Management of Production Problems in Manufacturing Companies in Enugu State (A Case Study of Anammco, Proda, Sunrise)

Abstract

This study has examined the efficient management of production problems in manufacturing companies in Enugu state. The selected companies were ANAMMCO, PRODA AND SUNRISE. The research design used for this research work was descriptive research design. The questionnaire was the instrument distributed to the participants which was later retrieved. Frequencies, arithmetic means, standard deviations and statics were used to analyze the data. The findings of the study, showed that availability of raw material significantly enhance production. When the raw materials are available at the needed time, it is easy for manufacturing firms to meet production targets. However, another finding of this study is that adequate financial base enhances production. Manufacturing firms cannot function effectively or even produced goods without adequate capital. Based on the findings of this study, the researcher recommends as follows; there is a need to ensure that raw materials are available when needed. Thus, management should give production a priority in the manufacturing firms by ensuring that vitally needed raw materials are provided. Above all, management should endeavor to keep abreast of government policies on importation, taxes, tariffs which greatly influence production especially ANAMMCO, which relies partly on foreign spare parts for production.

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Production can be defined as the process by which good and services are created. It is a process by which a set of desired inputs is converted into a set of desired output. Production includes all activities wherein something of value is created.

It includes services such as those provided by hospitals, universities, insurances etc. manufacturing, on the other hand, refers to production of tangible goods such as books, automobiles and food products.

In the evolution days, production was, in a sense, almost an isolated function many companies. It jobs was, to take the designer’s blue-print and produce a product. Whether the product was accepted or not, there were barriers, in communication and cooperativeness between manufacturing and other functions of the company. Since production entails employment of the bulk of manpower, utilization of the physical assets and engagement of the bulk of the financial resources; pressures in the organization great; failure to deliver, an idle machine, a line of an unsafe process all demand attention in order to attain the corporate objectives.

However, management scholars having identified several problems in the production process for instance, low capacity utilization, poor quality and inadequate personnel, have tried to evolve an efficient production system that would attract profits at low cost and thus enhance the survival and growth of the organization.

More importantly, management experts have deduces that decisions and actions relating to production seriously affect the success of a firm. Good judgment in location and layout of the production facilities can produce cost savings and efficient operations. Effective purchasing and control of materials minimize the chance of operation interruptions. Careful production scheduling and quality help to assure that customers will get on-time delivery and quality products.

Regrettably, despite all effort by scholars aimed at evolving an efficient production system, many manufacturing companies have persistently failed to pay attention to planning and control of the production process which includes among others, quality, material and inventory control etc. This has been responsible for the colossal decline in factory profits with its attendant problems.

Industrialization is the only vehicle to a great tomorrow, to security, to higher income and to a higher standard of living. Industrialization changed Japan form fended aristocracy to a buoyant economy.

Industrialization will change the face of Africa, Asia then production will have to be provided with the attention, motivation, and infrastructural facilities it desires.

This will enable production function assume its role of stimulating our technological take-off and thereby create enough wealth to improve the standard of living of present and future generation of Nigerians.

The facts above underscores the need to delve into problems encountered in production and thus put forward better ways of managing the production process so as to enhance the overall growth of the manufacturing industry.

1.2  STATEMENT OF THE PROBLEM

Most manufacturing firms in Nigeria are faced with declining profits due to focus on capital investment as a means to reduce labor and consequently ignore the huge profits to be gained through improved quality, reduced inventory and more timely introduction of new products. In a desperate bid to make and meet the demand, many of such companies are operating below their installed capacities. Some have retrenched their staff while yet others have shut down production. Often times, some of the problems have been attributed to; inability to procure vitally needed machinery, raw materials and spare parts. Other includes low managerial skills and inadequate infrastructure.

Some of the man-made constraints to raw materials procurement include lack of technical personnel to direct the manufacturing process. However, it has been observed that most companies fail to pay attention to managing these problems associated with production of goods. This has largely contributed to inefficiency in production system, lack of growth and declining currently being faced by most manufacturing firms.

