AN EVALUATION ON THE EFFECTS OF INVENTORY MANAGEMENT PRACTICES
ON AN ORGANIZATION: A CASE STUDY OF NAKUMATT SUPERMARKET IN KISII
TOWN.
HESBORNFredrick gitongaGilbert seriahChepkorir mercy
A Research Project Report Submitted in Partial Fulfillment of
The Requirements for The Award of Diploma in Business
Administration Of Kisii University College.
EGERTON UNIVERSITY
August , 2012 DECLARATION AND RECOMMENDATIONDECLARATIONThis
research project is my original work. Has never been presented
before for the award of any diploma or qualification.Signature..
DateOCHARO EZRA OKIBOCBP01/1OO45/10
RECOMMENDATIONThis research project report has been submitted
for examination with our approval as Kisii University College
supervisors.sign................................
Date.................................................................MR.
ROBERT NYABWANGALECTURERKISII UNIVERSITY COLLEGE
Sign...................................................................Date...........................................................MR.
BEN NYARANGILECTURERKISII UNIVERSITY COLLEGE
DEDICATIONThis research is dedicated to my beloved parents, Mr.
Jared M Okibo and Mrs Zipporah Moraa.
ACKNOWLEDGEMENTMy foremost gratitude goes to our almighty God
for enabling and guiding me through my academic life. I wish to
record my gratitude to my supervisors Mr Robert Nyabwanga and Mr
Ben Nyarangi for guiding me right from the first stage up to this
final stage. I also acknowledge Kisii University College staff that
supported me in one way or another during my period of study.
besides, my appreciation goes to my cousins Edward who helped me
with writing materials needed during the research period and
Zackary who guided me in topic selection. I also thank my uncles,
walter Aminga, Richard Ongera, and Enock Orora for their support as
I was writing this project report. My special thanks goes to my
sister Lilian and Brother Vincent for giving me financial support
needed to do this work. I thank the family of my uncle Japhet
Ombaso for their assistance as I was writing this projet report.
Above all, I owe a lot to my classmates; they deserve special
recognition. They nursed my frustrations and offered company as we
struggled to beat the deadlinesMay God bless you all.
ABSTRACTThe purpose of the study was to assess the effect of
inventory management practices on warehouse operations efficiency
in Ouru Superstore Kisii town. This study was important to
management of Ouru Superstore in adopting ways of efficient
inventory management practices. The study was a basic to unearth
certain problems relating to material management and inventory
management practices and went along way to enhance interest in new
concepts, approaches and philosophies aimed at better cost control
over inventories. This study was of benefit to students carrying
out researches on inventory management practices in corporate
organizations especially warehouses, and finally add to existing
literature on the subject. The research applied a case study where
questionnaires were used to collect quantitative data. The target
population was 80 employees of Ouru Superstore Kisii town, where a
sample of 20 persons were taken using purposive sampling and simple
random sampling methods. The collected data was analyzed using
descriptive statistical techniques such as percentages, frequencies
and weighted averages. Analyzed data will be presented in tables
and charts. The study found out that the effect of inventory
management practices on warehouse operations efficiency are:
improved labor productivity, enhanced customer services,
facilitates standardization of inventory movements, improved cycle
counting, more efficient use available warehouse space, faster
inventory turns and reduction inventory paper work. The study
suggested that further research be done on the following areas: the
study can be carried out using other warehouses in different towns
to make results have better generalization.
TABLE OF CONTENTSDECLARATION...iiDEDICATION
..iiiACKNOWLEDGEMENT....ivABSTRACT ......vLIST OF
ABBREVIATION.......viLIST OF FIGURES
.................................................viiTABLE OF
CONTENTS....viiiCHAPTER ONE... 11.0 INTRODUCTION....11.1 Background
of the study ................. ...11.2 Statement of the
problem.........21.3 Objective of the Study..31.3.1 General
objective of the study..........31.3.2 Specific
objective...........31.4 research questions.........31.5 scope of
the study.........31.6 significance of the study..........31.7
assumptions of the study......41.8 limitations..........41.9
Operation definition of terms...........5CHAPTER TWO6LITERATURE
REVIEW..62.1 Concept of inventory
management....................................................................................62.2
Inventory management techniques........72.2.1 The economic order
quantity (EOQ) model...72.2 The ABC analysis
techniques................82.2.3 Just in time techniques
(JIT)......................92.2.4 Material Requirement
Planning...................102.2.5 Vendor Managed inventory
..........102.3 Replenishment system.....112.4 Inventory holding
costs.......................122.5 Inventory Purchase Budget..122.6
Inventory Tracking..........................132.7 The Lead
Time............................132.8 Re Order
Point.........................132.9
Warehousing............................142.9.1 Warehousing and
store management...142.9.2 Store operations......142.10 The
Techniques used in store inventory control........152.11 Conceptual
Frame Work........183.0 CHAPTER THREE...20RESEARCH
METHODOLOGY...203.1 Research design...203.2 Study
area.............203.3 Target population.....203.4 Sample size and
sampling procedure...............203.5 Research
instrument.....213.5.1 Validity of the instrument.....213.5.2 The
reliability of the instruments..223.5.3 Data collection
procedure.............223.6 Data analysis and
presentation.............22CHAPTER FOUR..23DATA ANALSIS, RESULTS
AND DISCUSSION.234.1 Questionnaire Return Rate..4.2 Demographic
characteristics of the sample4.2.1 Tenure of employment..4.3
Findings on objective one..Findings on objective two..Findings on
objective three.CHAPTER FIVE.SUMMERY, CONCLUSIONS AND
RECOMMENDATIONS5.1 Summary of Finding and Conclusion..
Recommendation REFERENCE....APPENDICESAPPENDIX : QUESTIONNAIRE
LIST OF FIGURESGraphical presentation of EOQ...10Conceptual
flame work.4.5 graphical presentation of factors considered while
determining maximum stock level4.7 Success of Ouru Superstores
overall inventor management practices..4.9 challenges incurred in
storing goods in the store4.10.1 Challenges facing Ouru Superstores
in adopting inventory management practices
LIST OF ACRNYMS AND ABBREVIATIONSDOD- Department of DefenseGAO-
General Accountancy OfficeEOQ- Economic Order QuantityTC -Total
CostCO -Ordering CostCC -Carrying CostQ -QuantityMRP- Material
Requirement PlanningJIT -Just in time techniquesVED -Vital
Essential DesirableVMI -Vendor managed inventoryFIFO -First in
first outSSE- Small Scale Enterprise
LIST OF TABLES3.4 Sample size and sampling procedure4.2.4 Tenure
of employment4.4 Effect of inventory management practices on
warehouse operation efficiency.4.5 Factors considered while
determining the maximum stock levels.4.7 Success of Ouru
superstores overall inventory management practices.4.8 The type of
stock ordered by Ouru superstores most..4.9 The inventory costing
method used by Ouru superstores to value stock in its warehouse4.10
Challenges incurred in storing goods in the store.4.10.1 Challenges
facing Ouru in adopting inventory management practices4.11
Effectiveness of Ouru superstore in carrying out inventory levels
management practices
CHAPTER ONE INTRODUCTION1.1 Background of the StudyBased on the
establishment that effective inventory management had the greatest
effect on the financial planning model as indicated by its largest
standardized beta coefficient (0.505), as by the findings of
(Nyabwanga et al,2011). The study suggests that Small Scale
Enterprises (SSE) shoud pay more attention to the management of
inventory since it has large effect on financial performance.
