AN EVALUATION ON THE EFFECTS OF INVENTORY MANAGEMENT PRACTICES

ON AN ORGANIZATION: A CASE STUDY OF NAKUMATT SUPERMARKET IN KISII

TOWN.

HESBORN
Fredrick gitonga
Gilbert seriah
Chepkorir mercy

A Research Project Report Submitted in Partial Fulfillment of The Requirements for The
Award of Diploma in Business Administration Of Kisii University College.

EGERTON UNIVERSITY

August , 2012
DECLARATION AND RECOMMENDATION
DECLARATION
This research project is my original work. Has never been presented before for the award
of any diploma or qualification.
Signature.. Date
OCHARO EZRA OKIBO
CBP01/1OO45/10

RECOMMENDATION
This research project report has been submitted for examination with our approval as
Kisii University College supervisors.
sign................................ Date.................................................................
MR. ROBERT NYABWANGA
LECTURER
KISII UNIVERSITY COLLEGE

Sign...................................................................Date...........................................................
MR. BEN NYARANGI
LECTURER
KISII UNIVERSITY COLLEGE

DEDICATION
This research is dedicated to my beloved parents, Mr. Jared M Okibo and Mrs Zipporah Moraa.

ACKNOWLEDGEMENT
My foremost gratitude goes to our almighty God for enabling and guiding me through my
academic life. I wish to record my gratitude to my supervisors Mr Robert Nyabwanga and Mr
Ben Nyarangi for guiding me right from the first stage up to this final stage. I also acknowledge
Kisii University College staff that supported me in one way or another during my period of
study. besides, my appreciation goes to my cousins Edward who helped me with writing
materials needed during the research period and Zackary who guided me in topic selection. I also
thank my uncles, walter Aminga, Richard Ongera, and Enock Orora for their support as I was
writing this project report. My special thanks goes to my sister Lilian and Brother Vincent for
giving me financial support needed to do this work. I thank the family of my uncle Japhet
Ombaso for their assistance as I was writing this projet report. Above all, I owe a lot to my
classmates; they deserve special recognition. They nursed my frustrations and offered company
as we struggled to beat the deadlines
May God bless you all.

ABSTRACT
The purpose of the study was to assess the effect of inventory management practices on
warehouse operations efficiency in Ouru Superstore Kisii town. This study was important to
management of Ouru Superstore in adopting ways of efficient inventory management practices.
The study was a basic to unearth certain problems relating to material management and inventory
management practices and went along way to enhance interest in new concepts, approaches and
philosophies aimed at better cost control over inventories. This study was of benefit to students
carrying out researches on inventory management practices in corporate organizations especially
warehouses, and finally add to existing literature on the subject. The research applied a case
study where questionnaires were used to collect quantitative data. The target population was 80
employees of Ouru Superstore Kisii town, where a sample of 20 persons were taken using
purposive sampling and simple random sampling methods. The collected data was analyzed
using descriptive statistical techniques such as percentages, frequencies and weighted averages.
Analyzed data will be presented in tables and charts. The study found out that the effect of
inventory management practices on warehouse operations efficiency are: improved labor
productivity, enhanced customer services, facilitates standardization of inventory movements,
improved cycle counting, more efficient use available warehouse space, faster inventory turns
and reduction inventory paper work. The study suggested that further research be done on the
following areas: the study can be carried out using other warehouses in different towns to make
results have better generalization.

TABLE OF CONTENTS
DECLARATION...ii
DEDICATION ..iii
ACKNOWLEDGEMENT....iv
ABSTRACT ......v
LIST OF ABBREVIATION.......vi
LIST OF FIGURES .................................................vii
TABLE OF CONTENTS....viii
CHAPTER ONE... 1
1.0 INTRODUCTION....1
1.1 Background of the study ................. ...1
1.2 Statement of the problem.........2
1.3 Objective of the Study..3
1.3.1 General objective of the study..........3
1.3.2 Specific objective...........3
1.4 research questions.........3
1.5 scope of the study.........3
1.6 significance of the study..........3
1.7 assumptions of the study......4

1.8 limitations..........4
1.9 Operation definition of terms...........5
CHAPTER TWO6
LITERATURE REVIEW..6
2.1 Concept of inventory management....................................................................................6
2.2 Inventory management techniques........7
2.2.1 The economic order quantity (EOQ) model...7
2.2 The ABC analysis techniques................8
2.2.3 Just in time techniques (JIT)......................9
2.2.4 Material Requirement Planning...................10
2.2.5 Vendor Managed inventory ..........10
2.3 Replenishment system.....11
2.4 Inventory holding costs.......................12
2.5 Inventory Purchase Budget..12
2.6 Inventory Tracking..........................13
2.7 The Lead Time............................13
2.8 Re Order Point.........................13
2.9 Warehousing............................14
2.9.1 Warehousing and store management...14
2.9.2 Store operations......14
2.10 The Techniques used in store inventory control........15

2.11 Conceptual Frame Work........18

3.0 CHAPTER THREE...20
RESEARCH METHODOLOGY...20
3.1 Research design...20
3.2 Study area.............20
3.3 Target population.....20
3.4 Sample size and sampling procedure...............20
3.5 Research instrument.....21
3.5.1 Validity of the instrument.....21
3.5.2 The reliability of the instruments..22
3.5.3 Data collection procedure.............22
3.6 Data analysis and presentation.............22
CHAPTER FOUR..23
DATA ANALSIS, RESULTS AND DISCUSSION.23
4.1 Questionnaire Return Rate..
4.2 Demographic characteristics of the sample
4.2.1 Tenure of employment..
4.3 Findings on objective one..
Findings on objective two..
Findings on objective three.
CHAPTER FIVE.

SUMMERY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary of Finding and Conclusion..
Recommendation
REFERENCE....
APPENDICES
APPENDIX : QUESTIONNAIRE

LIST OF FIGURES
Graphical presentation of EOQ...10
Conceptual flame work.
4.5 graphical presentation of factors considered while determining maximum stock level
4.7 Success of Ouru Superstores overall inventor management practices..
4.9 challenges incurred in storing goods in the store
4.10.1 Challenges facing Ouru Superstores in adopting inventory management practices

LIST OF ACRNYMS AND ABBREVIATIONS

DOD- Department of Defense
GAO- General Accountancy Office
EOQ- Economic Order Quantity
TC -Total Cost
CO -Ordering Cost
CC -Carrying Cost
Q -Quantity
MRP- Material Requirement Planning
JIT -Just in time techniques
VED -Vital Essential Desirable
VMI -Vendor managed inventory
FIFO -First in first out
SSE- Small Scale Enterprise

LIST OF TABLES
3.4 Sample size and sampling procedure
4.2.4 Tenure of employment
4.4 Effect of inventory management practices on warehouse operation efficiency.
4.5 Factors considered while determining the maximum stock levels.
4.7 Success of Ouru superstores overall inventory management practices.
4.8 The type of stock ordered by Ouru superstores most..
4.9 The inventory costing method used by Ouru superstores to value stock in its warehouse
4.10 Challenges incurred in storing goods in the store.
4.10.1 Challenges facing Ouru in adopting inventory management practices
4.11 Effectiveness of Ouru superstore in carrying out inventory levels management practices

CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Based on the establishment that effective inventory management had the greatest effect on the
financial planning model as indicated by its largest standardized beta coefficient (0.505), as by
the findings of (Nyabwanga et al,2011). The study suggests that Small Scale Enterprises (SSE)
shoud pay more attention to the management of inventory since it has large effect on financial
performance. Therefore (SSE) should ensure that stocks are sufficient to meet customers demand
while at the same time avoid holding unnecessary surplus stock that may increase holding costs.
SSE should seek knowledge on how to use stock optimization techniques so as to be able to
determine right quantities of stock to hold at any given time. (Nyabwanga et al, 2011).
Long-term planning for network design is considered when investing in resources or contracts
with third party logistics companies.The total cost is determined based on location,
transportation, and inventory costs. To optimize the logistic network model, the factors affecting
costs are considered. Pujawan, (2004) studied the effective lot sizing rules by comparing the
variance of order interval and quantity. He focused on order variability under different order lot
sizes without considering shipping costs and location capacity in a single level system from
suppliers to end customers. The majority of the studies in the literature use mathematical
optimization techniques or montecarlo simulation. To consider optimizing all the systems in a
company, the discrete simulation the simulation techniques is used to deal with complexity of
factors and strategies, Torress, (1997).
Due to many assumptions and responses to potential factors of inventory management practices,
the abstracted process in Liu of detailed process is considered as in the earlier research by
suwanruji, (2004) and Kliejnen (2005) indicated simulation as a tool of methodological
concerns; verification, sensitivity or what if analysis optimization and robustness and uncertainty
analysis for strategic levels.

Anily and Federgruen, (1993) researched fixed renting truck cost and constant replenishment
interval inventory policy. They used deterministic demand and assumed the demand is identically
uniform for all regions through two echelons et al,(1999) modeled logistics network with stop
over, travel, and shipping cost. Jayaraman, (1998) studied a logistics networks with the space of
location limited by the dimension of products. Inventory holding and warehousing continue to
play an important role in modern supply chains. A survey of logistic costs in Europe identify the
cost of inventory as being 13 percent of total logistic costs, whilst

warehousing

accounted for a further 24 percent, Baker,(2007), however determination to control purchase and
inventory costs in warehouses in many cases have not been motivated to control purchasing costs
in the same way that competitive industry has.
Inventory management offers great potential for organization to reduce costs and improve
customer service performance, (Jeffrey et al 2008). However, it should not be forgotten that
money saved by cutting inventory costs could be used to improve the performance and add to
profitability of the company.
Several organizations have over the past applied inventory management practices; studies show
that the united states General Accounting Office, (GAO) use of innovative business practices to
improve inventory management and the opportunities. What the researcher wanted to find out is;
whether the inventory management practices help Ouru superstore to maintain the flow of
inventory in his warehouse.
1.2 Statement of the Problem
It is important that a company maintain adequate stock of material for a continuous supply to the
market for an un interrupted production. In doing so, such a company is exposed to two
undesirable points, namely; excessive and inadequate inventories. Each of them has dangers. For
instance, inventories can lead to unnecessary tying-up of the firms funds and loss of profit,
excessive carrying cost and risk liquidity while inadequate inventories can lead to production
hold ups and failure to meet delivery commitments. The financial managers prefer to keep
materials. This situation indeed makes it necessary to examine the inventory management
practices and techniques as this can have severe impact on the organizations performance with

associated consequences on the survival of the firm. The study is concerned with the problem of
how to maintain optimum level of inventory using inventory management practices.

1.3 Objective of the Study

To assess the effect of inventory management practices on warehouse operation efficiency in
Ouru Superstore Kisii Town.
1.3.1 General Objective.
The general objective of this study was to assess the effect of inventory management practices on
warehouse operations efficiency
1.3.2 Specific Objectives.
(i) To establish the inventory management practices of Ouru super store
(ii) To evaluate the warehouse operation efficiency of Ouru Superstore
(iii) To determine the effect of inventory management practices on warehouse operations
efficiency
1.4 Research Questions
(i) What are the inventory management practices of Ouru Super Store?
(ii) What is the Warehouse operation efficiency of Ouru Superstore?
(iii) What is the effect of the inventory management practices on the warehouse operations
efficiency of Ouru Super Store?
1.5 Scope of the Study
This study was limited to assessment of effect of inventory management practices on warehouses
operation efficiency taking Ouru superstore situated in kisii town as the case study. The study
was conducted between May and August 2012.

1.6 Significance of the Study.

This study was important to management of Ouru super store in adopting ways of efficient
inventory management practices. This study was also of immense benefit to students who
carrying out researches on inventory techniques in corporate organization especially warehouses.
Finally the research was significant in adding to existing literature on the subject.
1.7 Assumptions of the Study
The following were the assumptions of the study; first, the management was to allow the
researcher into their premises to do the research. Ouru superstore has adopted inventory
management practices. He also has a warehouse to store inventories. All research questions were
to be answered honestly
1.8 Limitations of the Study
The study was limited to Ouru Superstore Kisii Town hence its findings may not be generalized
to other Superstore. The management was reluctant

and uncooperative in giving relevant

information citing the confidentiality of the information given, this forced the researcher to
engage the respondents in a brief interview to let them know the importance of this study as a
strategy to avoid lack of co-operation. Ouru superstore staff may be busy hence lack time to
attend the researcher as by their daily chores. The collection of data was based on the
questionnaire whereby the respondents may not be accurate, honest and clean in giving their
response, therefore the researcher will employ qualitative techniques to select and document,
reliable and accurate findings. Some respondents were unwilling to respond because they feared
that if they give factual information they may loose their job, hence the researcher assured the
respondents of the confidentiality of the information to fight the fear in them.

1.9 Operational Definition of terms used in the study

Buffer stock
Is a term used to describe a level of extra stock that is maintained to mitigate risk of stock out
(shortfall in raw materials or packaging) due to uncertainties in supply and demand .
Inventory
Inventory is an idle stock of physical goods that contain economic value and are held in various
forms by an organization in its custody awaiting packaging, processing, transforming, use or sell
in the future point of time.
A warehouse
A warehouse is a commercial building for storage of goods. Warehouses are used by
manufacturers, importers, exporters, wholesalers, transport businesses and so on.
Obsolete inventory
Refer to inventory that is not usable anymore either due to the product being at the end of its life
cycle or has not sold for a set of time period generally determined by the industry.
Carrying cost of inventory
This is the cost a business incurs over a certain period of time to hold and store its inventory.
Business use this figure to help them determine how much profit can be made on current
inventory. It also helps them to find out if there is need to produce more or less in order to keep
up with expenses o maintain the same stream.

