G Aruba Emmanuel Project

THE ROLE OF INVENRTORY MANAGEMENT IN
ORGANISATIONAL MANAGEMENT IN NIGERIA
GARUBA EMMANUEL MINIZI

13AA014462
COVENANT UNIVERSITY
PROJECT PRESENTED TO THE DEPARTMENT OF ACCOUNTING, COLLEGE

OF BUSINESS AND SOCIAL SCIENCES, COVENANT UNIVERSITY, OTA IN
PARTIAL FULFILLMENT FOR THE AWARD OF BACHELOR OF SCIENCES
(B.Sc.) DEGREE IN ACCOUNTING
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CONFIRMATION
This project, roles of corporate governance in controlling accounting fraud, was carefully
assessed and approved by the committee of the Department of Business Management,
College of business and social sciences.
…………………………………..
………………………….
DR AGWU EDWIN Date
Project Supervisor
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ACKNOWLEDGEMENT
My gratitude and appreciation goes to my lecturer Dr. Agwu Edwin who put me through
every chapter and chastened me when I was wrong and also helped me see deeper into my
research topic.
I also thank Dr. Iyiola who put us through all the research methods and who has also taught
us rigorously for the past few weeks.
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ABSTRACT
The research study considered the roles of corporate governance in controlling accounting
fraud. This study made use of primary data through the administration of questionnaires. 17
questionnaires were well filled and returned out of the 20 questionnaires distributed. The
data obtained from the questionnaires were analyzed using Statistical Package for Social
Sciences. (SPSS). The study concludes that inventory management pays significant roles in
controlling organization management. It therefore recommends that inventory
management should be properly implemented to control Organizational management.
The research is carried out to study the activities of inventory management in Nigeria. This research
examined the effectiveness of inventory management as a tool for evaluating the various
departments in Nigeria.
The research also found out the existing challenges in the use of inventory management of
Organizational management in Nigeria.
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TABLE OF CONTENT
Approval page…………………………………………………………………………………. .ii
Acknowledgement……………………………………………………………………………… iii
Abstract………………………………………………………………………………………….iv
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study………………………………………………….............................. 1

1.2 Statement of the Problems…………………………………………………............................3
1.3 Objective of the Study…………………………………………………...................................4
1.4 Research Questions ………………………………………………….......................................5
1.5 Hypotheses of the Study………………………………………………….............................. 5
1.6 Significance of the Study…………………………………………………..............................6
1.7 Scope and Limitation of the Study…………………………………………………................7
1.8 Definition of terms …………………………………………………....................................... 7
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Introduction…………………………………………………………………………….. 9
2. Conceptual Framework …………………………………………………………………..13
2. Inventory management defined ………………………………………………………….13
2. Demand ……………… …………………………………………………………………15
2. Running operations ……………………………………………………………………. ….16
2. Lead Time … ……………………………………………………………………………..17
2. Hedge …………………………………………………..................................................17
2. Economic Order Quantity ……………………………………………………………….20
2. Just In Time…………………………………….............................................................22
2. Obj Of Inventory management ………………………………………………………...23
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2. Theoretical framework ………………………………………………………………..24
2. Stock out …………………………………………………….....................................25
2. Demand Management defined ………………………………………………………...25
2. Inventory Turns………………………………………………………………………25
2. Class of Inventory ……………………………………………………………………25
2. Emprical Framework …………………………………………………………………….25
2. Gap in Literature ………………………………………………………………………….. 26
CHAPTER 3: RESEARCH DESIGN AND METHODOLOGHY
3.1 Introduction ………………………………………………………………………………27
3.2 Research design ………………………………………………………………………….27
3.3 Area of the study…………………………………………………………………………27
3.4 Population of the study………………………………………………………………… 28
3.5 Sample size and sampling technique…………………………………………………….28
3.6 Data Gathering methods…………………………………………………………………28
3.6.1 Sources of data………………………………………………………………………......28
3.6.2 Research instrument…………………………………………………………………….29
3.6.2 Validity of instrument used…………………………………………………………….29
3.6.4 Reliability of the instrument used………………………………………………………30
CHAPTER 4: DATA PRESENTATION AND ANALYSIS
4.1 Data Presentation…………………………………………………………………………31
4.2 Data Analysis - Preliminary……………………………………………………………….32
4.3 Data Analysis – Advanced………………………………………………………………..42
4.4 Hypothesis Testing…………………………………………………………………………49
CHAPTER 5: SUMMARY OF FINDINGS, CONCLUSION, RECOMMENDATION
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5.1 Summary of work done…………………………………………………………………55
5.2 Summary of findings……………………………………………………………………56
5.3 Conclusion………………………………………………………………………………58
5.4 Recommendations………………………………………………………………………59
5.5 Suggestions for further study…………………………………………………………….61
FIGURES
FIGURE 1.1 Schematic Of A Supply Chain……………………………………………………...13
FIGURE 2.1 Conceptual Framework…………………………………………………………..…15
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
It is a known fact that “he who fails to plan, plans to fail” (Winston 2010). However it is clear
that planning without control is eventually hopeless and waste of time and resources.
Historically, inventory management has been referred to as excess inventory and inadequate
management or shortage of inventory and adequate management practice. Several penalties
could be apportioned to excesses in either direction. Inventory problem has escalated as
progress in technology increases the ability of organizations to produce goods faster in
multiple design variation and greater quality (Letinkaya and Lee, 2000).Since the mid-1980’s
inventory management, production planning and scheduling has become the obvious strategic
benefit (Larrson ,1995).
Inventories are the stocks of raw materials, work in progress, finished goods and supplies
held by a business organization to facilitate operations in the production process (Pandey,
2005). Inventories can either be assets as well as items held in the ordinary course of business
or they can be goods that will be consumed or used in the production of goods to be sold
(Green and James, 2000). Inventory is considered to have originated from the military’s need
to supply themselves with arms, ammunition, and rations as they moved from their base to a
forward position (Cachon, and Fisher, 2000). According to Silver, David and Rein, (1998),
inventory management is a system concerned with integration of information, transportation,
acquisition, inspection, material handling, warehousing, packaging and control of supplies
and ensuring security of inventory.
Supply chain management is the process of efficiently integrating suppliers ,manufacturers,

warehouses and stores so that merchandise is produced and distributed in right quantities
,to the right locations ,and at the right time in order to minimize system wide costs while
satisfying service-level requirements .In the retail environment ,this process is well known
and has been in use for a long time (Fawcett et al, 2009), .Certain organizations such as
Wal-Martt and Dell have managed to streamline their supply chain networks to become
industry leaders .The term supply chain management can be conveniently divided into two
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areas :inventory management and distribution .Besides this two areas there are many other
decisions critical to streamlining the process, such as facility location ,material procurement
and adapting to changes in the system and environment (Rajeev, 2008).
Japanese firms earned more deserved attention in the mid-to late 1980s due to their notable
performance on quality and inventory management. In Nigeria, the size of industry, small,
medium, and large scale, has a significant effect on both the numerical strength of staff and
level of involvement in inventory management of both raw material and the finished product.
The type of inventory system in practice in any organization depends on many factors among
which are economic stability of the place, infrastructural facilities available, transportation
network and many more which are called constraints.
Inventory control is the supply of goods and services at the right time with the right quality
and quantity. It is a reliable means in which businesses are been managed to ensure customers
are satisfied and organization remains in operations via minimization of losses. Inventory
management has been a problem to many business organizations in Nigeria. According to
retail historian, Robert Spector, a critical factor for retailers is that they have to have a good
inventory system. If the retailer does not have a good inventory system, they will not be able
to forecast demands with any kind of accuracy. This might result in them running out of stock
every so often (Levinson, 2005).
FIG 1.1: SCHEMATIC OF A SUPPLY CHAIN
WAREHOUSE
Customers
Final
Outside Assembly
Component
Suppliers
producer
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WAREHOUSE
SOURCE: INVENTORY MANAGEMENT BY GUIDO VAN HECK
1.1.1 OBJECTIVE OF THE STUDY

1. To establish the relationship between inventory management and profitability
management in Dominion Publishing House and Hebron FM
2. To ascertain the impact of the relationship between inventory management and
profitability of management in Dominion Publishing House and Hebron FM
3. To determine inventory management techniques in Dominion publishing house and
Hebron Fm.
1.2 STATEMENT OF RESEARCH PROBLEMS
Inventory management has issues that affect customer satisfaction levels. Many large retailers
are expecting manufacturers to provide them with perfect order deliveries. This study
examines the relationship between effective inventory management and customer satisfaction
with the goal of having complete orders and on time deliveries. This research’s purpose is to
find ways to improve inventory management, thereby increasing customer satisfaction. Lee
and Kleiner (2001) stated that in order to manage inventory management successfully,
“retailers should understand customer needs, vendor partnerships, technology, data integrity,
and performance measurements”. (Scott, G.E. 2007).
Stocks are managed, that the level of stock held are neither more than or less than
requirement for a given reason. Accurate information on the stock is necessary for
management control of working capital requirement.
1.2.1 RESEARCH QUESTIONS
1. What is the relationship between inventory management and profitability management in

