CHAPTER ONE

INTRODUCTION

1.1     Backgroundof the study

 Inventories constitute the most significant part ofcurrent events of a large majority of companies in Nigeria and indeed manyother part of the world. Because of the large size of inventories maintained byfirms, a considerable amount of fund is required to be committed to them.Therefore, the efficient and effective management of inventories becomesimperative in order to achieve unnecessary turnover or to minimize the costassociated with keeping inventories. The neglect of inventory management andcontrol by a firm will amount to jeopardizing its long run profitability andmay even cause the firm to fail ultimately. Inventory is defined as the stockof any item or material used in an organization. Therefore, an inventorymanagement is the set of policies and control that monitor levels of inventoryand determines the following:-

i.      What level should bemaintain

ii.     When stock should bereplenished.