CHAPTER TWO
LITERATURE REVIEW
2.1 Concept of Inventory Management
Any stock that a firm keeps to meet its future requirement of production and sales is called
inventory. The basic reason for holding inventory is to keep up production activities
unhampered. It is neither physically possible nor economically justifiable to wait for stock to
arrive at the time when they are actually required. Therefore keeping of inventory is a must for
efficient working of a business unit. Hari (2004).
The necessity of inventories prevails in order for companies to successfully manage market
expectations throughout fluctuating business cycles, Silver et al ( 1998), for majority of
companies; the role of inventory is to improve overall delivery responsiveness and to buffer
against production or supplier product shortages that potentially conflict with the desired
customer service level. Inventory management contribute towards accompany strategy as a key
driver of product, price, and responsiveness within the supply chain, Goldratt (1986). It is
considered to enable competitive advantage within organizations, Hayes, (2005) and therefore
considered to be crucial element for sustainable, successful business operations.
Inventory is used to satisfy demand, which is generally considered to be probabilistic under
normal conditions. This is particularly true for retailers operations where consumer demand is
completely subjective and bound by the activity of shoppers within the retail storefront. Large
unanticipated demand will inevitably contribute towards a product arriving too early resulting in
excess or potentially obsolete product in stores, Silver et al, (1998). On most accounts, the
traditional approach to addressing this problem has been to plan and manage inventory levels.
In order to address the problems concerning inventory, researchers have applied theoretical
formulae based around the economic ordering quantity (EOQ), calculation, Buxey, (2006) and

the use of safety stock throughout the organization. Other recommendation include the concept
of Total cost of logistics, Lambert $ Stock, (1993) or based upon flexible re-order level policies
that adjust to variations and levels in demand. Lewis (1989). These alternative approaches
suggest that the function of inventory management could be managed independently from other
business functions through the use of various formulae
This particular tactic imposes a business risk where efforts to reduce costs in one activity may
actually lead to an increase in total cost due to rising expenses in another part of the organization,
Lambert $ Stock, (1993). This means that managers that attempts to resolve the problem through
localized management of inventories must negotiate the risk of sub- optimization a cross the
entire plant or organization.
2.2 Inventory Management Techniques
To achieve the objectives of inventory management, the firm should endeavor to determine the
optimum level of inventory. This calls for the application of sound techniques. Some of the
techniques are discussed below.
2.2.1 The Economic Order Quantity (EOQ) model
Undoubtedly, best known and most fundamental inventory decision model is the economic order
quantity model. Its origin dated back to the early 1900s. The purpose of using the EOQ model in
this research is to find out the particular quantity, which minimize total inventory costs that are
the total ordering and carrying costs.
The EOQ has been previously defined by Dervitsiotis, (1981), Monks, (1996), Lucey T (1992)
and Schreader (2000) as the ordering quantity which minimizes the balance of cost between
inventory holding cost and reorder costs. Lucey,(1992) stressed further that to be able to
calculate a basic EOQ, certain assumptions are necessary; That there is known, constant holding
costs; that there is known , constant ordering cost; the rate of demand are known; there is a
known constant price per unit; that replenishment is made instantaneously, that is the whole
batch is delivered at once, and lastly, no stock outs are allowed.
It would be apparent that the above assumptions are some what sweeping and they are a good
reason for treating an EOQ calculation with caution. Also, the rationale of EOQ ignores buffer

stocks, which are maintained to cater for variations in lead time and demand. The above
assumptions are wide ranging and it is unlikely that all could be observed in practice.
Nevertheless, the EOQ calculation is a useful starting point in establishing an appropriate reorder
quantity.The EOQ formula and graphical presentation is given below;
EOQ= 2DCo/CC
Where CO, Cc, and D denotes the ordering costs, carrying costs and annual demand respectively.
Note also that annual stock= EOQ/2, Total annual carrying cost = CcQ/2, number of orders per
annum = D/Q, Annual ordering cost = COD/Q, and total cost = CcQ/2 +CoD/Q, Q= calculated
EOQ
Graphically, the EOQ can be represented in the fig 1

EOQ
Carrying cost

Ordering cost
cost
inventory level
Fig 1: presentation of EOQ graphically.
Source: Lucey T, (1992) Quantitative techniques; 4th edition.
2.2.2 ABC Analysis Technique
For a firm that deals with thousands inventory items, it is obviously difficult to devote equal
attention in terms of personnel and financial resources to each of the inventory item, hence the

need for selective control, Ravi A, (2003) The common technique to be used in measure the
significance each item of inventories in terms of its values. ABC analysis demands knowledge of
each of its value, price, usage and lead time as well as problems which can be encountered
during procurement.
Under ABC analytical technique, the inventories are classified into A items and C items. The
high value items are classified as A items and would be under the highest control and attract
maximum attention C represent relatively least value and would be under simple control, as it
would attract the least attention B items falls in between this two categories and require
reasonable attention management since ABC analysis concentrates on important items
Richmond, (1969; 74-78) branded it control by importance and exception.
According to Pandey, (1979), the steps involved in ABC analysis are; classifying the items of
inventory determining the expected use in units and the price per unit of each item; determining
the total value of each item by multiplying the expected units by its units prices; rank the items in
accordance with the total value giving first rank to the item with highest total value and so on;
compute the ratios (percentage) of number of units of each item to total units of all items and the
ratio total value of items; finally combine items on a basis of the relative value to form three
categories A B and C
2.2.3 Just in Time Techniques (J I T)
J I T is the Japanese system of inventory control which is based on the premise that inventory is
the most of all evil and should be kept at an absolute minimum level. The commonsense phrase
just in time suggests that inventories should be available when a firm needs them. The of JIT
techniques is zero inventories with 100 percent quality. It does not mean the firm shiftsInventory
tasks to the supplier, rather calls for synchronization between supplier and customer production
Schedules so that it becomes unnecessary to keep buffer stock. According to Lotter, (2004),
effective implementation of JIT should result in reduced inventory and lead time and increase
quality productivity and adaptability to changes. One of the importances of JIT is that it helps to
ensure strict quality control, frequent and reliable delivery. It also encourage easily supplies
involvement in production process of the buying organization should maintain table production
schedule. Other advantages of Just-in-time are; funds that were tied up in inventories can be used