Dominion Publishing House
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2. What is the impact of the relationship between inventory management and profitability of
management in Dominion Publishing House and Hebron Fm?
3. In what ways do inventory management techniques differ among firms in Dominion

Publishing House and Hebron fm?
1.3RESEARCH HYPOTHESIS
Based on the problems and objectives of this study, the following hypothesis are formulate
this research.
Hypothesis1
Ho : There is no significant relationship between the inventory management and profitability

of management.
H1: There is significant relationship between the inventory management and profitability in
Dominion Publishing House and Hebron FM
Hypothesis 2
H0: Efficient of inventory management has no impact on profitability of Dominion

Publishing House and Hebron FM
H1: Efficient inventory management has an impact on profitability management in

HYPOTHSEIS 3
H0: Adoption of diverse inventory management techniques causes disparity in results in

H1: Adoption of diverse inventory management techniques does not cause disparity in the
results in Dominion Publishing House and Hebron FM?
1.4 MODEL SPECIFICATION
Y= F(x)
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Y= Independent variable
X= Depenedent Variable
F= Fixed
X1=Process stage
X2=Number & Value
X3=Demand Type
X4=Other
Y=F(x1+x2+x3+x4)
1.5 SIGNIFICANCE OF THE STUDY
This research assists in knowing how inventory is being managed. It will also highlight the
benefits and problems associated with the management of inventory to the following parties:
1. To a media company: It will enable the company to check its efforts with regards to
sock control and maintaining production capacity and profitability.
2. To reader: To give researchers’ greater understanding of the importance and relevance
of good inventory management to the success of operation.
3. To general public: To create awareness to the general public on the importance of
inventory to the overall performance of an organisation in terms of quality product.
(http://www.myprojecttopics.com/abstract-331.html)
4. Researchers: who will like to carry out further studies on this area will find this study
very relevant because it will serve as a data bank for their studies. ( Coker, 2014)
1.6 SCOPE OF STUDY
This research work covers a period of 2months that is, from Jan 2016 to March 2016. The
study focuses on inventory management in organisational management in Dominion
Publishing House and Hebron FM as a case study. It looks into various inventory
management techniques used and relevant information on stock valuation and stock taking.
The study is limited in the following factors:
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1. If the management intentionally conceal an information during the research work.
2. No much time for the study
1.7 DEFINITION OF TERMS
Control: It is the process of ensuring that a firm activities conform to its plan and objectives
are achieved and duly enhanced and formulated
Planning: It is the establishment of objectives and formulation, evaluation and selection of

policies, strategies, tactics and action requires to achieve these aims and objectives.
Management: This entails planning, controlling, organizing of resources in a more effective

and efficient manner in order to achieve organisational set out aims and objectives.
Retailers: These are individuals or an association who sell goods and services to the public.
E.g. Online retailers
Researchers: This are individuals who undertake a given project to analyse statistics and
events which have occurred or about to occur in an environment. They also look at the
pressing issues in the environment.
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CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
Choosing the most adequate inventory management model is essentially an empirically-based

decision that may involve the use of simulation, scenario analysis, incremental cost analyses
(Silva 2009;). An analysis of the literature dealing with inventory management model
selection shows that it originally focused on production and distribution environments in
which demand and lead time tend to be more predictable or, in other words, in which it is
easier to answer the questions of “what” and “how much” to order (Wanke and Saliby, 2009;
Wanke 2011b; Rosa et al. 2010)
2.1 CONCEPTUAL FRAMEWORK
FIG 2.1 CONCEPTUAL FRAMEWORK FOR THE STUDY
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Independent variables
INVENTORY
MANAGEMENT
TECHNIQUES
 Economic order
Dependedntquantity
variables
 Just in time
 Material
Requirement
Planning II
PERFORMANCE OF
PRODUCTION DEPARTMENT
EFFECTIVENESS OF  Quality
INVENTORY MANAGEMENT  Output per Unit of
Time
 Effective inventory  Optimal production
budgeting  Production targets
 Effective  On time delivery
management of
stock levels
 Effective stock
taking activities
COMUTERIZED INVENTORY
MANAGEMENT
 Computerized
warehousing
 Computerized
inventory records
 Inventory
management
software
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SOURCE: Role of inventory management on performance of Production department as a cas
of manufacturing firms by (Raymond et al.,2015)
The conceptual framework contains the most adherent probability distribution functions and
the most appropriate inventory management model, incorporating all the theoretical
considerations
2.1.1 INVENTORY MANAGEMENT CONCEPT DEFINED
Installation of a proper inventory control system in any organization in developing countries

like Nigeria is of paramount necessity. Inventory management is defined as a science based
art of ensuring that just enough inventory stock is held by an organization to meet demand
(Coleman, 2000; Jay & Barry, 2006).
Inventory control means availability of materials whenever and wherever required by

stocking adequate number and kind of stocks. The sum total of those related activities
essential for the procurement, storage, sales, disposal or use of material can be referred to as
inventory management. Inventory managers have to stock-up when required and utilize
available storage space resourcefully, so that available storage space is not exceeded.
Maintaining accountability of inventory assets is there responsibility. They have to meet the
set budget and decide upon what to order, how to order and when to order so that stock is
available on time and at the optimum cost (Benedict and Margeridis, 1999).
Hence, Inventory management involves planning organizing and controlling the flow of
materials from their initial purchase unit through internal operations to the service point
through distribution (Smaros, et al., 2003).
Inventory constitute one of the largest and most tangible investment of any retailer or
manufacturing organization. Intelligent inventory management strategies can not only help
boost profit but they can mean the difference between a business thriving or barely surviving.
Holding inventories at the lowest possible cost and giving the objectives to ensure
uninterrupted supplies for on-going operations is the aim of inventory management. “When
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making decisions on inventory, management has to find a compromise between the different
cost component, such as the cost of supplying inventory, inventory holding cost and cost
resulting from sufficient inventories” (Peterson and Silver, 1998; Zipkin, 2000).
According to Miller (2010), inventory control is the activity which organizes the availability
of item to the customers. It coordinates the purchasing, manufacturing and distribution
functions to meet the marketing needs. This role include the supply of current sales items,
new product, consumables, spare parts, obsolescent items and all other supplies. Inventory
enables a company to support the customer’s services, logistics or manufacturing activities in
situation where purchasing or manufacturing of the items is not able to satisfy the demand.
Inventory plays an unnegligible row in the growth and survival of an organization in the
sense that failure to an effective and efficient management of inventory, will mean that the
organization will lose customers and sales will decline. In other to attain its organizational
objectives, a business is to meet customer’s needs.
“Customer desire has always been a vital issue in a company not only to maintain sales but
also to increase it” (Tersine, 1994; Potilen & Goldsby, 2003). Kotler (2002), posits that
inventory management refers to all the activities involved in developing and managing the
inventory levels of raw materials, semi-finished materials (working-progress) and finished
good so that adequate supplies are available and the costs of over or under stocks are low.
Inventory management is primarily about specifying the size and placement of stocked
goods.
Inventory management is required at different locations within a facility or within multiple

