THE EFFECT OF STOCK CONTROL ON PROFIT MAXIMIZATION IN A MANUFACTURING COMPANY

posted on June 15, 2018

THE EFFECT OF STOCK CONTROL ON PROFIT MAXIMIZATION IN A MANUFACTURING COMPANY

BACKGROUND OF THE STUDY

Stock is frozen cash and as such should be given the same if not more priority than liquid cash. Firms need stock in one form or the other in order to carry out its day-to-day activities and as such, the need to have the stock at the required time, quantity, quality and under proper condition can never be over emphasized more often than not, organization hold in order to have ready supply of materials from the store house to guard against future increase in price, enjoy quality discount, prevent shortage of supply from its various sources etc. since the ultimate goals of any business set up is to make profit, then, such profit can only be realized through incurring the least affordable cost while expecting huge returns. Inventory is major area of asset deployment which should be required to produce, minimum return on capital investment since it incurs cost so there is a great need to minimize such cost and control stock with respect to its receipt, storage and issue. When an organization is declining on what is to be held in stock, it is of necessity to consider what item are to be used, and produced by the organization in question and then decide which items is stocked. Stock have been noted to be life blood of organization and all such efforts are always made to see that efficient stock control system and equipments are invented to cater for the various items held in stock. In order to minimize stock holding cost via efficient stock control measure, experience and qualified staff should be employed to see to such matter. In public sector of the economy today, stock control is nothing to write home about, you find stock idle in the store house, and some are even deteriorated due to lack of storage facilities and staff with the little or no knowledge with regard to store management. However, in the private sectors where individual are the owner of the business, the reverse is the case because stock, no matter its form is given attention by well trained stoppers, under the appropriate conditions after all, huge sum of money have been sunk in the acquisition of such stock items and to what much is given much is or will be expected.

Organization in recent times have been facing one problem or the other which in most cases lead to early liquidation. An investigation have revealed that most often than not, the whole problem normally arises from inefficient management of stocks at one stage or the other both within and out side the organization, you will find improper or lack of inspection facilities, poor and inadequate storing equipments, bad movement of stock, just to mention a few with most of these thing present in organization, there is a great possibilities of such an organization having problem thereby leading to closure.