1.3 OBJECTIVES OF THE STUDY

  1. To find out if the unavailability of raw material affect production.
  2. To ascertain to what extent the provision of the infrastructure facilitate production.
  3. To ascertain the extent adequate financial base enhance production.
  4. To verify how effective staff motivation have significant impact on their performance.

1.4  RESEARCH QUESTIONS

  1. Has the unavailability of raw material affect production?
  2. To what extent has the provision of the infrastructure facilitate production?
  3. To what extent has adequate financial base enhance production?
  4. Does effective staff motivation have significant impact on their performance?

1.5 SIGNIFICANCE OF THE STUDY

The study is significant in many ways. In the first instance, a review of the production system and its design will provide valuable information on the problem inherent in varied methods in production and thus reveal the appropriate way to plan production activities in the manufacturing sector.

Furthermore, production management personnel, organization specialists and others will be provided with additional knowledge on ways of coping with the onerous difficulties in production aimed at enhancing production efficiency and thus the overall growth of the organization.

Above all, this work will also create awareness for management scholars on the need to manage production since it will offer helpful recommendation on the benefits likely to be achieved in organizations that execute production activities properly.

1.6  SCOPE/DELIMITATION OF THE STUDY

The manufacturing companies are categorized under Auto-industry, Ceramic company and flour producing company.

The researcher out of the different categories randomly selected one from each of the categories. The selected companies are: “Anambra Motor Manufacturing Company” (ANAMMCO, Project Development Institute (PRODA) and Sunrise Flour Mills Limited (Sunrise).

The scope of the study is restricted to investigation production problems and exploring way by which the production process could be better managed to enhance growth and efficiency in the manufacturing industry.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

INTRODUCTION

2.1  CONCEPTIONAL FRAMEWORK

Keith (1988) defined production as the conversion of a set of inputs into a set of outputs through a set of processes. It related to other three main functional fields of business, namely; marketing, finance and personnel management as can be seen from the following:

Marketing programs of the company affect the demand for its producing and therefore qualities to produced, also the production policies affect the marketing and advertising programs; the financial position and policies affect the facilities available for production and therefore types of products and quantities that can be produced; industrial relations and personnel management policies affect the motivation and productivity of human resources and therefore affect the level of production.

Thus, production is interwoven with other aspects of management as highlighted above.

2.2  THEORETICAL FRAMEWORK

TYPES OF PRODUCTION PROCESS

The production process refers to the methods by which materials are put into the items that people want.

There are many kinds of production process viz:

EXTRACTIVE PROCESS

This consists of extracting substances from the earth, air or sea. Example mining of coal, gold, drilling for petroleum and fishing/farming.

ANALYTIC PROCESS

Here, a basic substance is broken into a number of other material, in which the product may bear little resemblance to the original substances, example petroleum refining.

FABRICATING PROCESS

This occurs when a material has its from changed by being machined, cut up, pressed, finished, or treated in some other manner example manufacturing of clothes, shoes.

2.3  PRODUCTION SYSTEM

In the conversion process, inputs go through a series of operations. The operations in a manufacturing organization many be mechanical, chemical assembly, inspection and control, packaging, shipping etc. This conversion process together with receiving of inputs and shipping of output is referred to as “Production System” (Ejiofor, 1989).

Each system of production makes its own demands on the management of the business – in all areas and on all levels. Each requires different competence, skill and performance. Unless management understands the demands of its system of production, it will not manage well (Ejiofor, 1989).

There are two main production systems in manufacturing organizations namely, “Continuous production System” and intermittent production System:

CONTINUOUS PRODUCTION SYSTEM

Employed for production those are produced continuously due to their high and stable demand, for example automobile manufacturing plants, refineries, breweries etc.

INTERMITTENT PRODUCTION SYSTEM

In this type of system, a given product is manufactured intermittently and not continuously. It is used in case where demand for a product is low that it needs not to be produced continuously, for example, if the for a product in a month can be met by production in one or two day, it then follows that the particular product can be produced only one or two days per month and stocked to cater for the demand.

