NIM Journal Dec2013

JULY - DECEMBER, 2013
A Journal published
by the Nigerian Institute
of Management (Chartered)
Volume 49: Numbers 3 & 4
PAGE 20
MANAGING CHAOS AS DEVELOPMENT

PAGE 24
THE IMPACT OF THE ENVIRONMENT ON THE

MANAGEMENT OF HUMAN CAPITAL
PAGE 42
TOWARDS THE APPLICATION OF OPERATIONS

RESEARCH IN MANAGERIAL DECISION MAKING
VISION
20:2020:
THE PERSPECTIVE OF POWER
GENERATION AND NATIONAL DEVELOPMENT
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VOLUME 49 : Numbers 3 & 4 JULY - DECEMBER 2013
PAGE 20
THE IMPACT OF THE ENVIRONMENT

ON THE MANAGEMENT OF HUMAN CAPITAL
PAGE 24
RAW MATERIAL MANAGEMENT IN

MANUFACTURING ORGANIZATIONS
PAGE 36
TOWARDS THE APPLICATION OF OPERATIONS

RESEARCH IN MANAGERIAL DECISION MAKING
PAGE 42
VISION
20:2020:
3 Management in Nigeria
From the Editor

Achieving 40,000 mega watts by the year 2020.
ne of the major key indices for determining the

overall development of any nation is its
electricity generation and consumption. All
other facets, namely infrastructural, social, economic and
industrial developments are linked to the availability and
utilization of reliable electric power. Nigeria's electricity
demand has continued to increase over
t h e y e a r s . H o w e v e r, t h e p o o r
performance recorded in the power
sector has not only stalled the nation's
development but also impoverished its
citizens. Also, the increasing population
that is not balanced by adequate energy
development programme has become a
major challenge.
It is a well known phenomenon that the
electricity market in Nigeria is facing
myriads of challenges ranging from slow
growth in generation capacity, slow
implementation of the market
deregulation process, interference by
Government, power lines and
equipment vandalization, poor maintenance of existing
facilities and corruption. In an effort to address this state of
affairs, the federal government embarked on an extensive
power reform programmes aimed at ensuring modest but
genuinely realisable improvements in the amount and
quality of electricity supplied to consumers all over the
country. To this end, a realistic, properly considered and
sustainable plan for service delivery in the short and
medium term were outlined. This included the unbundling
of the operations of the Power Holding Company of
Nigeria (PHCN).
Consequently, In 2013, the federal government decided to
hand over the operations of the Power Holding Company
of Nigeria (PHCN) to private operators nationwide. The
citizenry felt that a wind of relief had come their way as this
was seen as the final solution to curb incessant power

supply to millions of household and business concerns as
well as a means to boost the economy, especially through
small and medium scale enterprises (SMEs). But the
reverse seems to be the case on ground as major cities and
businesses still groan under epileptic power supply. A
nationwide assessment on the
performance of the new owners shows
that more still need to be done by these
business outfits to satisfy the yearnings
of Nigerians. One of the reasons given
for this is that the private companies
are not generating power, rather, they
are simply engaged in power
distribution; and the power they
distribute is the power that is
generated by the government.
Secondly, many of those involved in
the electricity distribution do not have
experience about power. They are
strictly businessmen looking for new
areas of business. You can understand
why we are having the problem for
now; because they are in the area that is supposedly not
their own.
It is obvious that the Federal Government of Nigeria would
not be able to fund such enormous investments in view of
the huge capital expenditures involved in the project.
Hence, it requires involvement of investments from the
private sector. The government therefore needs to provide
the incentives and enabling environment for the private
investors to fully participate in generating the target
40,000 mega watts by the year 2020.
OCTOBE
R - DEC
EMBER
, 2012
A Jou
rnal pub
by the
lishe
of Man Nigerian Instd
Volume agement (Ch itute
48: Num artered)
ber 4
PAGE
EDU
12
CATI
ON
AS A
NAT TOOL
REO IONAL FOR
DEV RIENTA
AND ELOPMETION,
INTE
N
GRA T
TION
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
VISION
20:2020:
Introduction
By Professor Rahamon A. Bello, FAEng

University of Lagos, Nigeria.
Power is critical to economic growth and development. Adequate provision of power is essential for national
development as it has a great influence on socio-economic activities as well as the living standards of citizens.
ision 20:2020 recognized that for the Nigerian

economy to become one of the top twenty in the
world, it has to generate and make available to its
citizenry adequate power for economic and social
purposes. The desire of Vision 20:2020 was and is to
increase the power production to meet the demand
progressively; utilizing all forms of available energy
resources in the country.
Currently, less than 50% of the Nigeria's total

population has access to the national grid due to
inadequate transmission and distribution networks.
Also ageing and poorly maintained infrastructure, weak
ion and radial network configuration and overloaded
transformers, result in frequent system collapse, high
transmission and distribution losses and poor voltage
profile.
Most of the power sector infrastructural facilities in

Nigeria were built in the 1970s and 1980s. Due to lack of
maintenance and adequate expansion of the facilities,
the country has had to live with epileptic and limited
availability of electricity supply. In spite of the abundant
energy resources in the country and significant
Government investments in the sector over the last ten
years, electricity supply remains a serious challenge to
Nigeria's socio-economic development.
Figure1 shows a very good correlation between power

consumption in KWH/capita/annum and the GDP in
PPP/capita of a nation, utilizing the data for 134 countries.
A close look at Fig.2 confirms the assertion in Fig 1. The
countries with high GDPs are seen to have higher values of
power production, which definitely translates to higher
level of economic activities.
30000
kWh/capita/annum
25000
20000
15000
10000
5000
0
0
10000
Nigeria
20000
30000
40000
GDP (PPP)/capita
Figure 1. Electricity consumption and GDP in 134 countries of the world
Given Nigeria's available generation of 5,482MW (2010) and an estimated 150 million population, the 136KWH per
capita estimate is a by smally low when compared to:
South Africa which has 40,000 MW for its 50 million people.
Brazil with 100,000 MW for 192 million people.
The US with 700,000 MW for 308 million people.

Nigeria's per capita consumption is just 7% of Brazil's and 3% of that of South Africa (Fig 2).
13,636
United States
8,358
Singapore
6,759
Israel
6,234
United Kingdom
5,110
Trinidad and Tobago
4,848
South Africa
2,474
Jamaica
2,013
Brazil
1,781
China
1,420
Namibia
1,226
Egypt
Zimbabwe
961
Gabon
932
710
Zambia
Ghana
271
Cameroon
214
Nigeria
136
2,000
4,000
6,000
8,000
10,000
12,000
14,000
KWh per capita per annum
Figure 2: Per capita electricity consumption for various countries
POWER SECTOR IN NIGERIA

Generally, electricity has to be generated by one of so many
modes, transmitted from where it is generated to where it
will be used or consumed and finally distributed to each of
the end-user or consumer. Hence, the usual three broad
segments: Generation, Transmission and Distribution.
Power Generation
This involves generating electricity from any of the
available energy resources. Generally, generating plants
make use of water or steam to turn turbines which rotate
electromagnets that are surrounded by huge coils of wires.
The push is transmitted to electrons and consequently
electricity is produced at voltages varying from 11 KV to
25KV. Transformers are located at the generating plants to
step up the voltage to between 138KV and 700KV for
transmission.
Power Transmission
This is the system for moving high voltage electricity from
source of its generation through interconnected
transmission lines. Should any of the networks of lines fail,
another takes over the load. At various points along the
way, transformers step down the transmission voltage at
substations to voltages below 69KV, which feed into the
distribution system.
Power Distribution
This is the final stage in the delivery of electricity to end
users. The system's network carries electricity from
transmission system and delivers it to consumers. Typically,
it is composed of medium voltage (less than 50KV) power
lines, substations and pole-mounted transformers, low
voltage (less than 1KV) distribution wiring and
sometimes meters used for residential and commercial
occupancies.
Color Key:
Black: Generation
Blue: Transmission
Green: Distribution
Substation
Step Down
Transformer
Subtransmission
Customer
20kV and 69kV
Transmission lines
705, 500, 345, 230 and 138kV
Generating Station
Generating
Step Up
Transformer
Primary Customer
13kV and 4kV
Secondary Customer
120kV and 240kV
Transmission Customer
138kV and 230kV
Figure 3: Simplified Electricity Distribution diagram from Generating Station. Transmission elements are shown in
blue while distribution elements are in green.
Table 1. Nigeria's Electric Power Transmission and Distribution Capacity (2010)
TRANSMISSION
DISTRIBUTION
Length of Transmission Lines:
Length of Distribution Lines:
330KV - 4,889.2Km
132KV - 6,319.3Km
Substations:
21 No. 330/132KV - 6,248MVA
108 No. 132/33/11KV - 8,305MVA
33KV - 46,482Km
11KV - 31,785Km
0.415KV - 193,822Km
Substations:
1,078 No. 33/11KV - 10,988MVA
41,477 No. (33/0.415KV & 11/0.415KV) - 17,044MVA
Power Generation in Nigeria

Power Generation Modes.
Nigeria is a country blessed with resources useful for
generating electricity such as coal, natural gas, oil, hydro
and other renewable energy.
Coal
Coal discovery in Nigeria dates back to 1909. Production
rose to a peak of 905,000 tonnes in the 1958/59 with a
contribution of over 70% to commercial energy
consumption in the country. In over 13 States of the
Federation, available data shows that coal of subbituminous grade is available in about 22 coal fields. About
639 million tones was established while the estimated

quantity are about 2.75 billion tonnes. However, the
discovery of fuel in commercial quantities in 1958 and
conversion of railway engines from coal to diesel led to the
fall of coal in the early sixties. It only contributed about
0.02% to commercial energy consumption in Nigeria in
2001. Nigeria's coal can be utilized for power generation,
where available.
Oil
Oil exploration in Nigeria witnessed steady growth over
the past few years. The nation had a proven reserve of 25
billion barrels of predominantly low sulphur light crude in
1999. This increased effectively to 34 billion barrels in
2004 and currently is about 36.5 billion barrels. Nigeria's

capacity was about 2.4 million barrels per day in 2008 and
1.85 million barrels per day averagely in 2012.
Nigeria has four refineries in the downstream oil sub-sector
with a total installed capacity of 445,000 barrels per day and
5001 km network of pipeline to 22 oil depots from the
refineries. Electricity can be produced from oil directly or
from products of the refineries, especially gas oil or diesel
and fuel oils. Vision 2020 is looking at maximizing this
potential for power improvement to meet its goal.
Natural Gas
Nigeria's proven natural gas reserves, estimated at about
187.44 trillion standard cubic feet in 2005, are known to be
substantially larger than its oil resources in energy terms.
Gas discoveries in Nigeria are incidental to oil exploration
and production activities. Consequently, as high as 75% of

the gas produced was being flared in the past.
Natural gas comes either associated with oil or nonassociated. It is the non-associated gas that has largely,
hitherto, been processed for generation and other uses,
instead of flaring. The main gas resources are still largely
untapped.
New and Renewable Energy
Nigeria is endowed with abundant renewable energy
resources, the significant ones being solar energy, biomass,
wind, small and large hydropower with potential for
hydrogen fuel, geothermal and ocean energies. The
estimated capacity of the main renewable energy resources
is given in the Table 2.
Table 2: Nigeria's Renewable Resource Estimate
ENERGY SOURCE
CAPACITY
Large Hydropower
Small Hydropower
Solar Radiation
11,250MW
735MW
Wind
2 4 m/s (annual average) at

10m height
3.5 - 7.0 kWh/m -day
Source: Energy Commission of Nigeria; National Energy Masterplan
Except for the large scale power generation from hydro

resources at Jebba, Kainji and Shiroro which serve as a
major source of electricity, the exploitation and utilization
of the renewable energy resources in the country is very low.
Recent efforts have led to the increasing use of solar energy
resources but others like wind and biomass are currently
limited largely to pilot and demonstration projects.
interruption if it is properly harnessed. The total installed

capacity of these stations is around 1,900MW. More
importantly, Nigeria has a very big potential to generate
several Mega Watts of electricity from hydro. UNIDO
Centre for Small Hydro put the unexplored potential of the
Nigeria's hydro electric power capacity at about
20000MW.
Hydro
In the case of hydro, currently, there are three main hydro
generating stations in Nigeria namely: Kainji, Shiroro and
Jebba in that order, these are stations that could ensure that
the nation gets a very sizeable supply of electricity without
CURRENT STATUS OF POWER GENERATION

In year 2000, power generation capacity was as low as
1,500MW in Nigeria. This was due mainly to lack of
investment in maintenance and expansion programs on the
existing power plants. Table 3 shows additional electricity
to be generated in view of achieving vision 20:2020.
Table 3: Expected Additional Generation Capacity
Station
Kainji
Jebba
Shiroro
Egbin
Sapele
Delta
Afam
Geregu
Papalanto
Omotosho
TOTAL
Available
Capacity
(MW)
470
482
450
1100
180
300
52
414
480
304
4232
With efforts on increasing power generating capacity, there

has been reasonable sectoral improvement as generation
capacity increased to 5482 MW in 2010. However, the
actual daily generation fluctuates between 2000 MW
3700 MW due to inadequate gas supply. Of this power
supply, gas-fired plants contributed about 74% of the
available power. The new power plants significantly added
to available generation capacity. These plants are compact
and flexible in operation with better control and
monitoring devices.
Expected
Additions
(MW)
100
96.4
150
220
90
200
346
1202.4
Total (MW)
2012
570
578.4
600
1320
270
500
398
414
480
304
5434.4
The figures highlighted are however related to the power

generation by PHCN and other identified associates
contributing to the grid. As shown in Fig. 4, a considerable
proportion of electricity is generated by individuals and
corporate bodies to compliment the inefficient services
offered by PHCN. An estimated 6000 MW is generated
via individual and corporate outfits to meet their minimum
demands for electricity.
7,000
6,000
5,000
Megawatts
Hydro
4,000
AES, AGIP, Shell

