Importance Of Production Planning And Inventory Control In An Organization

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Importance Of Production Planning And Inventory Control In An Organization


Verily the idea of production generally dates back to the ancient days/times when human being concerned most production systems, beginning with the family and craft system which involves into the factory system culminating in mass production lines and the automation concept. This productivity system are unique inventions of mankind. They are mean of which we create an endless list of goods and services needed for sustained modern society. Consequently, production planning and inventory control in an organization is basically aimed at establishing the significance of the subject matter organizations performance relating to the production process production control and planning inventory control. This is consistently relevant activity in production. Marketing and finance department in the organization toward achieving its objectives.

Chapter One


1.1 Background of the Essay

This essay is aimed at establishing the importance of production planning and inventory control in an organization with particular emphasis in the consideration on what the subject matter production planning, inventory control is all about to be emphasis in the introduction of the essay.

Basically, production refers to the transformation of raw materials into output, while production planning on the other hands is the determination of the production operation in a manufacturing unit.

Inventory technique is an internal control system that serves to ensure the maintenance of adequate inventory level in an organization. Moreover, inventory control represents the major capital investment in an organization.

The inventories in an organization function or stock record keepings stocks therefore can be seen as finished goods reader for sales. The importance of production planning and inventory control in an organization is to feed the organization with information about the stock of the organization in other to safeguard the organization from the risk of obsolesce of excess purchases of raw materials, it also ensure that the needed raw materials for production operation is constantly viewed or verified to meet the production. It also serves as a basis of which the purchasing as the stock inventory control will provide information about stock that are excess and those are by specification i.e. those are where the organization will likely be running of stocks.

Inventory Control in an organization is an important aspect in the daily life of an organization. This is because inventory control enhances organizational progress. The existing problem in this stock inventory control which instigate this standing to my point of view indirections. That is, it may be too large or too small so if it is large relative to it, the cost of carrying the inventory control will be equally higher than it needs be, while if it is too small, the cost of controlling the inventory will be small. Consequently, the inventory carrying cost include cost include such things as interest on the inventory management, handing cost depreciation and obsolesce.

1.2 Statement of the Problem

The basic significant statement of the essay is aimed at bringing a clear picture and transparent understanding of the essay “Production Planning and Inventory Control in an Organization”, it also embraces the problem facing the production sector, types of production and production planning methods of controlling inventories in an organization.

Furthermore, this essay entails all the necessary inventory techniques available in the management of inventories before and after being stored in the organization and the policies or scheme that will regulate the production activities in the organization.

1.3 Limitation of the Study

In undertaking an academic study, the research is often constrained by many factors ranging from inadequate facilities, this research is not an exemption.

There is infact information which could have helped the researcher in portraying the topic in a wider perspective but due to what some of the management staff of this company termed as “top secret policies” the researcher was limited to make the maximum use of the little information available to him.

Respondents’ unwillingness to respond to questions also posed some problem. Some of them had little or no spare time, while others still claimed that they do not understand the questions.

Lastly, some of the respondents showed a general lack of interest in supply appropriate answers to the questions drawn.

1.4 Definition of Terms

Inventory Control

Inventory control is designed to support the requisition processing, inventory management, purchasing and physical inventory reconciliation function of inventory management through a set of highly interactive capabilities, the design of inventory control is based on the following key objectives:

  1. To provide information on the availability of stocked items and the status of stoked requisition.
  2. To facilitate timely requisition.
  3. To automatically record and service back orders.
  4. To help minimize inventory management consistent with service objective by passing purchasing decision on usage history.

Inventory is the stock of any item or resource used in an organization. Inventory can exist raw material goods products, component parts, supplier and work in process organization keep inventory for a number of reason including of maintaining independent of operations to meet, the variation in product demand to allow flexibility in the production scheduling to provide a safeguard to variation in raw materials delivery time and to take advantage of economic purchases and order size cost association with inventory include holding or carrying cost set up or ordering cost and shortage order quantity of fixed time period in the fixed order quantity model the same amount of inventory is replenished in each order period. Necessary assumptions include demand is know constant and uniform throughout a period lead times is constant and the price per unit and ordering cost are constant.

