CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In the real sense of economic development, the efficiency and effectiveness of a nation’s economy rests viably on its ability to meet with the demands of the populace of such an economy. In order words, the effectiveness of an economic is vested on the manufacturing sector. This is because, the indices by which the development and progress of an economy is measured is predicated on the goods and services so produced by the out fits in such a sector which could either be consumed locally or be exported for exchange of foreign currency. Furthermore, the distinguishing factor between productive and unproductive economies lies in the production capacity in relation to the importation capacity which directly affects the economy. However, the adore-mentioned positive outcomes/results are based on the” effective management of the manufacturing industry in terms of its capital (Financial resources) ,inventory, labour (Human resources) among other things, so as not to bring about negative results such as costs resulting from overstocking, loss resulting from capital tied down and loss goodwill as a result of stock outages.
1.2 STATEMENT OF THE PROBLEM
Inventory plays an essential role in any organization. The larger the inventory size, the easier it is to reduce costs of purchasing, manufacturing and shipping as well as provide prompts customer’s service. However, a larger inventory stock requires a higher investment of money, higher carrying cost such as storage handling risk of obsolescence and data processing. These costs must be balanced o against any advantages in holding inventory.