of quantity and quality materials used by the operations of the hospitality industry (Tosdal, 2006). Inventory control procedures are those measures that are adopted to determine how much stock an establishment can hold at a given time and how they keep track of it (Bleigh, 2009). This practice covers stock at every stage of the production process, from purchases and delivery to using and reordering of items. This concept revolves on the fact that stores, being a service oriented department, must provide the entire organization with the right materials that are delivered and issued in the right quantities and quality which must be available at the right time, right place and at the right price (Levis, 2009). The objective of practicing inventory control is to ensure that the conditions mentioned above are fulfilled by providing the information necessary to take appropriate action at every stage of the production process or operation. Inventory control practice is a necessity if the hospitality establishment is to offer their guests a balanced assortment; this means every item held in the store should be controlled. Different hospitality establishments adopt different measures that best suits them, this provides up to date information and also reduce excesses to the nearest minimum (Cooper, 2006). Sustainability is the capacity to endure for humans. Sustainability is the long-term maintenance of well-being which has environmental, economic, and social dimensions, and encompasses the concept of stewardship, the responsible management of resource use (Jacobs & Chase, 2008). Relating this to Inventory control in hospitality industry, it centers on responsible management of resources which will aid in increasing the economic aim of a hospitality which is the profit margin, environmental aim which is the physical environment and service delivery of the hospitality sector and the social aim which is the experience and satisfaction the guests get from the hospitality industry (Wikipedia, 2011). The three pillows of sustainability explained above, when applied in stock control will help the hospitality sector to move forward in the various aspects of its services and existence, as rightly pointed out by Aplewhite (2004), that effective stock control plays a vital role in the smooth and efficient running of hospitality establishments.

Mismanagement of items and low profit margin has become the order of the day in most hospitality establishments. The mismanagement and other adverse effects can be linked to lack of effective control of Inventory of materials for production and operational activities. Most hospitality organizations have not identified stock control as very crucial which has led to such practices as theft, pilferages, shortages, wastages, inappropriate accounting and inadequate record keeping and other loses, as they cannot account for the usage and management of materials like the food items, toiletries, supplies, stationary, production equipment, cleaning and laundry materials etc. This poses a serious problem in terms of limited production and service, low profit margin and inability to meet up with customer/guest demands. The problems associated with poor inventory control is what prompted the researcher to embark on this study to investigate and determine the way forward for the hospitality industry. The main purpose of this study is to evaluate the contributions of Inventory control practice to the sustainability of hospitality establishments in Awka, Anambra State. Specifically the study seeks to Identify the stock control methods used in various hospitality establishments in Awka L.G.As; verify the sustainability procedures used for Inventory control in hospitality establishments in Awka L.G.A; determine the effect of Inventory control practice on the profit margin of hospitality establishments in Awka L.G.A.

Hospitality industry is one of the leading industries in the world;

It contributes to prosperity creation and further economic development of a country; it covers hotel, resorts, and travel as well as restaurant businesses.

These services business are mutually depend increase in tourism will ultimately lead to improvement in resorts, restaurants, hotel including travel industries.

This study basically concerned with assessing the strategies of the inventory control in hospitality. This will consequently access the extent to which stock can be controlled.

Source: Dennis Oscar. “Humanity and hospitality” 2011

Inventory control is a management function that involves planning organizing, directing, coordinating, motivating, staffing and controlling of activities in the store and inventory control.

On the other hand it can also be defined as the art and science of achieving objective of the store in an organization.

A fundamental problem currently faced by hospitality according to Karlin and Zipkin (2009) is the seasonal demand for their products. This problem is very common and concerns a wide variety of products such as food stuff, functions and banqueting and many other applications.

The seasonal demand issue is difficult to access for both the theorist and practitioner. The problem requires the optimal combination of inventory and production rates for each product in each time period to be found; principal question is to determine the product quality in each period so as to minimize the discounted costs of production, inventory storage, and cost sales. This type of demand usually creates more complex problem because firms usually have insufficient capacity to meet demand in high demand period.

This ultimately impacts on planning of production process as a whole.

The main thrust of this study is to map out strategies to solve the problems of seasonality of the perishable goods which is very prevalent in the Nigerian hospitality industry.

The central question here is, how can menu planning guests, and what range of perishable food items can be stored and over what period of time?. As opined by Patrick (2009) combinatorial optimization which means combining planning and inventory control to optimize guest satisfaction in the running of hospitality business remains one of the mathematical challenges.

Strategies directed towards confronting these challenges are many and varied, depending on the methods of meal preparation service and the variety of customer’s satisfaction where stocks are produced independent of orders because there is a need to supply customers immediately with good meals from that stock.


1.2 Statement of Research Problem

Most hospitality industry today faces one or more problems. This problem of inventory control practices is common to all hotels hence difficult to manage efficiently.

In terms of perishable foods especially, it affect production planning in the hotels.

Since local storage facilities are virtually absent, there is acute shortage of certain items at certain tune of the season and this is accompanied by serious price fluctuation.

Also the preference of customers affects the planning of the menu to satisfy the guest need.

