Professional Documents
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Regg Research Final
Regg Research Final
FRUITS PROCESSORS
DSUM/13813/2021
AUGUST, 2021
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DECLARATION
This research project is my original work and has not been presented to any college.
Name: Regina Makena Mutua
Index 1151010390
Signature.....................................
Date: …………………………...
Declaration by supervisor
This project has been submitted for examination with my approval as College Trainer.
Signature...................................
Date............................
Mr. John Luseta
DEPARTMENTOFBUSINES
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ACKNOWLEDGEMENT
The project owes a lot of people, who at various stages of its inception and creation offered
help, advice until its completion. I also owe a debt of gratitude to many trainers and
colleagues’ from whom I abundantly. Have learned so much over the entire course.
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DEDICATION
I would like to dedicate this proposal to my father and mother Mr. and Mrs. Mutisya .You all
believed and invested so much in me even when you owned so little of your own. For what I claim
as my achievements, you have achieved much more through your dedication to excellence and the
opportunities you provided for me. I also thank my siblings Rose, Mercy and Sammy who
stood by me during my course. May the Almighty bless you all abundantly.
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LIST OF ACRONYMS
EBQ: Economic Batch Quantity
EOQ: Economic Order Quantity
FIFO: First In First Out
JIT: Just In Time
LIFO: Last in First Out
MRO: Maintenance Repair and Operations
MRP: Manufacturing Resources Planning
MRP: Material Requirement Planning
WIP: Work in progress
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ABSTRACT
The study will investigate the effect of inventory management on performance of organizations
while considering Voyager beach resort fruits processors ltd based in Mombasa County. The study
will be guided by three objectives; to find out effects of inventory turnover at Voyager beach resort
fruits processors plant, to determine relationship between inventory management and performance of
Voyager beach resort fruits processors plant and to find out the effective methods used by Voyager
beach resort fruits processors plant in managing the inventories. Data is collected using a
questionnaire and interview guide, and during data collection purposive sampling method is used.
Both qualitative and quantitative methodologies will be used to analyze data as a sample size of 50
respondents will be considered. This study will provide information to managers in different
organizations especially on knowing how to compare actual performance and inventory
management. The result will suggest the government to set up educational institutions to provide
training on how to manage inventory management in organization
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TABLE OF CONTENTS
DECLARATION.................................................................................................................ii
ACKNOWLEDGEMENT..................................................................................................iii
DEDICATION....................................................................................................................iv
LIST OF ACRONYMS........................................................................................................v
ABSTRACT........................................................................................................................vi
TABLE OF CONTENTS........................................................................................................vii
CHAPTER ONE.....................................................................................................................1
1.0: Introduction.......................................................................................................................1
1.1Background of the Study.....................................................................................................1
1.2 Statement of the Problem...................................................................................................1
1.3 Purpose of Study................................................................................................................2
1.4 Objectives of the study.......................................................................................................2
1.4.1 Main Objective................................................................................................................2
1.4.2 Specific Objectives.......................................................................................................2
1.5 Research Questions...........................................................................................................2
1.6 Significance of the Study.................................................................................................2
1.7 Limitations of the study....................................................................................................3
1.8 Delimitations of the study................................................................................................3
1.9 Scope of the Study............................................................................................................3
1.10 Conceptual Framework..........................................................................................................3
1.11 Operational Definition of Terms......................................................................................5
CHAPTERTWO: LITERATURE REVIEW............................................................................6
2.0 Introduction.........................................................................................................................6
2.1 Theoretical Literature.........................................................................................................6
2.1.1 Theory of Economic Order Quantity Model................................................................6
2.1.2 Transaction Cost Analysis (TCA) Theory....................................................................7
2.1.3 Bureaucratic Procurement Procedures Theory................................................................8
2.2 Empirical Literature...........................................................................................................8
2.2.1 Inventory Investment....................................................................................................8
2.2.2 Inventory turnover........................................................................................................9
2.2.3 Measurement of Organizational Performance.............................................................10