locations of a supply network to protect the regular and planned course of production against
the random disturbance of running out of materials or goods. The scope of inventory
management also concerns the fine lines between replenishment lead time, carrying costs of
inventory, asset management, inventory forecasting, inventory valuation, inventory visibility,
future inventory price forecasting, physical inventory, available physical space for inventory,
quality management, replenishment, returns and defective goods and demand
forecasting(http://www.abstract.lib-ebook.com/a1-psychology/ the impact-effective-
inventory-control-management-organisational) .
Balancing these competing requirements leads to optimal inventory levels, which is an on-
going process as the business needs shift and react to the wider environment (Ghosh and
Kumar, 2003). Rosenblatt (1977) says: “The cost of maintaining inventory is included in the
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final price paid by the customer. Good in inventory represent a cost to their owner; the
manufacturer has the expense of materials and labour. The wholesaler also has funds tied up.”
Therefore, the basic goal of the manufacturers is to maintain a level of inventory that will
provide optimum stock at lowest cost. Morris (1995) stressed that inventory management in
its broadest perspective is to keep the most economical amount of one kind of asset in order
to facilitate an increase in the total value of all assets of the organization human and material
resources.
Ogbo (2011) posits that the major objective of inventory management and control is to
inform managers how much of a good to re-order, when to reorder the good, how frequently
orders should be placed and what the appropriate safety stock is, for minimizing stock-outs.
Thus, the overall goal on inventory is to have what is needed, and to minimize the number of
times one is out of stock. Ghosh & Kumar (2003) defined inventory as a stock of goods that
is maintained by a business in anticipation of some future demand.
This definition was also supported by Brag (2005) who stressed that inventory management
has an impact on all business functions, particularly operations, marketing, accounting, and
finance. He established that there are three motives for holding inventories, which are
transaction, precautionary and speculative motives. The transaction motive occurs when there
is a need to hold stock to meet production and sales requirements. A firm might also decide to
hold additional amount of stock to cover the possibility that it may have under estimated its
future production and sales requirements. This represents a precautionary motive, which
applies only when future demand is uncertain. The speculative motive for holding inventory
might entice a firm to purchase a larger quantity of materials than normal in anticipation of
making abnormal profits. Advance purchase of raw materials in inflationary times is one
form of speculative.
2.1.3 DEMAND
A retailer stays in business when he has the product the customer wants on hand when the
customer wants them. If not, the retailer will have to back order the product. If the customer
can get the goods from some other source, he or she many chose to do so rather than wait
than wait in order to allow the original customer to meet demand later (through back-order).
Hence, in some instances a sale is lost forever if goods are not in stock. (Ogbo, Onekanma &
Wilfred 2014).
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2.1.4 RUNNING OPERATIONS
In order to manufacture a product a manufacturer must have certain purchased items (raw
materials component or subassemblies). Completing the production of a finished goods can
be prevented when a manufacturer is running out of only one item. Inventory between
successive dependant operations also serves to decouple the dependency of the operations. A
work-centre often depends upon the previous operation to provide it with parts to work on. If
work stops at a work-centre, all subsequent centre’s will shut down for lack of work. Each
machine can maintain its operation for a limited time, hopefully until operations resume at
the original centre if a supply of work-in-progress inventory is kept between each work-
centre (kuku, 2004 cited in Ogbo, Onekanma & Wilfred).
2.1.5 Lead Time
Lead time is the time that elapses between when order is placed ( either a production order
issued to the factory floor or a purchase order ) and actual time goods ordered are received. If
an external firm or an internal department or plant (supplier) cannot supply the required
goods on demand, then the client firm must keep an inventory of needed goods. The larger
the quantity of goods the firm must carry in inventory depends on the longer the lead time.
2.1.6 Hedge
Inventory can also be used as a hedge against price increases and inflation. Before a price
increase goes into effect, salesmen routinely call purchasing agents. This gives the buyer a
chance to purchase material in excess of current need at a price that is lower than it would be
if the buyer waited until after the price increase occur (kuku,2004)
2.1.7 Economic Order Quantity (EOQ) MODEL
The economic order quantity also known as the Wilson EQQ model is a model that defines
the optimal quantity to order that minimizes total variable costs required to order and hold
inventory (Lee, 2002). EOQ refers to the optimal ordering quantity for an item of stock that
aids in the minimization of costs. This inventory management technique assumes that the
demand for the item is known with certainty, the lead time is known and fixed, the receipt of
the order occurs in single instant, quantity discounts are not calculated as part of the model
and shortages of inventory or stock out do not occur. Economic order quantity graphs
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illustrate the relationship amongst the ordering costs holding total costs and economic order
quantity (Nair, 1995)
2.1.8 Just in time (J.I.T)
This is an inventory management method whose goal is to maintain just enough material in
just the right place at just the right time to make first the right amount of the product
(Carlson, 2002). This was pioneered by the Japanese manufacturing firms where inventory is
acquired only when required in business for production process and this aimed at improving
the return on investment of the business by reducing in-process inventory and its associated
costs (Schonsleben, 2000). In this system, the supplier has the responsibility of delivering the
components and part to the production line “Just in Time” to be assembled. Other names for
just in time system is Zero stock inventory and production (Lazaridis & Dimitrios (2005).
For the just in time method to work successfully the quality of the parts must be very high
because defective materials could up halt the operations of the assembly line, there must be
dependable relationships and smooth co-operation with suppliers, ideally this implies that the
supplier should be located near to the company with dependable transportation available
(Konke, 2003). Just in time inventory management system helps in reducing inventory costs
by avoiding carriages of excess inventories and mishandling of raw materials.
According to Kortz(2003), Just in time purchasing recognizes high costs associated with
holding high inventory level and as such it has become important in most organizations to
order inventory just in time of production so as to cut costs of holding inventory like storage
lighting, heating, security, insurance and staffing (Dimitrios, P. (2008).
2.1.9 INVENTORY MANAGEMENT
Inventory management has been referred to as excess inventory and inadequate management
or shortage of inventory and adequate management practice. Several penalties could be
apportioned to excesses in either direction. Inventory problem has escalated as progress in
technology increases the ability of organizations to produce goods faster in multiple design
variation and greater quality (Letinkaya and Lee, 2000). Effective inventory management is
essential in the operation of any business (Bassin, 1990).
Hakansson and Persson (2004) identifies three different trends in the development of logistics
solutions within industry, one trend is concerned with the increased integration of logistics
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activities beyond organization boundaries with an aim to reduce cost items such as capital
costs for inventory and handling costs of flows. Inventory as an asset on the balance sheet of
companies has taken on increased importance because many companies are applying the
strategy of reducing their investment in fixed assets, like plants, warehouses, equipment and
machinery, and so on, which even highlights the significance of reducing inventory (Coyle,
2003).
Changes in inventory levels affect return on assets (ROA), which is an important financial
parameter from an internal and external perspective. Reducing inventory usually improves
ROA, and vice versa if inventory goes up without offsetting increases in revenue (Coyle ,
2003).
2.1.10 OBJECTIVE OF INVENTORY MANAGEMENT
1. To study the tools and techniques of inventory management
2. To study the inventory control measures in inventory management
3. To study the demand forecast of inventory management
4. To identify problems related to inventory management and to find out suitable measures to
overcome them
2.1.11 WHY FIMS HOLD STOCK
1. Transactional motive
2. Precautionary motive
3. Speculative motive
2.2 THEORETICAL FRAMEWORK
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This looks at the theories of researchers work in this section.
2.2.1 STOCK OUT
If stock-out occurs, different scenarios will happen. Subject to distribution inventory stockout
or manufacturing inventory stock-out, the impact on the supplier and the customer is different
in terms of extent and scale, i.e. the impact is greater and more serious for one party than the
other one. So the attitude toward stock-out varies accordingly. For instance, if there is a
manufacturing inventory stock-out in the manufacturing companies like Ford and Toyota, the
result is critical.
The production line will be shut down and startup costs are very high. Hence such stock-out
is prohibited. In case of distribution inventory stockout, the impact on the customer is usually
not big and serious, e.g. it is not a big deal when consumers encounter such a stock-out,
therefore their counterparts-the suppliers, such as wholesalers and retailers, tolerate stock-
outs. When a supplier is unable to satisfy demand with available inventory, one of four events
may occur: (1) the customer waits until the new replenishment arrives; (2) the customer back
orders the product; (3) the sale is lost; (4) the customer is lost (Coyle et al., 2003). For most
companies, the four results are listed from best to worst in terms of the impact
2.2.2 Demand Management Demand
Management may be thought of as “focused efforts to estimate and manage customers’

demand, with the intention of using this information to shape operating decision.” (Blackwell
& Blackwell, 1999; cited in Coyle et al., 2003) Independent and Dependent Demand
Independent demand is what whose usage is based on external market requirements rather
than related to other items’ demand.
The market demand for consumer goods is a typical example of independent demand.
Dependent demand is determined by the requirements of other items in the manufacturing
process. The requirement of components or parts is based on the demand for the finished
products (Toomey, 2000).
The inventory corresponds to independent demand is called distribution inventory/ finished