Therefore (SSE) should ensure that stocks are sufficient to meet
customers demand while at the same time avoid holding unnecessary
surplus stock that may increase holding costs. SSE should seek
knowledge on how to use stock optimization techniques so as to be
able to determine right quantities of stock to hold at any given
time. (Nyabwanga et al, 2011).Long-term planning for network design
is considered when investing in resources or contracts with third
party logistics companies.The total cost is determined based on
location, transportation, and inventory costs. To optimize the
logistic network model, the factors affecting costs are considered.
Pujawan, (2004) studied the effective lot sizing rules by comparing
the variance of order interval and quantity. He focused on order
variability under different order lot sizes without considering
shipping costs and location capacity in a single level system from
suppliers to end customers. The majority of the studies in the
literature use mathematical optimization techniques or montecarlo
simulation. To consider optimizing all the systems in a company,
the discrete simulation the simulation techniques is used to deal
with complexity of factors and strategies, Torress, (1997).Due to
many assumptions and responses to potential factors of inventory
management practices, the abstracted process in Liu of detailed
process is considered as in the earlier research by suwanruji,
(2004) and Kliejnen (2005) indicated simulation as a tool of
methodological concerns; verification, sensitivity or what if
analysis optimization and robustness and uncertainty analysis for
strategic levels.Anily and Federgruen, (1993) researched fixed
renting truck cost and constant replenishment interval inventory
policy. They used deterministic demand and assumed the demand is
identically uniform for all regions through two echelons et
al,(1999) modeled logistics network with stop over, travel, and
shipping cost. Jayaraman, (1998) studied a logistics networks with
the space of location limited by the dimension of products.
Inventory holding and warehousing continue to play an important
role in modern supply chains. A survey of logistic costs in Europe
identify the cost of inventory as being 13 percent of total
logistic costs, whilst warehousing accounted for a further 24
percent, Baker,(2007), however determination to control purchase
and inventory costs in warehouses in many cases have not been
motivated to control purchasing costs in the same way that
competitive industry has.Inventory management offers great
potential for organization to reduce costs and improve customer
service performance, (Jeffrey et al 2008). However, it should not
be forgotten that money saved by cutting inventory costs could be
used to improve the performance and add to profitability of the
company.Several organizations have over the past applied inventory
management practices; studies show that the united states General
Accounting Office, (GAO) use of innovative business practices to
improve inventory management and the opportunities. What the
researcher wanted to find out is; whether the inventory management
practices help Ouru superstore to maintain the flow of inventory in
his warehouse.1.2 Statement of the ProblemIt is important that a
company maintain adequate stock of material for a continuous supply
to the market for an un interrupted production. In doing so, such a
company is exposed to two undesirable points, namely; excessive and
inadequate inventories. Each of them has dangers. For instance,
inventories can lead to unnecessary tying-up of the firms funds and
loss of profit, excessive carrying cost and risk liquidity while
inadequate inventories can lead to production hold ups and failure
to meet delivery commitments. The financial managers prefer to keep
materials. This situation indeed makes it necessary to examine the
inventory management practices and techniques as this can have
severe impact on the organizations performance with associated
consequences on the survival of the firm. The study is concerned
with the problem of how to maintain optimum level of inventory
using inventory management practices.
1.3 Objective of the StudyTo assess the effect of inventory
management practices on warehouse operation efficiency in Ouru
Superstore Kisii Town.1.3.1 General Objective.The general objective
of this study was to assess the effect of inventory management
practices on warehouse operations efficiency1.3.2 Specific
Objectives.(i) To establish the inventory management practices of
Ouru super store(ii) To evaluate the warehouse operation efficiency
of Ouru Superstore(iii) To determine the effect of inventory
management practices on warehouse operations efficiency1.4 Research
Questions(i) What are the inventory management practices of Ouru
Super Store?(ii) What is the Warehouse operation efficiency of Ouru
Superstore?(iii) What is the effect of the inventory management
practices on the warehouse operations efficiency of Ouru Super
Store?1.5 Scope of the StudyThis study was limited to assessment of
effect of inventory management practices on warehouses operation
efficiency taking Ouru superstore situated in kisii town as the
case study. The study was conducted between May and August 2012.1.6
Significance of the Study.This study was important to management of
Ouru super store in adopting ways of efficient inventory management
practices. This study was also of immense benefit to students who
carrying out researches on inventory techniques in corporate
organization especially warehouses. Finally the research was
significant in adding to existing literature on the subject.1.7
Assumptions of the StudyThe following were the assumptions of the
study; first, the management was to allow the researcher into their
premises to do the research. Ouru superstore has adopted inventory
management practices. He also has a warehouse to store inventories.
All research questions were to be answered honestly1.8 Limitations
of the StudyThe study was limited to Ouru Superstore Kisii Town
hence its findings may not be generalized to other Superstore. The
management was reluctant and uncooperative in giving relevant
information citing the confidentiality of the information given,
this forced the researcher to engage the respondents in a brief
interview to let them know the importance of this study as a
strategy to avoid lack of co-operation. Ouru superstore staff may
be busy hence lack time to attend the researcher as by their daily
chores. The collection of data was based on the questionnaire
whereby the respondents may not be accurate, honest and clean in
giving their response, therefore the researcher will employ
qualitative techniques to select and document, reliable and
accurate findings. Some respondents were unwilling to respond
because they feared that if they give factual information they may
loose their job, hence the researcher assured the respondents of
the confidentiality of the information to fight the fear in
them.