2.3 Summary of Literature Review........................................................................................11
CHAPTERTHREE: RESEARCH METHODOLOGY...............................................................12
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3.0 Introduction.......................................................................................................................12
3.1 Research Design...............................................................................................................12
3.2 Location of Study.............................................................................................................12
3.3 Target Population.............................................................................................................12
3.4 Sample Design................................................................................................................12
3.4.1 Sample size.................................................................................................................12
3.4.2 Sampling Technique......................................................................................................13
Table 3.1Target population.....................................................................................................13
3.5 Data Collection Instruments...................................................................................................13
3.6 Data collection procedures...............................................................................................13
3.7 Reliability and Validity....................................................................................................14
3.8 Data Analysis Procedure..................................................................................................14
3.9 Ethical Consideration.......................................................................................................14
CHAPTER FOUR................................................................................................................15
RESEARCH FINDINGS, ANALYSIS..................................................................................15
4.0 INTRODUCTION............................................................................................................15
Table 4.1. Demographic Characteristics.........................................................................15
Table 4.1.1 Distribution of respondents by Gender...............................................................15
Table 4.1.2 Distribution of respondents by age.....................................................................15
Table 4.1.3 Distribution of the respondent by highest academic qualification ................16
4.2 Presentation of Findings.................................................................................................16
4.2.1 Inventory Investment...................................................................................................16
Tables 4.2.1: Are the Employees satisfied with Inventory Investment?..............................17
4.2.2 Inventory Turnover.....................................................................................................17
Tables 4.2.2: Are the Inventory Turnover systems effective?...........................................17
4.2.3 Methods used in Inventory Management on Organizational Performance.................18
CHAPTER FIVE..................................................................................................................19
SUMMARY...........................................................................................................................19
5.0 Introduction......................................................................................................................19
5.1 Summary of the finding....................................................................................................19
5.2 Conclusions......................................................................................................................20
5.3 Recommendations............................................................................................................20
5.4 Suggestions for further studies.........................................................................................20
REFERENCES.......................................................................................................................21
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APPENDIX I: LETTER OF INTRODUCTION ............................................................23
APPENDIX II: CONSENT ............................................................24
APPENDIX III: QUESTIONNAIRE ............................................................25
APPENDIX IV: TIMELINE AND BUDGET ............................................................27
APPENDIX V: LOCATION ............................................................28
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CHAPTER ONE
1.0 Introduction
1.1 Background of the Study
Inventory is the stock of goods held for doing business and it's usually required to carry on
business and its activities. Inventory may include raw materials, work-in-process goods and
completely finished goods that are considered to be portion of a business's assets that are
ready or will be ready for sale. Inventory represents one of the most important assets that most
businesses posses because the turnover of inventory represents one of the primary sources of
revenue generation and subsequent earnings for the company's shareholders/owners.
There are costs that accrue as a result of holding inventory, example, holding costs, extensive
product proliferation and risk of obsolescence, especially in a rapidly changing market make
the expense of holding large inventories of finished goods excessive and that demand items
naturally have safety stock assigned to them. In many organizations there are so many very-
low-demand items that keeping any stock of these items is unreasonably expensive, so they
argue that companies must now provide good service while maintaining minimal inventories.
Therefore, inventory management approaches are essential for aspects of any organization.
Buffers tocks have been kept by many organizations against possibility of running out of the
needed items; however large buffer inventories consume valuable resources and generate
hidden costs.
1.2 Statement of the Problem
Most organizations experience conflict between the need for efficient and effective services
and the need to economize in stock holdings. It is however, obviously desirable to provide the
services as economically as possible. Frequently, but not always, the most important
consideration is to keep the stock value at the lowest practical level to economize in the use of
working capital, which is most of time scarce, and to minimize on the cost of storage.
Another challenge in managing inventory is to balance the supply of inventory with demand.