3,000
6,000
2,000
1,119
1,000
794
Thermal
1,754.7
PHCN
& IPPs
Diesel & Petrol

Generators
Figure 4: PHCN Peak Generation Compared with Capacity of Individual Diesel and Petrol Generators (2010)
S/N
1
2
3
4
5
6
7
8
9
10
NIPP
Calabar
Egbema
Ihovbor
Gbarian
Sapele
Omoku
Alaoji
Papalanto
Omotosho
Geregu
TOTAL
Total Output
562.5
337.5
450.5
225.0
450.0
225.0
960.0
675.0
451.0
434.0
4770.5
In spite of the huge and diverse

endowed energy resources in
Nigeria, there are only two
major resources that are
exploited for electricity
generation in Nigeria namely
gas which contributes about
68% on average, and water
which generates about 31% of
electricity supply.
Table 4 Capacity Output of the NIPPs
Figure 5 gives a pictorial view of actual PHCN generation capacity and associated generation from other sources with
projection to 2020.
45,000
40,000
35,000
30,000
Megawatts
25,000
25,000
Gas, Transmission & Build Gap
Construct?
Gas & Transmission Gap
20,000
35, 000
Actual Generation
15,000
10,000
5,000
-
4,000
Unconstrain?
6,000
Maintain?
PHCH + NIPP in 2011
In spite of the huge and diverse endowed energy resources in

Nigeria, there are only two major resources that are
exploited for electricity generation in Nigeria namely gas
which contributes about 68% on average, and water which
generates about 31% of electricity supply. The national
electricity grid comprises of three (3) hydro, seven (7)
government-owned and three major IPP-owned thermal
plants, with a total available capacity of 5,482MW as at
2010. However, the level of generation fluctuates due
primarily to gas supply constraints. The available capacity is
2020 Target
inclusive of the power generated by the three major

Independent Power Producers (IPPs). Table 4(b) shows
current capacity output of the NIPP.
There exist virtual independent and potential power
generating facilities at various locations which are unused
and untapped because of absence of synergy between
Ministries of Water Resources, Mines and Steel
Development and Power. Examples are Dadin Kowa Dam
(30MW), Oyan Dam (9MW), ALSON (540MW).
Electricity Supply Mix

Nigeria
Power
Generation
by
F u e l Ty p e
1.20 %
31.28 %
67.53 %
Coal
Hydro
Other Renewables
Nuclear
Natural Gas
Oil, Diesel
Figure 6: Power generation by type
Figure 6 shows the current electricity generation pattern

by resource. Large hydro accounted for about 31.30% of
electricity generation capacity while natural gas accounted
for 67.5 and the balance of 1.2% through other resources
as at 2005. In a study conducted by A. S. Sambo on
Matching electricity supply with demand in Nigeria
seven different fuel types were considered. These include

natural gas, large hydro, coal, nuclear, small hydro, solar,
and wind. Oil was considered to be very expensive and was
not used in the optimization. The shares of the different
power generation technologies in the total installed
capacity for the Reference Case are shown in Table 5.
Table 5: Future Installed Electricity Generation Capacity By Fuel (Reference Case), %
Fuel Type
Coal
Gas
Hydro
Nuclear
Solar
Wind
2010
0.0
78.6
21.3
0.0
0.1
0.0
The share of hydropower (large and small) in the total instal

capacity could decrease from 31.30% in 2005 to about
13.6% in 2020, while the share of natural gas based power
capacity could decrease from 68.30% in 2005 to 78.6% in
2010 and thereafter decrease to 53.5% in 2020. Coal and
nuclear, which are not used for power generation at all at
present could account for 13.8% and 5.3% by 2020,
respectively. Solar and wind are also projected to account for
11.0% and 2.9% respectively by 2020. The High Growth
and Optimistic Scenarios follow similar patterns.
ISSUES AND CHALLENGES
The key challenges facing the Nigerian Power Industry are as
follows;
2015
9.9
48.5
18.9
9.4
13.1
0.1
2020
13.8
53.5
13.6
5.3
11.0
2.9
I. Inadequate power generation capacity

In comparison to other countries, Nigeria's installed
capacity is grossly inadequate. As at 2010, only
about 3,700MW was available for a population of
140million people due to various reasons including:
Gas supply constraints
Inadequate maintenance of equipment that stems

from procurement constraints, dearth of skilled
maintenance personnel and the dependence on
imports of parts and foreign experts to effect
repairs and overhauls.
II. Gas Supply
Considering Nigeria's reliance on gas for the thermal
stations which is currently estimated at about 74%,
the frequent gas supply disruptions have been primarily

responsible for power load shedding across the country.
The main reasons for the disruptions were:
Quality of gas which is sometimes delivered

with condensates.
Non implementation of the gas master plan
leading to inadequate gas infrastructure for the
existing power plants
Inappropriate gas and power pricing structure to
support investment in domestic gas supply.
Vandalisation of gas infrastructure
PHCN's recurring debt to NGC
Lack of coordination between agencies of the
Ministries of Power and Petroleum
III. Sector Reform

1. Industry regulation
The National Electricity Regulatory Commission
(NERC), saddled with the responsibility of regulating
the power industry, has to be properly empowered and
enabled to carry out its functions. The independence of
the regulator also needs to be strengthened in order to
give confidence to investors. This needs to be addressed
to create a viable and competitive power sector. The
success of this is what will make or mar the effective
development of the sector.
Power losses
(% of generation)
2. Industry and Market Structure

The implementation of the Electric Power Sector
Reform Policy has introduced a number of new players
in the power industry. NERC has licensed thirty one
(31) companies for generation, transmission and
distribution.
3. Inappropriate Electricity Pricing
Nigerian electricity tariffs have to reflect the costs of
generation, transmission and distribution to ensure

stability and attract investors. Nigerians, who
currently generate supplementary power, pay much
higher prices for electricity. Generation with the use of
diesel, if efficient, is at about N40/KWh, much higher
than what would be paid to a more efficient power
sector.
4. Commercial framework to support private
investments
Although the implementation of the Power Sector
Reform Program is well advanced, the appropriate
c o m m e rc i a l f r a m e w o r k t o s u p p o r t p r i v a t e
investments needs to be clearly spelt out and the
framework made attractive enough to investors.
In order to proceed with the reform program, it is
necessary to develop a comprehensive action plan to
holistically implement the reform program as
encapsulated in EPSRA 2005.
IV.
Transmission
Inadequate Transmission Network
The transmission network is overloaded with a
wheeling capacity which is currently estimated at
5,000 MW. It does not have adequate voltage
profile, dispatch and control infrastructure, grid
network, has frequent system collapse, and
exceedingly high transmission losses. Access to
electricity services is low.
Obsolete and Inefficient Transmission and
Distribution Equipment
Significant portions of the transmission and
distribution network are obsolete, especially in the
major cities. The transmission and distribution
losses (figure 7) are of the order of 40%.
50
40
Figure-7: Power Losses as a

percentage of Generation
30
20
Source: National Energy Data Bank,

www.nationalenergydatabank.org
10
0
1970
1980
1990
2000
2010
VI
Vandalization of power assets
The incidence of vandalization has
significantly impacted negatively on grid
equipment and capacity development in the
sector at all levels. Vandals target various
equipment from distribution flow voltages
of 415v to 330Kv super grid levels. These
include transmission lines and transformers
at distribution level. Usually these vandals
pilfer the distribution transformers, line
conductors, insulators and other line
equipment that are resold to the grid on the
open market.
OBJECTIVES, STRATEGIES AND
THRUSTS OF VISION 20:2020
The policy thrust of the medium term plan of
vision 20:2020 envisages a power sector that
efficiently delivers sustainable, adequate,
qualitative, reliable and affordable power in a
deregulated market while optimizing the on,
off grid energy mix and a technologically
driven renewable energy sector that
harnesses the nation's resources to
complement its fossil fuel consumption and
guarantee energy security.
The key strategic objectives for the first

medium term Implementation Plan (2000
2013) were as follows:
1. To increase generation, transmission
and distribution capacity for adequate
a n d s u s t a i n a b l e p o w e r s u p p l y.
Generation of 16,000MW by 2013 was
envisaged.
2. To have an optimal energy mix of Gas
fired plants 12,730MW, Coal 900MW,
Nuclear 0MW, Hydro 2250MW with
other renewable i.e. wind 10MW, Solar
10MW and Biomass that can give a total
of 16,000MW by 2013 - using
appropriate technologies.
3. To encourage local production of inputs
for Power sector development using
local materials.
4. To reduce wastage of electricity by
promoting efficient practices through
introducing demand side management,
publicity, encourage use of energy saving
equipment.
5. To promote effective utilization of coal
to complement the nation's Power needs
and ensure the much-needed Power
generation mix.
6. To harness a significant contribution of
hydropower potential for electricity
generation with the mini and micro
hydropower schemes developed for
electricity extension to rural and
remote areas.
7. To ensure a significant contribution of
the wind energy to electricity generation
mix in the areas feasible.
8. To make effective use of the solar energy
resources for electricity generation,
particularly in the rural and remote
areas.
WAY FORWARD
The first medium term for the vision
20:2020 is virtually over. However, all hope
is not lost with the power sector. Noting the
There is low
human
capacity in
the Industry
and there is
need to
enhance
human
capacity
development
in the
Nigerian
power sector.
In order to
address this
challenge,
the reform
proposed a
National
Power
Training
Institute,
similar to the
Petroleum
Training
Institute
V. Low level of human capacity

development
There is low human capacity in the Industry
and there is need to enhance human capacity
development in the Nigerian power sector.
In order to address this challenge, the reform
proposed a National Power Training
Institute, similar to the Petroleum Training
Institute, which was set up to take over the
operations of the existing training schools of
PHCN. The Institute should be adequately
funded to discharge its mandate.
Development of the specific high-level skill
requirement should immediately commence
so as to be able to meet the needs of the
sector, when fully open to the private sector.
Full advantage should be taken not to repeat
the experience with the oil and gas sector and
ensure the jobs available are taken by
Nigerians.
socio-political terrain and the usual attitudes towards

government programmes, a lot of progress has been made
in the implementation plan for the power sector. The major
bottleneck has to do with the unbundling of PHCN, which
has taken the whole of the first medium term and all is yet to
be fully achieved. The recent release of funds for the PHCN
pensioners as well as the conclusion of the transfer of some
of the Gencos to the private sector may just set the pace for
an accelerated development in the sector.
transmission and distribution capacities by

3040MVA at 132/33KV and 5250MVA at
3 3 0 / 1 3 2 K V a n d 3 5 4 0 M VA ( 3 0 0 9 M W )
respectively by December 2011 and much more by
2013 should be hastened.
(iv)
Construction of Additional Gas Supply

Infrastructure
In order to realize the power generation target,
urgent need for additional gas resources had been
established and a few projects identified or
earmarked to mitigate the shortfalls. The
completion of those projects and additional ones
would be essential to move near the targets of the
power needs in Vision 20:2020. These include:
Development of gas resources from

Obiafu/Obrikom fields held by Nigerian Agip oil
Company (NAOC)
Construction of a 100km 48 pipeline for gas

evacuation through the East-West inter-connector
gas pipeline from Obiafu/Obrikom in the East to
Oben node in the West is needed to meet the high
demand in majority of the power plants in the
western part of the country.
Phase I project of gas pipeline construction of
about 400Km through Calabar-UmuahiaAjaokuta to supply gas to the power plants in the
Eastern part of Nigeria such as Alaoji, Geometric
power plants etc.
Hence, efforts would need to be put at:

(i)
(ii)
(iii)
Intensifying the Implementation

of the Power Sector Reform Program, i.e.
Improvement of industry regulation with specific
reference to capability, capacity and the
independence of NERC.
Maintenance of viable electricity and gas pricing
that will encourage and guarantee financial and
capital investment.
Conclusion of the privatization of the PHCN
successor distribution and generation companies.
Feasible incentive scheme backed by policy to
encourage private sector investment in generation
and distribution.
Conclusion of the fate of TCN to be sure of a
robust and operationally efficient transmission
network.
Financing institutional and market systems that
will support power procurement between
generation companies and distribution companies
should be put in place. Empowerment should be
given to the office of the market operator to
commence shadow trading.
Overhaul and Rehabilitation of Existing Power
Plants
The overhaul and rehabilitation programmes of the
existing thermal and Hydroelectric Power plants
station should be speedily concluded and
privatized accordingly.
National Integrated Power Projects (NIPP)
The completion of the on-going National
Integrated Power Projects (NIPP) which were
expected to contribute about 4,770.5MW of
electricity to the national grid and increase the
Always read
Management in Nigeria Journal
ER , 2012
R - DECEMB
OCTOBE
d
publishe
Institute
A Journal
Nigerian (Chartered)
by the
ent
4
of Managem
48: Number
Volume
PAGE
TION
CA
FOR
EDA U
TOOL
AS ONAL
N,
NATI IENTATIOT
REOR LOPMEN ION
DEVEINTEGRAT
AND
12
(v)
(vi)
(viii)
(ix)
(a)
(b)
Upgrading of Facilities at the National Power