This production system has the following characteristics; produces small quantities of a large numbers of products and secondly equipment must be flexible enough so that they can be adapted to process a wide variety of products.

Each of these systems has its own basic principles and each make specific demands on management. Inability of application of the appropriate system only results in lack of performance. Inappropriate system inevitably increases the difficulties of managing the business (Ducker, 1988).

2.4  DESIGN OF THE PRODUCTION SYSTEM

In accomplishing the objectives of production, there are two major types of decisions to be dealt with, For example, location factor, Job design, selection and design of the product, and selection of equipment.

2.4.1 LOCATION FACTORS

The location of a manufacturing facility is very important because it partially determines operating and capital cost while the resulting physical factors influence layout. Boone puts forward factors that can influence a location decision which include market related factors. Market related factors involve the location of buyers and competition. If the company plans to provide a service to senior adult, it should probably be located in an area with an aged population. Similarly, some firms prefer to locate in areas where there is limited direct competitions (Boone, 1987).

Thus, market proximity is prime advantage in industry location. Plant location is significant because of its effect on both production and distribution costs which are frequently in conflict. The gain in government incentives and in the lower land and labor costs obtained by locating away from major cities may be set-off by the increased expense of warehousing transportation to serve these markets. Firms that produce perishable products or whose perishable products are relatively expensive to ship must usually locate their markets.

Manufacturing companies that produce a product using raw material that is more expensive to ship than the finished product usually located their plants near their source of supply of raw materials.

Tangible cost factors include transportation, utilities, labor, taxes, site costs and construction costs. Management would prefer cheap, nearby transportation, low utility costs; a ready supply of low cost but skilled labor; a modest tax structure and construction costs.

As (Pickle, 1980) supports, that it is important to consider community attitudes, taxes and services in the process of selecting a plant location. This is because many communities reject any new industry. Plants that produce offensive smells or other forms of polluting are having increasing difficulty finding communities that welcome them, inspite of the increased employment they provide. And it is difficult for a manufacturing plant to locate in a hostile environment.

In the same vein, industries searching for plant locations should always consider the services offered by different communities, for example, a firm may want to be located on the edge of the community, and find that one another community is willing to bring city utilities to them at no cost to the business.

Furthermore, taxes are also an important factor in plant location since they vary from, state to state and community to community. A production firm that operates on a narrow margin of profit may find that extra heavy taxes/levies eliminate their profit. It is on this consideration that communities in order to attract new industry do at times give special tax breaks.

It is pertinent to infer that variations in tangible cost factors require a careful handling/balancing on the part of management. There is no site location decision that needs 100 percent of the firm’s ideal standards. Therefore, management is compelled to achieved a balance of favorable and unfavorable factors and choose a site that provides the most favorable blending of all factors, Intangible cost factors, refers to the attitude , legal regulations, room for growth, climate, schools, churches, hospitals and recreational opportunities, some industries have minimal need to be located near supply sources/markets; thus their location decisions are influence by other factors like amenity such as desirable living condition for employees.

In effect, management will, after ascertaining that adequate labor, raw materials, water and power are available seek the least cost location which is the one for which the sun of production costs is minimized. Management choice may then be modified by market requirements, the influence of competitor’s location, employment preference(climate recreational facilities) and conditions imposed by the local authorities.

2.4.2 PHYSICAL/PLANT LAYOUT

All stages of production must be considered to design an efficient production facility. More so, the inputs at each stage of the production process must be considered too and also material handling system must be designed to blend smoothly with the choice of physical layouts. Ball asserts that the arrangement of machinery, personnel and service facilities should be made prior to the erection of the building. In this way, the building is accommodated to the layout that is judged to be the most capable of obtaining a smoothly functioning production system.

The design must attempt to obtain the maximum utility from costly building space while simultaneously providing room for the future expansion of each department.

The designer must attempt obtain the maximum utility from costly building space while simultaneously providing room for the future expansion of each department.

Basically, three types of layout have been identified as product layout, process layouts and fixed position layout.