product inventory, while dependent demand inventory is known as manufacturing
inventory/raw material inventory and work-in-process (WIP) inventory (Simchi-Levi,
Kaminsky & Simchi-Levi, 2004; Toomey, 2000). Inventory is kept to meet demand, in light
of dependent demand and independent demand, different approaches to managing inventory
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should be applied to align inventory supply with demand. Just-in-Time (JIT) approach and
Materials Requirements Planning (MRP) system are typically associated with managing
manufacturing inventory to serve dependent demand. Cross-docking is a typical approach for
managing distribution inventory efficiently. Nevertheless, Vendor-managed-inventory (VMI)
approach is applicable both for manufacturing inventory and distribution inventory.
2.2.3 Inventory Turns
Inventory turns indicates the number of times per year the companies such as retailers and
manufacturers are able to sell off or use up their complete inventory of raw materials or
finished goods (Coyle et al., 2003). To maximize sales with the least amount of inventory, the
company should try to meet demands by ordering smaller quantities more frequently from the
suppliers, thus achieving more inventory turns, which refer to the annual number of times that
average inventory sells (Goldsby et al., 2005). The inventory turns can be expressed
mathematically as: Inventory turns = Sales volume at cost/Value of average inventory
Increasing inventory turns means the company is holding fewer inventories on average, at the
same time being able to fulfill the customer demand. The company’s finance desires to
reduce inventory, increase inventory turnover, and yield high capital return on assets (Coyle
et al., 2003). But the company should note that there is no such a conclusion that the more
inventory turns, the better the inventory policy. Again, individual company should recognize
an appropriate number in their best interest. Figure 2.1 gives an example to demonstrate the
relationship between inventory carrying cost and inventory turns. As inventory turns increase,
inventory carrying cost will reduce.
2.2.4 Classification of Inventory
Minner (2000) introduces three types of motives of inventory control, and based on which
classifies inventories into five categories. The three motives are transaction, safety, and
speculation motives. The transaction motive is a result from the fact that ordering and
manufacturing decisions are made at certain points of time instead of being performed
continuously. The safety motive emerges in uncertainty where lead-time, demand and
production yield are unknown at the time when decisions are made.
The speculation motive generally refers to the special uncertainty in prices, if there is an
anticipation of price increase for purchased goods, order are made in advance. In light of
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three motives, inventories are divided into five groups (Minner, 2000): l Cycle stocks. The
cycle stock induced by batching alternates between an upper level when a batch has just
arrived and a lower level just before the arrival of the next batch. Cycle stocks mostly
attribute to economies of scale of purchasing and transportation, and technological
restrictions in production (Minner, 2000). l Pipeline stocks.
Order processing times, production, and transportation rates contribute to pipeline stocks,
also called process inventories. Materials that are in process, in transport, and in transit to
another processing unit belong to pipeline stocks (Minner, 2000). l Safety stocks. The safety
stock is interpreted as the expected inventory just before the next replenishment arrives. It is
caused by the uncertainty of demand, processing time, yield and other factors. And its major
function is to protect business performance from forecasting errors (Minner, 2000). l
Speculative stocks.
Expected price increase may result in earlier supply than would have been experienced under
constant price, meaning there are more inventories on hand than actual demand at certain
period of time, the redundant inventory is speculative inventory. And additionally, stimulated
by the possible higher selling price, speculative stock may also appears (Minner, 2000). l
Anticipation stocks. Some products are characterized with seasonal demand, this fact, rather
than expectations, generate anticipation stocks. A time varying demand pattern asks for
balancing of overtime and inventory carrying cost in order to deal with the demand peak
(Minner, 2000). Companies with significant seasonality find it more efficient to use smaller
plants and produce prior to demand, which obviously means accumulation of inventory
2.2.5 Reorder Point (ROP)
Davis (1983) pointed out the reorder point (ROP) system determines when to place orders
based on the number of component units on hand. The reorder point consists of two
components. The first is the average demand during lead time, and the second is the safety
stock. The safety stock is the amount of inventory that the company needs to keep at the
warehouse and in the pipeline to protect against deviations from average demand during lead
time (Simchi-Levi et al., 2004). ROP is calculated using lead time, average demand, and
safety stock. Lin (1980) suggested if demand has no seasonal fluctuation, and the supplier’s
lead time is reliable, the reorder point is just the demand during lead time (DDLT) plus a
small amount of safety stock.
24
2.2.6 How much to order?
There are some techniques will be introduced for managers to determine how much should be
ordered for replenishment orders.
2.2.7 EOQ Model
According to Onwubolu (2006),
EOQ technique is based on several assumptions: (1) demand is known and constant; (2) lead-
time is known and constant; (3) receipt of inventory is instantaneous, that is, inventory from
an order arrives in one batch, at one time; (4) quantity discounts are not possible; (5) the only
variable costs are cost of placing an order and the cost of holding inventory; and (6) stock-
outs can be completely avoided if orders are placed at the right time. With these assumptions,
the graph of inventory usage over time has a saw tooth characteristic.
Minimizing acquisition cost
The significant variable costs constituting acquisition cost are
(i) ordering cost,
(ii) holding cost.
2.2.8 VARIATION OF ORDERING COST VS HOLDING COST
The more the quantity of materials that is ordered at a time, the less the ordering or
replenishment cost, and the more holding cost; and vice-versa. The combination of above
objective functions should be optimized as follows:
Min ∑｛ordering costs + holding costs｝
This optimization leads to the following deductions: (1) minimum acquisition cost is a
compromise of cost of ordering versus cost of storage, and (2) minimum total costs
(acquisition cost) will be achieved by the economic order quantity. The classical EOQ model
is given as
2DC
25
H
where D=annual demand (units per year), 0 C = cost/order, and h C = variable holding cost
(cost/unit/year). The simplified classical EOQ model assumes that stock is replenished just at
the point when inventory is zero. This zero inventory before replenishment is known as
stock-out (Onwubolu et al., 2006).
2.2.8 WAREHOUSING
The warehouse is a point in the logistics system where a firm stores or holds raw materials,
semi-finished goods, or finished goods for varying periods of time.’ (Coyle et al., 2003,
p.285).
Three Basic Functions of Warehouse According to Lambert & Stock (1993), there are three
basic functions of warehouse:
♦ Movement is necessary to store a product properly.
It can be divided into three activities:
i. Receiving inbound goods from transportation carriers and performing quality and quantity
checks.
ii. Transferring goods from the receiving docks and moving them to specific storage
locations throughout the warehouse.
iii. Shipping the goods outbound to customers by some forms of transportation.
♦ Storage is the second function of warehousing.
It can be performed in two different ways:
i. Temporary storage means that storing a product, which is necessary for inventory
replenishment.
ii. Semi-permanent storage is used for inventory in excess of immediate needs. It is the safety
or buffer stock
♦ The last function of warehouse is the information transfer. When the product is moved and
stored, this function occurs at the same time. It is important for the management to have
26
timely and accurate information in order to administer the warehouse activity. The
information can cover a lot of things like inventory levels, throughput levels, and data of the
customer, facility space utilization and also about the personnel (Lambert, et al., 1993).
2.2.9 PURCHASING MANAGEMENT
Purchasing has two main objectives, one is to purchase for resale, and the other one is to
purchase for consumption or for transformation (Dobler, Burt & Lee, 1990; cited in Quayle &
Quayle, 2000). Purchasing function starts as subordinate to the more important functions of
marketing, finance and operations (Bloomberg et al., 2002). Firms give more attention to
purchasing when the costs of purchased items increase. Reengineering the supply chain
strategy concerns not only coordination of the various activities in the supply chain but also
deciding what to produce in-house and what to outsource (Simchi-Levi et al., 2004). With the
strong trend towards more outsourcing over the last decade, presently purchasing has evolved
as an important strategic area of management. Grittner (1996) suggests a 4C purchasing
strategy which is to choose a competitive supplier, establish a commitment to the supplier,
and analyze the complete production process with a cost-analysis mind-set, and co-ordinate
with the supplier early and frequently to maximize cost efficiency (cited in Quayle, 2000).
2.2.10 THE MAJOR PROCESSING DECISION PROCESS
There are six major purchasing decision processes: (1) ‘make or buy’, (2) supplier selection,
(3) contract negotiation, (4) design collaboration, (5) procurement, and (6) sourcing analysis
(Aissaoui, Haouari & Hassini, 2007). In the ‘make or buy’ decision process, based on the
part/service is a finished/semi-finished goods or not, a company will decide thSe part/service
should be produced internally or outsourced; In the supplier selection process, a number of
supplier are chosen for purchasing according to a predefined set of criteria; the purchasing
contract could be either short-term or long-term; as to design collaboration, the buyer and the
supplier cooperate closely to design part/service that meet the customer’s specific
requirements; the procurement decision process is related to ensuring delivery of the
part/service in time from the supplier and with minimum costs; finally, in the sourcing
27
analysis phase, a company should examine the effectiveness and efficiency of its
procurement process (Aissaoui, Haouari & Hassini 2007).
2.2.11 SUPPLIER RELATIONSHIP MANAGEMENT
The most important purchasing activity is to select and keep close relationships with several
reliable and high-quality suppliers, in order to reduce product costs, maintain good product
quality and customer services (Aissaoui, Haouari & Hassini 2007). Relations between
suppliers and buyers in industrial markets have been found to be long term and characterized
by stability (Gadde & Mattsson, 1987). Partnership should be established because if the buyer
is to be best served, then the parties to a deal must work together for the win-win situation
and both parties have an interest in each other’s success (Quayle, 2000).
2.3 EMPRICAL REVIEW
In a study done by Kolias (2011), in order to test inventory-performance link using