An organization would ideally want to have enough inventories to satisfy the demands of its
customers and not to lose customers due to inventory stock outs. On the other hand, the
organization does not want to have too much inventory staying on hand because of the cost of
carrying inventory. Enough but not too much is the ultimate objective.
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1.3 PURPOSE OF STUDY
The study was to investigate the effects of inventory management on organizational
performance in Voyager Beach Resort.
iii. What are the methods used in inventory management on organization performance?
From the findings of the study the researcher hope that the findings will help the Voyager
Beach Resort Processor identify areas where costs can be reduced while ensuring overall
efficiencies in the voyage beach resort Processor is maintained. The study therefore seek to
propose to the management of the voyage beach resort Processor the current inventory control
systems to implement in order to reduce costs associated with inputs and outputs of
inventories of the voyage beach resort Processor without reducing the service level while
improving efficiencies at the same time.
The study can also be used as basic information by the stores officer and inventory control
staff to develop friendly policies and procedures for purchasing inputs and controlling their
levels as well.
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1.7 Limitations of the study
In carrying out of the study, the following limitations were faced;
i. Holding inventory can result to a greater risk of loss of changes in price
ii. Unwillingness of respondents to disclose all information.
iii. Lack of enough time to carry out research.
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Independent Variables
Completeness of information.
Up to date records
Stock position/ No. of stock.
Dependent variable
Organizational performance
Inventory investment
Cost reduction
Capital invested Customer satisfaction
Cash flow
Value of goods in store
Inventory turnover
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1.11 Operational Definition of Terms
Inventory – refers to the goods and materials that a business holds for the ultimate goal
production or utilization.
Management – this isthe effective planning, organizing, staffing, directing, and controlling
in an organization to accomplish a goal in an organization
Inventory Turnover- a financial ratio showing how many times a company has sold and
replaced inventory during a given period.
Consumer – Individual who buys a product for the final use or consumption.
Supplier- it refers to a source of goods or services.
Procurement – Process by which organizations or businesses purchase goods and services
from other organizations.
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CHAPTERTWO: LITERATURE REVIEW
2.0 Introduction
This chapter reviews the literature of the study. It's organized under the following parts:
theoretical literature and empirical literature. Literature will be reviewed in line with the
stated study objectives. The review will relay greatly on data obtained from published
reference materials such as books, online magazines, and journals. The review will provide an
overview of major past activities that had earlier been studied in relation to inventory
management and how it affects organizational performance.
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2.1.3 Bureaucratic Procurement Procedures Theory.
As organization become large and more complex, the authoritarian- paternalistic patter gave
way to increased functional specialization with many layers of middle and lower management
for coordinating organization effort (Kenneth, 2010). According to Osborne and Plastrik
(2010), the advantages of bureaucracy are many folds. Apart from consistent employee's
behavior, it eliminates overlapping or conflicting jobs or duties and behavior of the system is
predicable. Despite the above advantages, bureaucratic organization has some significant
negative and side effect. Too much red tapes and paper work not only lead to unpleasant
experiences but also to inefficient operations. Since employees are treated impersonality and they
are expected to rely on rules and policies, they are unwilling to experience individual judgment
and avoid risk. Bureaucracy expects conformity in behavior rather than performance (Kenneth &
Kenneth, 2005).During the financial year 2011 -2012 various Government Ministries and
department in Kenya returned billions of money meant for critical projects to Treasury (The
Standard Newspaper, 2012, July 26).The head of Public Service blamed it on bureaucratic
procurement procedure while the Prime Minister on the other hand, blamed Procurement rules
for slow implementation of the projects.
Minimum-Maximum Inventory Levels, theoretically the minimum inventory levels could be zero.
The last unit of inventory would be used at the moment a new shipment arrives. The
maximum inventory would then be the correct ordering quantity or economic order quaintly.
This buffer system is not as popular as it once was for it tends to encourage the maintenance
of excess inventories.