elsewhere; areas previously used to store inventories can be used for other more productive uses;
throughput time is reduced, resulting in less wastes and greater customer satisfaction.
2.2.4 Material Requirement Planning (MRP system)
This is a computer based production and inventory planning system primarily employed for
products in which the final product is an assembly of component parts the concept provides a
basic and different way of looking at the management manufacturing operation. The objectives
of MRP system are; To ensure the availability of materials and components for assembly of the
end item; to minimize level of inventory; to plan manufacturing activities, delivery schedules and
purchasing activities. According to Ezirim, (2002; 327) MRP challenges the traditional concept
that any significant level of production. Inventory need to be carried prior to the time materials
are actually required by production, the basic of MRP system is first to analyses and an end item
(finished products) and break it down into various component party i.e. explosion. A schedule is
then determined so that the demand and lead time at a particular component level is determined.
That means it is possible to calculate precisely the production material need for a given period of
operation. The bill of material for a given finished product can be exploded for a number of
units to be obtained, the products exact requirement for each component. Material, or part with
this approach, a firm can calculate production material requirement in advance of actual need,
and then generates requisitions for each material to be delivered in the required quantity prior to
the beginning of the manufacturing operation.
2.2.5 Vendor Managed Inventory
Vendor managed inventory simply means the vendor (the manufacturer) manages the inventory
of the distributor. Vendor managed inventory, V.M.I) is one of the many initiatives that strives
towards closer co-operation between the members of supply chains in the area of inventory and
demand management, Doughtery,( 1999). V.M.I is an inventory management process that falls
under the push stock management process. These are processes that are triggered by
interpretation of expected demand in inventory and supply is scheduled to meet this demand.
Vendor managed inventory/consignment stock is inventory that is in the possession of the buyer,
(shop, warehouse or store), but is still owned by the supplier.

Payment of the inventory is made once it is sold accordingly, the capital investment on the stock
comes from the supplier and the buyer provides space for it. Kumar (2003) V.M.I have benefits
and some of the benefits are; increase in sales, where companies who have implemented V.M.I
have increased their sales by an average of 22-35 %.

By providing customers with

replenishment order alerts and ensuring shelves are stocked with vendor products; strengthen
customer relations; increase performance on delivery time.
2.3 Replenishment system/ P-system/ periodic review/ periodic count system
In this system, costs are not explicitly considered and order quantity is not fixed. On the other
hand, time is taken into consideration and given more emphasis. Inventory is periodically
reviewed at fixed intervals and if there has been any depletion in consumption between the last
and present review period, a replenishment order is placed to bring the stock at a
predeterminined level. (A K Datta, 2004)
A predetermined quantity is equal to the difference between replenishment level and actual
inventory on hand. In other words, we are here interested in actual or average consumption over
a period of time, ie. Time between two reviews, review time and lead time. Replenishment level
is computed as;
M=B+D(R+L), where,
M=Replenishment level units
B=Buffer stock in units
D= Average demand for the item (units/time)
R=Review period (weeks/months)
L= Lead time (weeks/months)
I= Inventory on hand in units
Order quantity Q can be computed as follows:
(i) If L>R, then Q=M-I-Qord. Where,

I= Inventory on hand

Q= Quantity on order

2.4 Inventory holding cost

Edmonds $ Thomas p (2000) referred to inventory holding costs as the costs associated with
acquiring and retaining inventory. It includes the costs of storage space, lost, stolen or damaged
merchandise, insurance personnel and management, and interest.
2.5 Inventory purchases budget
After the amount of projected sales has been established, accountants focuses on the amount of
inventory that will be needed to satisfy the sales demand (Edmonds & Thomas P 2000). Meeting
the sales demand requires having enough inventories to cover expected sales and future sales
between re-order points. Accordingly, the total amount of inventory needed for each month
equals the amount of budgeted sales plus the desired ending inventory.
The total amount of inventory needed can be obtained from the two sources. In other words,
customers demand can be satisfied with goods that are beginning inventory. The difference
between the amount of goods needed and the beginning inventory is the amount of goods to be
purchased (Edmonds & Thomas p, 2000)
Accordingly, the purchases budget follows a logical format that is summarized here;
Cost of budget sales

xxx

Plus: Desired ending inventory xxx

Inventory needed.

Xxx

Less beginning inventory

(xxx)

Amount to purchase.

Xxx

Nyabwanga et al (2012), suggested that preparation of inventory budgets and review of inventory
levels are regularly carried out and managers are in agreement with findings of kwame, (2007)
which established that majority of small businesses always review their inventory levels and

prepare inventory budgets and this is stressed by Lazaridis and Dimitrios, (2005) that enhancing
the management of inventory enable businesses to avoid tying up excess capital in idle stock at
the expense of profitable ventures.
2.6 Inventory tracking
The purpose of inventory tracking is to ensure that while some of your capital must be tied up in
inventory, it doesnt hinder your companys cash flow or waste employees time. Your business
will run best if you an accurate count of inventory, procedures for changing it, and an
organization scheme that allows fast and efficient access to it.( David and Donald 1996).
Firms should set a side sufficient space for their inventory. A sizable and well-lighted area allows
them to organize and manage their inventory in the way that fits your company. They should also
organize there inventory in a manner that fits the type of business they run (David and Donald,
1996).
2.7 Lead time
Can be explained as the time between planning the release of an order work in progress until the
order is completed. According to Green J H (1997), lead time is the required period to complete
one operation on a component. Green further states that manufacturing lead time as a time
required to manufacture an item.
2.8 Re- order point
The re-order (ROP) is the level of inventory when an order should be made with suppliers to
bring the inventory up by the Economic Order Quantity EOQ (Khan $ Jain, pk 2003), the
reorder point for replenishment of stock occurs when the level of inventory drops down to zero.
In view of jumps to the original level from zero level. The two factors that determine the
appropriate order point are the delivery time stock which is the inventory needed during the lead
time (i.e. the difference between the order date and the receipt of the inventory ordered and the
safety stock which is held as a protection against shortages due to fluctuations in demand.( khan
and Jain 2003)
Re-order point= normal consumption during lead time+ safety stock

2.9 Warehousing
Warehousing can be viewed as a physical system, involving facility space, labour, and
equipment, where inbound products are put away, stored, and protected until the outbound
product shipment-related process occur. (Ackerman, 2000). The warehouse system has control to
manage the physical flow, to ensure the proper care and handling of materials, and to document
all activities occurring in the warehouse. the proper care and handling of materials, and to
document all activities occurring in the warehouse. The major activities of warehousing are
receiving, putting away, storage, order picking, marking, staging, and shipping. Ernst& ( 1985).
Another important activity considered by some as equally important, is housekeeping. Ackerman
(2000)
2.9.1 Warehousing and stores management
Receiving and storage are important flow control activities in the materials management chain.
Regardless of the efficiency with which all preceding materials activities have been conducted,
to a significant extent receiving and stores determine the degree to which the operating units will
be supplied satisfactorily (Donald,( 1996).
2.9.2 Storage operations
Storage functions are usually an extension of receiving department duties. The basic functions of
storage are the movement of products from the dock area to a holding location and quantity, and
the updating of storage records so that the products can be found easily when it is needed.Datta,
(2004).
2.9.3 Measuring warehouse efficiencies.
Warehouses are one of the most labor intensive nodes in supply chains. While there have been
major innovations towards increasing warehouse productivity through process and mechanical
automation, they still constitute a substantial part of the supply chain cost. Warehouses generally
measure their effectiveness through various metrics that can be grouped in one of the following
categories;