construction firms listed in Bursa Malaysia, it was found that there is a positive correlation
between inventory turnover and capital intensity as a result of the nature of investments. A
study by Fullerton et al (2003) provides empirical support that manufacturing firms that
implement higher degrees of modern inventory management techniques should outperform
competitors; it was found that a positive relationship exists between firm‟s profitability and
the degree to which waste reducing production practices such as reduced set up times,
preventive, maintenance programs, and uniform workloads are implemented. These findings
indicate that manufacturing enterprises employing modern inventory management techniques
are consistently more profitable than their counterparts. Another study suggesting a positive
relationship between inventory management and performance was Eroglu and Hofer (2011),
which used the Empirical Leanness Indicator (ELI) as a measurement for inventory
management. They argued that inventory leanness is the best inventory management tool.
Lean production considers inventory as a form of waste that should be minimized and has
become synonymous with good inventory management Their study on USA manufacturing
firms covering the period 2003-2008 found that leanness affects profit margins.
According to Eroglu and Hofer (2011), firms that are leaner than the industry average
generally see positive returns to leanness. They found that the effect of inventory leanness on
28
firm performance is positive and generally non-linear. Their study also implies that the effect
of inventory leanness is concave which is in line with inventory management theory that
there is an optimal degree of inventory leanness beyond which the marginal effect of leanness
on financial performance becomes negative.
A survey of 351 management accountants by the National Association of Accountants

(NAA) in a cross-section of industries to assess current inventory management practices in
the
U.S indicated that: just-in-time inventory management techniques are increasing in

popularity, as are automated time-phased inventory re-order system. The survey further
established that 85 percent of respondents have no plans to change their inventory controls
and that actual business experience is relied upon more than inventory quantitative models.
Also, the survey established that some inventory management practices such as assessing
inventory levels and balancing stock-out costs against expenses related to higher inventory
levels are seldom used in practice (Romano, 2011).
Lazaridis & Dimitrios (2005) highlighted the importance of firms keeping their inventory at
an optimum level by analyzing the relationship between working capital management and
corporate profitability and stressed that its mismanagement will lead to excessive tying up of
capital at the expense of profitable operations. A similar study by Rehman (2006) empirically
established a strong negative relationship between the inventory turnover in days and the
profitability of firms.
Sushma & Phubesh (2007) in their study of 23 Indian Consumer Electronics Industry firms
established that businesses‟ inventory management policies had a role to play in their
profitability performance.
Lazaridis & Dimitrios (2005) in their study of 131 companies listed on the Athens Stock
Exchange showed that mismanagement of inventory will lead to tying up excess capital at the
expense of profitable operations and suggested that managers can create value for their firms
by keeping inventory to an optimum level.
Also, Rajeev (2008) in his study of 91 Indian Machine Tool Enterprises to evaluate the
relationship between inventory management practices and inventory cost established that
effective inventory management practices have a positive impact on the inventory
performance of businesses and also have an eventual effect on the performance of the overall
businesses processes.
29
Juan & Mertinez (2002) in their study of 8872 small and medium-sized Spanish firms also
demonstrated that managers of firms can create value by reducing the number of days of
inventory. Effective inventory management processes helps increase operational efficiency of
firms; improves customer service; reduces inventory and distribution costs; and enables
businesses track items and their expiration dates consequently balance between availability
and demand (Pandey, 2004).
2.3. GAPS IN LITERATURE
As with all research, formulating questions that need further investigation and being able to
identify gaps in literature must be approached with research. Identifying and selecting
relevant information sources from which you will find the literature you need will mean
looking at books in the library, catalogues, databases and on the internet.
Once you have decided what area you want to target and you have found appropriate sources
to research you will need to interpret the results
2.3.1 WHAT IS A GAP IN LITERATURE
A gap in literature is a research question relevant to a given domain that has not been
answered adequately or at all in existing peer received scholarship. A gap in literature might
emerge adequately or at all in existing peer received scholarship. A gap in literature might
emerge if:
1. The question has not been addressed in a given domain, although it may have been
answered in a similar or related area.
2. The question has never been asked before but is now merits exploitation due to changes in
accepted theory, data collection technology, or culture.
2.3.2. WHY DOES IT MATTER
30
Even if a legitimate gap in literature exists, it does not necessarily mean that the research
question(s) merits pursuit. To justify to yourself and others the investment of time and
energy.
CHAPTER THREE
METHODOLOGY
3.1 INTRODUCTION
Saunders, Lewis and Thornhill (2003) define business and management research as
undertaking systematic research to find out things about business and management. Business
and management research not only should provide findings that advance knowledge and
understanding, it also should address business issues and practical managerial problems
(Saunders et al., 2003). The research process usually includes formulating and clarifying a
topic, reviewing the literature, choosing a strategy, collecting data, analysing data and writing
up (Saunders , 2003). The research process is not strictly sequential in reality; the researcher
often needs to revisit each stage many times in order to refine the ideas. Research
methodology represents the strategies involves in collecting and analyzing data collected, in
order to have meaningful interpretations of the research findings. This section attempts to
give an insight into the way and manner in which this research was carried out. This includes
the mode of data collection, how these data were analyzed and the research design.
The study used descriptive research design. Descriptive research design was used because the
study was not only confined to the collection and description of the data but sought to
examine and establish the existence of certain relationships among the variables under study.
Survey method was used in which participants answered questions administered to them
through questionnaires. Survey method was used because it permits the collection of data
through questionnaires administered to a sample and the data collected can be used to suggest
relationships between variables and produce models for these relationships. The method is
also preferred because it facilitates the collection of a considerable amount of data quickly,
efficiently and accurately.
The Publishing house and Hebron FM has an inventory management system.
31
3.2. RESEARCH DESIGN
Research design is the plan, strategy or the structure that relates to the investigation of the
activities of the researcher towards providing solutions or answers to the research questions.
It covers the specifications of the procedures and strategies to follow so as to obtain the most
valid answers to the research questions (Oshodi, Asikhia and Asikhia, 2007 cited in Agwu
2015 CU Bus 327 lect note).
3.3 METHOD OF DATA COLLECTION
Essential information was collected from secondary sources which includes
 Articles
 Magazines
 Student Project
This is the data referred from already prepared sources used in the course of the research.
Secondary data used in the course of the research. Secondary data used in the study are
journals, textbooks, past projects of students and internet browsing for information .
3.4. DATA COLLECTION PROCEDURES
Questionnaires were used as the data collection instruments. In carrying out the research, the
researchers paid close attention to the issue of the validity of the research instrument hence a
test of reliability and validity of research instrument was be conducted.
3.5 POPULATION OF STUDY
Population is a complete set of elements (persons or objects) that possess some common
characteristic defined by the sampling criteria established by the researcher.
32
TYPES OF POPULATION
1. TARGET POPULATION: The entire group of people or objects to which the researcher
wishes to generalize the study findings. It meets set of criteria of interest to researcher.
2. ACESSIBLE POPULATION: The portion of the population to which the researcher has
reasonable access; may be a subset of the target population. It may be limited to region, state,
city, county, or institution.
This research looked at Dominion Publishing House and Hebron FM and its population of
interest is the users.
In research population is the set of all participant that qualify for the study. This reseach work
has a population which is principally all the
3.5 SAMPLE SIZE ANS SAMPLE TECHNIQUES
Sample is the selected elements (people or objects) chosen for participation in a study; people
are referred to as subjects or participants.
Sampling is the process of selecting a group of people, events, behaviors, or other elements
with which to conduct a study.
Sampling Frame is a list of all the elements in the population from which the sample is
drawn.
The study used stratified random sampling. The target population was divided into strata. The
strata are necessary because the target population is heterogeneous in nature. Respondents
were randomly selected from the three strata and each respondent selected was issued with a
questionnaire. Stratified random technique was chosen because it gives each member of the
population an equal chance of being selected and it thus reduces biasness in the selection of
cases to be included in the sample. Since the units selected for inclusion within the sample
are chosen using probabilistic methods, stratified random sampling allows us to make
statistical conclusions from the data collected that will be considered to be valid.
3.6 VARIABLE DESCRIPTION
Dependent Variable :
33
In order to analyse the effects of inventory management from the firms profitablility. Return
on Total assets is given as the dependent variable. It is calculated thus profit before interest
and taxon Total asset.
Independent variable
With regards to the independent variable, inventory management was measured by inventory
conversion period(ICP).ICP reflects the average variable of days of stock held by the firm
.ICP measues how quickly an inventory flows through the company from purchases* sales
Control variables
In order to account for from the size and other variables that may influence profit, sales a
pursuit for size (the nature logarithm of sales) and the gearing ratio (total fixed debt/total
assets), the gross working caption
34
CHAPTER FOUR
DATA PRESEMNTATION AND ANALYSIS
4.0 INTRODUCTION
This chapter presents and analyzes the data gathered from the field survey. The data analyzed
were gotten through the administration of a total number of 20 questionnaires to the managers
and accountants of three banks in Lagos state of which 17 were well filled and returned.
The analysis of response from respondents were presented in tables using Statistical Package
for Social Sciences (SPSS) and hypothesis was tested using one sample test.
1.1 DATA PRESENTATION