Training Institute
The middle level manpower development for the
sector would be largely from the newly established
National Power Training Institute, whose upgrade
should be completed to a world class standard. A
complimentary high-level skill development should
also commence through specialized Masters
degrees in aspects of power generation,
transmission and distribution. These should jointly
be mounted by universities and the power servicing
companies.
Independent Power Producers (IPP)
Development Program
Nigeria government will have to provide incentives
such as pre-approved permits, tax holidays, off take
guarantees, model form PPAs, GSPAs etc. to
achieve the power generation target needed to
achieve the objectives of Vision 20:2020. As
highlighted in Figure 5, the bulk of the power
generation needed to meet the needs of the vision
will have to be through the IPPs. Hence, a focused
effort to encourage the development of
Independent Power Projects (IPPs) in the country is
essential.
Utilisation of other Energy Resources for
Adequate Power Mix
In order to enhance energy security and
sustainability through the diversification of
feedstock for power generation, the use of coal and
other renewable energy resources hitherto unused
(wind, solar, biomass) have to be fully deployed in
partnership with the private sector.
Full Exploitation of the Hydroelectric
Resources in the Country.
Hitherto, hydroelectric power is the second largest
source of power in the nation after the gas-fired
plants. Developments in this area are dual:
Completion of the Zungeru (700MW) and the
Mambilla (2600MW) Hydroelectric Power
Projects which could add a total of 3300MW to the
grid.
The installation of turbines in existing dams to
generate electricity should be a priority since these
facilities are near completion.
CONCLUDING REMARKS
It has been clearly shown that provision of electricity is key
t o e c o n o m i c d e v e l o p m e n t a s t h e re i s d i re c t
proportionality between power generation in an economy
and its level of development. No nation can thrive and
keep its workforce in jobs without adequate level of power
generation and provision. Entrepreneurship and SME
development can be maximized with adequate power
provision.
The Vision 20:2020 plan, as it relates to power, set out to
articulate the path to achieving adequate power supply for
Nigeria. Its first implementation plan spanning 2010 2013 seems to be far behind its target of the provision of
16000MW of power by 2013, albeit with appreciable
power mix. However, the major hurdle to the vision's
realization, which is the full involvement of the private
sector in the generation, transmission and distribution of
power appears to be on course, even though behind in
time frame.
The eventual solution to the Nigerian power problem will
involve the generation of power from resources (coal,
wind, solar, nuclear, biomass, etc) as at where they are
available in the nation and not 100% reliance on
generation from only natural gas and hydro resources.
This will ensure security of supply.
There has to be synergy between Ministry of Power and
that of Petroleum Resources to ensure adequate gas
resources for power generation by the existing plants and
new ones that are bound to come up to meet the demands
of the vision. Key projects like the East West pipeline and
the gas processing plants must be scheduled to meet the
needs of the power agenda. Similarly, synergy must exist
between the Ministry of Power and the Ministry of Water
Resources to harness power from the existing dams in the
nation.
More importantly, the framework for appropriate gas and
electricity pricing as well as power purchase must be
without blemish. The regulator, NERC, must be
independent and be allowed to play its role for a vibrant
power sector which is what could and would drive the
economy to take it to be one of the best twenty (20) in the
world, not far beyond 2020.
REFERENCES
*
Ebewele, J. O. (2011): The challenges of power generation in Nigeria, Paper delivered at the Summit on Energy and sustainable economic
growth.
Goldwyn,D. (2003): Power sector reform review, World Bank Operations Evaluation Department (OED), [on line]. Available:
http://www.worldbank.org/oed
Labo,H.S. (2010); Current status and future outlook of the transmission network, investors' forum for the privatization of PHCN successor
companies, [online]. Available: http://www.nercng.org/tcn
Owonubi,O. U. Equere, A. Adelakun, A. Solanke, T. Oluwakiyesi, A. Idowu and R. Ahmed; 31 (August 2010):.Nigeria-power sector reform
roadmap, Nigeria Vetiva Flashnote, [Online] Available: http://www.proshareng.com/admin/upload/reports/VetivaResearchFlashNote
Oluseyi,P. O.(2012) "Evaluation of the Roadmap to Power Sector Reforms in a Developing Economy, Proceeding of European Energy
Market (EEM) conference, Florence, Italy, May 10-12, 2012.
Sambo,A. S. (2008):"Matching Electricity Supply with Demand in Nigeria", International Association of Energy Economics, 4th Quarters pp
32-36. [online]. Available: www.iaee.org/en/publications/newsletterdl
Shettima,A.(2011) Market development in the Nigeria Electricity supply Industry (NESI),. [online]. Available http://www.nercng,org/tcn
Nigerian Electricity Regulatory Commission(NERC), The Grid Code for Nigerian Electricity Transmission System, The Grid Code version 01,
[on line].Available: http//www.nerc.ng.org/tcn http://en.wikipedia.org/wiki/Electric_power_distribution
NIM
NIGERIAN INSTITUTE
OF MANAGEMENT
(CHARTERED)
NIGERIAN INSTITUTE OF MANAGEMENT

(CHARTERED)
Management Excellence
Since 1961
The President & Chairman of Council,
DR. NELSON U. O. UWAGA, mni, FNIM, FPSN

on behalf of the Institute, invites you to the
2014 CENTENARY DISTINGUISHED

MANAGEMENT LECTURE
holding at the
SHEHU MUSA YAR'ADUA CENTRE , ABUJA
on Thursday, 10
Theme:
RESETTING NIGERIA,
APPLYING TRANSFORMATIONAL
DISCIPLINES
TH
JULY, 2014 at 11.00 am.
GUEST SPEAKER:
DR. (CHIEF) L. E. A. AIMIUWU, FNIM, CNIM, OON
(The Osayuwanoba of Benin Kingdom)
World renowned transformation strategist and planner
R.S.V.P
Engr. M. K. Sulaiman, FNIM
Registrar/Chief Executive
08037185477
NIM VISION: To be the SOURCE and SYMBOL of Management Excellence

MANAGING
CHAOS
AS DEVELOPMENT
By Mallam Nuhu Ribadu

Principal Partner, Ribadu and Partners, Abuja
Abstract
The discussed the centrality of management in the evolution of
a livable community, in the organization of states and in the
architecture of national development. In order to drive home
the message on national development, it raised some
fundamental questions such as: Why is our national
development effort since independence unable, till date, to
support a decent life and a promising future? Why are all the
symbols of promised economic growth suddenly stunted and
even in reverse gear? Have we truly given thought and
sufficient reflection to the meaning and scope of development
and management? It called on the NIM to be part of Nigeria's
Management Mix as the best people to lead the nation are the
professional managers.
Development is strictly about the transformation of

society. The transformation of society is not just about
slogans, they have to be coded in the values of direction.
Transformation must be about what kind of society we
seek to build, and for what goals and purposes. This is the
only way that transformation acquires its true meaning,
and that is why development experts insist that
transformation is also a process mechanism that affects
not only what we do, but how we do it.
An accurate conception about Nigerian development is
essentially about quality of life issues; issues such as
poverty eradication; peace and security, true and broad
health care and education beyond basic literacy. It is also
about economic security, the creation of safety nets, a
democratic, equitable and sustainable development.
Introduction
Development is certainly much more than crunching
GDP figures, drilling oil, erecting skyscrapers or even
blindly accepting the western economic theories of
privatization, stabilization and liberalization.
Many Nigerians are frustrated about the failure of

development on our shores. What many have failed to ask
however is how they understand the concepts and the
values that give development its meaning. The Indian
economist and philosopher, Professor Amatya Sen makes
Why is our
national
development
effort since
independence
unable, till
date, to
support a
decent life and
a promising
future? Why
are all the
symbols of
promised
economic
growth
suddenly
stunted and
even in reverse
gear? Have we
truly given
thought and
sufficient
reflection to
the meaning
and scope of
development
and
management?
the important point that democratic values,

as much as economic values are critical in an
accurate conception of development.
These key in with the vision of the
American Nobel Prize winner, Joseph
Stieglitz who definitively affirms that
words like openness, partnership and
participation, women empowerment, and
environmental health carry in their innards,
a theory of development, as well as evidence
that can lead to more successful
development efforts.
Management in Nigeria:
The question is to look down the passage of
time and ask why half a century after
independence Nigeria remains a near
destitute nation. Whichever way it is
viewed, management has received a bloody
nose in the country, and those who insist
that our tribe of managers cannot escape
the humiliation of failing to provide
leadership appear to be right. We need to
just look around ourselves, recall our last
visit to a true factory, take a broad view of
many of our national monuments, even
colleges, health centres, car assembly plants,
steel mills, agricultural projects and the
endless lists of failed national institutions.
Undoubtedly there is a major management
deficit in the land and the result is that the
country is far away from where it ought to
be.
Nigeria's problem is not with its laws. The
amendment to Nigeria's Constitution and
other laws alone would not take the nation
to the desired destination. The problem is
largely that of management. Bad managers
cannot operate the best of laws, the best of
businesses and the best of countries. The
country's management problem did not
begin today. Management is the act of
getting people together to accomplish
desired goals and objectives using available
resources efficiently and effectively.
Flowing from this definition, the questions

are: how efficiently and effectively have the
God-given natural resources been used to
uplift our great country? How well have the
talents and endowments of Nigeria's
human resources been harnessed to put the
country on the path of sustainable
development? How well have we managed
ourselves as a giant in Africa and an
important entity in the comity of nations?
While pondering over the questions and
making deductions, the immense damage
and huge cost that poor leadership and
management have led Nigeria to socio,
political and economic failures should be
visited. These are giant setbacks like more
than three decades of military dictatorship
in Nigeria polity, the brutal civil war, the
phenomenal misuse of huge oil resources,
the incessant ethnic and religious
intolerance, the monumental corruption,
the massive brain drain and now the bitter
experience of terrorism on our own
homeland.
Need for New Management Paradigm:
Are our management assumptions really
right? It is said that once the assumptions of
social science are wrong, the analysis is
destined to a fatal failure. The father of
modern management science, Peter
Drucker said, The basic assumptions
underlying much of what is taught and
practised in the name of management are
hopelessly out of date. As a challenge to us
all, we cannot afford not to think of an ideal
management model for ourselves that is in
tune with our country's political, economic,
social and cultural realities. Hence, the task
of the Nigerian Institute of Management.
Martin Meredith, author of the classic
work, The State of Africa, noted aptly that
mismanagement and corruption in our
country is as old as our independence, if not
older. He asserted that: In Nigeria, the first years of

independence became an orgy of power being turned into
profit. The advantages of political office were used at
every opportunity by Nigerian leaders to accumulate
empires of wealth and patronage with which to improve
both their personal and their party's fortunes. Using
public resources, party and government bosses were able
to reward their supporters and friends with jobs,
contracts, loans, scholarships, public amenities; indeed
any favour that came within their purview.
He added that: Power itself in effect came to rest on the
ability to bribe. Parties, once in power, moved quickly to
amass a fortune from public funds large enough for them
to be able to win the next election; a network of banks,
businesses and financial structures were set up to support
this objective. Parties that did not command state
resources simply stood no chance of winning elections.
Furthermore, he submitted that: Between 1958 and
1962, for example, the Action Group government in
Nigeria's Western Region invested about 6.5million GBP
in the National Investment and Properties Company, a
business which had four party leaders as its directors. In
the period between April 1959 and November 1961, one
of the directors gave 3.7million pounds to the Action
Group in the form of special donations. Northern
politicians ran a similar spoils system. A study of thirtynine investment and loan projects of the Northern
Nigeria Development Corporation undertaken in 1966
showed that the biggest borrowers had been the big men
of the Northern government.
From the foregoing, it could be seen in horror that
Nigerian leaders began to mismanage the country right
from day one. The commanding vision of development
was not even part of the bargain. A little comparison of
Nigeria and Tanzania at independence could be made to
underline what good and bad management can do to a
country. Tanzania is younger than Nigeria, becoming
independent a year after in 1961. Zanzibar, its semiautonomous region, got independence in 1963. But
because of the quality of their managers, they foresaw
strength in unity and worked extremely hard, in spite of
their religious and cultural differences, to become one
country the United Republic of Tanzania in 1964. The
country grew stronger, more prosperous and ended up

avoiding military coups, civil war and disintegration. It
became the bastion of peace and stability in a very restive
region, even turning out to be saviours to its tumultuous
neighbours.
Tanzania had the same kind of challenges Nigeria had at
independence. But its leaders had better managerial
know-hows. Nigeria is not that lucky with its managers,
and the rest is history. The first wrong steps were taken
and the country is paying dearly for them ever since.
Effects of Mismanagement
The point has been made earlier about how so many years
of mismanagement and inept leadership has led to the
social and political dislocation in the country. If we were
to subject this result to the standards of strict business
judgments, there ought to be consequences for this type
of result. Every manager knows that his or her longevity
at the head of a corporate organization is as certain as the
continued satisfaction of the shareholder to executive
performance.
Apparently, the mismanagement of Nigeria has led to the
extinction of institutions of national significance and
pride such as Nigerian Airways, National Shipping Lines,
Steel Rolling Mills, NITEL, Car Assembly Plants and
even the national soccer team, the Super Eagles, which
used to be the symbol of the nation's collective unity and
pride, that some Nigerians now refer to as Super
Chickens. Poor managers that we are, we have
mismanaged our natural resources, particularly the oil
that is the cash cow of the national economy today, to the
extent that most observers and commentators of the
industry now believe oil is a curse on Nigeria.
The Managers Nigeria Desire
The central challenge is to identify how we all can
effectively respond to our daunting challenge of
management and development. Development will
continue to elude us if we cannot deploy a new generation
of managers that will interpret the challenge of our failure
as the failure of current management practices.
The community must support the ennoblement of man
and its resources. It must be an empowering community
of equality and justice where values of collective and
A Managerial Model for Nigeria