1.9 Operational Definition of terms used in the studyBuffer
stockIs a term used to describe a level of extra stock that is
maintained to mitigate risk of stock out (shortfall in raw
materials or packaging) due to uncertainties in supply and demand
.InventoryInventory is an idle stock of physical goods that contain
economic value and are held in various forms by an organization in
its custody awaiting packaging, processing, transforming, use or
sell in the future point of time.A warehouseA warehouse is a
commercial building for storage of goods. Warehouses are used by
manufacturers, importers, exporters, wholesalers, transport
businesses and so on.Obsolete inventoryRefer to inventory that is
not usable anymore either due to the product being at the end of
its life cycle or has not sold for a set of time period generally
determined by the industry.Carrying cost of inventoryThis is the
cost a business incurs over a certain period of time to hold and
store its inventory. Business use this figure to help them
determine how much profit can be made on current inventory. It also
helps them to find out if there is need to produce more or less in
order to keep up with expenses o maintain the same stream.
CHAPTER TWO LITERATURE REVIEW2.1 Concept of Inventory
ManagementAny stock that a firm keeps to meet its future
requirement of production and sales is called inventory. The basic
reason for holding inventory is to keep up production activities
unhampered. It is neither physically possible nor economically
justifiable to wait for stock to arrive at the time when they are
actually required. Therefore keeping of inventory is a must for
efficient working of a business unit. Hari (2004).The necessity of
inventories prevails in order for companies to successfully manage
market expectations throughout fluctuating business cycles, Silver
et al ( 1998), for majority of companies; the role of inventory is
to improve overall delivery responsiveness and to buffer against
production or supplier product shortages that potentially conflict
with the desired customer service level. Inventory management
contribute towards accompany strategy as a key driver of product,
price, and responsiveness within the supply chain, Goldratt (1986).
It is considered to enable competitive advantage within
organizations, Hayes, (2005) and therefore considered to be crucial
element for sustainable, successful business operations.Inventory
is used to satisfy demand, which is generally considered to be
probabilistic under normal conditions. This is particularly true
for retailers operations where consumer demand is completely
subjective and bound by the activity of shoppers within the retail
storefront. Large unanticipated demand will inevitably contribute
towards a product arriving too early resulting in excess or
potentially obsolete product in stores, Silver et al, (1998). On
most accounts, the traditional approach to addressing this problem
has been to plan and manage inventory levels.In order to address
the problems concerning inventory, researchers have applied
theoretical formulae based around the economic ordering quantity
(EOQ), calculation, Buxey, (2006) and the use of safety stock
throughout the organization. Other recommendation include the
concept of Total cost of logistics, Lambert $ Stock, (1993) or
based upon flexible re-order level policies that adjust to
variations and levels in demand. Lewis (1989). These alternative
approaches suggest that the function of inventory management could
be managed independently from other business functions through the
use of various formulaeThis particular tactic imposes a business
risk where efforts to reduce costs in one activity may actually
lead to an increase in total cost due to rising expenses in another
part of the organization, Lambert $ Stock, (1993). This means that
managers that attempts to resolve the problem through localized
management of inventories must negotiate the risk of sub-
optimization a cross the entire plant or organization.2.2 Inventory
Management TechniquesTo achieve the objectives of inventory
management, the firm should endeavor to determine the optimum level
of inventory. This calls for the application of sound techniques.
Some of the techniques are discussed below.2.2.1 The Economic Order
Quantity (EOQ) modelUndoubtedly, best known and most fundamental
inventory decision model is the economic order quantity model. Its
origin dated back to the early 1900s. The purpose of using the EOQ
model in this research is to find out the particular quantity,
which minimize total inventory costs that are the total ordering
and carrying costs.The EOQ has been previously defined by
Dervitsiotis, (1981), Monks, (1996), Lucey T (1992) and Schreader
(2000) as the ordering quantity which minimizes the balance of cost
between inventory holding cost and reorder costs. Lucey,(1992)
stressed further that to be able to calculate a basic EOQ, certain
assumptions are necessary; That there is known, constant holding
costs; that there is known , constant ordering cost; the rate of
demand are known; there is a known constant price per unit; that
replenishment is made instantaneously, that is the whole batch is
delivered at once, and lastly, no stock outs are allowed.It would
be apparent that the above assumptions are some what sweeping and
they are a good reason for treating an EOQ calculation with
caution. Also, the rationale of EOQ ignores buffer stocks, which
are maintained to cater for variations in lead time and demand. The
above assumptions are wide ranging and it is unlikely that all
could be observed in practice. Nevertheless, the EOQ calculation is
a useful starting point in establishing an appropriate reorder
quantity.The EOQ formula and graphical presentation is given
below;EOQ= 2DCo/CCWhere CO, Cc, and D denotes the ordering costs,
carrying costs and annual demand respectively.Note also that annual
stock= EOQ/2, Total annual carrying cost = CcQ/2, number of orders
per annum = D/Q, Annual ordering cost = COD/Q, and total cost =
CcQ/2 +CoD/Q, Q= calculated EOQGraphically, the EOQ can be
represented in the fig 1
EOQCarrying cost
Ordering costcostinventory levelFig 1: presentation of EOQ
graphically.Source: Lucey T, (1992) Quantitative techniques; 4th
edition.2.2.2 ABC Analysis TechniqueFor a firm that deals with
thousands inventory items, it is obviously difficult to devote
equal attention in terms of personnel and financial resources to
each of the inventory item, hence the need for selective control,
Ravi A, (2003) The common technique to be used in measure the
significance each item of inventories in terms of its values. ABC
analysis demands knowledge of each of its value, price, usage and
lead time as well as problems which can be encountered during
procurement.Under ABC analytical technique, the inventories are
classified into A items and C items. The high value items are
classified as A items and would be under the highest control and
attract maximum attention C represent relatively least value and
would be under simple control, as it would attract the least
attention B items falls in between this two categories and require
reasonable attention management since ABC analysis concentrates on
important items Richmond, (1969; 74-78) branded it control by
importance and exception.According to Pandey, (1979), the steps
involved in ABC analysis are; classifying the items of inventory
determining the expected use in units and the price per unit of
each item; determining the total value of each item by multiplying
the expected units by its units prices; rank the items in
accordance with the total value giving first rank to the item with
highest total value and so on; compute the ratios (percentage) of
number of units of each item to total units of all items and the
ratio total value of items; finally combine items on a basis of the
relative value to form three categories A B and C2.2.3 Just in Time
Techniques (J I T)J I T is the Japanese system of inventory control
which is based on the premise that inventory is the most of all
evil and should be kept at an absolute minimum level. The
commonsense phrase just in time suggests that inventories should be
available when a firm needs them. The of JIT techniques is zero
inventories with 100 percent quality. It does not mean the firm
shiftsInventory tasks to the supplier, rather calls for
synchronization between supplier and customer production Schedules
so that it becomes unnecessary to keep buffer stock. According to
Lotter, (2004), effective implementation of JIT should result in
reduced inventory and lead time and increase quality productivity
and adaptability to changes. One of the importances of JIT is that
it helps to ensure strict quality control, frequent and reliable
delivery. It also encourage easily supplies involvement in
production process of the buying organization should maintain table
production schedule. Other advantages of Just-in-time are; funds
that were tied up in inventories can be used elsewhere; areas
previously used to store inventories can be used for other more
productive uses; throughput time is reduced, resulting in less
wastes and greater customer satisfaction.2.2.4 Material Requirement
Planning (MRP system)This is a computer based production and
inventory planning system primarily employed for products in which
the final product is an assembly of component parts the concept
provides a basic and different way of looking at the management
manufacturing operation. The objectives of MRP system are; To
ensure the availability of materials and components for assembly of
the end item; to minimize level of inventory; to plan manufacturing
activities, delivery schedules and purchasing activities. According
to Ezirim, (2002; 327) MRP challenges the traditional concept that
any significant level of production. Inventory need to be carried
prior to the time materials are actually required by production,
the basic of MRP system is first to analyses and an end item
(finished products) and break it down into various component party
i.e. explosion. A schedule is then determined so that the demand
and lead time at a particular component level is determined. That
means it is possible to calculate precisely the production material
need for a given period of operation. The bill of material for a
given finished product can be exploded for a number of units to be
obtained, the products exact requirement for each component.