Operations- the operational metrics measures the efficiency of warehouse operations. This is
primarily focused on the number of activities performed. The example of metrics in this category
will be number of cases received and shipped, number of picks and put away tasks completed,
units handled, dollar value of the handled merchandise an so on.Datta,( 2004). The main focus of
operational metrics is to measure the efficiency of the material handling operations within the
warehouse, whether they are handled through labor, automation or a combination of the two.
Equipment like the conveyor, forklifts, automated carousel systems, diverters, barcode scanners,
sorters, label applicators, dimensioning systems, automated guided vehicles and so on can help
enhance operational efficiency in warehouse.
Stocking efficiency- this set up metrics primarily measures the efficiency of the warehouse
space usage. How does the warehouse make use of its space, horizontally and vertically? These
matrices show how racking and slotting needs are being fulfilled and how these decisions affect
the operations by affecting picking, putting away and replenishment tasks efficiency, active and
reserve location. Datta,(2004).
2.10 The Techniques Used In Store Inventory Control
Store/ inventory control techniques is the important tool in the hands of the modern management.
It is indispensable for each and every manufacturing concern. The following are the important
techniques of store control.
2.10.1 Fixation of various stock levels
Under this method, various stock levels are fixed scientifically to avoid overstocking and under
stocking of materials. Overstocking of materials leads to unnecessary blockage of materials and
investment and under stocking of material leads to disputation in production. The following are
the stock levels which help for planning of materials;
2.10.2 Perpetual inventory system.
According to Ravi, (2003) perpetual inventory system is a system of records maintained by
controlling department which reflects the physical movement of stock and their current balances.
Bin cards and store ledger constitute the bedrock of perpetual inventory system. It is a method of
recording store after every receipt and every issue and their current balances to avoid closing

down the firm for stock taking. To ensure accuracy, the physical verification may be made which
must have to agree with the balance of Bin cards and store ledger. If there is discrepancy between
the two, it may be adjusted by preparing debit note and credit note

2.10.3 Inventory turnover ratio

Inventory turnover ratio is one of the methods of store control. It indicates how quickly the
stocks are converted into sale. Low inventory turnover ratio indicates the inefficient management
in inventory and high inventory turnover ratio always implies favorable situation.(Lucey 1992)
2.10.4 Purchase requisition
Purchase requisition is a form used as a formal requisite by the store keeper to the purchasing
department to purchase requisite quantity of materials. When store reaches at the ordering level,
the store keeper initiates purchase requisition to the purchasing department for fresh supply of
materials. The purchase department may not purchase materials according to its own accord.
When purchase officer receives purchase requisition, he arranges for purchase of materials
2.10.5 Material management.
Material management is concerned with the flow of material to and from the manufacturing
departments, (Dean S Ammer, 2006), material management is the process which integrates the
flow of supplies into, through and out of an organization to achieve a level of service which
ensures that the right material are available at the right place in the right quantity at the right
time, at the right price. It include the functions of procurement, material handling and storage,
production and inventory control, packaging transport and associated information systems and
their application throughout the supply.
2.10.6 Pricing of goods in warehouse
According to James B Wilcox, (1987), in pricing merchandising wholesaling must price their
goods in such away that can be able to sale at satisfactory rate or cost is covered, a desired profit
is made, customers are treated well and they should know how to compete with their
competitors.

2.10.7 First in first out (FIFO)

First in first out is an inventory control method where all inventory is used based on the time or
date it was acquired. This method simply decreases waste and spoilage and requires sting end
control of inventory based on date
2.11 CONCEPTUAL FRAME WORK
INDIPENDENT VARIABLES

DEPENDENT VARIABLES

Inventory management
practices

Warehouse operation
efficiency

Inventory
budgeting)

Fixation of various
stock levels

Inventory tracking

Pricing of goods in
warehouse

Lead time

Re-order point

Replenishment of
stock

Inventory
management
techniques i.e,EOQ,

Storage operations

Stocking efficiency

size of
warehouse

Location of the
warehouse

employee in the
organization

Price level

INTERVENING VARIABLES

Source: Researcher, (2012

Explanation of variables
Inventory management techniques, inventory budgeting and lead time are some of the inventory
management practices that ensures warehouse operations is efficiency. The independent variables
are lead time, re-order point, inventory tracking, replenishment, inventory control and costs and
inventory management techniques like Economic order Quantity, (EOQ), Material Requirement
Planning (MRP), ABC analysis techniques, just in time techniques, Vendor managed inventory
and First in First Out (FIFO). While dependent variables are fixation of various stock levels,
replenishment, pricing of goods in warehouse, contingency. However, as much as Ouru
superstore Kisii town attempts to put in place necessary measures to ensure warehouse operation
efficiency, there are other factors that may affect its plan. Such factors are size of warehouse,
location of warehouse, number of employees in the organization and changes in price level.

CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research design
This study adapted a case study design. It was considered appropriate since it enabled the
researcher to deal with each characteristic within the population in depth (Mugenda and
Mugenda, 1999). It also assisted the researcher to know the interrelationships of inventory
management practices thus a case study was more appropriate.
3.2 Study area
The study was carried out in Ouru Super Store Kisii Town. This area was appropriate because it
was easily accessible by the researcher.
3.3 Target population
The study targeted 80 employees of Ouru Supertore Kisii Town who were categorized as; 5 from
management, and 75 warehouse attendants.
3.4 Sample size and sampling procedure
Based on Kothari, (1993) suggestion of a sample of 10% for social studies, the researcher took
sample of 25% hence a sample size of the study was 20 respondents consisting of 5 managers
and 15 warehouse attendants.
Five heads of department were selected using purposive sampling method. Purposive sampling
was used because the heads of department had clear information on the effects of inventory
management practices on warehouse operations efficiency. Simple random sampling method was
used to select the sample of 15 warehouse attendants. Simple random sampling techniques was
preferred because it gave each of the warehouse attendant an equal chance of being selected into
the sample. (Oso and Omen. 2005).

Table 3.4 Sample size and Sampling procedure

Respondents

Population

Sample

Store Manager

Procurement officer

Stock Control officer

Chief store keeper

Store accountant

Warehouse attendants

75

15

TOTAL

80

20

Source:Ouru Superstore Kisii Town 2012

3.5 Research Instruments
The researcher used a questionnaire to collect data from the respondents. The questionnaires
were used because they coverered a wide area of a sample frame, no bias on the side of the
researcher and the respondents have adequate time to give well thought-out answers ( oso and
Omen, 2005). The questionnaires were hand delivered to the employees to cut down postage
costs and save time for data collection. The questionnaires were administered by the researcher
to ensure a high rate of return and response.
3.5.1 Validity of the instrument
Jankowicz (1993) states that the validity of the instruments is established by expert judgments.
The university lecturers examined the content of the instrument and made necessary corrections
before it was taken to collect data

