Inventory Management: An Impetus for Increased Profitability in Manufacturing Firms
International Journal of Accounting, Finance and Risk Management
Volume 4, Issue 4, December 2019, Pages: 110-115
Received: Aug. 27, 2019;
Accepted: Sep. 29, 2019;
Published: Nov. 25, 2019
Views 201 Downloads 114
Adebola Daniel Kolawole, Department of Accounting, Afe Babalola University, Ado-Ekiti, Nigeria
Adesola Busola Akomolafe, Department of Accounting, Afe Babalola University, Ado-Ekiti, Nigeria
Babatunde Johnson Olusipe, Department of Agriculture Economics, Afe Babalola University, Ado-Ekiti, Nigeria
This study evaluated the degree of relationship between inventory management and profitability of manufacturing firmsin Nigeria. International Breweries Plc was adopted as case study. Secondary data were sourced from the company’s annual reports for the period of 10 years. A simple linear regression model was specified to test the correlation between variables used. Stock turnover ratio was used to capture the relationship between costs of sales incurred in generating total revenue and the inventory utilized in for production and distribution. The result generated from the study showed that the company operates an efficient Inventory Management System which has strong influence on its profitability. The correlation coefficient (r) was 85.3% while r2 was 72.7%. The study concluded that the efficient inventory management contributed significantly to profitability of manufacturing companies. The study recommended that manufacturing firms should focus on improving on their inventory management system by adopting a more efficient approach in utilizing inventory items.
Adebola Daniel Kolawole,
Adesola Busola Akomolafe,
Babatunde Johnson Olusipe,
Inventory Management: An Impetus for Increased Profitability in Manufacturing Firms, International Journal of Accounting, Finance and Risk Management.
Vol. 4, No. 4,
2019, pp. 110-115.
Adeyemi, S. L., & 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. Journal of Social Sciences 23 (2), Pg 135-142.
Adu-Bobi, K. A (2009). An Evaluation of Inventory Management Practices in Soap Manufacturing Firms in Ghana: the Case of Appiah – Menka Complex Ltd, Kumasi, Institutional Repository for Kwame Nkurumah University of Science and Technology (KNUST), Retrieved from http://hdl.handle.net/123456789/913.
Atnafu, D., & Balda, A. (2018). The impact of inventory management practice on firms’ competitiveness and organizational performance: Empirical evidence from micro and small enterprises in Ethiopia. Cogent Business & Management, 5 (1), 1503219.
Egberi, K. A &Egberi, E. O. (2011). Inventory Control and Management as Effective and Efficient Tools in Achieving Organisational growth in Nigeria: A Case study of Eternit Limited, Sapele, Delta State.
Heyl, J. (2011). Inventory Management, Operation Management Strategy Decisions. Pearson Education Inc., publishing as Prentice Hall.
Imeokparia, L. (2013). Inventory Management System and Performance of Food and Beverages Companies in Nigeria. IOSR Journal of Mathematics (IOSR-JM) Volume 6, Issue 1, PP 24-30. Retrieved from http://www.iosrjournals.org/iosr-jm/papers/Vol6-issue1.
Kumar, N. & Manohar, V. (2011). An evaluation of the size in the management of inventory in Tamilnadu cement industry. Foundation for Organisational Research & Education. Retrieved http://www.freepatentsonline.com/article/Abhigyan/258241629.
Kotler, P. (2002). Marketing Management, 2nd Edition, the Millennium Edition, New Delhi: Prentice Hill of India.
Kontuš, E. (2014). Management of inventory in a company. Ekonomski vjesnik: Review of Contemporary Entrepreneurship, Business, and Economic Issues, 27 (2), 245-256.
Leung, N. H. Z., Chen, A., Yadav, P., & Gallien, J. (2016). The impact of inventory management on stock-outs of essential drugs in Sub-Saharan Africa: secondary analysis of a field experiment in Zambia. PloS one, 11 (5), e0156026.
Lucey, T. (2003), Costing, 5th Edition. London: AshfrodColour Press.
Morris, C. (1995). Quantitative Approach in Business Studies: London: Pitman Publisher.
Rajeev, N. (2008). Do inventory management practices affect economic performance? An empirical evaluation of the machine tool SMEs in Bangalore.International Journal of Management Science and Engineering Management, Vol. 3 No 4, pp. 312-320.
Reid, D. & Sanders, N. R. (2010), Operations Management, 4th Edition, Wiley.
Rosenblatt, B. S. (1977). Modern Business - A Systems Approach. 2nd Edition, Boston: Houghton Mifflin Co.
Shen, H., Deng, Q., Lao, R., & Wu, S. (2016). A case study of inventory management in a manufacturing company in China. Nang Yan Business Journal, 5 (1), 20-40.
Stevenson, W. J. (2007). Inventory management, the McGraw-Hill Companies, Inc.
Sohail, N & Sheikh T. H. (2018). A Study of Inventory Management System Case Study. Journal of Dynamical and Control Systems, 10 (10), 1176-1190.