PRODUCTION PLANNING AND INVENTORY CONTROL IN HOSPITALITY INDUSTRY

Description

CHAPTER ONE

1.0 INTRODUCTION

This research is on Production planning and inventory control in hospitality industry. Recently, high mix low volume production has been accelerated through necessity by the diversification of customers demand. Under these circumstances, having excess stock causes not only the increase in the inventory cost but also decrease in profit because of abrogation of the stock when specification of product is changed. Especially, in the hospitality industry, proper inventory control is indispensable. Therefore, it is necessary to make production planning that minimizes total cost for productions with minimum inventory considering entire industry at the same time.

Source: Odam Anat 2003 Business Management and control

Many of past researches about the production management and inventory for hospitality industry directed to optimize production plan under the conditions of given time to be used and exhausted or amount of production. Therefore, it exists necessity for planning that considers both the production plan and the inventory control at the same time.

Source: Eskow, Dennis. Rising Stock: Integrated Inventory Systems Help Companies Shoot Economic Rapids. 2005.

Heretofore, the inventory control and the production planning in the hospitality industry have been hierarchically decided. That is, inventory control system that is a superior system outputs the production request to product by which amount of inventory fall below reasonable inventory quantity, and the production planning system decide production plan that is based on the production request.

However, such a method cant necessarily optimize total plan.

Source: Haaz, Mort. How to Establish Inventory Levels. 2002

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 production planning and inventory control in hospitality. This will consequently access the extent to which stock can be controlled.

Source: Dennis Oscar. Humanity and hospitality 2011

Production planning and 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 customers 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 seasonal availability of food items 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;

1.Determine production planning and inventory control in the hospitality industry.

2.Assess how Nike Lake Resort Enugu copes with production planning and inventory control in the face of seasonal availability of food items.

3.Identify methods to serve as a platform for future improvement in the area of purchasing food items and control.

4.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.