The optimum model: According to the Van Horne (2012), a company should introduce policies to
reduce lead time, regulate usage and thus minimize safety status. Therefore the finance
manager should ensure that only an optimum amount is invented in inventory to achieve the
trade of between profitability and liquidity (Pandey, 2010). Materials management is there a
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managerial process of counting planning, coordinating, control, monitoring and motivation.
On effects of inventory management practices on inventory shrinkages, losses resulting from
goods expiration leads to increased inventory shrinkage, losses resulting also from damages leads
to increased inventory shrinkage, losses resulting from obsolesce increased inventory
shrinkage. Losses resulting from goods theft leads to increased inventory shrinkage. Inventory
shrinkage results from a number of issues including employee theft, backorder, stock outs at the
wholesalers & manufacturing points, product recalls, expired goods e.t.c. Thus, inventory
shrinkage in the long run is uneconomical to the organization and largely affects performance
negatively. To ensure accurate and reliable stock records there is need to do spot checks/
surprise checks, stock taking, which is the physical counting and measuring of quantity of
each item in stock and recording the results. It is therefore apparent that effective record
management is essential function of inventory management thus in order to improve inventory
process there is need to ensure that all records kept by the organization are accurate. Inventory
turnover have effect on holding costs, Inventory turnover have effect on service level and
Inventory turnover may lead to low cost of operation of Voyager beach resort fruit processors.
Depending on the ratios of inventory turn, the firm can have a positive or negative impact on
its performance.
Like purchases (Leenders, 20l0) assess that inventories may be classified in a variety of ways
including ABC analysis. Nature of items carried is frequency of use. Modern computer and word
processing systems allow extensive automation of purchasing and inventory control. Control of all
items is improved and a managerial time freed for the negotiations value engineering, research and
other managerial tasks necessary to deal effectively with A and B items.
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CHAPTERTHREE: RESEARCH METHODOLOGY
3.0 Introduction
This chapter presents the research methodology which includes; Research design, target population,
sample design, data collection methods, data analysis procedure and ethical consideration.
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3.4.2 Sampling Technique.
Stratified sampling will be applied in selection of respondents. Stratification will be
used because the population was structured into various non-homogenous units, hence the
need for sample diversity. The procurement population will be divided into three
divisions; senior managers, supervisors and subordinates staffs as shown below.
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assessment of people’s attitudes, experiences and orientations. Self administered survey will
reduce bias error while giving respondents greater anonymity.
Personal Interviews these include asking respondents questions orally and record is kept of
the answers. It reduces the incidences of ambiguity and confusion during analysis. There is
also possibility of seeking clarification. They are effective when collecting data from
leaders because of their unavailability to take part in the survey. Personal interviews are
flexible, and the response is instantaneous. It also affords the respondent privacy and control
of the interview flow.
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CHAPTER FOUR
RESEARCH FINDINGS, ANALYSIS
4.0 INTRODUCTION
The chapter presents and discusses the findings of the study. The chapter involves
demographic characteristics and presentation of findings. Data presented, analyzed and
interpreted according to the research objectives formulated in chapter one. It is presented in
the form of tables basing on the responses got from the study respondents that were selected
during the process of data collection.
The above Table shows that 67% of the respondents were male while the female
constituted 33%.The business outlets adhered to the requirement of 30% of either gender.
The researcher sought to know the age of the respondents and the results are show in Table
4.1.2
From the results, 37% of the respondents had an age of 31-35 years, 33% had an age of 26-
30 years, and 17 % had less than twenty five (25) years while 13% had over 35 years. This
could imply that majority of employees in Voyager beach resort fruits processors are middle
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aged probably reason being they tend to retain their employees or employ experienced staff
from other sectors.
qualification
Masters 7 7% 5%
Degree 12 23% 16%
The Table above shows the highest academic qualification where 37% of the respondents
were certificate holders, 33% were diploma holders and worrying 7% were master’s
holders.
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Tables 4.2.1: Are the Employees satisfied with Inventory Investment?