Table 4.1.1 Rate of Response by Respondents
QUESTIONNAIRE RESPONDENTS PERCENTAGE

Returned 17 85 %
Not returned 3 15 %
Total 20 100 %
Source: Field survey 2016
ANALYSIS
From the table 4.1.1 a total of 20 questionnaires were issued to two media companies in
Ogunstate. As shown in Table 4.1.1, of the 20 questionnaires issued 17(85 %) were well
filled and returned, while 3(15 %) were not returned.
The 85 % filled and returned is a reasonable level upon which the research can be based.
4.1.2Reliability Statistics
35
Cronbach's
Alpha N of Items
.721 8
INTERPRETATION
Cronbach's Alpha is a statistic test that is used to test the reliability of factors in
research instrument. It is used to rate questions with two possible answers or multiple
possible answers. As a general rule, it requires reliability of 0.70 and above. Hence, with the
co-efficient of 0.721, which is above 0.70,it can be concluded that the research instrument is
reliable.
4.2 DATA ANALYSIS- PRELIMINARY
4.2.1 Gender Of Respondents
Cumulative
Frequency Percent Valid Percent Percent
Valid Male 6 35.3 35.3 35.3
Female 11 64.7 64.7 100.0
Total 17 100.0 100.0
Source: Field
From table 4.2.1 it is shown that 6(35.3%) males and 11(64.7%) females were asked to
answer the questions in the questionnaire. This survey reveals that the number of females
outnumbered that of males
Age
Cumulative
Valid Below 20 years 4 23.5 23.5 23.5
20-30 years 13 76.5 76.5 100.0
Total 17 100.0 100.0
Source: Field survey 2016
The table 4.2.2 classifies the respondents by age. It shows that 4(23.5%) and
13(76.5%) were in the age bracket Below 20 years and 20-30 years respectively. This shows
that most of the respondents were in the age bracket of between the ages of 20-30 years.
36
Educational attainment
Cumulative
Valid WAEC/O LEVEL 2 11.8 11.8 11.8
HND/B.SC/B.A 14 82.4 82.4 94.1
MSC/MBA/MA 1 5.9 5.9 100.0
Total 17 100.0 100.0
Years of working experience/patronage
Cumulative
Valid Below 5years 12 70.6 70.6 70.6
6-10 5 29.4 29.4 100.0
Total 17 100.0 100.0
Position within the organisation
Cumulative
Valid Lower level worker 4 23.5 23.5 23.5
Middle level worker 7 41.2 41.2 64.7
Upper level worker 6 35.3 35.3 100.0
Total 17 100.0 100.0
My organisation carries out evaluation and re-evaluation procedures
37
Cumulative
Valid strongly agree 4 23.5 23.5 23.5
agree 13 76.5 76.5 100.0
Total 17 100.0 100.0
My organization evaluates suppliers constantly before sending them requirements
Cumulative
agree 7 41.2 41.2 70.6
undecided 5 29.4 29.4 100.0
Total 17 100.0 100.0
My organization observes suppliers service level measurement procedures
Cumulative
agree 11 64.7 64.7 76.5
undecided 2 11.8 11.8 88.2
diagree 2 11.8 11.8 100.0
Total 17 100.0 100.0
My organization performs analyze of he non-conformities, and require that

corrective actions be taken.
Cumulative
agree 14 82.4 82.4 100.0
Total 17 100.0 100.0
My organization performs inspection and reception procedures during the process

and the final product
38
Cumulative
agree 12 70.6 70.6 94.1
undecided 1 5.9 5.9 100.0
Total 17 100.0 100.0
My organization defines and document the reject and acceptance criteria
Cumulative
agree 11 64.7 64.7 94.1
diagree 1 5.9 5.9 100.0
Total 17 100.0 100.0
My organization’s measurement equipment are calibrated periodically
Cumulative
agree 12 70.6 70.6 94.1
undecided 1 5.9 5.9 100.0
Total 17 100.0 100.0
My organization has and maintain procedure for the management of the non-
satisfying products
Cumulative
agree 6 35.3 35.3 64.7
undecided 4 23.5 23.5 88.2
diagree 2 11.8 11.8 100.0
Total 17 100.0 100.0
My organization engages in identification and traceability methods for its products
Cumulative
39
agree 10 58.8 58.8 82.4
undecided 2 11.8 11.8 94.1
diagree 1 5.9 5.9 100.0
Total 17 100.0 100.0
My organization keeps inspections and tests keeping documentation.
Cumulative
agree 7 41.2 41.2 64.7
undecided 4 23.5 23.5 88.2
diagree 2 11.8 11.8 100.0
Total 17 100.0 100.0
My organization ensures maintenance planning for the machines and equipment.
Cumulative
agree 11 64.7 64.7 94.1
undecided 1 5.9 5.9 100.0
Total 17 100.0 100.0
My organization has a production planning system
Cumulative
agree 11 64.7 64.7 88.2
undecided 2 11.8 11.8 100.0
Total 17 100.0 100.0
My organization has planning, control, training and supervising procedures for the
external personnel
40
Cumulative
agree 11 64.7 64.7 94.1
strongly disagree 1 5.9 5.9 100.0
Total 17 100.0 100.0
My organization shows the criteria it applies to identify and classify the products in
its warehouses
Cumulative
agree 14 82.4 82.4 94.1
undecided 1 5.9 5.9 100.0
Total 17 100.0 100.0
My organization verifies periodically the products in warehouses in order to assure

the quality of them
Cumulative
agree 11 64.7 64.7 88.2
undecided 2 11.8 11.8 100.0
Total 17 100.0 100.0
My organization has established preserving, delivery, packaging and identification

criteria for its products.
Cumulative
agree 8 47.1 47.1 76.5
undecided 2 11.8 11.8 88.2
diagree 2 11.8 11.8 100.0
Total 17 100.0 100.0
My organization has stock controlling systems such as FIFO or LIFO
41
Cumulative
agree 10 58.8 58.8 76.5
undecided 4 23.5 23.5 100.0
Total 17 100.0 100.0
My organization has automatic equipment for material transport within the process
areas.
Cumulative
agree 9 52.9 52.9 70.6
undecided 4 23.5 23.5 94.1
strongly disagree 1 5.9 5.9 100.0
Total 17 100.0 100.0
There is improved product quality
Cumulative
agree 7 41.2 41.2 88.2
undecided 1 5.9 5.9 94.1
diagree 1 5.9 5.9 100.0
Total 17 100.0 100.0
The pricing method adopted is very competitive in the market.
Cumulative
agree 10 58.8 58.8 88.2
undecided 1 5.9 5.9 94.1
diagree 1 5.9 5.9 100.0
Total 17 100.0 100.0
The pricing method adopted is very competitive in the market.
42
Cumulative
agree 10 58.8 58.8 88.2
undecided 1 5.9 5.9 94.1
diagree 1 5.9 5.9 100.0
Total 17 100.0 100.0
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
My organisation carries out

evaluation and re-evaluation 17 1.00 2.00 1.7647 .43724
procedures
Valid N (listwise) 17
My organization evaluates
suppliers constantly before 17 1.00 3.00 2.0000 .79057
sending them requirements
My organization observes
suppliers service level 17 1.00 4.00 2.2353 .83137
measurement procedures
43
My organization performs
analyze of he non-
17 1.00 2.00 1.8235 .39295
conformities, and require that
My organization performs
inspection and reception
17 1.00 3.00 1.8235 .52859
procedures during the
process and the final product
My organization defines and

document the reject and 17 1.00 4.00 1.8235 .72761
acceptance criteria
My organization’s
measurement equipment 17 1.00 3.00 1.8235 .52859
are calibrated periodically
44
My organization has and
maintain procedure for the
17 1.00 4.00 2.1765 1.01460
management of the non-
satisfying products
My organization engages in
identification and traceability 17 1.00 4.00 2.0000 .79057
methods for its products
My organization keeps
inspections and tests 17 1.00 4.00 2.2353 .97014
keeping documentation.
My organization ensures
maintenance planning for the 17 1.00 3.00 1.7647 .56230
machines and equipment.
45
My organization ensures
maintenance planning for the 17 1.00 3.00 1.7647 .56230
machines and equipment.
My organization has
planning, control, training
17 1.00 5.00 1.8824 .92752
and supervising procedures
for the external personnel
My organization shows the

criteria it applies to identify
17 1.00 3.00 1.9412 .42875
and classify the products in
its warehouses
My organization verifies
periodically the products in
17 1.00 3.00 1.8824 .60025
warehouses in order to
assure the quality of them
My organization has
established preserving,
delivery, packaging and 17 1.00 4.00 2.0588 .96635
identification criteria for its
products.
46
My organization has stock

controlling systems such as 17 1.00 3.00 2.0588 .65865
FIFO or LIFO
My organization has
automatic equipment for
17 1.00 5.00 2.2353 .97014
material transport within the
process areas.
There is improved product