Material, or part with this approach, a firm can calculate
production material requirement in advance of actual need, and then
generates requisitions for each material to be delivered in the
required quantity prior to the beginning of the manufacturing
operation.2.2.5 Vendor Managed InventoryVendor managed inventory
simply means the vendor (the manufacturer) manages the inventory of
the distributor. Vendor managed inventory, V.M.I) is one of the
many initiatives that strives towards closer co-operation between
the members of supply chains in the area of inventory and demand
management, Doughtery,( 1999). V.M.I is an inventory management
process that falls under the push stock management process. These
are processes that are triggered by interpretation of expected
demand in inventory and supply is scheduled to meet this demand.
Vendor managed inventory/consignment stock is inventory that is in
the possession of the buyer, (shop, warehouse or store), but is
still owned by the supplier.Payment of the inventory is made once
it is sold accordingly, the capital investment on the stock comes
from the supplier and the buyer provides space for it. Kumar (2003)
V.M.I have benefits and some of the benefits are; increase in
sales, where companies who have implemented V.M.I have increased
their sales by an average of 22-35 %. By providing customers with
replenishment order alerts and ensuring shelves are stocked with
vendor products; strengthen customer relations; increase
performance on delivery time.2.3 Replenishment system/ P-system/
periodic review/ periodic count systemIn this system, costs are not
explicitly considered and order quantity is not fixed. On the other
hand, time is taken into consideration and given more emphasis.
Inventory is periodically reviewed at fixed intervals and if there
has been any depletion in consumption between the last and present
review period, a replenishment order is placed to bring the stock
at a predeterminined level. (A K Datta, 2004)A predetermined
quantity is equal to the difference between replenishment level and
actual inventory on hand. In other words, we are here interested in
actual or average consumption over a period of time, ie. Time
between two reviews, review time and lead time. Replenishment level
is computed as;M=B+D(R+L), where,M=Replenishment level
unitsB=Buffer stock in unitsD= Average demand for the item
(units/time)R=Review period (weeks/months)L= Lead time
(weeks/months)I= Inventory on hand in unitsOrder quantity Q can be
computed as follows:(i) If L>R, then Q=M-I-Qord. Where,I=
Inventory on hand Q= Quantity on order
2.4 Inventory holding costEdmonds $ Thomas p (2000) referred to
inventory holding costs as the costs associated with acquiring and
retaining inventory. It includes the costs of storage space, lost,
stolen or damaged merchandise, insurance personnel and management,
and interest.2.5 Inventory purchases budgetAfter the amount of
projected sales has been established, accountants focuses on the
amount of inventory that will be needed to satisfy the sales demand
(Edmonds & Thomas P 2000). Meeting the sales demand requires
having enough inventories to cover expected sales and future sales
between re-order points. Accordingly, the total amount of inventory
needed for each month equals the amount of budgeted sales plus the
desired ending inventory.The total amount of inventory needed can
be obtained from the two sources. In other words, customers demand
can be satisfied with goods that are beginning inventory. The
difference between the amount of goods needed and the beginning
inventory is the amount of goods to be purchased (Edmonds &
Thomas p, 2000)Accordingly, the purchases budget follows a logical
format that is summarized here;Cost of budget sales xxxPlus:
Desired ending inventory xxxInventory needed. XxxLess beginning
inventory (xxx)Amount to purchase. XxxNyabwanga et al (2012),
suggested that preparation of inventory budgets and review of
inventory levels are regularly carried out and managers are in
agreement with findings of kwame, (2007) which established that
majority of small businesses always review their inventory levels
and prepare inventory budgets and this is stressed by Lazaridis and
Dimitrios, (2005) that enhancing the management of inventory enable
businesses to avoid tying up excess capital in idle stock at the
expense of profitable ventures.2.6 Inventory trackingThe purpose of
inventory tracking is to ensure that while some of your capital
must be tied up in inventory, it doesnt hinder your companys cash
flow or waste employees time. Your business will run best if you an
accurate count of inventory, procedures for changing it, and an
organization scheme that allows fast and efficient access to it.(
David and Donald 1996).Firms should set a side sufficient space for
their inventory. A sizable and well-lighted area allows them to
organize and manage their inventory in the way that fits your
company. They should also organize there inventory in a manner that
fits the type of business they run (David and Donald, 1996).2.7
Lead timeCan be explained as the time between planning the release
of an order work in progress until the order is completed.