Researchers at the Harvard Business School, concerned
at the failure quotient of corporate organizations in the
United States, came up with new markers of
management vision for the new age. They proposed that
the businesses of the future that will endure and last must
be guided by the following principles: Eliminate formal
hierarchies; Reduce fear and increase trust; Exploit
diversity; Expand employee autonomy; Unleash human
imagination; Encourage passion among employees; Use
lofty goals such as truth, love and justice to inspire
employees instead of mundane ones such as
differentiation or focus.
The NIM must challenge the country in the face of the
current climate of failure in many of our institutions with
new values for the future. If we have lost the past decades,
but hope to refocus, it is imperative that new values of
leadership and management should guide our next steps.
The notion that Nigeria's geography, race or culture has
anything to do with its current situation is not tenable.
The examples of Nigeria's neighbours and sister nations
sufficiently suggest that we can and should try harder. We
need to learn some management lessons from some
countries on African continent and then formulate an
ideal management system for the country. A bit of
Tanzania (how to build a nation out of a country), a bit of
Botswana (the sharing of resources accountability and
transparency) and a bit of Rwanda (how quality
leadership pulls a country back from the brink and puts it
on the path of sustainable development with the highest
development indices in Africa. Certainly not to forget
Ghana, Nigeria's cousin in the region, that is showing on
a daily basis that size and wealth have nothing to do with
development and progress.
The Place of NIM In the Nigeria Management Mix
A management revolution is urgent if we are to gain the
We need to just look around

ourselves, recall our last visit
to a true factory, take a broad
view of many of our national
monuments, even colleges,
health centres, car assembly
plants, steel mills, agricultural
projects, and the endless lists
of failed national institutions.
Undoubtedly there is a major
management deficit in the
land, and the result is that the
country is far away from
where it ought to be.
individual progress are an abiding faith. The manager

Nigeria desires must be one with a national ethos, not a
sectional jingoist, he must be a competent, modern,
honest, God-fearing, compassionate, benevolent,
courageous and firm, confident, articulate, great team
builder. Presumably, the Nigeria Institute of
Management has an unusual ball in its court.
decade ahead. Today we are at best managing chaos and

that is not a viable development model. However, it can
also be an opportunity to turn failure to success. If we put
in the will and the determination we shall and can make it.
The history of our nation and of the components of the
larger nation has shown that we have the capacity to pull
back from the brinks and make impressive wins. The
most salutary example is how we managed to rebuild
after a nasty civil war and still kept the faith of a united
nation aglow. This should be the focus of the NIM. It
should inspire Nigerians to know that there is a way out
of our current failings and the alternative in the new
century is that failure cannot be an option. Nations and
societies that cannot put the challenge of development, of
leadership and of management at the front burner, will
atrophy and vegetate. The easy way out is to find a way
out of the endemic corruption that has choked the breath
out of Nigeria's purpose to progress and the best people
to lead the nation in this march are the professional
managers.
THE IMPACT OF THE ENVIRONMENT ON

THE MANAGEMENT AND PLANNING OF
HUMAN
CAPITAL
BY
Dr. WURIM, BEN PAM
(Assistant Chief Accountant)
National Directorate of Employment, PlateauState.
ABSTRACT
The environment in which an organisation finds itself
considerably dictates the way and manner in which the human
capital of the organisation is planned and managed. The
environment consists of a plethora of forces (environmental
challenges) that exert varying degrees of pressure and influence
on the planning of human capital. The paper investigated the
factors militating against the planning and management of
human capital planning in public organisations. Three
hypotheses were drawn and tested based on the data gathered
through a questionnaire. The survey investigation method was
used in collecting the primary data for the study. The sample
consisted of 349 middle level management staff of five public
sector organisations in Nigeria. The results showed that the
planning and management of organizational people is
significantly influenced by political influences, traditional

rulers and military rulers; globalization, economic meltdown
and technological changes; and the corporate strategic plans
and objectives of the organization. Based on the
aforementioned, the paper concluded that the environments in
which organisations find themselves contain key trends and
forces that have potential impact on the management and
planning of human capital. These factors possess both
opportunities and threats which, if well harnessed and checked,
can be great potential for public sector organisations. The paper
recommended advocacy by Human Capital Planning (HCP)
managers to influence detrimental laws that affect or influence
HCP; training programmes and updates on technological
changes and the need to harmonize HC plans with corporate
strategic plans.
THE IMPACT OF THE ENVIRONMENT ON THE MANAGEMENT OF HUMAN CAPITAL
Human capital is a key economic resource which demands

the same attention from its enterprise as planning its
finance, equipment, raw materials, production or services,
sales, investments or profits. Human capital has been
defined as the stock of productive skills and technical
knowledge embodied in labour. In order words, human
capital comprises of expertise, dexterity, talent, craft,
aptitudes and abilities, and understanding. Without
people, organisations cannot exist.This is because it is the
knowledge, skills and abilities of individuals that create
value to the organization (Armstrong, 2003). Davenport
as cited in Armstrong (2003:353), observed that people
possess innate abilities, behaviors and personal energy.
These elements make up the human capital they bring to
their work. It is they, not their employers, who own this
capital and decide when, how and where they will
contribute it.
Human capital represents the human factor in the
organisation; the combined intelligence, skills and
expertise that gives an organisation its distinctive character.
The human element of an organisation are those capable of
learning, changing, innovating and providing the creative
thrust which if properly motivated can ensure the long term
survival of the organisation (Bontis, et al, 1999: 391-402).
In summary, all the workers or employees of an
organisation form the human capital of that organisation.
Human Capital Management (HCM) and Human Capital
Planning (HCP) are two vital activities often associated
with human capital and organizational performance. While
human capital management is a management function
concerned with the recruitment, selection, training and
development of people in an organisation, (Aswathappa,
2005: 6), human capital planning is the process by which a
firm ensures that it has the right numbers and kinds of
people in the right places at the right time, doing things for
which they are economically most useful (Fammularo,
1986:10).
The assumptions underpinning the management and
planning of human capital are that people are the
organisation's key resource, and organizational
performance largely depends on them. Thus, if an
appropriate range of human capital policies and processes

are developed and implemented effectively, human capital
would make a substantial impact on organizational
performance.
Human capital planners and managers in Nigeria grapple
with the tasks of planning and managing the human capital
of organisations in such a way as to increase productivity,
effectiveness and efficiency, and meet production targets.
In spite of efforts put in by such organizational operators,
most organisations suffer from gross mismanagement
which has consequently resulted into inefficiency in the use
of resources, faulty recruitment of employees, inadequate
training, absence or non compliance to replacement
charts/succession plans, massive purges and corruption
which have in turn weakened the ability of organisation to
carry out their functions effectively (World Bank,
1991:23).
Simply asked, why is it that in spite of frantic efforts to plan
and manage the human capital in organisations, the
productivity and performance levels of the workers is still
below expectation. It is well known that no organisation
operates in a vacuum. The environment in which it finds
itself considerably dictates the way and manner in which
the human capital of the organisation is planned and
managed. Environment may be understood as all those
forces which have their bearing on the planning and
management of human capital (Decenzo, et al, 2002: 46).
Analysis of the environment is very important in order to
be proactive. Reactive strategy serves the purpose when the
environment is fairly stable and competition is less severe.
Today's business environment is characterized by change
and intense competition. Hence, proactive steps in the
planning and management of human capital are vital for
any organisation if it has to survive in such an environment.
Human capital represents the

human factor in the organisation;
the combined intelligence, skills
and expertise that gives an
organisation its distinctive
INTRODUCTION
STATEMENT OF THE PROBLEM

It is a truism that people are the organization's key resource,
and organizational performance largely depends on the
people. However, the realization of a well planned and
managed human capital that ensures maximum
organizational effectiveness and performance depends on
the inter-play of a plethora of forces that exert varying
degrees of pressure and influence on the planning and
management of human capital.
The great pressure exerted by the environment in which an
organization's human capital is planned and managed
appears to be the main bane of its ability to meet target,
datelines and customer demand, the achievement of
teamwork and the employment of the right quality and
quantity of workers. Other attendant problems are low
labour productivity and capacity utilization. These forces
include among other things: global economic meltdown;
logical changes; demographic changes; government/legal
regulations; cultural diversities and trade union interest
and expectations. Others are: globalization; e-commerce;
corporate strategic plans; objectives and policies. Whereas
some of these are clearly observable, others are largely
remote in operation and effect.
What is not yet very clear, however, is whether or not, or
further still, which of these forces, affect the planning and
management of human capital in Nigeria and to what
extent? Further compounding the problem is the apparent

uncertainty as to whether the easily identifiable factors as
opposed to the remote factors are the worst culprits
militating against the planning and management of human
capital in Nigeria.
RESEARCH OBJECTIVES
The major objective of this paper is to generally investigate
the factors militating against the planning and
management of human capital in organisations. The
specific objectives of the study are:
1) To assess the impact of political, traditional and
military leaders influences on human capital planning
and management
2) To ascertain the extent to which globalization,
economic meltdown and technological changes affect
human capital planning and management
3) To assess the impact of corporate strategic plans on
human capital planning and management.
METHODOLOGY
The study was a survey investigation to find out how
certain environmental forces militate against the planning
and management of human capital in five organisations.
The population of the study is made up of 10,127 middle
level management staff presently active in the employment
of the five selected organisations.
Table 1.1 Population of Middle Level Management staff in the Five Selected Organisations
Organisations
No of Employees
National Directorate of Employment (NDE)
1,677
Power Holding Company of Nigeria (PHCN)
3,072
Plateau State Water Board (PSWB)
360
Federal Ministry of Finance (FMF)
2,066
Nigerian National Petroleum Corporation (NNPC)
2,952
Total
10,127
Source: Field survey, 2012
It is a truism that people are

the organization's key
resource, and organizational
performance largely depends
on the people.
Given that the population of study is finite, the Taro

Yamane (1964) formula was used to arrive at a sample size
of 385. The formula is given as
n =
N
1+N (e)2
Where: n = Sample size; N = Population; e = level of
significance (or limit of tolerable error), in this case, 0.05.
and 1 = Constant value.
The primary data were generated using a Likert Scale (5
Points) structured questionnaire which covered three
management functions and other issues relevant to the
research topic. The questionnaire was administered on the
selected sample (385) through direct distribution. The data
collected through the questionnaire was analyzed using the
Kruskal-Wallis test statistic.
THEORETICAL FRAMEWORK
To actually understand the plethora of forces that exert
pressure and influence on the planning and management of
human capital, an environmental scanning must be carried
out.
Environmental Scanning
In order to identify the key trends and forces in the
environment of an organisation as having a potential
impact on the management and planning of human capital,
an environmental scan must be carried out. This is because
no organisation operates in a vacuum. The environment in
which it finds itself considerably dictates the way and
manner in which its human capital is planned and
managed.
Mathis & Jackson (2000: 38) posited that environmental
scanning is the process of studying the environment of the
organisation to pinpoint opportunities and threats. The

external environment especially affects human capital
planning because each organisation must draw from the
same labour market that supplies all other employers.
Indeed, one measure of organisational effectiveness is the
ability of an organisation to compete for sufficient supply
of human capital with the appropriate capabilities. Mathis
and Jackson suggested the areas to be scanned to include:
Government influence, economic conditions, geographic
and competitive concerns, and workforce changes.
According to Aswathappa (2005:72), environmental
scanning refers to the systematic monitoring of the external
forces influencing the organisation. To him, managers
monitor several forces but the following are pertinent for
human capital planning: economic changes; technological
changes; demographic changes; political and legislative
issues as well as social concerns.
Analysis of External Environment
When carrying out an external scan of an environment for
the purpose of human capital planning, what things should
one look at? According to the Government of
Saskatchewan H R planning guidelines as contained in
Bacal & Associate (2008: 1-2), in order to do human
capital planning you need to have a sense of both the
current external environment, and anticipate things that
may happen in the future in the labour market place. You do
this via an external scan or environmental scan that can
address the following issues and questions:
What is the current external environment? What

elements of the current environment are relevant to the
company? Which are likely to inhibit the company
from reaching its goals?
What are the company's specific issues and the

implications of these issues? What key forces in this
environment need to be addressed and which ones are
less critical?
What is the impact of local trends on the company

( d e m o g r a p h i c , e c o n o m i c , p o l i t i c a l , i n t e rgovernmental, cultural, technology, etc)?
Are there comparable operations that provide a similar

service? How might that change?
How would that affect the company?
Where does the work of the company come from?

How might that change and how would it affect the
organisation?
How might the external environment differ in the

future? What forces at work might change the external
environment? What implications will this have for the
organisation?
What kinds of trends or forces affect similar work in
other jurisdictions?
What kind of trends or forces affect the company's
partners/stakeholders and customers?
It has been noted that many factors are driving change both
from within and without. A carefully scanned environment
is likely to reveal active forces like government/legal
regulations, economic and technological changes,
globalization, e-commerce, demographic changes, and
union interests and expectations. Others are societal
expectations and corporate objectives and policies.
The Internal Organisational Environment
Human capital planning cannot take place in a vacuum. It is
essential to note that human capital planning is affected by
corporate strategic plans, objectives and policies of an
organisation. Bartholomew & Smith (1970:3), observed
that human capital planning is an essential part of the
overall corporate planning of any organisation and cannot
be successfully developed as a separate or parallel activity.
For one thing, all the components of a corporate plan are of
necessity, related to the organization's mission and
objectives, and all are concerned with the same future
environment, although they focus on different aspects of it.
Incomplete or inconsistent basic assumptions made by
different contributors to a corporate plan are well known
sources of disaster.
Human capital planners must be very conversant with their
corporate plans and objectives, financial conditions and
technology in use or to be used. This is because therein lies
the answers and solutions to some of the basic questions
they (HR planners) face. In scanning the internal
environment of an organisation to detect forces that
influence human capital planning and management, a
number of questions and issues need to be addressed. Bacal
& Associate (2008:6) adapted from the Government of
Saskatchewan (USA) a list of such questions and issues to
be addressed. They include but not restricted to the
following:
What knowledge, skills, abilities and capabilities does

the organisation have?
What is the company's current internal environment?

