Professional Documents
Culture Documents
CHAPTER I and II
CHAPTER I and II
Sheik and Sohail (2018) defined inventory as the supply of raw materials, partially
meet its operational needs. It represents a sizeable investment and a potential source of
waste that needs to be carefully controlled. Inventory is defined as a stock of goods that
is maintained by a business in anticipation of some future demand. The quantity to
which inventory must fall in order to signal that an order must be placed to replenish an
item.
Inventory plays a significant role in the survival and growth of any business in the
sense that inefficient and ineffective inventory management will imply that the
organization loses customers with a decline in sales. Inventory control involves the
materials. Inventory control is the combination of activities with the primary goal of
getting the right inventory in the right place, at the right time and in the right quantity.
means that the inventory management system will directly or indirectly affect the
profitability of an organization.
study further concludes that the firm is able to compete based on quality and delivery of
According to Sohail and Sheik (2018), inventory problems of too great or too small
quantities on hand can cause business failures. Inventory management indicates the
broad frame work of managing inventory. The inventory management technique is more
useful in determine the optimum level of inventory and finding answers to problem of
This study examines the inventory management of hardware stores in Digos City
• Sector of business
• Product Line
Hypotheses
Inventory management
investments for the firms, the study of the existence of an optimal level of inventory
progress, raw materials and other objects of activity by enterprises in order to reduce
storage costs while ensuring the level of service and uninterrupted operation of the
optimization of operations directly related to the processing and clearance of goods and
coordination with the procurement and sales services, the calculation of the optimal
The strategic benefits of inventory management have become obvious since the
mid-1980s. Nowadays many firms coordinate with other firms in their supply chains.
Instead of responding to unknown and highly variable demand, companies in the supply
chain share information so that the variability of the demand they observe is significantly
are all materials and goods which are maintained by firms in order to meet future
demands. In addition to this definition, Viloria & Robayo (2016) categorize them as
products in process, finished goods, raw materials and final products that are
available physically to the organization and is utilized by the company in the prospect
great competitive advantage to reduce costs, optimize operations and ensure business
strictly monitored. Another point of attention is the legislative issue (Ballou, 2007).
organization’s operating budget. Since they do not add value to products, the
lower the level of inventory that a productive system can manage to work with,
the more efficient it will be (Wild, 2017). The efficiency of its administration can create
the difference with competitors, improving quality, reducing time, reducing costs
among other factors, thus offering a competitive advantage for the firm itself. It is
essential that companies minimize the quantity of stocks in the supply chain in
order to rationalize storage costs and maintain them. The improvement of the
productive quality, the reduction of operational times, the careful reduction of costs,
among other aspects, are some of the benefits obtained through effective inventory
management.
The study of Oballah, Waiganjo, & Wachiuri, (2015) investigates the effect of
This study revealed that inventory accuracy has a positive impact on organizational
This fact is supported by the study of Miller (2010), where the author asserts that
inventory management involves all activities put in place to ensure that customer have
the needed product or service. In addition, this study also confirms that inventory
accuracy brings in its meaning the idea of precision. The accuracy of inventory can be
defined by the measurement (in percentage) of the amount of material physically found
by the quantity recorded in the information system (Miller, 2010). The results of the
study deduced that accuracy of inventory has a positive effect on inventory
management with the majority of the respondents strongly approving that up to date
Nsiah Asare, & Prempeh (2016) stated that there is a substantial relationship
(MwangI, 2016; Etale, & Bringilar, 2016; Koumanakos, 2008) also support the direct
In contrast, the studies conducted by (Bratland, & Hornbrinck, 2013; Sitienei, &
Memba, 2015; Mawutor, 2014) showed vice versa. However, almost all the mentioned
studies fail to recognize the fact that management of inventory also have an impact on
Organizational Performance
product market circumstances, and time (Pierre, Timothy & George, 2009).
Organizational performance, meanwhile, has not been frequently defined and has been
used differently according to the context, as well as being difficult to define and measure
organizational processes which occur in the course of its daily operations. Pierre,
Timothy & George, 2009) proposed that organisational performance is represented by
various dimensions such profitability, growth, sales turnover. Awino (2015) uses the
such as customer satisfaction, internal firm processes and firm image influences
performance among large manufacturing firms. On the other hand, Shisia, Sang,
Matoke and Omwario (2014) contend that strategic innovation has potential to impact
capital on organizational performance has also been investigated. Odhon’g and Omolo
(2015) focused on analyzing the effect the investment in human capital has on
tests of association, the study revealed that organizational performance was associated
with investment in quality, relevance, and reliability in the human capital. On the other
hand, Kariuki and Murimi (2015) investigated employee empowerment and how it
impacts on organizational performance. The study explored the case Tata chemicals in
Magadi Kenya and found out that employee empowerment through information sharing
Christopher (2005 as cited in Chimwani, Iravo, and Tirimba, 2014) contends that in
order for any responsive organization to meet its desired procurement goals such as the
despite the wide array of measures that can be deployed to measure procurement
performance, the success of the measurement relies basically on a few indicators which
can be determined by use of the balanced score card (Chimwani et al., 2014). The
balanced scorecard takes cognizance of the procurement goals which are often a mix of
the organizations internal measures for managing resource utilization and total quality
and result in outputs that match organizational goals (Muma et al., 2014; Osuga et al,
Kimotho (2014) who argues that satisfactory procurement performance has a direct
therefore that use of appropriate supply chain practices remains the panacea to
challenges facing the textile industry in Kenya. However, in the event of scanty evidence
from a textile industry perspective, the present study yearned to identify supply chain
determinants that could best predict firm performance in this important sector.
