INVETORY MANAGEMENT AND CONTROL IN CASE

BELAYAB CABLE MANUFACTURING PLC

A RESEARCH PROPOSAL SUBMITTED TO THE DEPARTMENT OF

THE ACCOUNTING AND FINANCE IN PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR A DEGREE IN ACCOUNTING AND FINANCE

BY ID

Eskedar Bizuneh 462/10

Meseret Debebe 225/10
Hana Yosef 470/10
Tsehay G/tsadik 440/10
Yodit Alazar 251/10
ADVISOR

 Birhane

ADAMA PARADISE VALLEY COLLEGE DEPARTMENT OF ACCOUNTING AND

FINANCE

SUBMITED DATE

MAY 2012
 I ABSTRACT

The purpose of the proposal will be Inventory management is a challenging problem area in
supply chain management. Companies need to have inventories in warehouses in order to fulfill
customer demand, meanwhile these inventories have holding costs and this is frozen fund that
can be lost. Therefore, the task of inventory management is to find the quantity of
inventories that will fulfill the demand, avoiding overstocks. This paper presents a case
study for the Belayab Cable manufacturing industry on inventory management. The relationship
between the inventory management and company performance was determined based on
inventory days and return on asset analysis. Questionnaires have been administered simple
random technique will be 30 selected employees work in Sales & Marketing Department,
Finance Division and property administration division .Interviewed different managers who have
direct contact in the company’s inventory and Physical Observation warehouse & Distribution
Section.
Contents
I ABSTRACT..............................................................................................................................................I
Chapter one............................................................................................................................................4
1 Introduction.........................................................................................................................................4
1.1 Background of the Study.......................................................................................................................4
1.2 Statement of problem...............................................................................................................................5

1.3 Research Question………………………………………………………………………………………5

1.4 Objective of the study………………………………………………………………………..................5

1.4.1 General objective…………………………………………………………………………………….5

1.4.2 Specific objective…………………………………………………………………………………….6

1.5 Scope of the study……………………………………………………………………………………...6

Chapter 2.............................................................................................................................................6
2. Methodology and Method........................................................................................................................6
2.1 Research Design……………………………………………………………………………...................6

2.2 Data Sources …………………………………………………………………………………………...6

2.3 Method of Data Collection……………………………………………………………………………...7

2.4 Method of Sampling…………………………………………………………………………………….7

2.5 Method of Data Analysis ………………………………………………………………………………7

2.6 Significance of the Study…………………………………………………………………….................7

2.7 Schedule and Timeline..........................................................................................................................8

2.8. Ethical Approval...................................................................................................................................8
2.9 Resources and Budget......................................................................................................................9
 Chapter one

1 Introduction

1.1 Background of the Study

Inventory is the supply of raw materials, partially finished goods called work-in-progress and
finished goods, an organization maintains to meet its operational needs. It represents a sizeable
investment and a potential source of waste that needs to be carefully controlled. Inventory is
defined as a stock of goods that is maintained by a business in anticipation of some future
demand. The quantity to which inventory must fall in order to signal that an order must be
placed to replenish an item.

Inventories can be totally good or bad. As Murthy (2003:167) indicated, too much inventory
causes excessive holding costs, extra space requirements and product obsolescence. Too fewer
inventories, on the other hand, is dangerous because it hampers production. Apart from this, the
type of inventory normally held depends to a large extent on the characteristics of the business.
Merchandise (wholesale or retail businesses) holds inventory goods (or merchandises) for resale
in the normal course of businesses.

Retail comes from the old French word ‘tiller’, which means “to cut off, clip, pare, divide” in
terms of tailing (1365 G.C.).It was first recorded as a noun with the meaning of a “sale of small
quantities” in 1433. Like in French, the word retail in both Dutch and German also refers to the
sale of small quantities of items. Nowadays, a retailer purchases goods or products in large
quantities from manufacturers directly or through a wholesale, and the sell smaller quantities to
the consumer for a profit.

Inventory management boils down to maintaining of adequate supply of something to meet the
expected demand pattern which is subjected to budget considerations. Inventory is reported on
the balance sheet as a current asset because it is usually used or converted in to cash within one
year or within the next operating cycle of the business whichever is longer. Hence, this research
tries to assess inventory management and control system at BELAYAB CABLE
MANUFACTURING PLC.

