The Impact Of Inventory Management On Firm Performance: The Case Of Bamak Foam And Plastic Factories In Gelan And Dukem Towns, Oromia, Ethiopia

Abstract

Inventory management is a significant asset in any business and effective management of inventory will be a key task in the operations of an organization, on the contrary, poor inventory management leads to poor performance. The study is to examine the effect of inventory management on the performance of Bamak Foam and Plastic Factories in Gelan and Dukem Towns, Oromia Region, Ethiopia. This study used a descriptive based on quantitative approach. The population of the study is 248 and sample size of 154 respondents, but 138 participants answered and returned the questionnaires properly. The researcher used primary source of data and the result would be presented by frequency, percentage, mean and standard deviation through SPSS software. The study revealed that Bamak employed all the techniques stated in the study in different range and brought noticeable achievement in enhancing the firm level of production, level of service delivery and reduction of costs. The result showed there was impact of independent variables (Material Requirement Planning, Distribution Resource Planning, Economic Quantity Order, Just in Time system, and ABC Analysis system) on organization performance in view of optimizing production, service delivery and cost reduction. However, it lacks on providing reliable stock information promptly (as most respondents disagree on it) under Perpetual Inventory system. As a result, Bamak has sound inventory control techniques that help in managing its stock level. So the management of Bamak has to give more emphasize on the sustainability of the practice and recommended to enhance employees awareness to have updated instantaneous stock level information.