What elements support the company's strategic
direction? What elements deter the organisation from
reaching its goals?
How has the organisation changed its organisational
structure? How is it likely to change in the future?
How has the organisation changed with respect to the
type and amount of work it does and how is it likely to
change in the future?
How has the organisation changed regarding the use of
technology and how will it change in the future?
How has the company changed with respect to the way
people are recruited?
What is the public's (or customers) perception of the
quality of the organization's products, programmes
and/or services? What is being done well? What can be
done better?
Are current programmes, processes or services
contributing to the achievement of specific
organisational goals?
What are the present and future financial positions
/conditions of the organisation?
Is the technology currently in use cost effective? What
other cost effective technology does the company have
in mind for the future?
Organisational Objectives, Policies andPrinciples

Efficient and effective human capital management is a
challenge to all human capital professionals. Staffing,
training and managing with the aim of increasing
organisational productivity needs proactive strategisation.
Among the core human capital activities are: payroll, time
and labour management, benefit administration and
human resource management. These activities are affected
by forces eminent in policies and principles of the
organisation.
Organisational objectives are benchmarks against which
actions of a Human Resource Management Department
are evaluated (Shehzad: 2008:1). For human capital
activities that are designed to increase organisational
productivity to be effective, certain standards of
measurement or points of reference must be set. The
primary objective of human capital management therefore,
is to ensure the availability of a competent and willing
workforce to an organisation. Beyond this, there are other
objectives too. Specifically, human capital management

objectives are four fold societal, organisational,
functional and personal. (Aswathappa, 2005:8). The
implication of organisational objectives on human capital
planning and management is that the planners and
managers must plan and manage human capital in line with
organisational goals. No more, no less.
Whatever the size of an organisation and however the
human capital management functions and objectives are
structured and located, there will be a need to communicate
to employees their terms and conditions of employment
and operations. These employment guidelines are usually
reflected in human capital policies. Shehzad (2007:3)
opined that polices are general statements that serve to
guide decision making. Armstrong (2004:129) gave a
more detailed definition of policies as he believed that they
are continuing guidelines on the approach an organisation
intends to adopt in managing its people. According to him,
they define the philosophies and values of an organisation

on how people should be treated, and from these are
derived the principles upon which managers are expected
to act when dealing with human capital matters.
Organisational policies therefore serve as reference points
when human resource management practices are being
developed, and when decisions are being made about
people. They help to define the way things are done. It is
clear that organisational objectives, policies and principles
exert pressure on the human capital planning and
management.
RESULTS
The questionnaire was distributed to 385 middle level staff
of the five selected organisations and 349 copies
representing 92% were completed and returned as shown
in Table 1.2
Table 1.2 Breakdown of Sample size According to Organisations
Organisation
Sample Size
National Directorate of Employment (NDE)
64
Power Holding Company of Nigeria (PHCN)
116
Plateau State Water Board (PSWB)
14
Federal Ministry of Finance (FMF)
79
Nigerian National Petroleum Corporation (NNPC)
112
Overall Sample Size
385
Source: Field Survey, 2011
planning on human capital planning and management.

For these reasons, the following hypotheses were
formulated:
1) Hypothesis 1: Political, traditional and military leaders'
influences have no significant impact on human capital
planning and management.
The study set out to provide the necessary lead for

empirical examination of the impact of environmental
forces in the management and planning of human capital.
Specifically, it tried to assess the impact of political;
traditional and military rulers; globalization; economic
meltdown; technological changes; and corporate strategic
The implication of organisational objectives on human capital

planning and management is that the planners and managers must
plan and manage human capital in line with organisational goals.
No more, no less.
Table 1.3 - Opinion of Respondents on the Impact of Political, Traditional and Military Influence on
Human Capital Planning and Management.
Q/
QUESTIONNAIRE
NO
STATEMENT
Q1
RESPONSE
FREQU-
ENCY
Political practices and influence

affects human capital planning
and management in my
organisation.
Agreement category
Disagreement
category
Undecided
306
23
Traditional rulers influence (also

known as godfatherism) do
compel my organisation to
employ the wrong type and
number of workers.
Agreement category
Disagreement
category
Undecided
212
92
The military personnel do

number of workers and this is
sometimes done even when
such vacancies do not exist
Agreement category
Disagreement
category
Undecided
212
92
87.7
6.6
5.7
100%
20
Q2
Q3
60.8
26.3
12.9
100%
45
60.8
26.3
12.9
100%
45
Source: Field Survey, 2012
Table 1.3 showed that 87.7% of the total respondents

agreed that political influences affect human capital
planning and management. About 6.6% thought
otherwise while 5.7% was undecided on the question
posed. Also, 60.8% of the total respondents agreed that
traditional rulers do compel their organisations to recruit
the wrong type and number of workers, whereas 26.3%
thought otherwise while 12.9% were undecided on the
question posed. Lastly, on the question of whether or not
military personnel do compel organisations to employ the
wrong type and number of employees even when such
vacancies do not exist, 60.8% of the total respondents
agreed while 26.3% disagreed. About 12.9% were
undecided on the question posed.
where: ni is the number of observations in group i ;rij is the

rank (among all observations) of observation j from group
I; N is the total number of observations across all groups
and
is the average of all the rij.
The Kruskal-Wallis one-way analysis of variance by ranks

named after William Kruskal and W. Allen Wallis was used.
It is a non-parametric method for testing equality of
population medians among groups. It is identical to a oneway analysis of variance with the data replaced by their
However, the Kruskal-Wallis computer-statistical package

for social sciences (SPSS)-16.O version was used to test the
impact of political, traditional and military; globalization,
economic conditions and technological changes; and
corporate strategic on human capital planning and
ranks. It is an extension of the Mann-Whitney U test to 3 or

more groups (Kruskal et al, 1952: 583-621). The test
statistic is given by:
K =
=
12
N(N + 1)
12
N(N + 1)
ni
i=1
g
_ _ N+1
2
r i.
_
ni r i.2 _ 3(N + 1)
i=1
management (i.e. hypothesis 1, 2, 3). The result of the

Kruskal-Wallis test showing the impact of these three
variables on human capital planning and management (as
shown on Table 2.1) showed that political, traditional and
military influences had a 0.69 effect on human capital
planning and management.
Test statistic = Kruskal Wallis; Decision criteria = Reject

Ho if K calculated > Kt = 0.5. Since Kc = 0.69 > Kt = 0.5 as
shown on Table 2.1, the Ho is rejected and H1 is accepted. It
was concluded that political, traditional and military rulers
influence have significantly affected the planning and
management of human capital in Nigerian public
organisations.
Statistical Decision
Level of significance = 0.05; Sample size (n) = 349,
Table 2.1 - The Result of the Kruskal-Wallis Test Showing the Impact of Political, traditional & Military;
Globalization & Corporate Strategic Plans on HCP & Management.
Test Statistics a,b
Globalizati
Corporate
on,
Strategic
Economic
plans &
Political,
Meltdown
Objectives
Tradition
&
al &
Technologi
Military
cal
Influence Changes
Chi-Square
0.357
0.197
Df
0.69
0.59
0.289
1
Asymp. Sig.
Human
capital
0.62
planning &
management
a. Kruskal Wallis Test
b. Grouping Variable: Political influences, Globalization
& Corporate
Strategic plans.
2)
Hypothesis 2: Globalization, economic meltdown and technological changes have no significant impact on human
capital planning and management.
Read Management in Nigeria

Table 2.2 - Opinion of Respondents on the Impact of Globalization, Economic Meltdown and Technological changes
on Human capital Planning and Management
Q/
QUESTIONNAIRE
NO
STATEMENT
Q4
Q5
Q6
RESPONSE
FREQU-
ENCY
Political practices and influence

affects human capital planning
and management in my
organisation.
Agreement category
Disagreement
category
Undecided
221
61
Traditional rulers influence (also

known as godfatherism) do
number of workers.
Agreement category
Disagreement
category
Undecided
221
61
64
64.2
17.5
18.3
100%
The military personnel do

number of workers and this is
sometimes done even when
such vacancies do not exist
Agreement category
Disagreement
category
Undecided
214
75
61.3
21.5
60
17.2
100%
64
64.2
17.5
18.3
100%
Level of significance = 0.05; Sample size (n) = 349; Test
statistics = Kruskal-Wallis (K); Decision criteria: Reject
Ho if K calculated Kt = 0.5. Since Kc = 0.59 Kt = 0.5 as
shown on Table 2.1, the Ho has been rejected and Ho, is
accept. It was concluded that globalization, economic
meltdown and technological changes have significantly
impacted on human capital planning and management in
Nigeria Public organisations.
Table 2.2 showed that 64.2% of the total respondents

agreed that human capital planning and management is
impacted by globalization. About 17.5% disagreed while
18.3% remained indifferent. Also, 64.2% of the
respondents agreed, 17.5% disagreed and 18.2% were
undecided on whether economic meltdown affects human
capital planning and management. Lastly, 61.3%, agreed,
21.5% disagreed and 17.2% undecided on the fact that
technological changes affect human capital planning and
management.
Foreign competitors can be formidable. For example, Coca cola earn

more than 80% of its revenue from outside the United States. The 500
largest firms in the world employ almost 44 million people
3) Hypothesis 3: Corporate strategic plans have no significant impact on human capital planning and management.
Table 2.4: Opinion of Respondents on the Impact of Corporate Strategic Plans on Human Capital Planning and
Management.
Q/NO
QUESTIONNAIRE
RESPONSE
FREQUENCY
226
82
65
23
12
100%
STATEMENT
Q6
Corporate policies and

objectives affect Human
Capital Planning and
Management
Agreement category
Disagreement
category
Undecided
41
Table 2.4 showed that 65% of the total respondents agreed

that corporate policies and objectives impact on human
capital planning and management, 23% disagreed while
12% of them were undecided.
Level of significance = 0.05; Sample size (n) = 349; Test
Statistics = Kruskal-Wallis (K); Decision criteria = Reject
Ho if K calculated >0.5. Since Kc = 0.62 > Kt = 0.5 as
shown on Table2.1, the Ho has rejected and H1 has been
accepted. It was concluded that corporate strategic plans
have significant impact on the planning and management
of human capital in Nigerian public organisations.
DISCUSSION AND IMPLICATION OF
FINDINGS
The result of the test of the first hypothesis indicated that
human capital planning and management is significantly
influenced by political, traditional and military leaders'
influence. (a=0.05, Kc = 0.69 > Kt = 0.5). It could be
concluded that the two variables are to a large extent
associated. The result of the test of hypothesis 1 agreed
with the findings of Abdullahi et al (2000:72) which
disclosed that the Nigerian Public Service, which is the
engine room of progressive policy formulation and
implementation and the sole provider of basic amenities
that sustained livelihood and propelled economic
development has since degenerated into a creaky apparatus
of political patronage that ignores merit and puts round
pegs in square holes.
Despite various interventions to revamp these public sector

organisations, the sector has remained in a tailspin.
Confirming this, Ayida (1997:2) lamented that in spite of
several reviews and commissions of investigation, the
Nigeria Public sector of today remains a shadow of what is
should be. According to him, some of the lofty ideals of
efficiency, professionalism and accountability have not
been achieved. This is partly due to political, traditional and
military rulers influence on the planning and management
of the people serving in these organisations. Such
influences take place in the areas of recruitment, selection,
discipline, promotion, transfers and performance
appraisals.
The result of the test of the second hypothesis showed that
globalization, economic meltdown and technological
changes significantly impact on human capital planning
and management ( =0.05, Kc = 0.59>Kt = 0.5). It
concluded that the two variables are to a large extent
associated. The result of this test agreed with the findings
from several other researches on the impact of globalization
on human capital planning and management. Fortune
(2000:232-234) observed that foreign competitors can be
formidable. For example, Coca cola earn more than 80% of
its revenue from outside the United States. The 500 largest
firms in the world employ almost 44 million people, they
gross almost $13,000 billion in revenues and $554 billion
in profits, and the total value of the assets exceeds $44
billion.
The second set of forces that militate

against human capital planning
and management are internally
located in organisations.
The implication of globalization for human capital

planning and management according to Reich (1990:5364), is that as every advanced economy becomes global, a
nations most competitive assets becomes the skills and
cumulative learning of its workforce. Globalisation, almost
by definition makes this true. It is therefore obvious that
the relationship between quantitative workforce and
foreign investment forms a vicious circle: well-trained
workers attract global corporations, which invest and give
the workers good jobs; the good jobs in turn, generate
additional training and experience.
On the impact of technological changes on human capital
planning and management, it has been observed that the
new millennium came with it a lot of technological changes
that affect almost every sphere of human and organisational
life. Sparked by new technologies, particularly the Internet,
the corporation is undergoing a radical transformation that
is nothing less than a new industrial revolution. In the
words of Cascio (2003:12), perhaps the most pronounced
impact of technology on human capital management is on
Human Resource Information System (HRIS). Indeed, as
technology integrates with traditionally labour-intensive
human capital activities, human capital professionals are
seeing improvements in response time and efficiency of the
report information available.
Also, the general business cycle of recessions and booms
affect human capital planning and management. Factors
such as interest rates, inflation and economic growth affect
the availability of workers which figure into organisational
and human capital plans. Decisions on wages, overtime,
hiring or laying off workers may be affected by economic
conditions (Mathis & Jackson, 2003:99).
From the third hypothesis, it was shown that corporate
strategic plans and objectives impact on human capital
planning and management.(a =0.05, Kc = 0.62 > Kt =