Layout planning involves decisions about how to arrange the physical facilities spatially. Their equipment decisions are translated into physical arrangements handling, maximizes workers and equipment efficiency (Pickle, 1980).

PRODUCT LAYOUT

It involves linear flow of the various work activities performed. This design is common in assemble lines and cafeteria. MBAIKE, in management in Nigeria, identified the product layout and purports that the machines layout is dictated by the sequence of production of the product. However, the advantages of this type of layout are its simplification of production of the product. However, the advantages of this type of layout are its simplification of production planning and control and the ability to utilize unskilled workers who can quickly learn the tasks involved. In addition, materials handling and processing time are reduced. It is appropriate for continuous or repetitive operations, such as mass producing air-conditioners.

The disadvantages of the product layout include its high capital investment, unless volume of production is high, machine utilization tends to be low. One machine breakdown ultimately results in stoppage of production since the operations are in series. The systems are also fairly inflexible being unable to accommodate changes readily and special purpose machines need to be bought. Finally, this design often leads to worker monotony.

PROCESS LAYOUT

It is arranged according to task. This layout approach has the advantages of flexibility of equipment and personnel, and increased worker satisfaction because of diversity of tasks. It typically requires smaller investment in equipment because duplication is not necessary unless volume is required. Therefore, expertise is developed since the supervisors for each department become highly knowledge about their functions.

A major short coming of this approach is that it involves cost and reduced efficiency. Back tackling and long movements may occur in materials handling, thereby lowering efficiency in this area. Timing inefficiencies may occur, with work having to wait between tasks. Since workers must have broad skills, higher wages may be necessary to attract qualified employees. Since each job is different, there are different, sets-ups and operator training requirements. Thus, the result is lower productivity.

FIXED POSITION LAYOUT

This approach is used for large and fragile products that cannot be moved from place to place. Typically adopted in the manufacture of air planes, vehicles and home construction. Here, workers, machinery are preassembled; parts are brought to the stationery product.

Fixed position layout entails the usage of some workers who necessarily must be skilled and versatile. Movement of people and equipment to end from site may be expensive; equipment utilization may be low because equipment may be left at a location where it will be needed again in a few days rather than moved to another location where it would be productive.

2.4.3 JOB DESIGN

The final decision in designing the production system concerns the structure of individual jobs. How will the work be done and who will do it? Job design specifies the content and methods of work by individuals and groups in the production system. It is the process of task declination necessary to meet various personal, works, organizational and environmental requirements. The job that is eventually specified should be technically, economically and behaviorally feasible.

As Stoner, (1980) purports, work methods analysis to find the best way of performing tasks in a given job. Such environmental factors as temperature, air flow, and humidity, noise and lighting levels should be controlled to ease task performance and increase job satisfaction.

Once the job design has been completed, job production standards are then developed using work measurement technique. Such standards are established as a basis for comparison when measuring and judging output. Production standards specify what an average worker or group of workers can produce under average job conditions.

PRODUCTION FUNCTION IN CORPORATE ORGANIZATION

Production function entails the employment of the bulk of buyer utilization of the physical assets and engagement of the bulk of the financial resources. Pressures in the organization for solutions these problems are therefore very great; failure to deliver, an idle machine, a line of operators who are not producing, a breakdown in quality, an unsafe process/service, all demand attention in order to attain corporate objectives.

It has most often been observed that the production/operations management is not incorporated into corporate policy. A situation that always results in a lot conflicts in the organization. As (Lockyer, 1970) asserts that failure to incorporate production operations into corporate policy will inevitably lead to problems. To be presented with policies which require?

A reduction in training costs, a substantial reduction in error rates, quicker delivery of special order higher plant utilization and greater flexibility can only result in frustration and malfunction of the organization (keith, 1988).

This underscores the need of the manager to make good decisions aimed at solving these problems and exploring opportunities that arise in the production process. In production, the manager is responsible for producing the goods in required quantities and good quality to meet future demand. This, he has to do in an economical way so as to maximize profit. In order to actualize this, he has to be concerned with: production planning, production control, quality control, inventory control, work measurement and wage incentive.