According to Green J H (1997), lead time is the required period to
complete one operation on a component. Green further states that
manufacturing lead time as a time required to manufacture an
item.2.8 Re- order pointThe re-order (ROP) is the level of
inventory when an order should be made with suppliers to bring the
inventory up by the Economic Order Quantity EOQ (Khan $ Jain, pk
2003), the reorder point for replenishment of stock occurs when the
level of inventory drops down to zero. In view of jumps to the
original level from zero level. The two factors that determine the
appropriate order point are the delivery time stock which is the
inventory needed during the lead time (i.e. the difference between
the order date and the receipt of the inventory ordered and the
safety stock which is held as a protection against shortages due to
fluctuations in demand.( khan and Jain 2003)Re-order point= normal
consumption during lead time+ safety stock2.9
WarehousingWarehousing can be viewed as a physical system,
involving facility space, labour, and equipment, where inbound
products are put away, stored, and protected until the outbound
product shipment-related process occur. (Ackerman, 2000). The
warehouse system has control to manage the physical flow, to ensure
the proper care and handling of materials, and to document all
activities occurring in the warehouse. the proper care and handling
of materials, and to document all activities occurring in the
warehouse. The major activities of warehousing are receiving,
putting away, storage, order picking, marking, staging, and
shipping. Ernst& ( 1985). Another important activity considered
by some as equally important, is housekeeping. Ackerman (2000)2.9.1
Warehousing and stores managementReceiving and storage are
important flow control activities in the materials management
chain. Regardless of the efficiency with which all preceding
materials activities have been conducted, to a significant extent
receiving and stores determine the degree to which the operating
units will be supplied satisfactorily (Donald,( 1996).2.9.2 Storage
operationsStorage functions are usually an extension of receiving
department duties. The basic functions of storage are the movement
of products from the dock area to a holding location and quantity,
and the updating of storage records so that the products can be
found easily when it is needed.Datta, (2004).2.9.3 Measuring
warehouse efficiencies.Warehouses are one of the most labor
intensive nodes in supply chains. While there have been major
innovations towards increasing warehouse productivity through
process and mechanical automation, they still constitute a
substantial part of the supply chain cost. Warehouses generally
measure their effectiveness through various metrics that can be
grouped in one of the following categories;Operations- the
operational metrics measures the efficiency of warehouse
operations. This is primarily focused on the number of activities
performed. The example of metrics in this category will be number
of cases received and shipped, number of picks and put away tasks
completed, units handled, dollar value of the handled merchandise
an so on.Datta,( 2004). The main focus of operational metrics is to
measure the efficiency of the material handling operations within
the warehouse, whether they are handled through labor, automation
or a combination of the two. Equipment like the conveyor,
forklifts, automated carousel systems, diverters, barcode scanners,
sorters, label applicators, dimensioning systems, automated guided
vehicles and so on can help enhance operational efficiency in
warehouse.Stocking efficiency- this set up metrics primarily
measures the efficiency of the warehouse space usage. How does the
warehouse make use of its space, horizontally and vertically? These
matrices show how racking and slotting needs are being fulfilled
and how these decisions affect the operations by affecting picking,
putting away and replenishment tasks efficiency, active and reserve
location. Datta,(2004).2.10 The Techniques Used In Store Inventory
ControlStore/ inventory control techniques is the important tool in
the hands of the modern management. It is indispensable for each
and every manufacturing concern. The following are the important
techniques of store control.2.10.1 Fixation of various stock
levelsUnder this method, various stock levels are fixed
scientifically to avoid overstocking and under stocking of
materials. Overstocking of materials leads to unnecessary blockage
of materials and investment and under stocking of material leads to
disputation in production. The following are the stock levels which
help for planning of materials;2.10.2 Perpetual inventory
system.According to Ravi, (2003) perpetual inventory system is a
system of records maintained by controlling department which
reflects the physical movement of stock and their current balances.
Bin cards and store ledger constitute the bedrock of perpetual
inventory system. It is a method of recording store after every
receipt and every issue and their current balances to avoid closing
down the firm for stock taking. To ensure accuracy, the physical
verification may be made which must have to agree with the balance
of Bin cards and store ledger. If there is discrepancy between the
two, it may be adjusted by preparing debit note and credit note
2.10.3 Inventory turnover ratioInventory turnover ratio is one
of the methods of store control. It indicates how quickly the
stocks are converted into sale. Low inventory turnover ratio
indicates the inefficient management in inventory and high
inventory turnover ratio always implies favorable situation.(Lucey
1992)2.10.4 Purchase requisitionPurchase requisition is a form used
as a formal requisite by the store keeper to the purchasing
department to purchase requisite quantity of materials. When store
reaches at the ordering level, the store keeper initiates purchase
requisition to the purchasing department for fresh supply of
materials. The purchase department may not purchase materials
according to its own accord. When purchase officer receives
purchase requisition, he arranges for purchase of materials2.10.5
Material management.Material management is concerned with the flow
of material to and from the manufacturing departments, (Dean S
Ammer, 2006), material management is the process which integrates
the flow of supplies into, through and out of an organization to
achieve a level of service which ensures that the right material
are available at the right place in the right quantity at the right
time, at the right price. It include the functions of procurement,
material handling and storage, production and inventory control,
packaging transport and associated information systems and their
application throughout the supply.2.10.6 Pricing of goods in
warehouseAccording to James B Wilcox, (1987), in pricing
merchandising wholesaling must price their goods in such away that
can be able to sale at satisfactory rate or cost is covered, a
desired profit is made, customers are treated well and they should
know how to compete with their competitors.2.10.7 First in first
out (FIFO)First in first out is an inventory control method where
all inventory is used based on the time or date it was acquired.
This method simply decreases waste and spoilage and requires sting
end control of inventory based on date2.11 CONCEPTUAL FRAME WORK
INDIPENDENT VARIABLES DEPENDENT VARIABLES
Warehouse operation efficiencyFixation of various stock levels
Pricing of goods in warehouseReplenishment of stockStorage
operations Stocking efficiencyInventory management
practicesInventory budgeting)Inventory trackingLead timeRe-order
pointInventory management techniques i.e,EOQ, JIT, MRP, ABC,
VMI,FIFO
size of warehouse Location of the warehouse employee in the
organizationPrice level changes
INTERVENING VARIABLES Source: Researcher, (2012
Explanation of variablesInventory management techniques,
inventory budgeting and lead time are some of the inventory
management practices that ensures warehouse operations is
efficiency. The independent variables are lead time, re-order
point, inventory tracking, replenishment, inventory control and
costs and inventory management techniques like Economic order
Quantity, (EOQ), Material Requirement Planning (MRP), ABC analysis
techniques, just in time techniques, Vendor managed inventory and
First in First Out (FIFO). While dependent variables are fixation
of various stock levels, replenishment, pricing of goods in
warehouse, contingency. However, as much as Ouru superstore Kisii
town attempts to put in place necessary measures to ensure
warehouse operation efficiency, there are other factors that may
affect its plan. Such factors are size of warehouse, location of
warehouse, number of employees in the organization and changes in
price level.
