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Full Project – The contribution of inventory control practices to the sustainability of hotel establishment

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CHAPTER ONE

1.0 INTRODUCTION

Hospitality entails cordial reception, kindness in welcoming guests and strangers. Singh (2007) defined hospitality as reception and entertainment of guests, visitors or strangers with liberality and goodwill. Stocks are stores of goods and materials that are held in a hospitality organization, they can be a nuisance, necessity or a convenience (Arington, 2006). Stock can come in various forms such as raw materials, work−in−progress, finished goods and goods ready for sale (Levis, 2009). The managers of hospitality establishments are challenged by paper based system and manual processes to view and control their establishments’ inventory. Ineffective administration and mismanagement of resources in hospitality establishments affect the needed quality delivery, customer care and service which as well have adverse effect on the sustainability of an establishment.

Inventory control represents the physical control and the movement of materials into and out of the storage areas, and it shows how much is needed to be ordered (Bim. 2003). Inventory control eliminates overstocking, resulting to too great a tie up of capital losses due to obsolescence or depreciation. Likewise, stock control eliminates under stocking of materials which results to inadequate follow up on delivery premises. Inventory control ensures that each item delivered from the store is properly accounted for, and any form of pilferage or wastage, is discovered at an early stage. The essence of practicing inventory control is not to be overlooked; the qualifying factor here is that, stock must be maintained just high enough to meet demands and also a constant supply of materials to be available as at when needed. The stock control process focuses attention on factors related to time utility, supply of quantity and quality materials used by the operations of the hospitality industry (Tosdal, 2006). Inventory control procedures are those measures that are adopted to determine how much stock an establishment can hold at a given time and how they keep track of it (Bleigh, 2009). This practice covers stock at every stage of the production process, from purchases and delivery to using and reordering of items. This concept revolves on the fact that stores, being a service oriented department, must provide the entire organization with the right materials that are delivered and issued in the right quantities and quality which must be available at the right time, right place and at the right price (Levis, 2009). The objective of practicing inventory control is to ensure that the conditions mentioned above are fulfilled by providing the information necessary to take appropriate action at every stage of the production process or operation. Inventory control practice is a necessity if the hospitality establishment is to offer their guests a balanced assortment; this means every item held in the store should be controlled. Different hospitality establishments adopt different measures that best suits them, this provides up to date information and also reduce excesses to the nearest minimum (Cooper, 2006). Sustainability is the capacity to endure for humans. Sustainability is the long-term maintenance of well-being which has environmental, economic, and social dimensions, and encompasses the concept of stewardship, the responsible management of resource use (Jacobs & Chase, 2008). Relating this to Inventory control in hospitality industry, it centers on responsible management of resources which will aid in increasing the economic aim of a hospitality which is the profit margin, environmental aim which is the physical environment and service delivery of the hospitality sector and the social aim which is the experience and satisfaction the guests get from the hospitality industry (Wikipedia, 2011). The three pillows of sustainability explained above, when applied in stock control will help the hospitality sector to move forward in the various aspects of its services and existence, as rightly pointed out by Aplewhite (2004), that effective stock control plays a vital role in the smooth and efficient running of hospitality establishments.

Mismanagement of items and low profit margin has become the order of the day in most hospitality establishments. The mismanagement and other adverse effects can be linked to lack of effective control of Inventory of materials for production and operational activities. Most hospitality organizations have not identified stock control as very crucial which has led to such practices as theft, pilferages, shortages, wastages, inappropriate accounting and inadequate record keeping and other loses, as they cannot account for the usage and management of materials like the food items, toiletries, supplies, stationary, production equipment, cleaning and laundry materials etc. This poses a serious problem in terms of limited production and service, low profit margin and inability to meet up with customer/guest demands. The problems associated with poor inventory control is what prompted the researcher to embark on this study to investigate and determine the way forward for the hospitality industry. The main purpose of this study is to evaluate the contributions of Inventory control practice to the sustainability of hospitality establishments in Awka, Abia State. Specifically the study seeks to Identify the stock control methods used in various hospitality establishments in Awka L.G.As; verify the sustainability procedures used for Inventory control in hospitality establishments in Awka L.G.A; determine the effect of Inventory control practice on the profit margin of hospitality establishments in Awka L.G.A.

1.1 BACKGROUND OF THE STUDY

Hospitality industry is one of the leading industries in the world. It contributes to prosperity creation and further economic development of a country; it covers hotel, resorts, and travel as well as restaurant businesses.

These services business are mutually depend increase in tourism will ultimately lead to improvement in resorts, restaurants, hotel including travel industries.

This study basically concerned with assessing the strategies of the inventory control in hospitality. This will consequently access the extent to which stock can be controlled.

Source: Dennis Oscar. “Humanity and hospitality” 2011

Inventory control is a management function that involves planning organizing, directing, coordinating, motivating, staffing and controlling of activities in the store and inventory control.

On the other hand it can also be defined as the art and science of achieving objective of the store in an organization.

A fundamental problem currently faced by hospitality according to Karlin and Zipkin (2009) is the seasonal demand for their products. This problem is very common and concerns a wide variety of products such as food stuff, functions and banqueting and many other applications.