3.5.2 The reliability of the Instruments

The reliability of the instrument was tested through test re-test method. Using this method, the
researcher piloted the study instruments on the non-sampled members of the population for the
first time and after one week the same questionnaire were re-administered on the same pilot
sample. The responses for the two occasions were compared so as to establish the consistency of
their response
3.5.3 Data collection procedure
The researcher got a letter from kisii University College after preparing the questionnaire. Then
the researcher went to the field. First, the researcher established a rapport with the respondents
and then administered the questionnaire to them and gave them a time of 14 days to complete the
questionnaire, after that the researcher went to collect them
3.6 Data analysis and Presentation
Data collected was analyzed using descriptive statistical techniques such as percentages,
frequencies and weighted averages. Analyzed data was presented in tables and charts

CHAPTER FOUR
DATA ANALYSIS, RESULTS AND DISCUSSION
4.1 Questionnaire Return Rate.
A sample of 20 respondents picked using purposive sampling and simple random sampling were
used in this study. 15 respondents returned the questionnaires which were duly completed for
data analysis. This represented 75%. This indicated that response was quite good for the study.
4.2 Demographic Information of the Sample
The 9 participants were male,this represented 60% and 6 participants were female who
represented 40&. All of them reported their age bracket as, 18-29 years 8 of them representing
53%, 30-39 years 6 of them representing 40% an 40-49 years where 1 respondent recorded
representing 6.7%.the respondents also recorded their level of education as; secondary 9
respondents representing 60% and 40% interviewed had post secondary education qualification
4.2.1 Tenure of employment
The study sought to establish the length of time the employees have worked for the company, the
variable tenure of employment was categorized as;
Table 4.2.1 Tenure of employment
Period

frequency

Percentage

Less than one year

20

2-5

40

5-10

40

Above 10 years

TOTAL

15

100

Source: field Data (2012)

From the table above, the results shows that 20% of the employees have worked for less than two
years; 40% have worked for 2 to 5 years, 40% again have worked for 5-10 years. It therefore

implies that a majority of 80% have worked for the organization for 2 years and above. This
shows that majority of the employees are experienced and therefore these is a high possibility of
understanding the effect of inventory management practices on Warehouse operations efficiency.
4.3 Inventory management practices of Ouru Superstores
The respondents were to identify inventory management practices of Ouru Superstores and they
identified them as; inventory budgeting, re-order point, inventory tracking, replenishment, and
inventory management techniques such as EOQ, MRP, ABC analysis, VMI and JIT techniques.
4.4 Effect of inventory management practices on Warehouse operations efficiency
Respondents were requested to rate the various effects of inventory management practices on
Warehouse operations efficiency
Table 4.4 response to the effect of inventory management practices on warehouse operations
efficiency.
Weights

Strongly Agree

No

Disagre

Strongly fi

agree 5

opinion

e2

disagree

3
Improved

wifi

wifi
fi

15

15

75

14

15

4.9

13

15

4.9

13

15

labour
productivity
Enhanced
customer
services
Facilitates
standardizatio
n of inventory
movements
Improved
cycle counting

73

4.9

More efficient 13
use

15

71

4.9

13

15

71

4.7

in 11

15

68

4.7

of

available
warehouse
space
Faster
inventory turns
Reduction
inventory
paperwork
Source: field Data (2012)
The respondents on table 4.4 were asked to indicate the effects of inventory management
practices on warehouse operations efficiency. The table shows the order of ranking various
effects using weights. The highest weight indicates the effect with high influence and the lower
weight indicate effect with least influence. From the table, improved labour productivity was
indicated as the effect of inventory management practices on warehouse operations efficiency
with weight of 5 while reduction in inventory paper work came last with least weight of 4.5
4.5 Factors considered while determining the maximum stock level
The respondents were requested to indicate the factors considered while determining the
maximum stock level.
Table 4.5 shows the response to the factors considered while determining the maximum stock
levels
Factors

Effect on stock level (%)

yes

no

Availability of storage space

100

The rate of material consumption

100

Time taken from order to delivery

100

Amount of stock already in the store

100

Capital necessary and available

93.3

6.7

The cost of storage

93.3

6.7

Average

97.77%

2.23%

Source: field Data (2012)

From the table 4.5 it is evident that the rate of material consumption, the lead time and buffer
stock were highly considered while determining maximum stock level with 100% respondents
followed by capital necessary and available and the cost of storage with a response rate of
93.3%.
Figure 4.5 Graphical presentation of factors considered while determining the maximum
stock level.
The figure below shows the respondents view to the factors considered while determining
maximum stock levels. 350 degrees represent those who were able to identify the factors while
10 degrees represent respondents with different opinion.

Key

Yes

No

4.6 The time period in which Ouru Superstore has practiced inventory management
practices.
The respondents were asked to tick the period in which Ouru Superstores has been applying
inventory management practices and their findings recorded as under;
Period

Frequency

Percentage

Less than 5 years

6.7

5-10

14

93.3

More than 10 years

Total

15

100%

Source: field Data (2012)

The table above shows that inventory management practices have been applied in Ouru Super
Stores for more than five years with a return rate of 14 out of 15 equivalent to 93.3%
4.7 Success of Ouru superstores overall inventory management practices.
Respondents were asked to rate the success of the companys overall inventory management
practices and the findings are as under.
Success

Frequency

Percentage

Exceeded expectation

Met expectations

14

93.3

Fell short of expectation

Unable to determine

6.7

Total

15

100

Source: field Data (2012)

The above table shows that the inventory management practices met Ourus expectation with a
frequency of 14 out of 15 interviewed representing 93.3% of all questionnaires returned.
Figure 4.7 :success of Ouru Superstores overall inventory management practices.

Key

Met Expectation

Unable to determine

The figure above shows that inventory management practices met ouru superstores expectation
with an area on the graph occupying 336 degrees while 24 degrees represent those who were
unable to determine the success.

4.8 The Type of stock ordered by Ouru Superstore most.

The respondents were asked to identify the type of stock which Ouru Superstore order most and
their response was recorded as;
Stock

Frequency

Percentage

Slow moving goods

Fast moving goods

15

100

Total

15

100

Source; field Date (2012)

It is evident from the table above that the company orders fast moving goods with a frequency of
15 representing 100 percent of the questionnaires returned.

