Inventory Control Of Manufacturing Companies In Rwanda Case Study

Inventory is a standout among the most essential assets in the companies,especially in manufacturing company.In case of issues identified with stock,the company's business procedures will be disturbed.Numerous Organizations face great challenges in managing inventories.Poor inventory control may result in under-stocking,overstocking as well as high inventory total cost.Inventory control system refers to excess inventory or shortage of inventory by inadequate management practice.The type of inventory control system in practice in any organization depends on many factors among which are economic stability of the place,infrastructure facilities available,transportation network and many more which are called constraints.However,In Rwanda,the size of industry,small,medium,and large scale has a significant effect on both the numerical strength of staff and level of involvement in inventory management of both raw material and the finished products.Organizations use inventory control system not only to ensure materials and products timely availability but also to ensure superior customer service and to achieve competitive advantage.The effectiveness of inventory control is directly measurable by how successful an organization providing service to its customers.Though it has a lot of difficulties in determining the stock levels,a optimal stock level ensures a free flow of materials without incurring heavy expenses in stocking those materials and products.It was therefore important to expand knowledge on inventory control system and lower cost to organizations.Some studies had conducted to related inventory control practices with various aspects of organizations now.The cost of inventory control has been also one of the optimization objectives of organization expenses.The main objective of this study is to assess the effective inventory control of manufacturing companies in Rwanda while considering Sosoma Industry Ltd as case study.Sosoma Industry has to maintain a reasonable stock which can meet to customer the demand without stock out or over sock for cost minimization.In addition,Sosoma Industry should know ordering quantity,including the order quantity,re-order point,and quantity discounts problems,etc.The objective of this thesis is to develop the economic order quantity model that will be used to determine number of units of products to be ordered at a time and the re-order point.The resulting quantity by EOQ for each product is compared to the actual ordered quantity so as to compare whether there is any relationship between them in operational cost reduction.The study used data from Sosoma Industry Ltd.According to the results,ordering numbers placed by Sosoma Industry Ltd before applying the EOQ model was much higher.Inaccurate reorder points result in stock out or stock excess and consequently increasing the total cost of inventory.The results show that the relationship between the EOQ's and the ordered quantities at Sosoma Industry Ltd in terms of cost reduction was significant.Therefore,it was concluded that the ordered quantities at Sosoma Industry Ltd Ire not optimal.Therefore,it is recommended that in order to manage inventory effectively,Sosoma Industry Ltd needs to employ inventory control model such as the EOQ model to obtain reasonable ordered quantities for its products.There are 7 figures,10 tables,and 62 references in the thesis.