Improving Production Planning and Control through the Application of Breakeven Analysis in Manufacturing Firms in Nigeria

Abstract

The study was on Improving Production Planning and Control through the Application of Breakeven Analysis in Manufacturing Firms in Nigeria. Manufacturing in Nigeria cannot be left out of the global connectivity in technological breakthrough of our time.  Ideals, policies and procedures for achieving global connectivity very often lead to business effectiveness and efficiency. In production planning and control, tools for achieving success are varied. Today manufacturing firms in Nigeria are almost extinct. Poor planning and control of productive systems arise and make operations less efficient. Manufacturing firms fail as a result of operational inefficiency and ineffectiveness. The problem of the study therefore was the incessant closure of manufacturing firms in Enugu urban, Nigeria. The study sought to ascertain the practical application of breakeven analysis in production planning and control; to determine the relationship between the application of breakeven analysis in production planning and control and the frequency or rate of meeting due dates; to ascertain the relationship between the application of breakeven analysis in production planning and control and profit generation and to ascertain the relationship between the application of breakeven analysis and the generation of scrap in manufacturing firms.  The study was conducted using the survey approach. The area of study was Enugu Urban, Nigeria; the idea of choosing Enugu Urban being the growing clusters of firms or industrial parks in urban areas in Nigeria. Two sources of data were utilised in the study: they included primary and secondary sources. The primary sources were personal interview and the administration of questionnaire to the CEOs or managers in-charge of production planning and control in the affected firms. Out of a population of 300 manufacturing firms including block industries, 171 firms were sampled. The sample size of 171 was chosen after applying the Taro Yamane formula for the determination of adequate sample size. Out of 171 firms sampled 150 firms returned the questionnaire accurately filled; that gave 88 percent response rate. The close-ended questionnaire was utilised. The validity of the instrument was tested using content analysis and the result was good. The reliability was tested using the Cronbach’s alpha reliability coefficient. It yielded a reliability co-efficient of 0.82 which was also good. The data were analysed using frequency tables, and simple percentages. The hypotheses were tested using Chi-square test of independence and the contingency table. It was found that a significant relationship existed between application of breakeven analysis and scrap generation; that breakeven analysis could be applied in production planning and control to improve on due dates, profit and to reduce scrap generation. It was concluded among others that the application of breakeven analysis was more likely to lead to efficiency, profit generation, scarp reduction and meeting of due dates. It was recommended that beakeven analysis should be taught in secondary schools and that it should be applied in the short run by manufacturing firms; and that block industries should be more conscious in the application of breakeven analysis in production planning and control.

Keywords: Breakeven Analysis, Production Planning and Control, Global Connectivity, Efficiency.