0.5). This showed that the two variables are to a large
extent associated. The result is in agreement with
Bartholomew & Smith (1970:3) who observed that
human capital planning is an essential part of overall
corporate planning of any organisation and cannot be
successfully developed as a separate or parallel activity. For
one thing, all the components of a corporate plan are of
necessity, related to an organization's mission and
objectives. All these are concerned with the same future
environment even though they focus on different aspects of
it.
CONCLUSION AND RECOMMENDATIONS
There is a set of clearly discernable forces that are external
and outside the control of organisations which include the
on-going global economic meltdown, technological
changes, globalization, e-commerce, demographic
changes, union interests and expectations, and societal
expectations. The second set of forces that militate against
human capital planning and management are internally
located in organisations. However, human capital
managers and planners have little control over them given
the ultimate objectives of the organisation as profit making.
These internal environmental forces include established
corporate objectives policies and principles.
The environments in which organisations find themselves
contain key trends and forces that have potential impact on
the management and planning of human capital. These
factors possess both opportunities and threats which, if
well harnesses and checked, can be great potential for both
the public and private sectors of the economy. Negatively,
such forces have directly or indirectly been traced to be
responsible for the low level of productivity in
organisations leading to low profit margins, inability to
meet datelines and work schedules, and the inability of
human capital planners and managers to employ the right
number and quality of workers.
Recommendations
In view of the above, the following measures are
recommended as ways of surmounting the forces of
pressure that affect human capital planning and
management:
(a)
Managers and Planners of human capital must
make deliberate efforts to study the opportunities

and threat imbedded in each environmental factor
with a view to incorporating such findings in their
human capital plans.
Specific environmental factors that negatively
affect productivity should be tactically dealt with
so as to improve workforce productivity and the
overall efficiency of the organisation.
Key forces in the environment should be separated
from less critical forces and handled separately.
Various actors in human capital planning and
management, especially the Human Resource
(b)
(c)
(d)
(e)
Department should adopt advocacy with the aim

of influencing detrimental laws and legislations
that have direct bearing on the operations of their
organisations.
Organisations should, as a matter of urgency,
undertake deliberate training programmes to
equip workers at the private and public sector
levels with updated technologies that would
increase the competitiveness of Nigerian
organisations with those of multinationals. This is
to overcome the forces of globalization and
international competition.
REFERENCES
*
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Armstrong, M. (2003), A handbook of Human Resource Management Practice, New Delhi: Kogan page.
Aswathappa, K. (2005), Human Resource and Personnel Management- Text and Cases,New Delhi: Tata McGraw-Hill.
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RAW MATERIAL MANAGEMENT IN MANUFACTURING ORGANIZATION
RAW MATERIAL
MANAGEMENT IN
MANUFACTURING
ORGANIZATIONS
By Olusakin S. Akindipe, MNIM
Department of Business Administration,
Igbajo Polytechnic, Igbajo, Osun State.
ABSTRACT
The paper brought to the fore, the salient issue of raw
material management and the effect it could bear on the
smooth running of production operations if not properly
handled. It concluded that, with efficient management of raw
materials, the problems of incessant stoppage of production
operations, non utilization of installed production capacity
and loss of fund on obsolete stocks will be addressed.
INTRODUCTION
Raw materials management is critical to the overall
performance of any manufacturing concern. Beside
demand and other forces like competitors actions and
general price index; raw material situation in terms of
efficient management and effective planning determines
the activity level, the turn-over and the ultimate profit in a
given company. The determination of Economic Order
Quantity (EOQ), re-order level and minimum/maximum
stock levels is important in raw material management in
any manufacturing outfit.
Relationship between Inventory and Raw Material
Manufacturing organizations should

always determine the minimum
level of stock to carry. This is to
ensure that stock-out or sudden
unavailability is forestalled.
The material function is assumed to be organized and

operated on an integrated basis. It is also presumed to be
responsible for material forecasting, planning, inventory
control, scrap control and disposal; providing management
information regarding purchases and inventories within
the framework of the financial policies and norms. A glance
at these functions will reveal the intricacies involved in an
attempt to maintain balanced policies on raw material
management.
Inventory refers to totality of stocks, being held by a

business enterprise at a particular
time. The following groups of inventory are of concern to
managers in manufacturing organizations:
1 Raw materials,
2 In-progress or semi finished goods,
3 Finished goods.
4 Other stocks such as: tools, spare parts and
production consumables.
Raw materials are component parts of the stock of
inventories carried by a manufacturing firm at a given time.
Every organization has inventories of some type. The
economics and techniques of inventory management are
critical for efficient operation, profitability and survival;
especially in a highly competitive environment.
Inventory control is the science-based art of controlling the
amount of stock held in various forms within a business,
Lewis (1970). Inventory control is a method of recording
and reporting the movement of raw materials within a
company: from material stock room, through any of the
manufacturing processes to the finished product stage.
Inventory management basically aims at providing both
internal and external customers with the required service
levels in terms of quality, quantity and order fill rate to
ascertain present and future requirements for all types of
inventory to avoid overstocking while avoiding bottleneck
in production and to keep costs to a minimum. (Sharif;
2011).
Material management being the coordination of efforts

(planning, controlling, organizing, directing) towards
achieving efficiency in the procurement, transportation,
stocking and utilization of inputs of a manufacturing
organization is central to production activities and
management. Effective and efficient functioning of
material management has direct bearing on the total
performance of an organization. Therefore, it deserves
serious attention and critical study in order to achieve
uninterrupted production runs and enhanced performance
in operations.
Classification of Inventory Management System

The use of inventory management system in raw material
management practice is imperative given the dynamic
nature of operations in the frequently changing world of
business.
Besides, holding the right stock level could improve the

level of available working capital that could be profitably
employed in other areas. These objectives could be
achieved through integrated approach to material
management functions by combining planning,
procurement and inventory control.
Mantho, (1994) classified Inventory Management

computer based activities into three broad areas:
1 Inventory record keeping: due to the availability
of computers at a reasonable price, SMEs have
found it appropriate to automate their inventory
records through computerization.
Inventory Decision-Making: many models can

be integrated into computer based inventory
systems.
Material Requirement Planning (MRP)
System: MRP is an Inventory Management (IM)
information system concerned with getting the
right materials to the right place at the right time.
However, modern Inventory Management systems are

more challenging because of several variables. According to
Sharif (2011), in a fluid IM environment; these factors
include high inflation rates at certain periods; low
availability of traditional materials; high costs of labour
leading to less making and more buying; increasing
numbers of suppliers entering the procurement market;
rapid development of micro-processor and software in
decision-making support systems. In addition, new
technological innovations lead to the development of
substitutes (for example, smart materials replacing steel
and aluminum), which add to the challenges for IM
(Mohanty, 1985).
Elements in Raw Material Management
Purchasing and inventory control are the key elements of
efficient material management. The issue of decisions on
how much to buy and when to buy cannot be viewed in
isolation as it is being done in many quarters. The provision
of safety stock on the other hand is a kind of insurance and
it is largely influenced by the lead time required to procure
the materials. It is obvious that any improvement in the
lead time would necessitate a decrease in the volume of
safety stock and thereby reduce overall capital lock-up in
inventory.
Also important in material management is the matter of
maintaining good systems and procedures. This calls for
strict discipline in documentation. It implies that all related
paper works are completed in time so as to generate the
basic data and compile timely and reliable information for
planning, follow-up and control; be it a manual or
computerized system. The success of the system calls for
cooperation and understanding of all concerned for
providing timely and the necessary data; in order to ensure
that the information processed for action reflects the
realities of the situation. Resource planning and timely
information for decision, action and control is possible
today with the support of computer system with the
relevant application package and software. An integrated

material management system and electronic data
processing support avoids many of the common volume
data in a short time span and check the actual against the
preset norms so as to take quick preventive and/or
corrective actions.
RAW MATERIAL MANAGEMENT PROBLEM
IN THE NIGERIAN MANUFACTURING
SECTOR
There are serious operational problems relating to raw
material management in manufacturing organizations in
Nigeria. They are rarely given adequate attentions due to
inability of people involved to link the problems with raw
material management.
Some of the problem identified includes;
1 The inefficient use of production time, labour and
other resources due to delays or incessant short
down and interruptions during production have
become inherent part of operations in many
manufacturing organizations in Nigeria. This led
to inability to meet customers' orders and eventual
loss of market shares. Low capacity utilization and
loss of revenue as consequence of these problems
led to closure of many manufacturing firms in the
country.
2 Poor liquidity position of many manufacturing
concerns in Nigeria is a matter of concern to
shareholders and stakeholders alike. To hold too
much stock than necessary will lead to capital lockup in inventory of raw materials. The materials
held idle in stores have values attached to them;
and the likelihood is that the organization will
never regain the money in them if they become
obsolete and useless.
3 Inadequate provision of good quality manpower
in stock maintenance and material management.
This is indeed, a serious issue since employees are
those charged with the responsibility of
monitoring progress and reporting impending
insufficiency. They are to ensure that stocks are
properly kept and protected against fire and other
disaster or loss. The people are to ensure efficient
use of warehouse facilities and space; keep proper
and adequate records; Akindipe (2005).
CONCEPTUAL REVIEW
In a work of this nature, a conceptual analysis of relevant
studies on the problem under consideration is desirable;
given the universal perception and the enormity of the
challenges that raw materials management had posed to
manufacturers.
Material Management Problem: Aged and Global
Providing a clue to what material management problem
was, Dear (1989) gave the following assertions: that the
most common reason by far for a manager becoming
interested in inventory is when he finds out he has more of
it than he should have. He went further that in a spare part
operation, management became interested in the first place
because the combined branch stockholding was in excess of
budget. Over-stocking as identified above is not the only
problem in material management. Under-stocking could
lead to a bigger problem as analyzed by the same writer.
How do managers react?
They order those in charge to reduce stock, with the result
that ordering on suppliers is cut back drastically. The
situation quickly changes from one of adequate cover of
moving lines with a considerable excess of non moving
stock to one of very inadequate cover of moving lines with a
considerable excess of non moving stock, Dear(1989). In
his analysis of problems relating to material management,
he observed that management formulates inventory
policies that are not applicable in their areas of operations.
Thus, he advised: Inventory control should be systematic
and be based on an objective set of rules or guidelines that
are in accord with the company objectives.
Another notable contributor to the subject of
consideration is Simeon (1990) who gave credence to the
enormity of raw material management problem when he
wrote: for batch manufacturing companies, stock control
is a major factor in managing production efficiency and ontime delivery, not to mention the havoc it can play with cash
flow. He asserted that delay in meeting customers' order
could be due to poor management of materials.
Macbeth (1989) believes that adequate staff development
programs must focus upon purchasing as tasks and
responsibilities and the way in which good supply
performance helps to sharpen the competitive edge.
Rajeev, (2008) made a study of forty small and medium

enterprises (SMEs) in Bangalore, India and observed that
even in an inventory intensive manufacturing industry
sector; such as the machine tool industry, Inventory
Management (nay, material management) practices were
poor. He went further that the use of formal practices for
managing inventories was also inadequate. According to
him, poor material management practices were
characterized by lack of an integrated approach in the form
of the absence of links between physical stock and
accounting system. Lack of appreciation for Inventory
Management (IM) among the entrepreneurs and the lack
of qualified staff were the two major factors contributing to
low Inventory Management practices. This situation was
complicated further by other factors such as constraints on
working capital, a lack of progress in the area of HRD and
the organizational characteristics of the SMEs. The use of a
formal inventory ordering policy, such as fixed quantity
ordering or fixed period ordering policy was not observed
in the SMEs. Instead, a random policy was followed by the
SMEs for material procurement. The study also identified
the use of rule of thumb for IM, a low importance given to
forecasting and random ordering for material
procurement, low level use of computers and a low level of
importance given to purchasing and variable lead-time.
The inventory management (IM) practices of small and
medium scale enterprises in Finland and Greece were
studied by Chikan and Whybark, (1990) to identify the
experiences of managers concerning IM. In Finland, 15
case studies of IM were undertaken, including examining
the role of IM in corporate planning, inventory decisionmaking and performance measurement. The findings
revealed that IM decisions are made at the operational level
with minimal guidance from the top. Furthermore, the lack
of accurate, real-time and suitable aggregate information of
material flows and stock levels prevented these enterprises
from setting precise quantitative goals for IM.
Furthermore, financial pressures were identified as forcing
the enterprises to reduce their inventories, which
eventually led to internal as well as external stock outs
Chikan and Whybark, (1990).
Given the fore-goings, it is clear that the problem of
material management is age long and people had; over the
years attempted to seek solution. The solution offered by
Townsend (1992) is in what he termed the standard

requisition concept which he said could be achieved
through:
1 Determination of order quantity and stock level, to be
controlled and managed;
2 Anticipation of workloads. This enables a realistic level
of planning to be completed to prevent a stock-out
situation.
Dear (1989), suggested an adaptive method of
forecasting by setting safety stocks in terms of a desired
service ( stock ) level under management control using one
of the available adaptive algorithms. Todd (1990) asserted
that the problem started with the implementation of
material management systems. He believed that material
management will be successful if its implementation is one
which is designed to provide the real benefit. As antidote to
the problems of implementation, he prescribed the
following rules:
1
Implementation should be considered as a tactical and

strategically business improvement.
2 Implementation should concentrate on people not the
systems.
3 Determine a long term vision of future to provide a
focus for real business benefits.
4 The project must have a full time project manager
re p o r t i n g t o a m u l t i - d i s c i p l i n e d e xe c u t i v e
management.
5 An educational plan must be constructed in line with
software and computer system plans.
6 Before the system goes to live, the base data must be
audited and achieve an acceptable level of accuracy.
He concluded: don't under-estimate the amount of
education needed including that of those who ought to
know.
Read
TOWARDS EFFICIENCY IN MATERIAL