CHAPTER THREE RESEARCH METHODOLOGY3.1 Research designThis study
adapted a case study design. It was considered appropriate since it
enabled the researcher to deal with each characteristic within the
population in depth (Mugenda and Mugenda, 1999). It also assisted
the researcher to know the interrelationships of inventory
management practices thus a case study was more appropriate.3.2
Study areaThe study was carried out in Ouru Super Store Kisii Town.
This area was appropriate because it was easily accessible by the
researcher.3.3 Target populationThe study targeted 80 employees of
Ouru Supertore Kisii Town who were categorized as; 5 from
management, and 75 warehouse attendants.3.4 Sample size and
sampling procedureBased on Kothari, (1993) suggestion of a sample
of 10% for social studies, the researcher took sample of 25% hence
a sample size of the study was 20 respondents consisting of 5
managers and 15 warehouse attendants.Five heads of department were
selected using purposive sampling method. Purposive sampling was
used because the heads of department had clear information on the
effects of inventory management practices on warehouse operations
efficiency. Simple random sampling method was used to select the
sample of 15 warehouse attendants. Simple random sampling
techniques was preferred because it gave each of the warehouse
attendant an equal chance of being selected into the sample. (Oso
and Omen. 2005).
Table 3.4 Sample size and Sampling
procedureRespondentsPopulationSample
Store Manager11
Procurement officer11
Stock Control officer11
Chief store keeper11
Store accountant11
Warehouse attendants7515
TOTAL8020
Source:Ouru Superstore Kisii Town 20123.5 Research
InstrumentsThe researcher used a questionnaire to collect data from
the respondents. The questionnaires were used because they
coverered a wide area of a sample frame, no bias on the side of the
researcher and the respondents have adequate time to give well
thought-out answers ( oso and Omen, 2005). The questionnaires were
hand delivered to the employees to cut down postage costs and save
time for data collection. The questionnaires were administered by
the researcher to ensure a high rate of return and response.3.5.1
Validity of the instrumentJankowicz (1993) states that the validity
of the instruments is established by expert judgments. The
university lecturers examined the content of the instrument and
made necessary corrections before it was taken to collect data
3.5.2 The reliability of the InstrumentsThe reliability of the
instrument was tested through test re-test method. Using this
method, the researcher piloted the study instruments on the
non-sampled members of the population for the first time and after
one week the same questionnaire were re-administered on the same
pilot sample. The responses for the two occasions were compared so
as to establish the consistency of their response3.5.3 Data
collection procedureThe researcher got a letter from kisii
University College after preparing the questionnaire. Then the
researcher went to the field. First, the researcher established a
rapport with the respondents and then administered the
questionnaire to them and gave them a time of 14 days to complete
the questionnaire, after that the researcher went to collect
them3.6 Data analysis and PresentationData collected was analyzed
using descriptive statistical techniques such as percentages,
frequencies and weighted averages. Analyzed data was presented in
tables and charts
CHAPTER FOUR DATA ANALYSIS, RESULTS AND DISCUSSION4.1
Questionnaire Return Rate.A sample of 20 respondents picked using
purposive sampling and simple random sampling were used in this
study. 15 respondents returned the questionnaires which were duly
completed for data analysis. This represented 75%. This indicated
that response was quite good for the study.4.2 Demographic
Information of the SampleThe 9 participants were male,this
represented 60% and 6 participants were female who represented
40&. All of them reported their age bracket as, 18-29 years 8
of them representing 53%, 30-39 years 6 of them representing 40% an
40-49 years where 1 respondent recorded representing 6.7%.the
respondents also recorded their level of education as; secondary 9
respondents representing 60% and 40% interviewed had post secondary
education qualification4.2.1 Tenure of employmentThe study sought
to establish the length of time the employees have worked for the
company, the variable tenure of employment was categorized as;Table
4.2.1 Tenure of employmentPeriodfrequencyPercentage
Less than one year320
2-5640
5-10640
Above 10 years__
TOTAL15100
Source: field Data (2012)From the table above, the results shows
that 20% of the employees have worked for less than two years; 40%
have worked for 2 to 5 years, 40% again have worked for 5-10 years.
It therefore implies that a majority of 80% have worked for the
organization for 2 years and above. This shows that majority of the
employees are experienced and therefore these is a high possibility
of understanding the effect of inventory management practices on
Warehouse operations efficiency.4.3 Inventory management practices
of Ouru SuperstoresThe respondents were to identify inventory
management practices of Ouru Superstores and they identified them
as; inventory budgeting, re-order point, inventory tracking,
replenishment, and inventory management techniques such as EOQ,
MRP, ABC analysis, VMI and JIT techniques.4.4 Effect of inventory
management practices on Warehouse operations efficiencyRespondents
were requested to rate the various effects of inventory management
practices on Warehouse operations efficiencyTable 4.4 response to
the effect of inventory management practices on warehouse
operations efficiency.WeightsStrongly agree 5Agree 4No opinion
3Disagree 2Strongly disagree 1fiwifiwififi
Improved labour productivity15----15755
Enhanced customer services141---154.9
Facilitates standardization of inventory
movements132---154.9
Improved cycle counting132---15734.9
More efficient use of available warehouse space13-2--15714.9
Faster inventory turns131-1-15714.7
Reduction in inventory paperwork11211-15684.7
Source: field Data (2012)The respondents on table 4.4 were asked
to indicate the effects of inventory management practices on
warehouse operations efficiency. The table shows the order of
ranking various effects using weights. The highest weight indicates
the effect with high influence and the lower weight indicate effect
with least influence. From the table, improved labour productivity
was indicated as the effect of inventory management practices on
warehouse operations efficiency with weight of 5 while reduction in
inventory paper work came last with least weight of 4.54.5 Factors
considered while determining the maximum stock levelThe respondents
were requested to indicate the factors considered while determining
the maximum stock level. Table 4.5 shows the response to the
factors considered while determining the maximum stock
levelsFactorsEffect on stock level (%)
Availability of storage spaceyesno100 -
The rate of material consumption100 -
Time taken from order to delivery100 -
Amount of stock already in the store100 -
Capital necessary and available93.3 6.7
The cost of storage93.3 6.7
Average97.77% 2.23%
Source: field Data (2012)From the table 4.5 it is evident that
the rate of material consumption, the lead time and buffer stock
were highly considered while determining maximum stock level with
100% respondents followed by capital necessary and available and
the cost of storage with a response rate of 93.3%.Figure 4.5
Graphical presentation of factors considered while determining the
maximum stock level.The figure below shows the respondents view to
the factors considered while determining maximum stock levels. 350
degrees represent those who were able to identify the factors while
10 degrees represent respondents with different opinion.