Therefore, the problems enumerated has necessitated this study on the production planning and inventory control in hospitality in Enugu state using the Nike Lake Resort Enugu. This is geared towards enhancing efficiency in the planning of menu meals service to customer preference and price fluctuation. Otherwise the meals planning would run into problem that will hinder the attainment of stated goals and objectives of the organization.


1.3 Objectives of the Study

The main objective of the study is to on production planning and inventory control in the hospitality industry in Enugu State with particular reference to Nike Lake Resort Enugu, to access the process and method the use in production control and inventory

Specifically, the study seeks to;

  1. Determine production planning and inventory control in the hospitality industry.
  2. Assess how Nike Lake Resort Enugu copes with production planning and inventory control in the face of seasonal availability of food items.
  3. Identify methods to serve as a platform for future improvement in the area of purchasing food items and control.
  4. Suggest the possible ways to help in making better production planning and inventory control.

1.4 Research Hypothesis

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: Production planning and inventory control in the hospitality industry does not enhance profitability.
    H1: Production planning and inventory control in hospitality industry enhance profitability.
  2. H02: There are no methods to serve as a platform for future improvement in the area of purchasing food items and control
    H2: There are no methods to serve as a platform for future improvement in the area of purchasing food items and control

1.5 Significance of the Study

Every organization is concerned with the best possible way of improving performance to guarantee sustainable growth that will lead to the achievements of organizational goals. Therefore, the knowledge that would be obtained from this research will assist management of Nike Lake Resort Awka, manage and assist in their production planning and inventory control.


1.6 Scope and Limitation of the Study

The scope of the study covers contribution of inventory practices to the sustainability hotel establishment in Awka. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.


1.8 Definition of Terms

Marketing:

In 1984 Chartered Institute of Marketing defined Marketing as “the management process responsible for identifying, anticipating and satisfying customers’ requirements profitably”. Kotler and Keller (2006), define marketing as groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others”.

Inventory:

Or stock refers to the goods and materials include that a business holds for the ultimate purpose of resale

Hotel:

According to Hotels Proprietor’s Act of 1956, hotel is defined as an establishment held out by the proprietor as offering food, drinks, and if so required sleeping accommodation, without special contract to any traveller presenting himself, who appears able and willing to pay a reasonable sum for the service and facilities provided and who is in a fit state to be received.

Production Planning:

Is the planning of production and manufacturing processes in a company or industry. It utilizes the resource allocation of activities of employees, materials and production capacity, in order to serve different customers.

Inventory Control:

Is the processes employed to maximize a company’s use of inventory. The goal of inventory control is to generate the maximum profit from the least amount of inventory investment without intruding upon customer satisfaction levels.

The Hospitality Industry:

Is a broad category of fields within the service industry that includes lodging, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain contribution of inventory practices to the sustainability hotel establishment in Awka

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges inventory practices to the sustainability hotel establishment in Awka


5.2 Summary

This study was on contribution of inventory practices to the sustainability hotel establishment in Awka. Three objectives were raised which included: Determine production planning and inventory control in the hospitality industry, assess how Nike Lake Resort Awka copes with production planning and inventory control in the face of seasonal availability of food items, identify methods to serve as a platform for future improvement in the area of purchasing food items and control, suggest the possible ways to help in making better production planning and inventory control. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Nike Lake resort, Awka, Anambra state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up managers, secretaries, cashiers and junior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 Conclusion

This work has attempted to evaluate the contribution of inventory practice in hospitality establishments in Awka. Hospitality establishments in Awka practice stock control; this implies that there is effective management and appropriate record keeping of materials in these establishments. Hospitality establishments in the study area adopt one or two methods for controlling their stock, however the result of the findings proved that all the establishments practice the First−in−First−out (FIFO), while majority adopt Cycle counting method Stock control has a positive impact on the profit margin of the hospitality establishments in Awka


5.4 Recommendation

Hospitality organizations should endeavor to maintain the control of their inventory, and in such cases adopt proper measures that is effective and consistent in their operations because it will always serve as guide to all staff and thereby help them improve on their performances, as the sole aim of every business is profit, the researcher believes that by practicing an effective inventory control in hospitality establishments, definitely the profitability of the industry will increase. Given the pace of change in the hospitality organizational environment in recent years, it is necessary that control is needed in an organization to help managers and the hospitality industry as a whole to monitor challenges and the changing nature of competition. Hospitality stakeholders should create awareness on the need for hospitality organizations to incorporate the computerized or RFID (Radio Frequency Identification) system of inventory control. Though the cost of installation and maintenance is high, but it has its strategic advantage as it will help management control their inventories, in turn lowering overall operating costs in the area of labor, facilities, logistics and fulfillment rate. Stores should be properly planned for and arranged, the documents for inventory control and record-keeping should be made available at all times and there must be a consistent system of inventory control in hospitality organizations in order to achieve effective stock control. It is important that the hospitality establishments try to maintain the optimum level of inventory so as not to keep too much of stock items or over-stock. By controlling inventory in the hospitality establishments, there will be continuous production and service thereby improving sales.


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