Organisational Growth
Organizational growth is better explained using the organizational life cycle. The
organizational life cycle according to Bess (1984) refers to the expected sequence of
organisations like that of a life cycle of a living organisms (Lester, Parnell, and Carraher,
2003). Scholars have suggested that there is a relationship between inventory control
and business growth (Elsayed and Wahba, 2016; Anichebe, 2013). A study by Elsayed
and Wahba (2016) shows that while inventory to sales ratio affects organisational
performance negatively in the initial growth stage and the maturity stage, it exerts a
positive and significant coefficient on performance in either the rapid growth stage or the
revival stage. Anichebe (2013) holds that efficient inventory management is very vital to
inventory held in stock and the record of inventory stored in a firm‟s information system
Kök and Shang (2014). This discrepancy can deeply affect the performance of firms
Sarac, Absi, and Dauzère-Pérès (2010) by generating lost sales, delay penalties, re-
scheduling, suboptimal planning and the increased use of small transport vehicles,
(Chuang & Oliva, 2015). Such inefficiencies are a natural consequence of uncorrected
order patterns caused by the Supply Chain members affected by inventory errors.
Essentially, they create critical distortions in order placement, as almost every order
policy utilizes information regarding current inventory levels Bruccoleri, Cannella, and
La Porta (2014), and if the recorded inventory quantity does not match the actual
quantity on the shelf, the system will either order unnecessary items or fall short on
inventory from the total inventory that is recorded in the official company records.
Inventory shrinkage is a real phenomenon that affects every single retail business on
the planet. If not managed on time and with proper systematic approach, it can prove to
be deadly in the long term. These differences might be due to various reasons ranging
inventory getting damaged and disposed of without having any record. Whatever the
accounted for to reconcile the accounting records with the physical count in order that
Profitability
Profitability is the ability of a business to earn profit. A profit is what is left of the
revenue a business generates after it must have paid all expenses directly related to the
generation of the revenue (Grimsley, 2017). Eroglu and Hofer (2011) found that
the lower the rate of return. Companies successfully optimize inventory through lean
supply chain practices and systems to achieve higher levels of asset utilization and
share (Green & Inman, 2005). According to Richard, Devinney, Yip and Johnson (2009)
measured against its intended outputs (or goals and objectives). It encompasses three
specific areas of firm outcomes: (a) financial performance (profits, return on assets,
return on investment, etc.); (b) product market performance (sales, market share, etc.);
and (c) shareholder return (total shareholder return, economic value added, etc.).
Significance of Study
Digos City.
Hardware owner. This research study can be a guide to administer their business
problem that they may encounter and to evaluate their inventory management from
suppliers to them. This study also may provide relationship to the supplier’s personnel
Future researcher. This study will provide valuable data that may serve as their
basis and source of information regarding inventory management business in Digos City
Definition of Terms
To facilitate a better understanding of the content of the study, the following are
defined conceptually and operationally. A word or phrase used to describe a thing or to
Hardware stores. A hardware store typically sells hand and power tools, building
materials, fasteners, keys, locks, hinges, chains, electrical supplies, plumbing supplies,
cleaning products, housewares, utensils, and paint. They’re designed for DIY
consumers and handymen (as well as tradesmen) who need a place to source supplies
for projects.
Chapter 2
METHOD
instruments, data gathering procedure, and statistical treatment of data utilized in this
study to obtain valid and reliable answers to the problems of the study.
Research Design
issues and proposing practical approaches to the found issues (Singh, 2006). The
research will use systematic approaches to identify and interpret the knowledge
Research Respondents
to include relevant respondents who have direct relation to the issue under study by his
judgment. This sampling technique helped the researcher to include all members of the
Research Instrument
For this study, survey questionnaire will be designed and distributed in order to
was derived from widespread literature review including but not limited to the
In asking permission to conduct the study, a permission letter will be sent to the
letter of permission to conduct data gathering which will be signed by the research
Collection and Processing of Data. After conducting the interview, data will be
arranged for easy statistical processing to answer the questions made by the
Interpretation and Analysis of Data. When the data gathered through the
interview were organized and processed statistically, the said data will be analyzed and