2.5.1 PRODUCTION PLANNING

This involves management decisions on the resources that the firm will require for its manufacturing operations and selection of these resources to produce the desired goods in the required amounts, at the least total cost. Production planning therefore involves setting the limits or levels of manufacturing operations in the future. Some of the decision to be made include deciding the size of the labor force during the period planned, and if hiring campaigns or layoffs are necessary when this will be settling plant and equipment capacities where these are flexible and setting the desired or objectives levels for inventory control. Production planning sets the frame work with which detailed schedule and inventory control schemes must operate (David, 1970).

Every successful manager must, therefore, plan, execute and control his work within the framework of the corporate plan. Indeed, unless the production/operation plan is part of the corporate plan, the total enterprise can only be a failure, or at best a sub-success. However, the production planning activity can be divided into two parts:

  1. Forecasting future, demand for company products, and
  2. Translating the demand of products to the demand it generates for various inputs, that is, determination of demand for various inputs.

Demand forecasting is the process of estimating future demand for an organization’s products or services. The reason is to get an idea of what will happen in future. The demand forecast in a manufacturing firm may involve projecting the numbers of product unite to be made each week. For a hospital, the same goal becomes one in projecting how many patients will be served each day. Meeting this demand generates requirements for people, equipment, raw materials and other resources. A good demand forecast helps develop appropriate plans for production and service operations. The more products to be manufactured or charts served, the greater the resource requirements. If demand is expected to increase, plans must be made to order more materials and supplies, buy more equipment and hire more people.

In summary demand forecasts are used in organization to:

  1. Decide whether demand is sufficient to generate the desired returns for the organization. If demand exists but at too low a “price” to cover the costs the organization should reject the opportunity.
  2. Determine long-term capacity needs for facility design. An accurate projection of demand for a number of years in the future can save the organization great expense in expanding or contracting capacity to accommodate future environment demands.
  3. Identify short-term (1 week- 3 months) fluctuations in demand for use in production planning, work force scheduling, materials planning.

Forecasts should be based on levels of activity government expenditure, labor availability; possible changes in price structure, variations in living standard market potentials, technology changes and companies resources. A long-term forecast is particularly necessary when considerable expansion is required and when heavy capital expenditure is contemplated. However, some authorities believe that in view of political uncertainties, there can be little usefulness in forecasts of any kind over periods of longer than five years (Lockeyer, 1970)

Furthermore, forecasting can be made for individual products or a group of products. If a group of products produced by the company is large, then it is more economical to group the products into a smaller number of groups according to use, type and forecast the demand for each group.

Forecasts for individual products can be made either in quantity units or in monetary units. The group forecasts in monetary units can be obtained by using different forecasting techniques such as collective opinion method, economic indicator method; time series analysis using regression or moving averages.

One of the functions of planning techniques in production is to give business management guides for use in settling the basic policies themselves. Management must make judgments about qualitative factors they find difficult to weigh. One method of helping to make these judgments about policy decisions to make impact on capacity/labor requirements, customer service and financial needs of alternative decisions in judgments areas.

2.5.2 PROGRAMMING METHODS

Various mathematical programming methods have been used for production planning in the face of seasonal production requirement. Linear programming has been found useful and a routine planning procedure. The use of linear programming in production planning is based on certain assumptions example production requirements are assumed twin and exact. This, of course, is rarely true, but the requirement schedule does represent best estimate, including an allowance for demand forecast error.

Cost functions or relationships are assumed to be linear, that is, cost relationships are assumed to be linear, that is, cost relations are assumed to consist of fixed elements plus elements which varying directly in proportion to the variable specified in the plan-amount of overtime, amount of inventory etc.

Linear programming has been found useful in situations where the problem is complicated by one or more of the following conditions.

  1. Several product lines using the same facilities or staff.
  2. Possibilities of planned use of overtime to meet peak needs.
  3. Several stages in manufacturing, with seasonal storage possibilities.

