CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

Manufacturing industries are those enterprises that are engaging in the production of certain products through the combination of factors of production such as material, labour and factory services land operation.

Inventory can be described as the totality of stocks of different. These includes basic raw material, partially finished goods and material (work-in-progress) sub assemblies, office and workshop supplies and finished goods. Without inventories, manufacturing industries cannot exist, for them to produce product, they need raw materials and in the process of production they will have stock of partially finished product called work-in-progress. All these form the totality of inventory of manufacturing concerns invest highly. Furthermore, manufacturing concerns invest highly in inventory and it constitutes about sixty percent (60%) and above of current assets held at any point in time depending on the size, level of operation and policies of such a particular concern. As a result of the huge amount always invested in inventory, proper planning and controlling here to put in place to avoid loss of inventory which will eventually affect the organization as a whole.

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