17 1.00 4.00 1.7059 .84887
quality
The pricing method adopted

is very competitive in the 17 1.00 4.00 1.8824 .78121
market.
Organization distribution
17 1.00 2.00 1.6471 .49259
network is effective
47
One-Sample Test
Test Value = 0
95% Confidence Interval of the

Difference
t df Sig. (2-tailed) Mean Difference Lower Upper
Organization distribution
13.786 16 .000 1.64706 1.3938 1.900
network is effective
The pricing method adopted
is very competitive in the 9.935 16 .000 1.88235 1.4807 2.284
market.
There is improved product
8.286 16 .000 1.70588 1.2694 2.142
quality
48
CHAPTER FIVE
SUMMARY OF WORK, RECOMMENDATIONS AND FINDINGS
5.0 INTRODUCTION
This chapter is the study in detail and summary of the research undertaken. Based on the
findings conclusions are drawn. These give a further basis for subsequent recommendation in
order to solve the research problem. These recommendation are given further in the topic.
Inventory management has become highly developed to meet the rising challenges in most
corporate entities and this is in response to thefact that inventory is an asset of distinct
feature.
.A basis for inventory planning and control was also provided in this study. Though looking
through the inventory policy of the company, it can be said to be dynamic to some extent but
the analysis and findings have revealed the need to remedy some situations in the company's
management of inventory. The study thus suggests some recommendations to remedy certain
defects in the company inventory policy and if these recommendations are implemented, the
company's inventory management situation will attain a greater height. First, emphasis should
be normally placed on the economic order quantity model because it was seen to be in the
best interest of manufacturing companies to maintain an optimal level of materials in store,
the level that minimizes total cost of investment in inventory. To achieve this successfully,
different costs, which are associated with inventory, should be segregated and accumulated in
such a way that EOQ can be easily determined.
Secondly, in the analysis we also mentioned that there was a positive relationship between
inventory and sales and between inventory and production cost. This does not imply that
inventory automatically determines production costs or sales and vice-versa. However, it
does show that inventory levels can be a useful indication of what level of sales to expect. It
is thus recommended that the sales and marketing department of the company should pay
49
closer attention to the growth pattern of inventory usage and incorporate it in sales
forecasting technique.
Lastly, materials management unit should also pay attention to sales growth over the years
and thus take into consideration, the apparent relevance of sales and production cost in
making decision with regards to inventory.
5.1 SUMMARY OF WORK DONE
The main objective of this study has been to investigate the relationship between inventory
amanagement and Organisational management.
In chapter one we talked about objective of study, study of research problem, Research
question, Model specification, Significance of study, Scope of study, Definition of terms.
In chapter two we talked about conceptual framework, inventory management , Demand,

Running Operation, Lead time, Hedge, Economic order quantity, Theoretical framework ,
Reorder point, How much to order, and Gap in literature
In chapter three we talked about Research Design, Method of data collection, Data collection
procedure, Population of study, Types of population, sample size and techniques and variable
description.
In chapter frour
5.2.0 SUMMARY OF FINDINGS
This study examined the relationship between inventory control management system and
organizational performance in Dominion Publishing House and Hebron Fm. Its major
objectives are to investigate how flexible inventory services will keep Dominion Publishing
House and Hebron Fm. from keeping too much and too little stock. These objectives were
guided by three research questions and three hypotheses. The researcher questions and
hypothesis were linked to existing theories and views on inventory control management.
50
This encompasses the analysis of data gotten in the case of this work. This summary consists
of both the related findings and empirical findings. The theoretical findings refer for the
findings refer to the findings drawn firm the interface in persons study and diverse
publications.
The result that emerged from the analysis of data gathered to answer research questions
revealed some of the reasons why organization evolve inventory control management system.
Some of these reasons include the need to smoothen operational requirements, the need to
maintain accountability and transparency and the need to optimize resources. Meeting up
operational requirement or keeping operations running have been identified as the major
reason for keeping inventory control. The study also found out that flexibility in inventory
control management is an important approach to achieving organizational performance.
5.2.1. THEORETICAL FINDINGS
Inventory represents a significant investment of capital for most companies in ties up money
coulkd be used more productive elsewhere. “The research found that a firm neglecting the
management of how items be jeopardising its long run profitability and may fail
ultimately”( Pandey 2005)
According to Pandey (2005) firms are faced with the problem of facing to conflicting needs
which are
1. To maintain a large size of investors of raw material and working process for efficient and
smooth production and of finished goods for manufacturing sales operator.
5.2.3. EMPRICAL FINDINGS
Theere is no significant relationship between efficient inventory management and

organisational profitability in the Nigerian main industry .It shared a rehgular relationship
between the length of ICP
5.2.3 CONCLUSION
51
In view of this forgone research work effective inventory control management is recognized
as one of the areas management of any organization should acquire capability.
The ability of any organization to evolve effective inventory control management system will
depend on the extent to which it perceives the benefits it stands to gain from such program. In
general the findings that emerged from this study have indicated that organizations stand to
gain a lot from effective inventory control management system. Some of this benefit include
optimal use of resources, cost reduction, improved profitability, improved sales effectiveness,
reduction of waste, transparency and accountability, easy storage and retrieval of stock, high
inventory utilization amongst others. However, in order to achieve all these, organizations
have to maintain flexible inventory service. Thus, the study found that there is a significant
relationship between effective inventory control management system and organizational
performance.
The objective of this study was to investigate the relationship between inventory management
and organisational management.
5.4 RECOMMENDATION & CONTRIBUTION TO KNOWLEDGE
1. The amount of thus that goods are held in inventory should be used and this can be
accomplished by implying the inventory control process or by having suppliers deliver raw
materials exactly when they needed in the production process
2. From the analysis the subsectors in the Nigerian Stock Exchange should adopt the control
and management
3. The management of manufacturing companies should adopt extra just in time in Total
Quality Management
4. Inventory management should be effectively placed in organisations so as to enable better

performance.
5.5 SUGGESTIONS FOR FURTHER STUDIES
1. There is much to be done about inventory management in Nigeria in the future.
52
2. In the research should be on local on the applicability of inventory management techniques
and its impact on profitability.
3. Studying the same research in a different industry could be more interesting on this study.
4. There should be given more funds for the research for this topic and other relate studies.
[ CITATION Agw15 \l 2057 ]
References
Agwu. (2015). Research Design. Ota Ogun state.
BIBLOGRAPHY
JOURNAL REFERNCING
Lining Bai and Ying Zhong (2008). Improving Inventory Management in Small Business:
A project submitted to the department of accountancy facaulty of management and sciences

in partial fulfilment of the reguirement of science (B.S.C) degree in accountancy
(2013, August). Effectiveness of inventory management in a manufacturing company
Ogbo, A.I., Onekanma, I.V. and Wilfred, I.U. (2014, June) The Impact of Effective
Inventory Control Management on Organisational Performance: A Study of 7up
Bottling Company Nile Mile Enugu, Nigeria Vol 5 No 10 June 2014
Agwu (2015)Research Design Ph.D. A Lecture Note, Covenant University, Ota, Ogun State,
53
Coker, O.B. (2014) The effect of inventory management on Organisational Performance in
Nigeria. Submitted to Covenant University, Ota, Ogun State, (Unpublished).
Raymond, M.M et al (2015, May) ROLE OF INVENTORY MANAGEMENT PRACTICES

