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EFFECTIVE PROCUREMENT AND PROFIT MAXIMIZATION IN A MANUFACTURING ORGANIZATION

CHAPTER ONE

1.1     INTRODUCTION

Effective procurement is one of the key functions of any manufacturing organization; profit is the excess of return over expenditure in any transaction or service of transaction especially the excess of selling price of goods over their cost or the net income for a given period of time. The word profit to the aforementioned fact, is the ratio of profit for a given year to the amount of invested or to the value of sales. In distance profit to some business experts is the compensation accruing to entrepreneurs for the assumption of risk in business enterprise of distinguished from wages or rent? However; in making the maximization of profit a reality in any business setup, the management team must be ready to harness her strength by making used of her available resources in maximum, implies the uses of the entire latent and uncultivated avenue for possible investment to suppress the environmental threats.

Any cost incurred by a firm may be classed into two groups. Fixed cost and variable cost. Fixed costs are incurred by the business at any level of output, including none. These may include equipment maintenance, rent, wages and general up keep. Variable cost changes with the level of output, increasing as more products are generated. Materials consumed during production often have the largest impact on this category. Fixed cost and variable cost, combined, equal total cost. Revenue is the total amount of money that flows in to the firm. This can be from any source, including product sales, government subsidies, venture capital and personal find.

Profit to an economist is the differences between total revenue and total cost or symbolically it is = TR – TC where represent profit. In view of these, business man, manufacture investors, marketers and what have you must ensure the effective validation of marketing tools and techniques through planning, implementation, monitoring and control to establish an equilibrium between the company(s) available and potential resources and the desire of the consuming populace towards profit maximization actualization. 

Nigerian business organizations conceive and yield to effective procurement in varying degree. Taking a wider look at firm’s different industries in Nigeria, one can conclude that many going concerns do not reach with “Effective procurement and maximization of profit business activities, especially in the area of organizational growth and profit ability level of a firm.

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