4.9 inventory costing methods used by Ouru Superstore to value stock in its Warehouse
The respondents were asked to indicate the inventory costing methods used by Ouru Superstores
to value stock in its Warehouse
Method

frequency

Percentage

First in first out

15

100

Last in last out

Average cost

Total

15

100

Source: field study (2012)

From the table above, it is evident that Ouru Superstores use FIFO as his inventory costing
method, this is because all respondents interviewed identified first in first out as inventory
costing method with 100% return.
Figure 4.9. Challenges incurred in storing goods in the store

Key

Yes

No

The figure above, 312 degree represents those who were able to identify the challenges while 48
degrees represent those who were unable to determine the challenges.
4.10 challenges incurred in storing goods in the store

The respondents were asked to indicate whether the following were challenges incurred in
storing goods in the store.
Challenge

Response rate % yes

Response rate % no

Space available

100

$ 100

Fluctuation in price level

100

Attack from pests and rodents

73.3

26.7

Spoilage due to over storing

60

40

Averages

80.66

13.34

Change

in

version

preference in the market

Source: field Data (2012)

From the table 4.9 above it is evident that space available, change in version and preference in
the market, fluctuation in price level, attack from pests and rodents and spoilage due to
overstoring are challenges incurred in storing goods in the store. Spoilage due to overstoring had
the least with a response rate of 60%
4.10.1 The response to the challenges facing Ouru Superstore kisii town in adopting
inventory management practices
The respondents were further requested to indicate whether the following challenges are faced by
Ouru Superstores in adopting inventory management practices.
Table 4.10.1. the response to the challenges facing Ouru Superstore in adopting inventory
management practices
Challenge

Response rate %
Yes

No

Lack of storage space

86.67

13.33

Over ordering of inventory

66.67

33.33

Lack qualified personnel to carry out the task.

60

40

Price level changes

100

The location of the store

80

20

Number of employees in the store

60

40

Average

92.22

7.88

Source: field Data (2012)

From the table 4.10.1, it is evident that price level changes is the major challenge facing Ouru
Superstore in adopting inventory management practices with 100% response rate, lack of
qualified personnel and number of employee in the store has lowest rate of 60%
Figure 4.10.1 Challenges facing Ouru Superstores kisii town in adopting inventory
management practices

Key
Yes

No

It is evident from the figure above that the respondents agreed to the challenges facing Ouru
Superstore kisii otwn in adopting inventory management practices taking 331 degrees while
those who didnt agree took 29 degrees on the pie chart.
4.10 Effectiveness of Ouru Superstores in carrying out inventory levels management
practices

Inventory

Not

Least

Fairly

Effectiv

Highly

level

effectiv

effectiv

effectiv

e4

effectiv

management

e1

e2

e3

fi

wifi

wifi
fi

e5

practices
Inventory

14

60

4.3

10

15

65

4.3

15

67

4.5

15

66

4.4

15

63

4.2

15

67

4.5

budgeting
practices
Review

of

inventory
level
Determinatio
n

of

appropriate
reorder level
of stock
Ensuring
availability of
adequate
stock at all
times
Use

of

inventory
management
techniques to
determine
inventory
levels
Determinatio
n
appropriate

of

maximum

minimum
inventory
levels
Source: field Data (2012)
The respondents on the table 4.10 above were asked to indicate their views on the effectiveness
of Ouru Superstore in carrying out inventory level management practices. The table shows the
order of ranking various inventory management practices. The highest weight indicate the
practice which has been effected by Ouru Superstore. From the table, determination of
appropriate re-order level of stock and determination of appropriate maximum and minimum
inventory inventory levels have great effect with a weight of 5 each. Use of inventory
management techniques to determine inventory levels has the least with weight of 4.

CHAPTER FIVE
SUMMERY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of the findings and Conclusion
This study sought to analyze the effect of inventory management practices on Warehouse
Operations efficiency taking Ouru superstore Kisii Town as a case study. Hence this chapter
gives the conclusion and recommendation of the whole study by analyzing the findings as
presented by respondents. The study sought to answer three objectives. First, to establish the
inventory management practices of Ouru Superstore. Second, to evaluate the Warehouse
operation efficiency of Ouru Superstore and the third objective was to determine the effect of
inventory management practices on Warehouse Operations efficiency.
In relation to the first objective, it was found that inventory budgeting, re-order point, inventory
tracking, replenishment, the lead time and inventory management techniques such as EOQ, MRP,
ABC analysis, VMI and JIT are the inventory management practices used by Ouru Superstore
Kisii Town. Table 4.10 shows how effective Ouru Superstore has been in carrying out inventory
management practices, this is based on the weight ranging from 4.3 to 4.2.
In relation to the second objective, the study found out that determination of appropriate re-order
level of stock, determination of maximum and minimum inventory levels, ensuring availability
of adequate stock at all times, review of inventory levels and use of inventory management

techniques are warehouse operations efficiency of Ouru Superstores kisii town. The use of
inventory costing methods like FIFO and average costing methods effectively has enabled stock
in Ouru Superstore to move.
In relation to the third objective, it was found out that improved labour productivity, enhanced
customer services, facilitated standardization of inventory movements, improved cycle counting,
more efficient use of available warehouse space, faster inventory turns and reduction in
inventory paperwork as the effect of inventory management practices on Warehouse operations
efficiency.

5.2 Recommendations.
In relation to above findings, the following recommendations can be made. That warehouses to
be build on an area which is easily accessible and large enough to allow easy movement of stock
in and out. Skilled personnel to be employed to carry out inventory management practices in
Warehouses.
5.3 Suggestion for Further Research
This study can be carried out using other Warehouses in different towns to make the results have
better generalization. The study also suggests that further research should consider the following
areas; how the obsolete stock can be made into usable material. And measures taken to maintain
optimum level of stock.

REFERENCE
AD Jankowicz (2005) Business Research Projects 4th edition published by Thomson learning
Singapore
Aquilano N J, and Chase R.B, (1989). Reconstructing Inventory Management Theory
(volume 26)
Bailey,p (2005) Purchasing Principles and Management 9th edition prentice Hall London
Bernard A, (1999) What Is The Theory Of Constraints?
Brocher,Stout, Cokins (2008), Cost Management; A strategic emphasis 5th edition . prentice
Newyork
Buxey, G. (2006) Reconstructing Inventory Management Theory, International journal of
Operation and production Management, volume 26

Butner et al (2007) Reshaping Supply Chain Management. Prentice; Boston USA, Pearson
Publishing

Dervitsiotis KN (1981) Operation management USA:McGrew-Hill Series in industrial

Engineering and management science

Edward JD, Hermonson R.H and Maher M.W (1993) Principles Of Financial and Managerial
Accounting (Revised edition)

Ernst and Whinney (1983) Transportation Accounting and Control: guidelines for distribution
and financial managers
G A Cole (2004), Management Theory and Practice. 6th edition, prentice TJ International,
London

Hilton, Platt,(2009) Managerial Accounting, prentice Newyork

Kotter P (2002). Marketing Management 2nd edition. The millennium edition
New Delhi
Kothari CK (2004). Research Methodology: Methods and Techniques 2nd edition
New Delhi
KIM (2009) Fundamentals of Production Operation Management

Lucey T (1991) Management Systems 6th edition, DP publications

Lucey T(1992) Quantitative Techniques 4th edition DP publication
Omera khan, Bernard B (2007), Risk and Supply Chain Management, creating a research
agenda the journal of logistics management, volume 18 issue
Oso,Omen (2005) A guide to beginners in research, option publishers
Mcwatters, Zimmerman, Morse (2008), management accounting. Analysis and interpretation,
Prentice, Hall
Robert S, Kaplan, Anthon A, Atkinson (2007). Advanced management accounting 3rd edition.
Prentice, Hall New Delhi

Ronald W Hilton (2008), Managerial Accounting, pretence Newyork.