ON PERFORMANCE OF PRODUCTION DEPARTMENT’ A CASE OF
MANUFACTURING FIRMS. Vol. III, Issue 5,
Scott, G.E.(2007 summer) Inventory management and its effect on customer satisfaction.
Volume 1, Number 3
Adeyemi, S.L. and Salami, A.O. (2010) Inventory Management: A Tool of Optimizing
Resources in a Manufacturing Industry A Case Study of Coca-Cola Bottling
Company, Ilorin Plant
Guido Van Heck Inventory Management
INTERNET REFERENCING
http://www.myprojecttopics.com/payment331.html checked on 18th of February 2016
http://www.researchgate.net/publication/235943399_WORKING_CAPITAL_MANAGEME
NT_AND_PROFITABILITY_AN_EMPERICAL_ANALYSIS_OF_INFORMATIO
N_TECHNOLOGY_SECTOR_IN_INDIA checked on 18th of February 2016
https://www.researchgate.net/profile/Wilfred_Ukpere/publication/263138566_The_Impact_o
f_Effective_Inventory_Control_Management_on_Organisational_Performance_A_St
udy_of_7up_Bottling_Company_Nile_Mile_Enugu_Nigeria/links/0c96053a02159a45
bc000000.pdf checked on 19th of February 2016
http://www.researchgate.net/publication/263138566_The_Impact_of_Effective_Inventory_C
ontrol_Management_on_Organisational_Performance_A_Study_of_7up_Bottling_Co
mpany_Nile_Mile_Enughttps://ercd.files.wordpress.com/2013/07/inventory-
54
management-and-its-effects-on-customer-satisfaction.pdfu_Nigeria checked on 20th of
February 2016
http://www.academia.edu/6227270/Inventory_Management_and_Its_Effects_on_Customer_
Satisfaction checked on 19th of February 2016
http://www.cengage.com/resource_uploads/downloads/0324291574_171597.doc checked on
19th of February 2016
http://www.sajhrm.co.za/index.php/sajhrm/article/view/476/655 checked on 17th of February

2016
http://www.apics.org/docs/default-source/education/2014-apics-production-and-inventory-
management-journal.pdf checked on 18th of February 2016
http://www.slideshare.net/aarish9696/inventory-management-3651797 checked on 19th of

February 2016
http://www.slideshare.net/abdulhaseeb5437923/a-study-on-inventory-classification-
technique-for-effective-store-management-at-milma checked on 20th of February 2016
http://www.slideshare.net/sagardwipdey/inventory-strategy-for-processing-independent-
demand-a-study-on-amul checked on 19th of February 2016
55
QUESTIONNAIRE
Department of Business Management,

School of Business,
College of Business Studies,
Covenant University,
Canaan land,
Ota, Ogun State.
Dear Sir/Ma,
The researcher is conducting a research on “The Role of Inventory Management in

Organizational Performance in Nigeria
Please kindly complete this questionnaire as carefully and completely as you can. All
information supplied will be used for the purpose of this study and will be treated with
utmost confidentiality. You need not give your name your cooperation will be highly
appreciated.
Thank you
Yours faithfully,
Garuba Emmanuel
Researcher
56
SECTION A: BIO DATA
INSTRUCTION: Read the questions carefully and tick () as appropriate the correct
answers as they relate to the questions.
1. Gender: Male ( ) Female ()
2. Age: Below 20 years ( )
20 - 30 years ( )
31 - 40 years ( )
41 - 50 years ( )
51 – Above ( )
3. Educational Attainment: WAEC/O LEVEL ( ) HND/B.SC/B.A ( ) MSC/MBA/MA ( )

Doctorate/Others ( )
4. Years of working experience/patronage? Below 5years ( ) 6-10 ( ) 11-15 ( ) 16-
20 ( ) 21 and above ( )
5. Position within the organization: Lower level worker ( ) Middle level worker ( )
Upper level worker ( )
SECTION B: INENTORY MANAGEMENT
57
INSTRUCTION: Indicate how often each of this statement applies in your organization, by
marking () whether you “SA - Strongly Agree”, “A - Agree”, “U - Undecided”, “D -
Disagree” or “SD - Strongly Disagree”, with the statements below.
Supply Management
S/N Items SA A U D SD
o
6. My organisation carries out evaluation
and re-evaluation procedures
on
7. My organization evaluates suppliers

constantly before sending them
requirements
8. My organization observes suppliers
service level measurement procedures
.
9. My organization performs analyze of
he non-conformities, and require that
Inspection and technical tests

S/N Items SA A U D SD
o
10. My organization performs inspection
and reception procedures during the
process and the final product
11. My organization defines and document
the reject and acceptance criteria
12. My organization’s measurement
equipment are calibrated periodically
13. My organization has and maintain
procedure for the management of the
non-satisfying products
Production
S/No Items SA A U D SD
14. My organization engages in
identification and traceability methods
for its products
15. My organization keeps inspections and
tests keeping documentation.
16. My organization ensures maintenance
planning for the machines and
58
equipment.
17. My organization has a production
planning system
18. My organization has planning, control,
training and supervising procedures
for the external personnel
Storage and Manipulation

19. My organization shows the criteria
it applies to identify and classify the
products in its warehouses
20. My organization verifies periodically
the products in warehouses in order
to assure the quality of them
21. My organization has established
preserving, delivery, packaging and
identification criteria for its
products.
12. My organization has stock
controlling systems such as FIFO or
LIFO
22. My organization has automatic
equipment for material transport
within the process areas.
SECTION C: FINANCIAL PERFORMANCE
23. There is improved product quality
24. The pricing method adopted is very competitive

in the market.
25 Organization distribution network is effective
59
60

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THE ROLE OF INVENRTORY MANAGEMENT IN

ORGANISATIONAL MANAGEMENT IN NIGERIA

GARUBA EMMANUEL MINIZI

PROJECT PRESENTED TO THE DEPARTMENT OF ACCOUNTING, COLLEGE

assessed and approved by the committee of the Department of Business Management,

College of business and social sciences.

DR AGWU EDWIN Date

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study………………………………………………….............................. 1

1.3 Objective of the Study…………………………………………………...................................4

1.4 Research Questions ………………………………………………….......................................5

1.5 Hypotheses of the Study………………………………………………….............................. 5

1.6 Significance of the Study…………………………………………………..............................6

1.7 Scope and Limitation of the Study…………………………………………………................7

1.8 Definition of terms …………………………………………………....................................... 7

CHAPTER 2: REVIEW OF RELATED LITERATURE

2. Conceptual Framework …………………………………………………………………..13

2. Inventory management defined ………………………………………………………….13

2. Demand ……………… …………………………………………………………………15

2. Running operations ……………………………………………………………………. ….16

2. Lead Time … ……………………………………………………………………………..17

2. Economic Order Quantity ……………………………………………………………….20

2. Obj Of Inventory management ………………………………………………………...23

2. Stock out …………………………………………………….....................................25

2. Demand Management defined ………………………………………………………...25

2. Class of Inventory ……………………………………………………………………25

2. Emprical Framework …………………………………………………………………….25

2. Gap in Literature ………………………………………………………………………….. 26

CHAPTER 3: RESEARCH DESIGN AND METHODOLOGHY

3.1 Introduction ………………………………………………………………………………27

3.2 Research design ………………………………………………………………………….27

3.3 Area of the study…………………………………………………………………………27

3.4 Population of the study………………………………………………………………… 28

3.5 Sample size and sampling technique…………………………………………………….28

3.6 Data Gathering methods…………………………………………………………………28

3.6.1 Sources of data………………………………………………………………………......28

3.6.2 Research instrument…………………………………………………………………….29

3.6.2 Validity of instrument used…………………………………………………………….29

3.6.4 Reliability of the instrument used………………………………………………………30

CHAPTER 4: DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation…………………………………………………………………………31

4.2 Data Analysis - Preliminary……………………………………………………………….32

4.3 Data Analysis – Advanced………………………………………………………………..42

4.4 Hypothesis Testing…………………………………………………………………………49

CHAPTER 5: SUMMARY OF FINDINGS, CONCLUSION, RECOMMENDATION

5.2 Summary of findings……………………………………………………………………56

5.5 Suggestions for further study…………………………………………………………….61

FIGURE 1.1 Schematic Of A Supply Chain……………………………………………………...13

FIGURE 2.1 Conceptual Framework…………………………………………………………..…15

1.1 BACKGROUND OF STUDY

Supply chain management is the process of efficiently integrating suppliers ,manufacturers,

FIG 1.1: SCHEMATIC OF A SUPPLY CHAIN

SOURCE: INVENTORY MANAGEMENT BY GUIDO VAN HECK

1.1.1 OBJECTIVE OF THE STUDY

1.2 STATEMENT OF RESEARCH PROBLEMS

1.2.1 RESEARCH QUESTIONS

1. What is the relationship between inventory management and profitability management in

3. In what ways do inventory management techniques differ among firms in Dominion

Ho : There is no significant relationship between the inventory management and profitability

H0: Efficient of inventory management has no impact on profitability of Dominion

H1: Efficient inventory management has an impact on profitability management in

H0: Adoption of diverse inventory management techniques causes disparity in results in

1.4 MODEL SPECIFICATION