ST.

MARY’S UNIVERSITY
FACULTY OF BUSINESS
DEPARTMENT OF MANAGEMENT

ASSESSMENT OF INVENTORY MANAGEMENT PRACTICE IN

MOHA SOFT DRINKS INDUSTRY S.C

BY
KIRUBEL BIRHANU

JUNE, 2023

ADDIS ABABA, ETHIOPIA

i
ASSESSMENT OF INVENTORY MANAGEMENT PRACTICE IN
MOHA SOFT DRINKS INDUSTRY S.C.

A SENIOR RESEARCH SUBMITTED

TO THE DEPARTMENT OF MANAGEMENT

BUSINESS FACULTY

ST. MARY’S UNIVERSITY

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

DEGREE OF BACHELOR OF ARTS IN MANAGEMENT

BY

KIRUBEL BIRHANU

ADVISOR: JIFAR BOGALE

JUNE, 2023

ADDIS ABABA, ETHIOPIA

 ST. MARY’S UNIVERSITY

AN ASSESSMENT OF INVENTORY MANAGEMENT PRACTICE

IN MOHA SOFT DRINKS INDUSTRY S.C.

BY

KIRUBEL BIRHANU

FACULTY OF BUSINESS

DEPARTMENT OF MANAGEMENT

APPROVED BY THE COMITTE OF EXAMINERS

_____________________ _______________

Department Head Signature

______________________ ________________

Advisor Signature

_______________________ ________________

Internal Examiner Signature

_______________________ ________________

External Examiner Signature

 ACKNOWLEDGEMENT
I would like to express my gratitude to my supervisor, Mr. Jifar Bogale, for his guidance and
support throughout my research project and for his valuable feedback and suggestions. I am
grateful to the technical staff at the university for their assistance. Finally, I would like to thank my
family and friends for their encouragement and support throughout my studies.
 Contents
ACKNOWLEDGEMENT..........................................................................................................................i
Acronyms.................................................................................................................................................vi
Abstract...................................................................................................................................................vii
CHAPTER ONE........................................................................................................................................1
1 Introduction............................................................................................................................................1
1.1 Background of the study..................................................................................................................1
1.2 Statement of the problem.................................................................................................................2
1.3 Objective of the study......................................................................................................................2
1.3.1 General objective.......................................................................................................................2
1.3.2 Specific Objectives....................................................................................................................3
1.4 Significance of the study..................................................................................................................3
1.5 Scope of the study............................................................................................................................3
1.6. Limitation of the study....................................................................................................................3
1.7. Research Methodology and Design................................................................................................3
1.7.1 Research Design........................................................................................................................3
1.7.2 Population and Sampling Technique.........................................................................................4
1.7.3 Method of Data Collection........................................................................................................4
1.7.4 Type and Source of Data...........................................................................................................4
1.8 Method of Data analysis..................................................................................................................4
1.9 Organization of the study.................................................................................................................4
CHAPTER TWO.......................................................................................................................................5
2. Literature review....................................................................................................................................5
2.1 Definition of inventory management...............................................................................................5
2.2 Why inventories exist......................................................................................................................6
2.3 Motivation of holding inventory......................................................................................................6
2.4 Inventory control responsibilities....................................................................................................6
2.5 Nature of Inventories.......................................................................................................................7
2.6 Inventory system..............................................................................................................................7
2.6.1 Periodic inventory system.........................................................................................................7
2.6.2 Perpetual inventory system.......................................................................................................7
 2.7 Inventory cost flow assumption.......................................................................................................8
2.7.1 First in first out method (FIFO).................................................................................................8
2.7.2 Last in first out (LIFO) method.................................................................................................9
2.7.3 Weighted Average Method.......................................................................................................9
2.7.4 Specific Identification Method..................................................................................................9
2.8 Inventory Valuation.........................................................................................................................9
2.9 Other valuation methods................................................................................................................10
2.9.1 Valuation of inventory at replacement costs...........................................................................10
2.9.2 Valuation of inventories at net selling prices..........................................................................10
2.10. Estimate the cost of inventory.....................................................................................................11
2.10.1 Retail method........................................................................................................................11
2.10.2 Gross profit method...............................................................................................................11
2.11 Internal control of inventories......................................................................................................11
2.11.2 Detective control...................................................................................................................11
2.12 Inventory behavior.......................................................................................................................12
2.13 Inventory costs.............................................................................................................................12
2.13.1 Purchase or acquisition cost..................................................................................................12
2.13.2 Ordering or set – up costs......................................................................................................12
2.13.3 Holding cost..........................................................................................................................12
2.13.4 Stock – out- cost....................................................................................................................13
2.14 Objective for Inventory Control...................................................................................................13
2.15 Inventories Defined......................................................................................................................14
2.16 Benefits of holding inventory......................................................................................................14
2.16.1 Benefits in purchasing...........................................................................................................15
2.16.2 Benefits in production...........................................................................................................15
2.16.3 Benefits in work –in-process.................................................................................................15
2.16.4 Benefits of sales....................................................................................................................16
2.17. Empirical Literature....................................................................................................................16
CHAPTER THREE.................................................................................................................................18
3. DATA PRESENTATION, ANALYSIS, AND INTERPRETATION................................................18
3.1 Response Rate of Respondents......................................................................................................18
3.3 Questions related with inventory costing method..........................................................................20
3.4 Questions related with inventory valuation method......................................................................21
 3.5 Questions Related with Inventory Control Method.......................................................................22
3.6 Questions related with maintaining the inventory.........................................................................24
3.7 Responses from the Interview........................................................................................................25
CHAPTER 4............................................................................................................................................26
4. Summary of Findings, Conclusion and Recommendations.................................................................26
4.1 Summary of Findings.....................................................................................................................26
4.2 Conclusion.....................................................................................................................................27
4.3 Recommendations..........................................................................................................................27
References...............................................................................................................................................28
APPENDIX A..........................................................................................................................................29
APPENDIX B..........................................................................................................................................34
Interview Questions.................................................................................................................................34
Declaration...............................................................................................................................................35
Submission Approval Sheet.....................................................................................................................36
 List of tables

