The Effect of Stock Control Profit Maximization in Manufacturing Company

The Effect of Stock Control Profit Maximization in Manufacturing Company



Abstract

Inventory is an essential decision variable at all phases of product production, distribution, and sales, as well as a significant part of many companies' existing assets. Inventory levels that are too high or too low reduce a company's profitability. Consequently, whether a production or merchandising company, the objective should always be the same: to guarantee that inventory is ready while also keeping inventory levels low. The goal of the research was to see how inventory management affected the profitability of industrial and associated businesses .The economic order quantity model (EOQ), which is based on cost minimization between stock holding and stock ordering, explains it. The study used a correlational research design. There were two kinds of data gathered. This should guarantee that companies maintain optimal inventory levels, resulting in increased profitability. Management should guarantee that employees are competent to execute the tasks given to them and that optimal inventory levels are maintained. It should also make certain that the employees keep correct inventory records.

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Introduction

Inventory management is critical to the profitability of manufacturing and retailing businesses (Anichebe&Agu, 2013). Raw materials, work in progress, spare parts / consumables, and completed products are examples. Inventory management is essential since a significant portion of a company's money is invested in it. Every business must guarantee that inventory levels are kept within acceptable limits. Inventory levels that are too high or too low reduce a company's profitability. Whether a manufacturing or merchandising organisation, the objective should always be the same: to guarantee that inventory is ready while keeping inventory levels low. Inventory is an essential decision variable at all phases of product production, distribution, and sales, as well as a significant part of many companies' existing assets. Inventory accounts for a significant portion of an organization's investment.
Moore, Lee, and Taylor (2003) estimate that inventories may account for up to 40% of a company's total capital. It may account for up to 90% of an organization's working capital and up to 33% of total assets (Sawaya& Giauque, 2003).

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Conclusion

Manufacturing finance managers are shown to take measures to guarantee that their companies maintain optimal levels of raw materials and finished products inventories. This may have resulted in improved profitability for manufacturing companies  and therefore it may be argued that inventory management and profitability have a positive and substantial connection. Economic Order Quantity (EOQ) and Just in Time inventory management systems should be installed and maintained by businesses (JIT). This ensures that companies maintain optimal inventory levels, resulting in increased profitability. The management should guarantee that the employees are competent to execute the tasks that have been allocated to them. Maintaining ideal inventory levels is essential. In addition, the personnel should keep precise inventory records. All of these factors have an effect on a company's profitability.

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