1.2 Statement of the problem

Inventory is one of main part of the major business’s physical assets that is ready use or will be
ready for sale.it can be the raw materials, work in progress, good & finished goods Ackah &
ghansah, 2016). It is the necessary to have physical stock in the system to take care of the
anticipated demand because non availability of materials when needed will lead to delays in
production or projects or service delivered. however the challenge on the cable manufacturing
sectors are quality problems luck of skilled man power land problem and delays in the transport
of raw material, fete noted adding that the institute is working in cooperation with other
stakeholders on Suring quality of the cables and giving others technical support.

1.3 Research Question

The following research questions will be to get adequate solution for the study.

 Does company use appropriate inventory valuation recording methods?

 Is the inventory control system efficient and strong in safeguarding inventory of
belayab cable?
 How does the company classify its inventory?
1.4 Objective of the study

1.4.1 General Objective

The general objective this research will be to assess the existing inventory management and
control system and practices at BELAY AB CABLE MANUFACTURING PLC.
1.4.2 Specific Objective

The specific objectives of the study were listed here under.

 To identify the practice of inventory valuation and reporting of BELAY AB CABLE

MANUFACTURING PLC.
 To identify whether the inventory control system is efficient and strong in safeguarding
inventory of BELAY AB CABLE MANUFACTURING PLC.
 To evaluate the practice of BELAY AB CABLE MANUFACTURING PLC in
determining the status of inventory periodically.
 To find out whether the company uses Economic Order Quantity and Re-order point to
minimize inventory related costs.
To identify the ways of inventory classification in the company

1.5 Scope of the study

The research by its nature needs considerable time, huge financial requirements and various
kinds of data. In fact, the time allocated to do this research was limited, budgeted financial
resources were scares and lack of available data. As a result of the aforementioned constraints
this study focused on BELAY AB CABLE MANUFACTURING PLC inventory control and
management system. BELAY AB CABLE MANUFACTURING PLC offers one of the most
complete lines of power cable, control and data cables from copper and aluminum cabling
system solution with over hundreds of different cable system product.

Chapter 2

2. Methodology and Method

2.1 Research Design

Descriptive research method will be used for this study because the study describe research
variables, facts and figures related to the company’s inventory control and management system
obtained through the tools of data collection.

2.2 Data Sources

The sources of data for the study were primary and secondary sources. Primary data have been
collected from sample respondents using questionnaires, interview and physical observation.
Secondary data have been collected from company’s record, written materials in the organization
like brochures ,reports, manuals and other document that are related to the topic under study.

2.3 Method of Data Collection

The questionnaires have been administered over selected employees work in inventory
management and control department and personally we interviewed different managers who
have direct contact in the company’s inventory and who are expected to give relevant
information for this study. To collect secondary data we used different company’s records,
manuals and other documents.

2.4 Method of Sampling

In BELAY AB CABLE MANUFACTURING PLC there are around 240 employees, which are
considered as the population for this study, out of which 30 employees who are working in stock
management department have been selected as a sample using the purposive sampling technique.

2.5 Method of Data Analysis

The collected data must be first organized in a more understandable form and then the available
data is explained in descriptive analysis based on the results obtained from respondents. In this
study we analyzed the organized data using tabulation, frequency and percentage to make the
result more appealing.

2.6 Significance of the Study

The following were significances of this study:

 It helps to identify the key challenges in implementing a good inventory management

system at BELAY AB CABLE MANUFACTURING PLC. This would be a valuable
input for management decision making.
 The results of the study can also be used as a source of information for other researchers
who want to conduct a study on the related topic.
 It will inform the company to take appropriate corrective action based on the conclusions
and recommendations.
 It will help the other retailers to improve their inventory control and management system.
 It gives priceless research experience for us.
2.7 Schedule and Timeline

In order to manage the overall research process it needs time budget. The table
gave bellow shows that the time that will be taken from topic selection to final
presentation.

No Activity May June July Aug

1 Topic selection X
2 Preparation of research proposal
X
3 Recommendation of comments to
1st draft of the proposal X
4 Typing of final proposal
(submission) X
5 Collection of proposal X
6 Data collection X
7 Data analysis X
8  Submission of first draft X
comment research report

9 Typing of final report X

10 Submission of final research X
11 Presentation X

2.8. Ethical Approval

Some institutions require that any research involving interaction with human participants get
approval from ethical advisory committees or boards. (If they have required)
 2.9 Resources and Budget

Resource Intended to get

Lap top Our lap tops/others option
Data From Company, our Advisor and college
Time
Transportation
Mobile cards
Stationaries