Table 3.1 Response Rate …………………………………………………………………. 18

Table 3.2 Demographic Profile …………………………………………………………. 19
Table 3.3 Inventory Costing ……………………………………………………………… 20
Table 3.4 Inventory Valuation ……………………………………………………………. 21
Table 3.5 Inventory Control ……………………………………………………………… 22
Table 3.6: Inventory Maintenance…………………………………………………………. 24
 Acronyms
MSDI- Moha Soft Drink Industry S.C

S.C- Share Company

FIFO- First in First Out

LIFO- Last in First Out

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 Abstract
This study was conducted to assess the inventory management practice in MOHA Soft Drinks Industry
S.C. The main areas of the study are inventory costing method, inventory valuation, inventory control
and inventory maintenance. The study examined the inventory management practice in the company.
Among the 98 employees the study was conducted among 71 employees. The study used descriptive
research design. Statistical package for Social Sciences (SPSS V.24) was used for analysis. Primary
data was collected through Likert scale questionnaires and interview. The study is significant in that it
will help the company with where it needs to improve related with inventory management. The
summary of the major findings shows that the inventory costing method the company has a system of
management of inventory cost, but it needs to be implemented by every department in the company.
The company uses different valuation methods like FIFO and LIFO to keep record of the accounts.
Regarding the inventory control method, the inventory control mechanism is good in that it manages
inventory levels effectively and removes defective items in a manner that improves the performance of
the company. To maintain the quality level, the company uses different principles to help it ahead of
the competition.

Key Words: Inventory, Performance, Valuation, Costing

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 CHAPTER ONE

1 Introduction

1.1 Background of the study

The success of one organization depends on the efficient and effective utilization of the given
resources. These resources need proper management. (Malcolm, 2003, P, 597)
Management’s role in any organization involves the acquisition, storage disposition and control of
resources that are necessary for the attainment of organizational objectives. Those factors of production
typically include labor, capital equipment and material of inventories (Sulanson, 2000, p 263)
Inventories are stock of materials of any kind stored for future used, mainly in the production process.
Those inventories today are to narrow production, how every semi-finished good are waiting a release
for sale are also include in the broad category of inventories which are nothing but idle resources.
Therefore, inventories are materials or resources of any kind having some economic value, either a
waiting conversion or use in future; inventory is one part of those resources needs much attention by
managers. As it requires large investment and circulates constantly unlike fixed assets. The effective
management of inventory in stores is crucial to the performance of many organizations (Sulanson,
2000, p 263).
Despite this fact, many organizations have not yet clearly understood the benefits of efficient stores
management and control, and those my subsequent study will try to investigate how stores
management and control. (Sulanson, 2000, p 263)
Inventory accounts for the major part for the enterprises assets weather it is merchandising or
manufacturing type of business. Ordinarily inventories are classified as a merchandising, which is held
of resale in the normal course of business and materials in the process of production or held for such
use. Inventory is the part of a company’s balance sheet and therefore is under close management
security. The major source of income or the principal source of revenue for the merchandising
organization that purchases and sells merchandise in a continuous manner and the most active elements
of the operation of production enterprise are inventories. (Thomas R, et’al,2001: PP. 376).