Mismanagement of Inventory Record

This is a situation where the stock official fails to take care of their responsibility of managing and controlling record of raw materials and finished goods the ability of manager and control stock of inventory has been tremendously affecting production in an organization.

Different Methods of Inventory Control and Production Planning

Production planning and inventory control has no universal method of planning and production operation and control of inventories.

However, inventory control differs from organization to organization mainly based on the king of production activities involve in the organization. Most firms adopts the scheme that will favour the operation.

Stock Control

A stock control system should keep you aware of the quantity of each kind of merchandize on hand. An effective system will provide you with a guide for what brand it will reduce the number of cost sales resulting from being out of stock of merchandize is popular demand. The system will also locate slow selling articles and help indicated. Locate change in customer preference. The size of your establishment and the number of people employed are determine factor in devising an effective stock control plan can keep control by observation.

Production Planning

Is a border area between management economic (specially manufacturing economy), mechanical engineering, industrial engineer nature and in particular the economical informatics. It is occupied with the operational temporal quantitative and even if necessarily planning, control and coherently with the administration of all procedures, which are necessary with the production of goods and goods, production planning can be divided into two (2) sub range:

  • Production program planning
  • Material requirement planning
Production Program Planning:

In production program planning (also primary requirement planning) kind of quantity and manufacturing dates of the finished product (primary requirements) are specified.

Material Requirement Planning:

It is requirement how the quantity unit at intermediate products and raw materials are needed for the covering of primary requirement.
Sequence Planning

During the detailed planning one specifies, which machines are assigned to certain orders. Short term task of the production control are to be seen particularly in connection with short term change in order capacity reality.

1.5 Scope of the Study

Production Planning and Inventory Control being a complex and dynamic concept has a wide area of coverage so it is clear that research of this nature cannot hold without problem. As such this work is limited to the area that are relevant to the problem under investigation that is effective production planning and inventory control in an organization.

Chapter Three

Summary, Conclusion and Recommendations

This is the concluding chapter of this essay (an extended on the importance of production and inventory control in an organization).

3.1 Summary

This essay is aimed at the importance of production planning and inventory control in an organization. Chapter one contains the general introduction of the research work, the background of study, the statement of the essay is to examine the need for inventory control in an organization and also to identify the nature of importance of inventory control in the organization.

The research reviewed the literature in chapter two which takes care of inventory control and related work on planning and development. Summary of findings also the research view the importance of inventory control for increasing knowledge and also finally, the researcher viewed the recommendation toward the enhancement of greater efficiency in an organization and in the area of selection procedure, the organization should maintain the present state and prevent the emergency of any problem.

3.2 Conclusion

Basically, the conclusions on the importance of production planning and inventory control in an organization certainly not far from the problems and solution of the subject matter, production process, production planning and inventory control and more also inventory techniques applied in an organization.

Hence for the importance of production planning and inventory control is to enable management to identify the significant importance of effective and efficient production planning and inventory control in any productive these aims organizations must be practical and scientific in their management decision.

3.3 Recommendations

This recommendation will be tailored toward the enhancement of greater efficiency in an organization they are recommended and suggested on the basis that were discovered from the findings, more so, in view of the fact that management is more scientific approach than decision making based on the scientific methods should be adopted for effective production planning and inventory control.

  1. Continue training of staff various level should be encouraged.
  2. In the areas of selection providers, the organization should maintain and prevent any such of problems in organization in order to achieve success and is going to make the employee to regard the policies of the organization continuous.
  3. The organization should bear in mind that education is a continuous process in life in view of this they centered on subordinate employees but middle and the management staff should inclusive this because as one takes more of ones word so would one encounter a lot of challenges.
  4. The present practice of acquiring raw materials locally should be reviewed official, supplier should be engaged for effective and continuous supply to avoid stock out.
  5. Longtime training, the organization should provide longtime training that would definitely expose the employee what is expected in the learning process. In other word, longtime training also enhance the possible breakage and more explanation to understand the training effectively and efficiency.
  6. The management should give adequate attention to outside course and seminars being organized willing and outside the country for all order of staff in order to broaden the conceptual thinking of the management and the work.
  7. All machines in the production department are obsolete, the management should endeavour to acquire the latest machinery and automated office for effective production output.

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