THE INTRODUCTION OF MY PROJECT:An evaluation of inventory management system of a Solar Energy Establishment, a case study of Agilet Solar Energy Limited, Uyo.

CHAPTER ONE
INTRODUCTION
Overview of the Study
From time immemorial, inventories have constituted the most significant element of the current assets of a large majority of firms around the globe. For any company that sells merchandised, inventory is an extremely important asset. According to Needles, et al (2007: 332) “Managing this asset is a challenging task. It requires not only protecting goods from theft or loss but also ensuring that operations are highly efficient”. Base on the above analogy, the evaluation of inventory system of Agilet Solar Energy Limited tends to be a little bit different from evaluating inventory in a merchandizing or a manufacturing firm, because the subject matter of discussion is a construction firm. As such, what may be inventory for it may not necessarily be inventory for manufacturing and merchandizing firm. According to Anwana (2009:3),
We are made to understand that conventional fuel source have created a myriad of environmental problems, such as global warming, acid rain, smog, water pollution, rapidly filling waste disposal sites, destruction of habitat from fuel spilling. Solar energy system otherwise referred to as photo-voltaic (PV) system does not pose these environmental problems. Today, the majority of PV modules use silicon as their major component. The silicon cells manufactured from one ton of sand can produce as much electricity as burning 500,000 tons of coal. Photovoltaic technology also creates jobs. In 2005, the solar industry directly employed at least 55,000 people in jobs such as research manufacturing development and installations. Also the PV installation market grew 34% worldwide in 2005. The field is growing and there is a need for qualified installation professionals.

According to Wikipedia, (2014:3) “Economists have predicted that photovoltaic will be the most rapidly growing form of commercial energy after 2030, with sales exceeding $100 billions. In fact, the use of solar renewable energy is expected to double by the year 2010, which would create more than 350,000 new jobs in countries in around the globe. Thus, photovoltaic system is no surprise the clean, reliable source of electric power regarded as the future of energy production”. It is on the backdrop of this important and revealing finding that this research was undertaken not just to evaluate the inventory system of the firm involved, but also to create and make recommendation of inventory practices that conforms with the conventional inventory system. According to Weygandt, et al (2012: 220), “the amount of inventory carried by a company has significant economic consequences. Inventory management is a double-edged sword that requires constant attention. On one hand, management wants to have a great variety and quantity on hand so that customers have a wide selection to choose from and items are always in stock. But such a policy may incur high carrying costs, e.g. investment, storage, insurance obsolescence and damage. On the other hand, low inventory levels lead to stock outs and lost sales”.
It should be noted that the fact that the elements of inventory may not necessary be the same between a merchandising, manufacturing and construction firm. As such, it becomes imperative to highlight what these entails in this context. For instance, inventories of manufacturing concerns are made of raw materials, work-in-progress (WIP) and finished goods while that of the merchanding firm embraces whatever that could be procured for resale to customers by way of finished goods. However, the case study which is a construction company that deals with designing, sizing and installation of solar energy for homes, offices, roads and firms etc, its inventory consists of mostly work in progress and finished goods. Based on this fact, it becomes ensuring that the right quantity and quality of inventory is provided at the right time and at the right place. As such this calls for good inventory management.
Just like Horngren, et al (2002: 764) puts it, “inventory management extends to stock valuation or inventory methods, in that a particular method affects income statement as well as balance sheet”. Deducing from the above, it becomes imperative to comprehend that good inventory management is crucial to the success of companies around the globe. To be at the top of the game of business, good inventory management is the key to bothretailing, wholesaling, manufacturing and construction firms. In Agilet, inventory system is integrated with the designing, sizing and installation facet of the firms working life cycle. So it becomes necessary for solar energy firms to strive for inventory control system and imperative for proper stock valuation and consistency in the use of a chosen method, so as to avoid distortion in the financial statements and other books of account. Based on this components, history and works of this research, construction, firms need an orderly inventory valuation system to efficiently and effectively plan and control its inventories in order to enhance profitability measurements.