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Therefore, it plays a significant role in the determination of net income for such enterprise. But the
method of accounting system can vary from enterprise to enterprise, and each has its own methods or
procedures for the determination and valuation of its financial activities. (Thomas R, et’al, 2001:).
In addition to that the accounting system can be dominated by local rules and regulations or by
universally applicable accounting and reporting principles.
Therefore, in today’s competitive economic and social climate, inventory accounting methods and
management practices have become profit enhancing tools. Better inventory system can increase
profitability whereas poorly conceived system can drain profits and put a business at a competitive
disadvantage. (Thomas R, et’al, 2001: PP. 376).
The study was implemented in checking the inventory management in the firm. The firm involves itself
in manufacturing, so it has two types of inventory raw material and merchandizing inventory.

1.2 Statement of the problem

Inventory control is the function of material management which attempts to maintain stocks at their
predetermined levels. The company incurred problems concerning inventory, store ledger are not in use
to control management of stock items in the ware house moreover due to over late appointment as
auditor of the company does not used attend the year end stock count and valuation and there is risk in
holding inventory. The researcher is interested to assess whether inventory control management is
effective or not.
Hence, this proposal research tries to answer the following basic research question: -

1. How do store ledgers use to control stock items in the warehouse?

2. How does holding inventory in the warehouse could impact on business?
3. How does late appointment with auditors of the company could affect the year end stock count and
valuation?

1.3 Objective of the study

1.3.1 General objective

The general objective of the study is to assess the inventory management practice of MSDI S.C and to
give constructive recommendation based on findings.

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1.3.2 Specific Objectives
1. To investigate how the MSDI S.C store ledger used to control stock items in the warehouse
2. To find out how holding inventory in the warehouse could impact on business
3. To find out how late appointment with auditors of the company could affect the year end stock count
and valuation

1.4 Significance of the study

The study believes to have an importance to make effective and efficient the inventory management
and control in MSDI S.C and to forward suggestions conclusions and recommendations based on the
finding furthermore. It may also serve as secondary sources for further study on similar Issues. The
finding of the research will initiate other interested researchers to undertake a better and detailed study
in the area. Moreover, the paper will help to the researcher to accomplish B.A degree and have an
experience for future development.

1.5 Scope of the study

The study will assess MSDI S.C. in its inventory management practices. The study will be conducted
at the Nefas Silk Plant. The production and finance department are the focus of the study.

1.6. Limitation of the study

Lack of experience and unwillingness of the company giving data regarding the management

department.

1.7. Research Methodology and Design

1.7.1 Research Design

The research was designed to assess the inventory management practices of MSDI S.C. The researcher
used descriptive research design using qualitative and quantitative methods to analyze the sample.
Descriptive design will be used because it will describe the topic without any hypothesis.

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1.7.2 Population and Sampling Technique
In MSDI S.C Nefas Silk Plant there are a total of 98 employees.

According to Yamane (1967), the formula below is used to determine the sample size:

N/1+Ne² 98/1+ 98(0.05) ²= 78.7

A total of 71 samples were collected. Stratified sampling will be used to collect the sample from 98
employees.

1.7.3 Method of Data Collection

The total population of the study is employees of MSDI S.C which are in finance and production
department. The questionnaire was contained closed ended questions specifically in a Likert form
scale. It aims to collect information from the respondent.

1.7.4 Type and Source of Data

The study was conducted in MSDI S.C. To achieve the objective of the research both primary and
secondary data will be collected. Primary sources of data will be collected by distributing
questionnaires for 95 employees of production and finance department and, Secondary sources of data
will be collected from sources like books, documents, and MSDI S.C website.

1.8 Method of Data analysis

The data will be presented in tabular form and will be analyzed by using ratio percentage.

1.9 Organization of the study

The study has four chapters; the first chapter discusses an introductory part, background of the study,
statement of the problem, the general and specific objective, significant of the study, scope of the
study, research methodology, data presentation and analysis and organization of the study.

The second chapter will be literature review which briefly discuss about inventory management. The
third chapter includes the data presentation, analysis, and interpretation. The last chapter, chapter four
contains the summary of findings, conclusion, and recommendations.