Key4.6 The time period in which Ouru Superstore has practiced
inventory management practices.The respondents were asked to tick
the period in which Ouru Superstores has been applying inventory
management practices and their findings recorded as
under;PeriodFrequencyPercentage
Less than 5 years16.7
5-101493.3
More than 10 years--
Total15100%
Source: field Data (2012)The table above shows that inventory
management practices have been applied in Ouru Super Stores for
more than five years with a return rate of 14 out of 15 equivalent
to 93.3%4.7 Success of Ouru superstores overall inventory
management practices.Respondents were asked to rate the success of
the companys overall inventory management practices and the
findings are as under.SuccessFrequencyPercentage
Exceeded expectation--
Met expectations1493.3
Fell short of expectation--
Unable to determine 16.7
Total 15100
Source: field Data (2012)The above table shows that the
inventory management practices met Ourus expectation with a
frequency of 14 out of 15 interviewed representing 93.3% of all
questionnaires returned.Figure 4.7 :success of Ouru Superstores
overall inventory management practices.
KeyThe figure above shows that inventory management practices
met ouru superstores expectation with an area on the graph
occupying 336 degrees while 24 degrees represent those who were
unable to determine the success.
4.8 The Type of stock ordered by Ouru Superstore most.The
respondents were asked to identify the type of stock which Ouru
Superstore order most and their response was recorded
as;StockFrequencyPercentage
Slow moving goods--
Fast moving goods15100
Total15100
Source; field Date (2012)It is evident from the table above that
the company orders fast moving goods with a frequency of 15
representing 100 percent of the questionnaires returned.4.9
inventory costing methods used by Ouru Superstore to value stock in
its WarehouseThe respondents were asked to indicate the inventory
costing methods used by Ouru Superstores to value stock in its
WarehouseMethodfrequencyPercentage
First in first out15100
Last in last out--
Average cost--
Total 15100
Source: field study (2012)From the table above, it is evident
that Ouru Superstores use FIFO as his inventory costing method,
this is because all respondents interviewed identified first in
first out as inventory costing method with 100% return.Figure 4.9.
Challenges incurred in storing goods in the store
KeyThe figure above, 312 degree represents those who were able
to identify the challenges while 48 degrees represent those who
were unable to determine the challenges.4.10 challenges incurred in
storing goods in the storeThe respondents were asked to indicate
whether the following were challenges incurred in storing goods in
the store.ChallengeResponse rate % yesResponse rate % no
Space available100-
Change in version $ preference in the market100-
Fluctuation in price level100-
Attack from pests and rodents73.326.7
Spoilage due to over storing6040
Averages80.6613.34
Source: field Data (2012)From the table 4.9 above it is evident
that space available, change in version and preference in the
market, fluctuation in price level, attack from pests and rodents
and spoilage due to overstoring are challenges incurred in storing
goods in the store. Spoilage due to overstoring had the least with
a response rate of 60%4.10.1 The response to the challenges facing
Ouru Superstore kisii town in adopting inventory management
practicesThe respondents were further requested to indicate whether
the following challenges are faced by Ouru Superstores in adopting
inventory management practices.Table 4.10.1. the response to the
challenges facing Ouru Superstore in adopting inventory management
practicesChallengeResponse rate %
Lack of storage space Yes No86.67 13.33
Over ordering of inventory 66.67 33.33
Lack qualified personnel to carry out the task.60 40
Price level changes100 -
The location of the store80 20
Number of employees in the store60 40
Average 92.22 7.88
Source: field Data (2012)
From the table 4.10.1, it is evident that price level changes is
the major challenge facing Ouru Superstore in adopting inventory
management practices with 100% response rate, lack of qualified
personnel and number of employee in the store has lowest rate of
60%Figure 4.10.1 Challenges facing Ouru Superstores kisii town in
adopting inventory management practices
KeyIt is evident from the figure above that the respondents
agreed to the challenges facing Ouru Superstore kisii otwn in
adopting inventory management practices taking 331 degrees while
those who didnt agree took 29 degrees on the pie chart.4.10
Effectiveness of Ouru Superstores in carrying out inventory levels
management practicesInventory level management practicesNot
effective 1Least effective 2Fairly effective 3Effective 4Highly
effective 5fiwifiwififi
Inventory budgeting practices18514604.3
Review of inventory level10515654.3
Determination of appropriate reorder level of stock8715674.5
Ensuring availability of adequate stock at all
times9615664.4
Use of inventory management techniques to determine inventory
levels18615634.2
Determination of appropriate maximum $ minimum inventory
levels8715674.5
Source: field Data (2012)The respondents on the table 4.10 above
were asked to indicate their views on the effectiveness of Ouru
Superstore in carrying out inventory level management practices.
The table shows the order of ranking various inventory management
practices. The highest weight indicate the practice which has been
effected by Ouru Superstore. From the table, determination of
appropriate re-order level of stock and determination of
appropriate maximum and minimum inventory inventory levels have
great effect with a weight of 5 each. Use of inventory management
techniques to determine inventory levels has the least with weight
of 4.
CHAPTER FIVE SUMMERY, CONCLUSION AND RECOMMENDATIONS5.1 Summary
of the findings and ConclusionThis study sought to analyze the
effect of inventory management practices on Warehouse Operations
efficiency taking Ouru superstore Kisii Town as a case study. Hence
this chapter gives the conclusion and recommendation of the whole
study by analyzing the findings as presented by respondents. The
study sought to answer three objectives. First, to establish the
inventory management practices of Ouru Superstore. Second, to
evaluate the Warehouse operation efficiency of Ouru Superstore and
the third objective was to determine the effect of inventory
management practices on Warehouse Operations efficiency.In relation
to the first objective, it was found that inventory budgeting,
re-order point, inventory tracking, replenishment, the lead time
and inventory management techniques such as EOQ, MRP, ABC analysis,
VMI and JIT are the inventory management practices used by Ouru
Superstore Kisii Town. Table 4.10 shows how effective Ouru
Superstore has been in carrying out inventory management practices,
this is based on the weight ranging from 4.3 to 4.2.In relation to
the second objective, the study found out that determination of
appropriate re-order level of stock, determination of maximum and
minimum inventory levels, ensuring availability of adequate stock
at all times, review of inventory levels and use of inventory
management techniques are warehouse operations efficiency of Ouru
Superstores kisii town. The use of inventory costing methods like
FIFO and average costing methods effectively has enabled stock in
Ouru Superstore to move.In relation to the third objective, it was
found out that improved labour productivity, enhanced customer
services, facilitated standardization of inventory movements,
improved cycle counting, more efficient use of available warehouse
space, faster inventory turns and reduction in inventory paperwork
as the effect of inventory management practices on Warehouse
operations efficiency.
