The impact of efficient inventory management on profitability: evidence from selected manufacturing firms in Ghana.

Prempeh, Kwadwo Boateng (2015): The impact of efficient inventory management on profitability: evidence from selected manufacturing firms in Ghana.

Abstract

Given the important contributions of the manufacturing sector to the Ghanaian economy, this research deems it necessary to evaluate the impact of efficient inventory management on the profitability of manufacturing firms in Ghana. A cross sectional data from 2004 to 2014 was gathered for the analysis from the annual reports of four manufacturing firms listed on the Ghana Stock Exchange. Measures of profitability were examined and related to proxies for efficient inventory management by manufacturers. The Ordinary Least Squares (OLS) stated in the form of a multiple regression model was applied in the analysis. The study revealed that the main variable raw materials inventory management designed to capture the effect of efficient management of raw material inventory by a company on it’s profitability is significantly strong and positive and impacts on the profitability of the manufacturing firms in Ghana. Therefore, efficient management of raw material inventory is a major factor to be considered by Ghanaian manufacturers in enhancing or boosting their profitability.

• Item Type: MPRA Paper
• Language: English
• Keywords: Manufacturing firms, inventory management, Ghana Stock Exchange, profitability
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M10 - General; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M11 - Production Management

References

Agus, A & Noor, Z.M. (2006). Supply chain management and performance. An Empirical Study. A working paper university of Malaysia.

Carter, R.J. (2002). Purchasing and Supply Management. London: Pitman Publishing.

Drurry, C. (2004). Management and Cost accounting. London: Prentice Hall

Eneje ,C., Nweze, A. and Udeh, A. (2012). Effect of efficient inventory management on profitability: evidence from selected brewery firms in Nigeria, International Journal of current Research, Vol. 4 (pp.350-354)

Pandey, I. M. (2005). Financial management Jangpura New Delhi: Vikas Publishing House PVT Ltd. 1226.

Kothari, C.R (1992). An introduction to operational Research. New Delhi: Vikas publishing

Koumanakos, D.P. (2008). The effect of inventory management on firm performance. International Journal of productivity and performance Management, Vol 57 (pp 355-369) Emerald Group Publication.

Lysons, K., & Gillingham, M. (2003). Purchasing and supply chain management. London: Prentice Hall.

Okoh, L., Mgbonyebi, D. C. and Umeadi, A. (2008). Impact of Inventory Control in Enhancing Business Growth in Nigeria, International Journal of Investment and Finance 1(2) 55-63.

Peterson, R. & Silver, E. A. (1979). Decision Systems for Inventory Management and Production Planning. New York: John Wiley & Sons.

Richard B. Chase and Nicholas J. Aquilano (1995), Production and Operations Management, USA: Von Hoffmann Press, Inc.

Sharma, S. C. (2000). Materials Management and Materials handling, Nai sarak Delhi: Khanna Publishers. 1008 P.