As Okeke, affirmed that the transportation method of linear programming as applied to production planning attempt to assign production capacity to individual products, brands/size in such a manner that demand (sales requirement) is fully satisfied at minimum aggregate production and inventory costs (Okeke, 1987).

The model can be expressed in a metric format with rows representing sources of production capacity and the column representing sales demand. Every satisfaction of demand from an assignment of production capacity is a transshipment, which has a cost determined by the source and destination of the assigned units of production capacity.

The objective of the model is the minimization of the total shipment costs.

  1. Transshipment costs-refers to the sum of incremental production labor and inventory costs.
  2. Labor cost-Data on salaries and wages of production. Direct Labor is available in aggregation for all product brands/sizes.

2.5.3 PRODUCTION CONTROL

Production control refers to the efficient utilization of plant resources, that is, raw materials, parts, equipment and labor and labor to produce the products in required quantity in time to satisfy the demand. Boone defines production control as a system designed to produce maximum output with minimal input contributions and at the lowest possible cost (Boone, 1897).

The production control function can only be accomplished by exercising some control over the activities in the plant. The fundamental function of production control is the timely issuance of orders to the production facility for replenishment of stocks in response to short-term fluctuations in demand.

The control of production entails control of inventory/resources. Inventory may be defined as any idle resources held for future use. It may be in form of raw materials, partially processed material, or finished goods that become components of the final products. Inventory control is a method of balancing the need to have sufficient raw materials, work in progress, and finished goods on land to meet demand with the costs involved in carrying the inventory.

A smoothly operating system depends upon availability of needed raw materials, component parts, and processed materials and parts. But if excess inventory is kept on hand, the firms will incur unnecessary costs in purchasing and stirring materials and parts until they are needed. Organizations keep inventories to maintain flexibility in their production/operations processes, smooth-out periods of excess or under capacity, meet periods of unusual demand, and/or achieve economies from large scale purchases. 

2.5.4 TYPES OF INVENTORY CONTROL

Fundamental, inventory control systems are chosen according to the demand situation facing the product being produced.

Just-in-time Inventory

This approach known as the Just-in-time(JIT) inventory control system involves minimizing inventory on hand at each production facility and eliminating stockpiles.

Management benefits from such system because of the marked reduction in inventory carrying costs.

Economic Order Quality

A number of costs are associated with inventory; some rise when inventory levels increase for example; costs of capital, storage, space, taxes, insurances, deterioration and obsolesce. Still others decrease with higher inventory levels. The costs of ordering set up and missed sales; in addition, larger inventory purchases may permit quantity discounts.

Production management is responsible for balancing these various costs(which can roughly be classified as either holding or ordering costs) and achieving the best order size-economic order quantity(EOQ).

Economic order quantity is method of inventory that involves ordering a fixed quantity of items every time or inventory level falls to a predetermined point. When this point is reached, a decision is automatically made, more frequently now by computer, to place a standard order.

Formula for determining the economic order quantity (EOQ) is pressed thus:

EOQ     2DO/C

Economic order quantity= the squared root of two times actual demand for inventory use multiplied by (x) ordering cost;

Where,

D     Actual demand for inventory use.

O     Ordering cost of inventory.

C      Carrying cost inventory.

For instance, if independent demand for inventory is 100 units per year, the cost for each order is $80 and carrying cost is $10 per unit per year.

The EOQ is thus expressed.

20($80×100) x 10= 40units.

The follows that the manager should order 40units each time to minimize inventory cost.

2.5.5 QUALITY CONTROL

The importance of this production function cannot be over-emphasized since the reputation of company products depends on their quality.

Quality controls are the processes and associated tasks designed to assure that a product or service meets acceptable standards, quality controls have three components.

  1. The product or service must be designed to be a least the minimum appropriate grade for its use.
  2. It should conform to the standards of the design.
  3. The consumer should receive the necessary training and service support so that his or her use of the product is satisfactory with reasonable expectations.

In production, a set of inputs is converted into a set of outputs through a conversion process. Therefore, the qualities of outputs depend in the quality of the inputs and the different operations of the conversion process.