Inventory Frequency percentage Total percentage
Investment
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4.2.3 Methods used in Inventory Management on Organizational Performance
Statement Strongly Disagree Neutral Agree Strongly Total
disagree agree
Effective Frequency 0 0 0 48 2 50
inventory
management
Percentage 0 0 0 93.3 6.7 100
helps
%
attract customers
Improved Frequency 0 0 0 3 47 50
inventory
management
reduces stock Percentage 0 0 0 10 90 100
wastage %
Improved Frequency 0 0 0 25 25 50
inventory
management
leads to easy Percentage 0 0 0 50 50 100
storage %
From the above table on whether improved inventory management helps attract customers, a
large number (93.3%) of respondents agreed that improved inventory management helps
identify clients’ needs. On the question on whether improved inventory management reduces
stock wastage90% of the respondents strongly agreed showing that businesses are able to
track the movement of their goods hence avoiding overstocking which leads to wastage. An
equal number 50% of the respondents agreed and strongly agreed that improved inventory
management leads to easy storage and access of raw materials.
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CHAPTER FIVE
SUMMARY
5.1 Introduction
The basic purpose of this chapter is to give the summary of the findings, summary,
recommendation and suggestion for further studies. This was based on the research findings
that was presented and discussed in the previous chapters.
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5.3 Conclusions
Based on the research findings, it can be concluded that effective inventory investment led to
improved inventory management in Voyager beach resort. It can also be concluded that
inventory management applied affected the level of customers’ satisfaction. There is
relationship between staff level of training and competency and effectiveness of inventory
management.
5.4 Recommendations
From the findings of the study, it can be recommended that the organization adopt new
methods and the staff need to be taken for training in the stores management since some of
them did not support use of IT. The inventory turnover system used should be improved
which will lead to effectiveness of inventory management.
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REFERENCES
Kakwezi, P., &Nyeko, $.(2008). Procurement processes and performcince: Efficiency
andEffectivenessoftheProcurementFunction,UnpublishedMBAProjectSchoolofBus
iness,MakerereUniversityBusinessSchool.
Kaplan,S.&Sawhney,M.2000.E-Hubs:TheNewB2BMarket-places. McGraw-
Hill,8^Edition
KarlaD.V,SunilPandMeindlP(2008).SupplyChainManagement(3"ded).PearsonEducationLim
ited,UnitedKingdom.
Kiage,J.0.(2013).FactorsAffectingProcurementPerformance:ACaseofMinistryofEnergy.
InterncitionalJournalofBusinessandCommerce.
Lau,J.S.K.,Huang,G.Q.&Mak,K.L.2004./mpoc/ofinformationsharfngoninventoryreplenishm
entindivergentsupplychains.InternationalJournalofProductionResearch.
Liu,J.,Jing,H.&Tang,Y.Y.2002.Multi-
agentorientedconstraintsatisfaction.ArtificialIntelligence,Irwin,Homewood,Illinois,8
'hedition.
LsysonsS.KandFarrington.B.
(2006).PurchasingandSuppliesChafnManagement(2"ded.)PrenticePrenticeHall,7thEdi
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Leenders,M.R.&Fearon,H.E.
(199d).PurchasingandSupplyManagement.Chicago:IrwinHomewood,8thedition.
Maki, J. (2012). Measuring the Effectiveness of Public Procurement .HAMK University of
Applied Sciences.
Mendoza, (2008).Prfvatization and Public Private Parmerships. NewYork, N.Y.:
Chatham House Publishers, 2"dedition.
Mwikali, R., &Kavale, S. (2012). Factors Affecting the Selection of Optimal Suppliers in
ProcurementManagement.InternationaljourtialofHumanftiesandSocialScience.
Ngugi P & Mugo (2010) Factors Affecting Procurement Performance: A Case of Ministry
of Energy. International Journal of Business and Commerce.
Noor,N.,Saeed,R.,&Lodhi,R.N.