5.2 Recommendations.In relation to above findings, the following
recommendations can be made. That warehouses to be build on an area
which is easily accessible and large enough to allow easy movement
of stock in and out. Skilled personnel to be employed to carry out
inventory management practices in Warehouses.5.3 Suggestion for
Further ResearchThis study can be carried out using other
Warehouses in different towns to make the results have better
generalization. The study also suggests that further research
should consider the following areas; how the obsolete stock can be
made into usable material. And measures taken to maintain optimum
level of stock.
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APPENDIX ALETTER OF REQUEST FOR DATA COLLECTIONOKIBO O EZRAP.O
BOX 450KEROKA,1O JUNE 2012TO THE MANAGER,OURU SUPERSTORE LTD,P.O
BOX 48624,NAIROBIDear sir\ madamRE: REQUEST TO COLLECT DATA FOR
RESEARCHI, am a student at Kisii University College taking a
diploma course in business administration, I, am carrying out
research project on effects of inventory management practices on
warehouse operations efficiency, I have chosen Ouru Superstore
kisii town as a case study.On the above regard, I kindly request
you to allow me collect data from your company premises which will
be subjected for academic purposes only and therefore
confidentiality of any information given is assured. God bless
youYours faithfully..Ezra O Okibo
APPENDIX BQUESTIONNAIREDear respondent,I am a student at Kisii
University College pursuing a Diploma in Business Administration,
as part of the requirement for the a ward of the diploma, am
carrying out a research project on the effects of inventory
management practices on warehouse operations efficiency, a case
study of Ouru Super Store Kisii Town. On the above regard, I kindly
request for you to assist me in answering the questionnaire which
shall be subjected to academic purposes only and therefore
confidentiality of any information given is assured. Your
participation will be highly appreciated. Please feel free to
answer all questions where possible. Thank you.
INSTRUCTION:Please feel free to tick [ ] the appropriate box or
write your answer in the space providedSECTION AGeneral
questionsPersonal Information(1) Please indicate your gender.Male [
]Female [ ](2) What age bracket are you in:18-29 years [ ]30 39
years [ ]40-49 years [ ]50 and above [ ](3) What is your highest
level of your education?Secondary School [ ]Diploma [ ]Degree [
]Higher Diploma [ ]Masters [ ](4) Please indicate your years of
experience in this company.Under 2 years [ ]2 - 5 years [ ]5 - 10
years [ ]Above 10 years [ ](5) What is your Job position?Top
Management [ ]Technical Supervisor [ ]Middle level management [
]Junior staff [ ]
(6) Terms of employmentPermanent [ ]On contract [ ]
SECTION B(7) Please indicate if the following inventory
management practices are applied in the company you manageInventory
budgeting [ ]
Re-order point [ ]
Inventory tracking [ ]
Replenishment [ ]
(8) Please rate on the Scale given below how often your business
or the one you manage carries out the following inventory
management practicesNever 1Rarely 2Sometimes3Often4Very often 5
Prepare inventory budgets
Review inventory levels
Carry out replenishment of stock
Carry out inventory tracking
(9) How frequently do your business carry out stock
monitoringDaily Weekly Fortnightly Monthly Quarterly
(10) After how long does your business orders inventoryDaily
Weekly Fortnightly Monthly Quarterly
(11) Which of the following methods does Ouru Super Store use
use in determining the maximum or minimum inventory levels to
holdEconomic order quantity (EOQ) [ ]Material requirement planning
(MRP) [ ]The ABC analysis [ ]Vendor managed inventory (VMI) [ ]Just
in Time technique ( JIT) [ ]No method [ ]
(12)Please rate on the scale given how effective you perceived
yourself to be in carrying out the following inventory budgeting
practices KEY ( not effective, 2 least effective, 3 fairly
effective, 4 effective, highly effective ).Inventory budgeting
Practice12345
Preparation of inventory budgeting
updating the inventory budgets
Use of inventory budgets in tracking inventory
Use of computers in inventory budgeting
(13) Please rate on the scale given how effective you perceived
yourself to be in carrying out the following inventory levels
management practices.Inventory level management practicesNot
effective1Least effective2Fairly effective3Effective
4Highly effective5
review of inventory levels
determination of appropriate maximum and minimum inventory
levels
Determination of appropriate reorder level of stock
Ensuring availability of adequate stock at all times
Use of inventory management techniques to determine inventory
levels
(14) How long does it take for an order to be received after it
has been made?1 day [ ]1 week [ ]2 weeks [ ]1 month [ ]More than a
month [ ](15) Please indicate your responses in the following
challenges incurred in storing the goods in the store. Tick YES or
NOStatementYESNO
Space available
Change in version and preference in the market
Fluctuation in price level
Attack from pests and rodents.
Spoilage due to over storing
(16) Please indicate on the following challenges whether they
are faced by Ouru superstore Kisii Town in adopting inventory
management practicesTick YES or NOYESNO
Lack of storage space
Over ordering of inventory
Lack of qualified personnel to carry out the task
Price level changes
The location of the store
Number of employees in the store
(17) Please, indicate for each statement within a scale from 1
(I strongly disagree) to 5 (I strongly agree) on the effects
inventory management practices on warehouse operations efficiency
in the company (i) Strongly Disagree = 1 point, (ii) Disagree = 2
points,(iii) No Opinion = 3 points, (iv) Agree = 4 points (v)
Strongly Agree = 5 points (Tick as appropriate). Statements
representing54321
Improved labour productivity
Enhanced customer service
Facilitates standardization of inventory movements
Improved cycle counting
More efficient use of available warehouse space
Faster inventory turns
Reduction in inventory paperwork
(18) Does the company consider the following factors while
determining the maximum stock levels?YesNo
Availability of storage space
The rate of material consumption/usage
Time taken from ordering to delivery
The amount of stock already in the store
The amount of capital necessary and available
The cost of storage
(19) How long has inventory management practices been applied in
your organization?Less than 5 years [ ]5 - 10 years [ ]More than 10
years [ ](20) How would you rate the success of your companys
overall inventory management practices?Exceeded expectations [ ]Met
expectations [ ]Fell short of expectations [ ]Unable to determine
at this time [ ](21) What type of stock does your company order
most?(i) Slow moving goods [ ](ii) Fast moving goods [ ]Does your
company or the one you manage use the inventory costing methods
below to value stock in its warehouse?YesNo
First in first out (FIFO)
Last in last out (LIFO)
Average costs
