Factors that influence inventory management practices in Kampala

Abstract

This study targeted to examine factors that influence inventory management systems in business organizations in Kampala. Specifically, the study sought to examine the role of demographic characteristics of business owners/workers in inventory management and to examine the effect of economic factors on inventory management. The study used primary data from 6 organizations which was analyzed at univariate, bivariate and multivariate level. Overall number of respondents was 108, of which three did not respond to the question about systems of inventory management, The three were dropped from analysis and hence 105 observations were used. Findings from the study indicate that 42.9% of the organizations included in the study Economic Order Quantity system of inventory management, majority of the respondents to this study were males (56.2%). Most were aged 18-25 (44.8%) and 33.3% had spent 1-3 years working for the organization. At bivariate analysis, age of the respondent, years worked for the company and frequency order management had a significant association with system of inventory management, these variables were used at multilevel analysis. The STATA command mlogit was used at multivariate analysis and results indicated that companies with employees aged 46 years or more were more likely to adopt ABC analysis and not economic order quantity compared to those that were aged 18-25 years, while firms with employees aged 26-35 would adopt just in time and not economic order quantity. Similarly, companies with employees that have stayed for more than 4 to 7 years and more were also more likely to adopt ABC analysis and not economic order quantity compared to those that had stayed for less than a year. Frequency of placing orders by the company had no relationship with the system of inventory management at multivariate level. Overall there are two main factors that is, age of employees and the number of years they have been working for the company that influence the system of inventory management.