(2013).FactorsAffectingSupplyChainmanagementEffectiveness.A case of textile
Sector of Pakistan.Journal of Basic and AppliedScientificResearch.
PPOA.
(2009).ProcurementManagementManual:AWorkingManualbyPublicProcurementOver
sightAuthorfty.Nairobi:GovernmentPrinter.
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Porter, A.M. (1999). Raising the Bar.Purchasing
Online.www.manufacturing.net/magazine/purchasing,RetrievedApril10, 2000.
Quesada,H.,Gazo,R.,&Sanchez,S.
(2012).CriticalFactorsAffectingSupplyChainManagement:A Case Study in the US
Pallet Industry. Pathways to Supply Chain Excellence, Beverly Hills, CA:
SagePublishing, 2"dEdition.
Robert M. Monczka, Robert B. Handfield, Larry Giunipero (2008). Purchasingand
SupplyChain Management.PearsonPrenticeHall,7'hEdition.
SherryR.Gordon (2008). Supplier evaluation and performance excellence ‘a guide to
meaningful metrics and successful results. J. Ross Publishing.
Speight,JamesG;Ancheyta,Jorge,ed.(2007).HydropracessingofHeavyOilsandResidue.
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Stanley,L.L.(1994).An Empirical Study of the Link between Buyer-Supplier Relationships and
Purchasing Performance. Tempe :Arizona State University.
Thai,K.V.(2001).PublicProcurementRe-examined.JourncilofPublicProcurement.
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RussellSageFoundation,4t'edition
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APPENDICES
APPENDIX I: LETTER OF INTRODUCTION
Regina Makena Mutua
Coast Institute of Technology
P.O. Box
Voi
Dear Respondent,
RE: REQUESTFORRESEARCHDATA
I am a diploma student at the Coast Institute of Technology, Business Department. In partial
fulfillment of the requirements for the award of Diploma in Supply Chain Management; I
am required to conduct a study on the effect of inventory management on organizational
performance in Kenya. Please note there is no right or wrong answer, so feel free to give the
answer you think is correct. Strict confidentiality will be maintained and all the information
collected through this questionnaire will remain confidential. The information you provide
will not be used for any other purpose apart from its intended academic use.
I thank you in advance for your co-operation.
Yours faithfully
Makena Mutua
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APPENDIX II: CONSENT
I am Regina Makena a third year student pursuing Supply Chain Management at Coast
Institute of Technology carrying out a study at this Company. Your feedback is very
important as your inputs will be used for academic purposes only. I greatly appreciate if
you could take a few minutes to provide me with information. Your response will be kept
confidential and it will not be given to any person or institution outside this corporation.
Thank you in advance
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APPENDIX III: QUESTIONNAIRE
Instructions
(N.B Answer by Ticking where applicable)
1. Gender
a) Male
b) Female
2. Education Level
a) Primary
b) Secondary
c) Tertiary
d) University
SECTION B: Techniques of inventory management used by Voyager beach resort
fruits processors
3. Do you understand the term inventory management?
a) Yes
b) No
4. Is the company trying to manage its inventories?
a) Yes
b) No
5. What kinds of inventories are managed at this company?
SECTIONC: Relationship between inv entory management and Voyager beach resort
fruits Processor Company
6. Do you think there is a relationship between inventorymanagement and performance of
this company?
a) Yes
b) No
7. If yes what kind of relationship
a) Positive
b) Negative
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SECTION D: Challenges faced by Voyager beach resort fruits processors company in
managing inventories
8. Is the company faced with challenges in the process of managing the inventories?
a) Yes
b) No
9. If yes to question 8, what are the challenges
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APPENDIX IV: TIMELINE AND BUDGET
Proposal writing
Proposal defense
Direct cost:
1.Topic Proposal 200
2.D a t a C o l l e c t i o n 500
4.Finalreportcost 200
Subtotal 1700
Miscellaneous 100
Totalcost 1800
APPENDIX V: LOCATION
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