MANAGEMENT IN NIGERIA
The Nigerian situation could be said to be slightly
different from that of the rest of the world, particularly the
advanced economies where business organizations are IT
compliant, within a different socio-cultural environment.
In order to ensure efficiency in the practice of raw material
management in Nigeria and other relevant part of the
world, it is suggested that;
1. Manufacturing organizations should always determine
the minimum level of stock to carry. This is to ensure
that stock-out or sudden unavailability is forestalled.
With the removal of stock-out, other banes such as loss
of production time, low capacity utilization and
inability to meet production targets will be removed.
2. Manufacturing organizations should make raw
material plans and schedules such that arrival of raw
material and other inventories is programmed to
ensure that there is no delay between requisition time
and the time of supply. This will prevent production
operations from being disrupted and as such low
capacity utilization and inability to meet production
target will be addressed.
3. All slow- moving stock items should be identified and
their time of need noted to ensure that the maintenance
of such item stop immediately. All obsolete items
should be sold to recoup capital lock up in them.
Acquisition of obsolete items could be removed by
being aware of trends in the technological and business
environments. Over-stocking could be forestalled by
having clear definition of maximum stock level. An
adherence to recommendations on slow-moving stock,
obsolete items and over-stocking would ensure that
tied-up fund that could be useful as working capital is
available. In this way, liquidity positions of
manufacturing organizations in Nigeria will be better.
4. Employment of untrained store workers should be
stopped to prevent misplacement and dislocation of
OCTOBER
- DECEMBER
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A Journal
)
Nigerian (Chartered
nt
by the
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, 2012
vital documents, files and stock items. In areas where

higher stock management education is not required,
(like stock keeping and records) employees should be
given adequate orientation and training. There should
be provision training and retraining of employees to
keep them abreast of developments in the field.
5. The use of electronic data processing device should be
encouraged to remove the problem of inability to use
inventory models.
CONCLUSION
Although the situation being experienced in the practice of
raw material/inventory management in Nigeria today is to
say the least, disheartening; given the poor level of
computerization, the degree of inability to use models for
inventory decision making, the involvement of non experts
in the management of raw materials and inventory, the
prospects for improvement are evident.
REFERENCES
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Akindipe S.O. (2005), Raw Materials Management and Inventory Control in Manufacturing Organization (A Case Study of Osogbo Steel Rolling Co.
Ltd.), Masters Thesis, University of Ado- Ekiti.
Chikan, A. (1990), Characterization of production-inventory systems in the Hungarian industry, Engineering Costs and Production Economics, Vol. 18,
pp. 285Chikan,A. and Whybark, C.(1990), ''Cross-national comparison of production and inventory management practices'', Engineering Costs and
Production Economics, Vol.19, pp.149-56.92.67.
Cynthia Wallin, M. Johnny Rungtusanatham and Elliot Rabinovich (2006) what is the right inventory management approach for a purchased item?
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Dear Anthony (1989): Improvement in Management and control of Inventory, Purchasing& Supply Management; Journal of the Institute of Purchasing
& Supply Management, vol. 1 No. 5, pg. 15-19.
John F. Kros, Mauro Falasca, and S. Scott Nadler (2006) Impact of just-in-time inventory systems on OEM suppliers, Industrial Management & Data
Systems Vol. 106 No. 2, pp. 224-241.
Khalid Saeed (2008) Trend forecasting for stability in supply chains, Journal of Business Research 61, 11131124.
Lewis C.D (1970), Scientific Inventory Control, London, Bottleworth Ltd., pg. 5
Macbeth Douglas (1989), Not Purchasing but Supply Chain Management, Purchasing & Supply Management; Journal of the Institute of Purchasing &
Supply vol. 1 No.9, pg 11-20.
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Marcello Braglia, Andrea Grassi and Roberto Montanari (2004) Multi-attribute classification method for spare parts inventory management, Journal
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Mariah M. Jeffery, Renee J. Butler, Linda C. Malone (2008), Determining a cost-effective customer service level, Supply Chain Management: An
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Logistics Management, the, Vol. 18 Iss: 1, pp.64 80.
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of Purchasing & Supply, vol. 1 No6, pg 5-10.
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News Vol. 31 No. 9 pp. 659-669.
Reza G. Nasiri, Hamid Davoudpour, Behrooz Karimi, (2010) "The impact of integrated analysis on supply chain: Management: a coordinated
approach for inventory control policy", Supply Chain Management: An International Journal, Vol. 15 Iss: 4, pp.277
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Management, vol. 6 No. 9 pg. 3-8.
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Stig-Arne Mattsson, (2007) "Inventory control in environments with short lead times", International Journal of Physical Distribution & Logistics
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Todd Richard (1990), Implementing A Material Management System, Logistics, Purchasing & Supply Management; Journal of the Institute of
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Management, vol.1 No. 3, pg.13-24.
TOWARDS THE APPLICATION OF OPERATIONS RESEARCH IN MANAGERIAL DECISION MAKING
TOWARDS THE APPLICATION

OF OPERATIONS RESEARCH IN
MANAGERIAL DECISION MAKING
BY
Agbo Melletus Uchechukwu, AMNIM
Department of Business Administration
University Amorji Nike, Enugu, Nigeria,
Eze Titus Chinweuba
Department of Economics
Caritas University Amorji Nike; Enugu, Nigeria
AND
Okpara Cyril Sunday
Department of Economics
Ebonyi State University, Abakaliki, Nigeria
ABSTRACT
As the global environment becomes fiercely competitive,
Operations Research has gained significance in applications like
world-class Manufacturing systems (WCM), Lean production,
Six-sigma quality management, Benchmarking, Just-in-time
(JIT) inventory techniques. The growth of global markets and
the resulting increase in competition have highlighted the need
for Operations Research. In order to survive and lead the today's
highly competitive and demand driven market, pressure is on
management to make economical decisions. One of the essential
management skills is the ability to allocate and utilize resources
appropriately in the efforts to achieving the optimal performance
efficiently. In some cases such as small-scale low complexity
environment, decision based on intuition with minimal

quantitative basis may be reasonably acceptable and practical in
achieving the goal of the organization. However, for a largescale system, both quantitative and qualitative (i.e. intuition,
experience, common sense) analysis are required to make the
most economical decisions. Using Operations Research
techniques including Linear Programming, Discrete Event
Simulation and Queuing Theory, organization leaders can
make high quality decisions. Operations managers are not
expected to be experts in any decision science tools, however, he or
she must have fundamental knowledge of such tools to acquire
right resources and to make the most economically sound
decisions for the company as a whole.
INTRODUCTION
The terminology Operations Research is somewhat
misleading, since it is not only concerned with operations,
but has applications involving research in different areas
and fields. Operations Research is the discipline of
applying advanced analytical methods to help make better
decisions. By using techniques such as mathematical
modeling to analyze complex situations, operations
research gives executives the power to make more effective
decisions and build more productive systems'. The role of
operational research in the Nigerian context is clear. It is
not only important, it is even critical, given the size and
magnitude of the tasks ahead to transform Nigeria as a
developed nation. In order to achieve these goals, there is
the need for a responsive and accountable government to
promote a positive environment of OR applications. It is
hoped that the Nigerian democracy would lead to this. It is
believed that globalization would further accelerate this
transition.
Operations Research (OR) is one of the popular
managerial decision science tools used by profit and
nonprofit organizations. As the global environment
becomes fiercely competitive, Operations Research has
gained significance in applications like world-class
Manufacturing system (WCM), Lean Production, Sixsigma quality management, Benchmarking, Just-in-time
(JIT) inventory techniques. The growth of global markets
and the resulting increase in competition have highlighted
the need for Operations Research. To be competitive,
businesses must meet the challenges present in a global
market by offering products and services that offer good
value to their customer. Good value is a combination of low
cost, high quality, rapid availability and real time
information.
Another name for managers is

decision makers. In order to
survive and lead today's highly
competitive and demand driven
market, pressure is on
management to make
economical decisions.
Essentially, Operations Research is usually the

mathematical treatment, analysis of a process, or operation
to determine its purpose and effectiveness and to gain
maximum efficiency. The operation technique is utilized by
functional groups such as Industrial Engineering in an
effort to support Operations Managers to make
economically feasible decisions on a range of systematic
challenges. The main responsibilities of operations
management are to manage and operate as efficiently and
effectively as possible with the given resources.
Quantitative methods which comprises of Simulation,
Linear and non-linear programming, Queuing Theory and
Stochastic Modeling, are well-accepted techniques by both
research and practice communities.
By and large, it could be said that typical areas of
Operations Research applications include:
Capital budgeting
Asset allocation
Portfolio selection
Fraud prevention, Anti-Money Laundering
Benchmarking
Marketing channel optimization, Customer
segmentation.
Direct marketing campaigns, Predicting customer
response, and Campaign optimization.
Supply Chain planning
Distribution, Routing, Scheduling, Traffic flow
optimization.
Resource allocation, Staff allocation
Inventory planning
Retail planning, Merchandize optimization
Product mix and blending, Industrial waste
reduction.
Oil industry
Functional entities such as Industrial or Systems
Engineering use methodologies to provide feasible
alternatives for operations managers to decide on. An
important component of decision-making process is
verifying and validating alternatives, which typically
involve decision makers, engineers or analysts. The growth
of Operations Research is to a large extent, the result of the
widespread availability of computers. Most Operations
Research involves carrying out a large number of numeric
calculations and without computers this would simply
difficult to solve. During the 1950's, there was substantial
progress in the application of Operation Research

techniques for civilian activities along with a great interest
in the professional development and education in
Research. Many colleges and universities introduced
Operations Research in their curricula. They were
generally schools of engineering, public administration,
business management, applied mathematics, economics,
computer science etc.
In 1958, project scheduling techniques: PERT (Program
Evaluation and Review Technique) and CPM (Critical Path
Method) were developed as efficient tools for scheduling
and monitoring lengthy, complex and expensive projects
of that time. Operations Research is also being used in
Railway, waiting or queuing problems of passengers for
tickets at booking windows or trains queuing up in
marshalling yard, waiting to be sorted out are tackled by
various Operations Research techniques.
Broadly, operational research as a discipline can be classified
into three distinct set of categories. They correspond to
tools, models and methodology. Tools include ABC
analysis, 80:20 rule, and Break Even Analysis. Blending
models, optimized distribution system, portfolio
optimization of assets would broadly represent examples
under the category of models. Operational research
methodology would include project management systems,
multi-criteria optimization, game theory, simulation,
methodology, data envelopment analysis, enterprise
resource planning systems and conflict resolution
methods. The tools, models and methodology of
operational research have found a variety of applications in
different contexts.
The Most commonly used techniques and methods of
Operations Research, which can be freely applied by a
progressive management in decision-making processes are:
Linear Programming, Decision Models, Network Theory,
Inventory Control Models, Queuing Theory, Sequencing,
Game Theory, Simulation, Replacement Theory,
Reliability, Markovian Models.
OPERATIONS RESEARCH APPROACH
The Operations Research approach is particularly useful in
balancing conflicting objectives (goals or interests) where
there are many alternative courses of action available to the
decision-makers. In a theoretical sense, the optimum

decision must be one that is best for the organization as a
whole, it is often called the global optimum. A decision that
is best for one or more sections of an organization is usually
called suboptimum decision. Operation Research attempts
to resolve the conflicts of interest among various sections of
the organization and seeks the optimal solution which may
not be acceptable to one department but is in the interest of
the organization as a whole. Operation Research is
concerned with providing the decision-maker with
decision aids (or rules) derived from:
(i)
A total system orientation
(ii)
Scientific methods of investigations, and
(iii)
Models of reality, generally based on
quantitative measurement and techniques.
For example, given that O.R. represents an integrated
framework to help make decisions, it is important to have a
clear understanding of this framework so that it can be
applied to a generic problem. In order to achieve this, the
so-called O.R. approach is now detailed. The approach
comprised of seven sequential steps illustrated in flow chart
diagram below:
(1)
Orientation
(2)
Problem Definition
(3)
Data Collection
(4)
Model Formulation,
(5)
Solution
(6)
Model Validation and Output Analysis,
and
(7)
Implementation and Monitoring.
In a theoretical sense, the optimum

decision must be one that is best for the
organization as a whole, it is often
called the global optimum. A decision
that is best for one or more sections of
an organization is usually called
suboptimum decision.
The above steps are illustrated through a Flow Chart

Diagram as given below:
ORIENTATION
PROBLEM
DATA
COLLECTION
DETERMINE
REQUIREMENTS
MODEL
FORMULATION
SOLUTION
DEFINE
PROBLEM
ESTABLISH
GOALS
IDENTIFY
ALTERNATIVE
OUTPUT
ANALYSIS
VALIDATION
IMPLEMENTATION/
MONITORING
OPERATIONS RESEARCH TECHNIQUES

