PROJECT PROPOSAL

ON

INCREASING PROFITABILITY IN THE HOTEL INDUSTRY THROUGH ASSESSMENT

OF PRODUCTION PLANNING AND INVENTORY CONTROL

BY

DAVID REJIOCE YUBAYUBA

1605012022

BACKGROUND TO THE STUDY

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.

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 and businesses mutually depend on 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.

1
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 customer satisfaction where stocks are

produced independent of orders because there is a need to supply customers immediately with good

meals from that stock.

2
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 stock 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.

In addition, poor purchasing and over buying of materials most especially the perishable items by

some establishment greatly hinders effective store management in the hospitality sector thereby

resulting in poor yield and quality products which consequently affects the desired profit Target

(Kinton, 1995). Wastages are bound to occur as a result of excessive storage. Goods such as

perishable foodstuff, inadequate ventilation, in the store room, moving stock, incorrect storage

temperature, exposure of food materials to vermin are other causes of deterioration (Ajayi, 1990) also

there are also consumable stocks such as office stationary. Economy in the use of office stationary

should be the target of the hold staff.

STATEMENT OF THE 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 affects 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.

3
Also, the preference of customers affects the planning of the menu to satisfy the guest need.

Therefore, the problems enumerated has necessitated this study of assessing the strategies of

production planning and inventory control in hospitality in Lagos state. 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.

OBJECTIVES OF THE STUDY

The main objective of the study is to assess the strategies of production planning and inventory

control in the hospitality industry in Lagos state with particular reference to Sheriff Royale hotel.

Specifically, the study seeks to;

i. Determine production planning and inventory control practices in the hospitality industry.

ii. Assess how hotels copes with production planning and inventory control in the face of

seasonal availability of food items.

iii. Identify strategies to serve as a platform for future improvement in the area of purchasing

food items.

iv. Determine how production planning and inventory control affects hotel profitability.

RESEARCH QUESTIONS

The following research questions guided the study

1. What are the production planning and inventory control practices in the hospitality industry?

2. How does the hotel cope with production planning and inventory control in the face of

seasonal availability of food items?

3. Is there any contributions of production planning and inventory control practices to the

sustainability of hotels?

4. Does production planning and inventory control affect hotel profitability?

4
RESEARCH HYPOTHESIS

For easy analysis of the research study and as a basis for decision making on the research works, the

following hypotheses were formulated;

HYPOTHESIS ONE

H0: Production planning and inventory control does not affect hotel profitability

H1: Production planning and inventory control affects hotel profitability

HYPOTHESIS TWO

H0: Production planning and inventory control practices does not contribute to the sustainability of

hotels

H2: Production planning and inventory control practices contribute to the sustainability of hotels

SIGNIFICANCE OF THE STUDY

The results will be of importance to several parties. First, the result of this study will be useful to all

in hospitality industries. Other restaurant may also utilize the finding of the study for training their

staff about the need for proper production planning and inventory control it can be used by many

hotels and catering establishment in presenting seminar on how resources can be controlled.

Implementation of the recommendation base on the findings of this study will help any of the hotels

to plan properly and control the kitchen and prevent unnecessary wastage of meals. This study will

also serve as reference material for future research.

SCOPE OF THE STUDY

The findings of this study need to be interpreted in light of the certain methodological and conceptual

limitations. The study is limited to the production planning of menu and food items inventory control

in hospitality industry. The scope of the study was limited to Sheriff Royale Hotel, Ikorodu and its

5
findings may not wholly explain the production planning and inventory control practices of hotels.

Further, the findings are based on the use of descriptive statistics and may be different if a more

analytical technique is used to examine the production planning and inventory control measures. The

study will be limited to evaluating the importance and general regard given to production planning

and inventory control practices in the hospitality industry. It would also review the effect of

production planning and inventory control practices on increasing profitability.

RESEARCH METHODOLOGY

The research design to be used in this project is survey design. The reason for using this design is

that it helps the researcher to gain insight into the research topic. The research will be carried out at

Sheriff Royale Hotel, Ikorodu. Hotel staffs will be interviewed through the use of questionnaire. A

convenience sample of 50 subjects will be sampled using the probability sampling technique. The

instrument to be used for this research is the questionnaire. This instrument is preferred because of

its expressiveness in mode data collection and its presentation of uniformity to all respondent

enabling the researcher to have an easy analysis of data. Likewise, the unity that accompanies the

questionnaire which lead respondent to be more open and truthful. The questionnaires will be well

structured with close ended questions. The questionnaires will be personally distributed to the

subjects by the researcher. Simple descriptive analysis like percentage, mean etc. will be used for

statistical analysis. The hypothesis will be tested using chi square test

6
 REFERENCES

Ajayi .K (1990): Costing and Control in Hotel Establishment. Lagos: Alabi Nigeria
Anthony R. N, Dearden J. and Gorindarajan H. (2009). Management Control Systems, 7th
ed, Great Britain: Irwin Publishing.
Applewhite J. V. (2004). Operations Management, 6th ed. New York: McGraw-Hill.
Arington, F. (2006). Food and Beverage Management Operations, 3rd ed. Great Britain: Irwin
Publishing.
Bleigh .W. (2009). Stock Purchasing in the Hospitality Industry, Great Britain: Gower Present
Limited.
Cooper W. (2006). Inventory Proportionality. New York: Prentice Hall.
Fagbulo, S. (2009). The Impact of Effective Stock Control in Hospitality Establishments. Evan
Enwerem University.
Jacobs, F.R and Chase, R.B. (2008).Operations and Supply Management: The Core. Great
Britain: McGraw-Hill/Irwin.
Jessop (1986): Storage and Control of Stock.
Kelvin (1997): Stock Valuation and Control. Great Britain: Irwin
Kent, J. (2002). Effect of Stock Control on Profit of an Organization. American Production
and Inventory Control Society.
Kinton (1984): The Theory of Catering. 5th ed Great Britain: Irwin
Levis Riley, (2009). Cambridge International Dictionary of English (Low Price Edition), New
Delhi: Press Syndicate.
Lillicrap D. (1998): Food and Beverage Service. London: Hodder and Stoughton.
Lockwood A. (1984): People and the Hotel and Catering
Mbabah N. U. (1990): Introduction to Business Management.
O’ Connor, P. (1999). Electronic Information Distribution in the Tourism and Hospitality.
Oxford: Oxford University Press.
Reimer .S. (2010). Introduction to Hospitality, New York: Prentice Hall, Inc.
Siguaw, J.A (2000). Adoption of Information Technology in U.S. Hotels Strategically Driven
Objectives. Journal of Travel Research, Vol. 39. P. 192-201.
Tasli, T. B. (2011). The Management Services Handbook, 8th ed. Great Britain: Longman
Group.
Tosdal O. (2006). Supply of Raw Materials in Manufacturing Industries, 3rded, New Jersey:
Pitman.