Nyabwanga R, Ojera P, Lumumba M, Odondo O, Otieno S (2012) Effect of working capital
management practices on financial performance. African journal of business
management vol 6(18) PP.5807-5817
William M Boyst, American production$ inventory control society (APICS 1988)
keth L a Muhlemen J Oakland (1994), production and operations management. London: pitman
Publishers

Kotter P (2002). Marketing management 2nd edition. The millennium edition New Delhi
Lucey T (1996) Costing 5th editions.
John T Mentzer (2001) Supply chain management. Prentice California
Mugenda (1999). Research methods, Act press
Donald W Dobler and David N Burt (1996) Purchasing and Supply management text and cases,
Prentice New Delhi
Russell & Taylor operations management: creating value along the supply chain 7th edition
Inventory control; nextlevelpurchasing.com/inventory.
Holmstrom j (1997)product range management; a case study of supply chain operations in the
European grocery industry international journal of supply chain management vol 2
No 8 pp 107-15
Baker K R (1989), lot-sizing procedures and a standard date set; a reconciliation of literature,
J.manufacturing and operations management 2

APPENDIX A
LETTER OF REQUEST FOR DATA COLLECTION
OKIBO O EZRA
P.O BOX 450
KEROKA,
1O JUNE 2012
TO THE MANAGER,
OURU SUPERSTORE LTD,
P.O BOX 48624,
NAIROBI
Dear sir\ madam
RE: REQUEST TO COLLECT DATA FOR RESEARCH
I, am a student at Kisii University College taking a diploma course in business administration,
I, am carrying out research project on effects of inventory management practices on warehouse
operations efficiency, I have chosen Ouru Superstore kisii town as a case study.

On the above regard, I kindly request you to allow me collect data from your company premises
which will be subjected for academic purposes only and therefore confidentiality of any
information given is assured. God bless you
Yours faithfully
..
Ezra O Okibo

APPENDIX B
QUESTIONNAIRE
Dear respondent,
I am a student at Kisii University College pursuing a Diploma in Business Administration, as part
of the requirement for the a ward of the diploma, am carrying out a research project on the effects
of inventory management practices on warehouse operations efficiency, a case study of Ouru
Super Store Kisii Town. On the above regard, I kindly request for you to assist me in answering
the questionnaire which shall be subjected to academic purposes only and therefore
confidentiality of any information given is assured. Your participation will be highly appreciated.
Please feel free to answer all questions where possible. Thank you.
INSTRUCTION:
Please feel free to tick [ ] the appropriate box or write your answer in the space provided
SECTION A
General questions
Personal Information
(1) Please indicate your gender.
Male

Female

(2) What age bracket are you in:

18-29 years

30 39 years
40-49 years

[
[

50 and above

(3) What is your highest level of your education?

Secondary School [

Diploma

Degree

Higher Diploma
Masters

(4) Please indicate your years of experience in this company.

Under 2 years

2 - 5 years

5 - 10 years

Above 10 years

(5) What is your Job position?

Top Management

Technical Supervisor

Middle level management

Junior staff

(6) Terms of employment

Permanent

On contract

SECTION B
(7) Please indicate if the following inventory management practices are applied in the company
you manage
Inventory budgeting
[
]
Re-order point

Inventory tracking

Replenishment

(8) Please rate on the Scale given below how often your business or the one you manage carries
out the following inventory management practices
Never 1

Rarely 2

Sometime

Often

Very

often 5

3
Prepare inventory budgets
Review inventory levels
Carry out replenishment of stock
Carry out inventory tracking

(9) How frequently do your business carry out stock monitoring

Daily

Weekly

Fortnightly

Monthly

Quarterly

Monthly

Quarterly

(10) After how long does your business orders inventory

Daily

Weekly

Fortnightly

(11) Which of the following methods does Ouru Super Store use use in determining the
maximum or minimum inventory levels to hold
Economic order quantity (EOQ)

Material requirement planning (MRP)

The ABC analysis

Vendor managed inventory (VMI)

Just in Time technique ( JIT)

No method

(12)Please rate on the scale given how effective you perceived yourself to be in carrying out the
following inventory budgeting practices KEY ( not effective, 2 least effective, 3 fairly effective,
4 effective, highly effective )
.
Inventory budgeting Practice

Preparation
of
inventory
budgeting
updating the inventory budgets
Use of inventory budgets in
tracking inventory
Use of computers in inventory
budgeting
(13) Please rate on the scale given how effective you perceived yourself to be in carrying out the
following inventory levels management practices.
Inventory level management practices

Not
effectiv

Least
effectiv

Fairly
effectiv

Effecti
ve

Highly
effecti

e
1

e
2

e
3

ve
5

review of inventory levels

determination of appropriate maximum and
minimum inventory levels
Determination of appropriate reorder level
of stock
Ensuring availability of adequate stock at all
times
Use of inventory management techniques to
determine inventory levels

(14) How long does it take for an order to be received after it has been made?
1 day

[ ]

1 week

2 weeks
1 month
More than a month

]
]

]
[

(15) Please indicate your responses in the following challenges incurred in storing the goods in
the store. Tick YES or NO
Statement

YE

Space available
Change in version and preference in the market
Fluctuation in price level
Attack from pests and rodents.
Spoilage due to over storing
(16) Please indicate on the following challenges whether they are faced by Ouru superstore Kisii
Town in adopting inventory management practices

Tick YES or NO
YES

NO

Lack of storage space

Over ordering of inventory
Lack of qualified personnel to carry out the task
Price level changes
The location of the store
Number of employees in the store
(17) Please, indicate for each statement within a scale from 1 (I strongly disagree) to 5 (I strongly
agree) on the effects inventory management practices on warehouse operations efficiency in the
company (i) Strongly Disagree = 1 point, (ii) Disagree = 2 points,

(iii) No Opinion = 3

points, (iv) Agree = 4 points (v) Strongly Agree = 5 points (Tick as appropriate). Statements
representing
5

Improved labour productivity

Enhanced customer service
Facilitates standardization of inventory movements
Improved cycle counting
More efficient use of available warehouse space
Faster inventory turns
Reduction in inventory paperwork
(18) Does the company consider the following factors while determining the maximum stock
levels?
Yes

No

Availability of storage space

The rate of material consumption/usage
Time taken from ordering to delivery
The amount of stock already in the store
The amount of capital necessary and available
The cost of storage

(19) How long has inventory management practices been applied in your organization?
Less than 5 years

5 - 10 years

More than 10 years

(20) How would you rate the success of your companys overall inventory management
practices?
Exceeded expectations

Met expectations

Fell short of expectations

Unable to determine at this time [

(21) What type of stock does your company order most?

(i)
(ii)

Slow moving goods

Fast moving goods

[
[

]
]

Does your company or the one you manage use the inventory costing methods below to value
stock in its warehouse?

Yes
First in first out (FIFO)
Last in last out (LIFO)
Average costs

No