You are on page 1of 6

The Table 5 is the result about the assessment on the inventory management of manufacturing business

in terms of carrying cost, it has the composite mean of 4.33 with a verbal interpretation of Observed.

The weighted mean of 4.72 got the highest mean which the firm analyzes opportunity costs in making
decision with a verbal interpretation of Highly Observed. The respondents most of the time evaluate first
the possible opportunity cost incurred if they do not choose the other one alternative, like in their
situation they have two choices if they need to hold inventory or to use the funds in other aspect.
According to the book of (Stevenson, 2010) the significance of the various components of holding cost
depends on the type of item involved. It also include opportunity costs associated with having funds that
could be used elsewhere tied up inventory and it is the variable portion of the holding cost that is

Followed by, the inventories are secured to prevent breakage and pilferage with a weighted mean of
4.59 and verbal interpretation of Highly Observed. Holding inventory must be secured by using
warehouses and hired employees to monitor the inventories to prevent breakage and pilferage because
according to the respondents if certain things happen it may cause wastages or loss. Furthermore,
holding cost includes the cost for storage facilities, handling, insurance, pilferage, breakage,
obsolescence, depreciation, taxes, and the opportunity cost of capital. Obviously, high holding costs tend
to favour low inventory levels and frequent replenishments (Jacobs and Chase, 2014). However, holding
stock is an expensive problem of inventory control almost been trying to improve costumers service
while lowering stocks and their supply chains.

The firm holds inventory to reduce transportation cost and help the transition process become less time-
consuming. According to the respondents holding inventory can reduce transportation cost and also
ordering cost because the more they hold inventory it reduces the expenses for transportation and it
lessen the time involve for the transition process of goods. The cost of not carrying adequate inventory
arise because of frequent placing of order at short intervals. This may increase the cost, such as extra
purchasing, handling and transportation cost, higher price due to small order quantities. Too many
transactions can affect the time that may incur in transition process. (Jawar, 2010)

The weighted mean of 3.52 got the lowest mean which the firm considers purchasing insurance of goods
to guard against the risks of destroyed goods as a result of fire or another natural disaster with a verbal
interpretation of Observed. According to our respondents insurance is a part of holding cost they provide
amount of money to secured the entire inventories to any unexpected events like fire and natural
disaster. The inventories also must be stored in a safe place, which requires warehouses and personnel
to manage the storage. The firm is also exposed to losses in the event that the inventory is stolen or
destroyed as a result of a fire or another natural disaster, or if it becomes obsolete. Of course, the firm
can purchase insurance to guard against these risks but there is direct cost of doing so. (Bekaert, 2012).

The firm eliminates obsolete inventory that may no longer be saleable with a weighted mean of
4.10 and verbal interpretation of Observed. Based on the respondents they removed from warehouses
all the obsolete inventory that has no value because if such units are still in the warehouses it incurs a
cost in holding it and compromised with the expenses that a business incurs to hold inventory over time.
Based on the book of Logistics Management written by Dr. Pedrito Real Pereda, as they hold those
materials in inventory, some are damaged and may not be fit for production processing. Some materials
may become obsolete due to changing market demand or the arrival of more suitable quality materials.
This refers to the holding costs of inventory include interest on funds tied up in inventory and the costs
of warehouse, insurance premiums and material handling expenses, there is also an implicit cost
associated with the danger of obsolescence or perishability or rapid price change (IIMTS, 2013).

Partnership got the highest mean in terms of carrying cost with a corresponding mean of 4.7333. It
involves only more than 2 partners the decision-making is easier and some partners contribute their
skills and time for in managing and securing the inventory it is easier for partners to know the needs of
their business in terms of holding inventory since one of them is assigned in that area.

Corporation got the lowest mean of 4.2571. Corporation is riskier than the partnership because the
member here are the persons that you don’t really know and their holding of inventory depends on the
capital that they provide and also based on their agreement if they need to hold such inventory or not.

6 – 10 years of operation got the highest mean of 4.5571. Based on the researchers at this point the
business is only beginner in the market so they give focused on holding inventory since they do not have
enough idea about how many units they need to hold and to make sure that they are not wasting their

16 – 20 years of operation got the lowest mean of 3.4000. According to them such businesses operating
more than 10 years already have its own market so they are not actually focusing on holding inventory
since they are familiar on the demand and targets.
P 3,000,000 and below got the highest mean in terms of carrying cost with a corresponding mean of
4.4095. Based on the observation of the researchers they invest small amount of money in holding
inventory since the wants and needs of the consumers varies over time also the prices of raw materials
because of the inflation in the country.

₱100,000,001 and above got the lowest mean of 3.7000. According to the researchers some
manufacturers are afraid to invest too much money because they believed that the lower the capital less
risky on their part.

100 – 199 number of employees got the highest mean in terms of carrying cost with a corresponding
mean of 4.9000. Holding inventory involves many responsibilities from maintaining the number of raw
materials also the finished products to securing the units free from any defects from this it is
automatically that the business needs to have enough employees to perform easily the task in holding
the inventory.

1 - 99 number of employees got the lowest mean in terms of carrying cost with a corresponding mean of
4.3071. It is not applicable to have few employees since in holding inventory they need to used
warehouses so in every different category of work it involves more than one employee especially it is a
manufacturing business the warehouses contains raw materials and finished products.