Decision Analysis: Decision analysis refers to a set of
quantitative methods for analyzing decisions that use
expected utility as the criterion for identifying the preferred
alternative. Decision analysis provides tools for
quantitatively analyzing decisions with uncertainty and/or
multiple conflicting objectives. These tools can be
especially useful when there is limited directly relevant data
so that expert judgment plays a significant role in the
decision making process. It provides a systematic
quantitative approach to making better decisions rather
than a description of how unaided decisions are made.
A general decision making process can be divided into the
following steps:
1.
Define the problem
2.
Determine the requirements
3.
Establish Goals
4.
Identity alternatives
5.
Define criteria
6.
Select a decision making tool
7.
Evaluate alternatives against criteria
8.
Validate solutions against problem
DEFINE
CRITERIA
SELECT
DECISION
MAKING
TOOLS
EVALUATE
ALTERNATIVES
AGAINST
VALIDATE
SOLUTION
AGAINST
PROBLEM
STATEMENT
SOLUTION
Linear Programming is a mathematical model developed

during Second World War to plan expenditures and returns
in order to reduce costs to the army and increase losses to the
enemy. Operations Research optimization means to find out
the maximum profit and loss in any deal using Quantitative
Techniques to narrow choices to the very best when there are
virtually immeasurable feasible options. This is a constrained
optimization technique, which optimize some criterion
within some constraints. In Linear programming, the
objective function (profit, loss or return on investment) and
constraints are linear.
Standard form of describing a linear programming problem
consists of the following three parts:
A linear function to be maximized

e.g. maximize C1XI + C2X2
Problem constraints of the following form
e.g. a11x1 + a12x2 < b1
a21x1 + a22x2 < b2
a31x1 + a32x2 < b3
Non-negative variables
e.g. x1 > 0
x2 > 0
SIMULATION
Generally, simulation techniques is used in uncertain
conditions where we want to conduct a real experiment
through this model to know more about different
situations which we use in this artificial model. The actual
exercise of building a simulation model reveals unapparent
relationships and provides systematic way to analyze the
situation. Simulation-based optimization utilizes the
simulation model in obtaining the objective function
values of a particular industry to use sound data and
management science techniques in making policy
decisions.
QUEUING THEORY
A real time example for queuing theory is the case of
customers waiting in the queue in banks or to buy groceries
in departmental stores. The contribution of computer is to
maintain the queue according to the arrival time of the
event and each event is processed one after the other
according to their arrival time. Simulation represents the
full extent of the models covering all perceivable systems
which incorporate characteristics of a queue. The unit
demanding service, whether it is human or otherwise is
identified as customer. The unit providing service is known
as the server. The terminology of customers and servers is
used in a generic sense regardless of the nature of the
physical context. Some examples are given below.
In communication systems, voice or data traffic queue

up for lines for transmission. A simple example is the
telephone exchange.
In a manufacturing system with several work stations,

units completing work in one station wait for access to
the next.
Vehicles requiring service wait for their turn in a

garage.
Patients arrive and wait at a doctor's clinic for

treatment.
Queuing System is used in situations where the queue is

formed (for example customers waiting for service,
aircrafts waiting for landing, jobs waiting for processing in
the computer system, etc). The objective is to minimize the
cost of waiting without increasing the cost of servicing. The
term classical queuing theory refer to descriptive models
of queuing systems, usually based on Markovian
assumptions, in which the goal is to derive an explicit
expression for the queue-length or waiting-time
distribution (or its transform), usually in steady state.
TRANSPORTATION TECHNIQUE
A special class of linear programming problem is
Transportation Problem. The objective is to minimize
the cost of distributing a product from a number of sources
(eg. Factories) to a number of destinations (e.g.
warehouses) while satisfying both the supply limits and the
demand requirements. Due to the special structure of the
Transportation Problem, the Simplex Method of solving is
unsuitable for the Transportation Problem. The model
assumes that the distributing cost on a given route is
directly proportional to the number of units distributed on
that route. Generally, the transportation model can be
extended to areas other than the direct transportation of a
commodity, including among others, inventory control,
employment scheduling, and personnel assignment. The
objective of the transportation problem is to satisfy the
required quantity of goods or services at each demand
destination, within the limited quality of goods or services
available at each supply origin, at the minimum
transportation cost or time.
Project Management with PERT (Project Evaluation
and Review Techniques) and CPM (Critical Path
Method)
CPM/PERT is based on a small set of activities, which make
up the longest path through the activity network control of
the entire project. If these critical activities could be
identified and assigned to responsible persons,
management resources could be optimally used by
concentrating on the few activities which determine the
fate of the entire project.
Non-critical activities can be rescheduled resources for

them which can be reallocated flexibly, without affecting
the whole project. Both are project management
techniques, which have been created out of the need of
industrial and military establishments to plan, schedule and
control complex projects.
Generally, the CPM/PERT have been useful in planning
costs, scheduling manpower and machine time.
CPM/PERT can answer the following important
questions:
What will be the project duration? What are the

risks/dependencies/assumptions involved?
What are the critical activities which could delay the

entire project if they were not completed on time?
What is the current status of the project i.e., is the

project on schedule, behind schedule or ahead of
schedule?
If the project has to be finished earlier than planned,

what is the best way to do this at the least cost?
The procedure of drawing a network is:
1.
Specify the Individual Activities: From the
work breakdown structure, a listing can be made of
all the activities in the project. This listing can be
used as the basis for adding sequence and duration
information in later steps.
2.
Determine the Sequence of the Activities: Some
activities are dependent on the completion of
others. A listing of the immediate predecessors of
each activity is useful for constructing the CPM
network diagram.
3.
Draw the Network Diagram: Once the activities
and their sequencing have been defined, the CPM
diagram can be drawn. CPM originally was
developed as an activity on node (AON) network,
but some project planners prefer to specify the
activities on the arcs.
4.
Estimate Activity Completion Time: The time
required to complete each activity can be estimated
using past experience or the estimates of
knowledgeable persons. CPM is a deterministic
model that does not take into account variation in
the completion time, so only one number is used
for an activity's time estimate.
5.
Identify the Critical Path: The critical path is the
longest-duration path through the network. The
significance of the critical path is that the activities
that lie on it cannot be delayed without delaying

the project. Because of its impact on the entire
project, critical path analysis is an important aspect
of project planning.
The critical path can be identified by determining the four
parameters for each activity. The four parameters are
Earliest Start, Earliest Finish, Latest Finish and Latest
Start.
Models and Modeling in Operations Research
A model is defined as the approximation or abstraction,
maintaining only the essential elements of the system,
which may be constructed in various forms by establishing
relationships among specified variables and parameters of
the system. A model does not, and cannot, represent every
aspect of reality because of the innumerable and changing
characteristics of the real life problems to be represented.
Modeling is the essence of an Operations Research
approach. By building model, the complexities and
uncertainties of a decision-making problem can be changed
to logical structure that is amendable to formal analysis. By
and large, a model provides a clear structural frame-work to
a problem for purposes of understanding and dealing with
reality.
Use of Computers to Solve Operations Research
Problems
The Operations Research problems are time consuming
and involve tedious computations. Even a simple problem
with few variables take a long time to solve manually and
even by a hand calculator. The advent of computers
accelerated the wide use of Operations Research techniques
for solving complex business problems faced by managers
and administrators in business and government. The
automation of computational algorithm allows decisionmakers to concentrate on problem's formulation and the
interpretation of the solutions. Major computer
manufacturers and vendors have developed software
packages for the various computer systems providing
computational support for problems to be solved by the
application of Operations Research techniques. Some
academic departments in different universities have also
produced software packages for solving various Operations
Research problems. Computer manufacturers like IBM,
CDC, Honeywell, UNIVAC, ICL, etc. have invested
substantial amount in developing software programs for
solving the optimizing, scheduling, inventory, simulation

and other Operation Research problems. Also large scale
simulations are possible through computers especially by
using GPSS software packages.
Challenges of Operations Research Applications
Due to vast quantities of data and calculation, solving
optimization problems is challenging and time consuming.
Such approach towards performance improvement may or
may not be economically feasible for some organizations.
Numerous studies were conducted on development of
more effective and efficient heuristic and exact algorithms
that can solve large scale optimization problems.
Basically, O.R. is quantitative problem solving technique.
Hence, data plays important, if not the most important,
role in producing high quality and executable solutions.
With an organization that has data readily available using
information system such as MRP and ERP it should be able
to use required data with certain level of integrity.
However, for a system that is highly manual, data driven
decision science techniques such as O.R. may or may not be
the appropriate approach. With companies moving
towards managing business with some form of companywide information system; Linear Programming, Discrete
Event Simulation and Queuing Theory will be most
suitable and appropriate decision tools.
Integrity of data depends on many factors. Information
system that requires manual input of data, unstable
network systems, unstable programs and defective
hardware are some of the factors. The most important
factor that determines high data integrity is human error
when inputting data. Human errors can be minimized
through education combined with hands-on training such
as on-the-job training. Unfortunately, many organizations
tend to focus heavily on physical system implementation
and give little or no attention on education and training.
Employees are often reprimanded for not entering the data
correctly and the quality of hardware and/or software is
questioned for poor data integrity. An organization can
implement the world's greatest database, but if the
personnel responsible for operating and sustaining the
system lack the knowledge of performing their job,
attaining and implementing the world's greatest system
would be meaningless.
Concluding Remarks
Another name for managers is decision makers. In order to
survive and lead today's highly competitive and demand
driven market, pressure is on management to make
economical decisions. One of the essential managerial skills
needed is ability to allocate and utilize resources
appropriately in the efforts of achieving the optimal
performance efficiently. In some cases such as small-scale
low complexity environment, decision based on intuition
with minimal quantitative basis may be reasonably
acceptable and practical in achieving the goal of the
organization. However, for a large-scale system, both
quantitative and qualitative (i.e. intuition, experience,
common sense) analyses are required to make the most
economical decisions. Using Operations Research
techniques including Linear Programming, Discrete Event
Simulation and Queuing Theory, organization leaders can
make high quality decisions. Operations managers are not
expected to be experts in any decision science tools.
However, they must have fundamental knowledge of such
tools to acquire the right resources and to make the most
economically sound decisions for the company as a whole.
The barriers to the use of O.R. techniques can best be
removed by increasing the managers understanding of
O.R. techniques especially through constant training and
development.
Major computer
manufacturers and vendors
have developed software
packages for the various
computer systems providing
computational support for
problems to be solved by the
application of Operations
Research techniques.
REFERENCES
Agbo, M.U. (2010) Quantitative Techniques: An Approach to Business Decions, Enugu, John Baz Publisher.
Budnick, F.S., Mcleavy Dennis, Mojena Richard (1999) Principles of Operation Research for Management.
Buffa, E.S., Sarin, R.K., (2009) Modern Production/Operation Management,India. John Wiley and Sons.
B. Erkan, M.C. Jothishankar, T. Ekrem, W. Teresa, Evolution of operations management: past, present and future, Management Research News, Vol. 30,
No. 7, 2007, pp. 843- 871.
Chary, S.N (2000) Production and Operation Management, Tata, McGraw-Hill Publishing Company Limited.
Chunawalla, S.A., Patel, D.R. (2006) Production and Operation Management, Himalaya Publishing House, Sixth edition.
F. Pericles, Operation Research Dealing with Human Values and Environmental Consideration, Advanced Modeling and Optimization Volume 9, Number 2,
2007, pp. 269-276.
Ghosh J.K., Mahalanobis and the art and science of statistics: The early days, Indian Journal of History of Science, Vol. 29(1), 1994, pp. 89-98.
J. Luckman, J. Stringer, The Operation Research Approach to Problem Solving, British Medical Bulletin, Vol. 30, No. 3,1974, pp 257-261.
Mahadevan, B., Operations Management; Theory and Practice, Pearson Education, Third edition, 2008.
N. Ravichandran, Vision 2020: The Role and Scope of Operations Research Models, pp.1-21.
Russell and Taylor, Operation Management:(2006) Quality and Competitiveness in a Global Environment, India Willy Publishing. .
Taha, H.A.(1997), Operation Research: An Introduction,India. Prentice Hall.
Taha, H.A., Natarajan, A.M., Balasubramanie, P., Tamilarasi A.,(2008) Operation Research: An Introduction, Pearson Education..
Winston, W.L., (2007) Operation Research: Applications and Algorithms, Fourth Edition,
W.T. George, Operation Research and Evolution, Journal of Operation Research Society, Vol. 37, No. 8, 1986, pp. 725-733.
Wilson J.M., Classification of Models in Operation Research, Journal of Operation Research Society, Vol. 36, No. 3, 1985, pp. 253-256.
13
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JULY - DECEMBER, 2013

MANAGING CHAOS AS DEVELOPMENT

THE IMPACT OF THE ENVIRONMENT ON THE

TOWARDS THE APPLICATION OF OPERATIONS

Judge Business School ExecutiveEducation

Date:16th - 21st November, 2014

Date:1st - 5th September, 2014

Date: 8th - 12th September, 2014

Date: 19th-23rd October, 2014

For more information, please visit www.managementnigeria.org or call 08052597204, 08052597205

- Prof. Zakari Mohammed, FNIM

VOLUME 49 : Numbers 3 & 4 JULY - DECEMBER 2013

MANAGING CHAOS AS DEVELOPMENT

THE IMPACT OF THE ENVIRONMENT

RAW MATERIAL MANAGEMENT IN

TOWARDS THE APPLICATION OF OPERATIONS

From the Editor

ne of the major key indices for determining the

was seen as the final solution to curb incessant power

VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT

By Professor Rahamon A. Bello, FAEng

VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT

ision 20:2020 recognized that for the Nigerian

Currently, less than 50% of the Nigeria's total

Most of the power sector infrastructural facilities in

Figure1 shows a very good correlation between power

Figure 1. Electricity consumption and GDP in 134 countries of the world

South Africa which has 40,000 MW for its 50 million people.

Brazil with 100,000 MW for 192 million people.

The US with 700,000 MW for 308 million people.

VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT

Trinidad and Tobago

KWh per capita per annum

Figure 2: Per capita electricity consumption for various countries

POWER SECTOR IN NIGERIA

VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT

Length of Transmission Lines:

Length of Distribution Lines:

Power Generation in Nigeria

639 million tones was established while the estimated

VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT

2004 and currently is about 36.5 billion barrels. Nigeria's

and production activities. Consequently, as high as 75% of

Table 2: Nigeria's Renewable Resource Estimate

2 4 m/s (annual average) at

3.5 - 7.0 kWh/m -day

Source: Energy Commission of Nigeria; National Energy Masterplan

Except for the large scale power generation from hydro

interruption if it is properly harnessed. The total installed

CURRENT STATUS OF POWER GENERATION

VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT

Table 3: Expected Additional Generation Capacity

With efforts on increasing power generating capacity, there

The figures highlighted are however related to the power

AES, AGIP, Shell

Diesel & Petrol

VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT

In spite of the huge and diverse

Table 4 Capacity Output of the NIPPs

Gas, Transmission & Build Gap

Gas & Transmission Gap

PHCH + NIPP in 2011

In spite of the huge and diverse endowed energy resources in