It is more convenient to determine any changes in outputs by checking the quality of output. Again, it is not easy to check the quality of each unit of output are taken and the quality of items in these samples are used in the basis of determining whether they change in input or conversion process may be made known for corrective action (Schemerhum, 1986).

However, a statistical quality control procedure entails determining whether the completed product conforms to design specifications. (Does it work as it should? Are the specifications being met?

A case study on quality control program by American Ford managers revealed that despite the fact that plant layout were well designed, there was still poor co-ordination of work effort; despite heavy expenditure on market research designed to forecast consumer demand. Ford often found itself with large stock-piles of finished cars sitting in storage areas and awaiting delivery to franchise operators.

In order to overcome such problems, the company made preventive quality control a high priority. Materials and parts were procured only from reliable suppliers, inspected upon delivery, and placed in service only when deemed acceptable to the company (Ejiofor, 1986).

Most importantly, the company formed employee groups that directly incorporated workers into the quality control effort. An extensive system was established to monitor operations on a continuing basis, with the resultant data used to compared system performance against production input and output standards. The effect of this was marked high performance (Stoner, 1986).

2.5.6 PURCHASING

This is a key management function in any organization. This is because an average manufacturer spends about one-half of its income on supplies of raw materials.

Production depends on the purchasing department to procure the raw materials, component parts and machinery this required to produce the finished product. The inability to obtain these materials when needed can result in costly shut downs and expensive sales.

Needham (1992), opines that the aim of the purchasing department is to keep costs down, ensure a fast stock turn-over, reduce obsolesce, ensure continuity of supplies and reduce lead times (the internal between the realization of a need and its ultimate fulfillment upon delivery).

However, in purchasing, the manager has to concern itself with four factors namely quality, quantity, price and delivery dates. It is better to have materials on hand than running short of them, though they are costs involved in keeping inventory. However when there are more inventories in store, the producer is tying up capital. Therefore, a balance must be struck between cost of running out of one inventory and the saving that accrues when lower inventories are kept.

2.5.7 MAINTENANCE

The maintenance activities makes for efficient running of the plant/machinery in production by preventing the occurrence of work, stoppages caused by equipment failure, proper maintenance of machines is more critical that attendance of workers. This is because if a key machine suddenly breaks down, the entire plant can be idle. This allows the planning of old machines replacement at the end of their life.

2.6  PRODUCTION PROBLEMS REVISED

It is often argued that the production function in an organization is the most difficult to understand, coordinate and carry out. This function often accounts for the largest allocation of an organization’s resources, so it is essential that managers have strategies worked out to deal with problems enumerated below they arise (Ibid, 1992).

2.6.1 LOW OUTPUT

Many factors may be responsible for the system’s to meet the design standard for output. These include failure of suppliers of raw materials to meet delivery dates or inability to supply materials in accordance with specifications.

In addition, poor co-ordination of production scheduling shows irregular delivery of finished products and this result in low output. As Ball opined, with large back orders, many short runs are made to full orders according to their dates, and the situation is perpetuated. The aversion to longer-range planning and the desire to please everybody that prevalent in some cultures prevent product personnel from neglecting back orders and going to longer production laws for greater output (Ball, 1992).

This re-affirms the need for longer-range planning especially in production involving huge investments or capital intensive.

2.6.2  EXCESSIVE MANUFACTURING COST

Any manufacturing cost that exceeds the budgeted cost is excessive. Over-optimist sales forecasts, unforeseen water or power failure account for the reasons why output may be lower than expected, often resulting in high overhead costs.

2.6.3  INFERIOR PRODUCT QUALITY

The term good quantity is relative. If the product satisfaction the purpose for which it is purchased then the buyer considers it to be of good quality.

Donnelly (1992) outlines the steps in quality-improvement programs as a way of enhancing the product quality;

Definition of quality characteristics

It is important to define quality characteristics by the customer, examining customer preferences and technical specifications. Customer preferences are significant since repeat sale are unlikely, unless a reasonable degree of customer satisfaction is achieved (Donnelly, 1992).