The seasonal demand issue is difficult to access for both the theorist and practitioner. The problem requires the optimal combination of inventory and production rates for each product in each time period to be found; principal question is to determine the product quality in each period so as to minimize the discounted costs of production, inventory storage, and cost sales. This type of demand usually creates more complex problem because firms usually have insufficient capacity to meet demand in high demand period.

This ultimately impacts on planning of production process as a whole.

The main thrust of this study is to map out strategies to solve the problems of seasonality of the perishable goods which is very prevalent in the Nigerian hospitality industry.

The central question here is, how can menu planning guests, and what range of perishable food items can be stored and over what period of time?. As opined by Patrick (2009) combinatorial optimization which means combining planning and inventory control to optimize guest satisfaction in the running of hospitality business remains one of the mathematical challenges.

Strategies directed towards confronting these challenges are many and varied, depending on the methods of meal preparation service and the variety of customer’s satisfaction where stocks are produced independent of orders because there is a need to supply customers immediately with good meals from that stock.

1.2 STATEMENT OF RESEARCH PROBLEM

Most hospitality industry today faces one or more problems. This problem of inventory control practices is common to all hotels hence difficult to manage efficiently.

In terms of perishable foods especially, it affect production planning in the hotels.

Since local storage facilities are virtually absent, there is acute shortage of certain items at certain tune of the season and this is accompanied by serious price fluctuation.

Also the preference of customers affects the planning of the menu to satisfy the guest need.

Therefore, the problems enumerated has necessitated this study on the production planning and inventory control in hospitality in Enugu state using the Nike Lake Resort Enugu. This is geared towards enhancing efficiency in the planning of menu meals service to customer preference and price fluctuation. Otherwise the meals planning would run into problem that will hinder the attainment of stated goals and objectives of the organization.

1.3 OBJECTIVES OF THE STUDY

The main objective of the study is to on production planning and inventory control in the hospitality industry in Enugu State with particular reference to Nike Lake Resort Enugu, to access the process and method the use in production control and inventory

Specifically, the study seeks to;

Determine production planning and inventory control in the hospitality industry.
Assess how Nike Lake Resort Enugu copes with production planning and inventory control in the face of seasonal availability of food items.
Identify methods to serve as a platform for future improvement in the area of purchasing food items and control.
Suggest the possible ways to help in making better production planning and inventory control.

1.4 SIGNIFICANCE OF THE STUDY

Every organization is concerned with the best possible way of improving performance to guarantee sustainable growth that will lead to the achievements of organizational goals. Therefore, the knowledge that would be obtained from this research will assist management of Nike Lake Resort Enugu, manage and assist in their production planning and inventory control.

1.5 RESEARCH QUESTION

In other to complete this research work, the researcher have embarked on, and using a survey method and questionnaire to accomplish this work, the researcher framed out some research questions that will be administered for the respondents. Which are?

How do you determine production planning level and inventory control in the hospitality industry?
How do Nike Lake Resort hotel copes with production planning and inventory control in the face of seasonal availability of food items.
What are the Identified methods and model used in the platform for your future improvement in the area of purchasing food items.
Do you think that the list of suggested methods of production planning and inventory control can help in making better production planning and inventory control in the hospitality industry and to your industry better?

1.6 RESEARCH HYPOTHESIS

The research formulated two possible hypothesis which will be tested in the course of this study.

H1: Production planning and inventory control in hospitality industry enhance profitability.

Ho: Production planning and inventory control in the hospitality industry does not enhance profitability.

In the course of the project it findings were made and recommendations were also developed to enhance profitability.

1.7 LIMITATION OF THE STUDY

In writing the study the writer was constrained by a number of factors prominent among includes:

FINANCIAL CONSTRAINTS: Under this limitation the researcher could not due to financial handicap attain the desired scope and depth expected. And the problems encounter by the researcher is high cost of material which militated against the project work occupied with high cost of transportation which presented the researcher from visiting other branches of the industry together much needed data.

The constraints although time should not be considered as a constraint cognizance must be given to the fact that academic work which was also undertaken by the researcher by which lectures and office duties could be seen to have limited the research to in-depth study.

BUREAUCRATIC CONSTRAINT: under this limitation strong attempt were made to interview or reach top officials failed because of protocol in handling officials engage and procedures in realizing the required data or official’s secrets of the company.

1.8 DEFINITION OF TERMS

Marketing: In 1984 Chartered Institute of Marketing defined Marketing as “the management process responsible for identifying, anticipating and satisfying customers’ requirements profitably”. Kotler and Keller (2006), define marketing as groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others”.

Inventory: or stock refers to the goods and materials include that a business holds for the ultimate purpose of resale

Hotel: According to Hotels Proprietor’s Act of 1956, hotel is defined as an establishment held out by the proprietor as offering food, drinks, and if so required sleeping accommodation, without special contract to any traveller presenting himself, who appears able and willing to pay a reasonable sum for the service and facilities provided and who is in a fit state to be received.

Production planning: is the planning of production and manufacturing processes in a company or industry. It utilizes the resource allocation of activities of employees, materials and production capacity, in order to serve different customers.

Inventory control: is the processes employed to maximize a company’s use of inventory. The goal of inventory control is to generate the maximum profit from the least amount of inventory investment without intruding upon customer satisfaction levels.

The hospitality industry: is a broad category of fields within the service industry that includes lodging, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry.

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