It was shown in Table 7 of Assessment on the Inventory Management of Manufacturing Business in

terms of Economic Order Quantity with the composite mean of 4.43 with a verbal interpretation of

As shown in Table 7 that the firm updates price list of the goods to be ordered with a weighted
mean of 4.66 which got the highest mean with a verbal interpretation of highly observed. Price lists are
maintained in alphabetical order according to supplier and provide a record of purchase prices, selling
price, markdowns and mark ups. It is important to keep this record completely up to date in order to be
able to access the latest price and profit information on materials purchased for resale. Change on prices
affects timely demandable items. The respondents stated that these records will help them estimate and
adjust their selling price on time which will enable them to prevent overpricing or under-pricing.
Switching to other products is necessary if possible, if changes in demand occur.

Having updated prices of goods to order is one of the important things in the business that should be
given emphasis. The respondents stated that the updated list is a great help for them to monitor their
expenditure and to measure expected income on sales as precisely as possible.

It is followed by the firm sets up return policy for defective products from customers with a weighted
mean of 4.62 with a verbal interpretation of “Highly Observed”. Regular and periodic policy of
monitoring inventories will keep the business aware of the quantity of each kind of merchandise on
hand. An effective system will provide a guide for what, when, and how much to buy on each product or
brand. It will reduce the number of lost sales resulting from being out of stock of merchandise in popular
demand. It will also locate small selling articles and help indicate changes in customer preferences.

However the firm is aware on the most in-demand products to avoid unnecessary reserve stock and the
firm enhances customer-supplier relations and efficient order processing with a minimum number of
delays and turnover with the lowest weighted mean of 4.24 and a verbal interpretation of “Observed”.
Storage or warehousing space has great impact on the decision that the manufacturer makes regarding
amount of products and supplies to be kept on hand at any given time. If the manufacturer has extra
space in store or warehouse, it should be analyzed, what products are the “best sellers”, the fastest
moving items, or the in demand products, so as to wisely fill that space with these items. At the same
time, overstocking of expensive or slow-moving items is to be avoided so that the investment is not
unnecessarily blocked in those items. Manufacturer must implement the most efficient inventory
stocking program for different department or product categories. He should also learn about properly
inventory tracking mechanism s and marking it for easy reconciliation with inventory checks.

The managers should learn to find the right balance between supply and demand so that the
manufacturer doesn’t have any inventory sitting in the warehouse which is not moving for long periods
of time (Madaan, 2010).

As noted from the table, the result of Assessment on the Organizational Performance of Manufacturing
Business got the composite mean of 3.41 with a verbal interpretation of performing.

Based on the results, the performance with the highest mean equivalent to 3.66 states that they feel like
‘part of the family’ at their organization. Based on the result, job performance was performing because
employees feel united with the management and they accept their co-workers’ opinion and suggestion
with regards to the job. It is also highly performing in terms of job performance because they have high
quality supervision to their employees. The organizations respect their employees. It is performing to the
job performance because employees feel the satisfaction and contentment inside or outside the
organization. It is performing to the job performance because employees’ loyalty makes them committed
and obligated to remain. Loyalty to the organization is being proud that they are member of the
organization, is performing as to job performance because employees feel that they belong to the
organization because of the recognition and rewards given them. They have good result in terms of their

Effective management ensures that employees and managers understand each other’s expectation and
how corporate strategies and objectives impact on their own context, their roles, behaviors, relationship
and interactions and rewards. One of the management tactics to pursue is through competencies which
includes knowledge and skills that employees are required to have and perform the job satisfactory
(Stoner 2010).

This was followed by the performance with a weighted mean of 3.62 which indicates that one of the
major reasons they continue to work for their organization is that they believe that loyalty is important
and therefore feel a sense of moral obligation to remain. This means that the organizational commitment
has an effect to a very great extent in terms of job performance because they have high quality
supervision to their employees. The organizations respect their employees. According to Mcshane
(2010), organizational commitment is the employees’ emotional attachment to, identification with and
involvement in a particular organization. This definition refers specifically to effective commitment
because it is an emotional attachment or feeling of loyalty to the organization.

On the other hand the third to the highest weighted mean got 3.59 with a verbal interpretation of highly
performing stating that they would be very happy to spend the rest of their career with their
organization and they were taught to believe in the value of remaining loyal to one organization.
According to Popper and Lipshitz (2010), the employee with “lifetime commitment” is one who
considers it morally right to stay in the company, regardless of how much status enhancement or
satisfaction the firm gives over the years.

The performance got the lowest weighted mean of 3.17 with a verbal interpretation of performing,
saying that they are not afraid of what might happen if they quit their job without having another one
lined up. Newstrom (2010) stated that organizational commitment is the employee’s loyalty, and it is the
degree to which an employee identifies with the organization and wants to continue actively
participating in it. It is the measure of the employee’s belief in the mission goals of the firm. It also
means willingness to expand effort in their accomplishment and intentions to continue working there.

Employees wanted to leave their organization and thinks it will disrupt their life got the weighted mean
of 3.14. It was verbally interpreted as performing. This means that the organizational commitment has
an effect to a great extent to job performance because employees’ lives are not interrupted instead they
find a new job. They know many opportunities to look for. According to Porter (2010), the three major
components of organizational commitment are strong belief in the acceptance of the organizations
goals, a willingness to exert effort considerable effort on behalf of the organization, and a definite desire
to maintain organizational.