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 CHAPTER TWO

2. Literature review

2.1 Definition of inventory management

Inventory management is concerned with having enough product on hand and avoid running out while
at the same time maintaining a small enough balance to allow for a reasonable return on investment.
Proper inventory management is important to the financial health of the corporation, being out of stock
forces customers to term to competitor or results in a loss excessive level of the however results in
lager inventory carrying costs including the cost of the capital tied up in inventory warehouse fees
insurance etc. a first-rate hassle with dealing with stock is that the call for a corporation ‘product is to a
degree uncertain the supply of the raw material used its production process is also somewhat uncertain
in addition on corporation’s own production contain some degree of uncertainty due to possible
equipment breakdown and labor difficulties. Because of these possibilities inventory acts as a shock
absorber between product demand and product supply. If product demand is greater than expected
inventory can be depleted without losing sales until production can be stepped up enough to select the
unexpected demand however inventory is difficult to manage because it crossed so many lines of
responsibilities.

The purchasing manager is responsible for supplies of raw material would like to avoid shortages and
to purchase in bulk to take advantage of quantity discounts. The production manager is responsible for
UN interrupted production and wants to have enough raw materials and work- in process inventory on
hand to avoid disruption in the production process. The marketing manager is responsible for selling
the product and wants to minimize the chances of running out of inventory. The financial manager is
concerned about achieving appreciate overall rate of return, funds invested in inventory are idle and not
earn a return.

The management of inventory has on the cash cycle of the corporation. It will develop some basic
techniques that can be used by the financial manager to effectively manage this basic important
component of the cash cycle. Poor inventory management results in an illiquid corporation. One that
must continually borrow to have enough operation cash on hand properly managed, the turnover of the

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inventory releases cash in a timely manner, and this cash flow then used to make payment on payables
as they come due.

2.2 Why inventories exist

The characteristic of the firm, which include the acquisition of uncooked materials, processing, and
having completed items to be had for the sale, has a sequential, bodily dependency. Maintenance of
inventories, allows the firm to decouple these functions so that each can be planned, scheduled, and
operated indecently. For retail firms. Inventory provides customers with selection choice and decouples
the purchasing function from the selling function.

2.3 Motivation of holding inventory

Economists have established their stock market motivation, transactional motivation, regulatory
motivation, and speculative motivation. In addition, the holding of some inventories may be
contractual.

Transaction motive: - The transaction motive for holding inventory in to satisfy the expected level of
activates of the firm.

Precautionary motive: - The precautionary reason is to offer a cushion in case the real stage of
activity is different than anticipated, holding enough inventory to full fill the expected demand. If
demand exceeds expectation (either in total or for a particular ingredient), sales will probably either be
lost or, if made, less profitable.

Speculative motive: - The speculative purpose for containing stock would possibly lure a company to
buy a bigger number of substances than ordinary in anticipation of creating unusual profits. Advance
buy of uncooked substances inflationary instances in a single shape of speculative behavior. A second
reason for speculative inventory purchase may involve an anticipated change in a product.

2.4 Inventory control responsibilities

The responsibility for inventory management or control is not wholly assignable to any one group of
people, any one department or any one function in plants with a store department or section, the
inventory control function is centralized. But the constant flow of material in to stores and then into
production and out gain making.

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Inventory control a joint responsibility of many departments. Purchasing naturally has a vested interest
in inventories, even to the extent that the purchasing and stores functions are often combined.
Production ought to appear after paintings in progress, no different association could be satisfactory.
Quality control is concerned with the condition of incoming materials since all purchased items must
meet quality specifications. Where there are such sections, traffic and receiving play an important
inventory control role. The economic important of inventories cause more than passing interest on the
part of accounting and finance. The fact that parts and materials must be moved from one plant
location to another to be properly utilized brings in the material handing function in to play, both to
exercise control and to physically move parts and material. (V.K Bahlla, 2004)

2.5 Nature of Inventories

Inventories consists of goods held for sale to customs partially completed goods and materials and
supplies to be used in production inventory items are acquired and sold continuously by a
merchandising enterprise or acquired placed in production, converted to a finished product, and sold by
a manufacturing enterprise. The sale of merchandise of finished products is the primary source of
revenue for non-service business enterprises. In a retail or merchandising operation inventories consist
principally of products purchased for resale in their existing form a retail enterprise also may have an
inventory of supplies such as wrapping paper, cartons, and stationery. A manufacturing enterprise has
several types of inventors as material parts and factors supplies goods in process and finished goods.
(Mosich, 1998)

2.6 Inventory system

2.6.1 Periodic inventory system

It is used only the revenue from sales is recorded each time a sale is made. No entry is made at the time
of sale to record the cost of the merchandise that has been sold. Consequently, a physical inventory
must be taken to determine the cost of inventory at the end of an accounting period. Ordinarily it is
practical to take a complete physical inventory only at the end of the fiscal year.

2.6.2 Perpetual inventory system

It uses accounting records that continuously disclose the amount of the inventory. a separate account
for each type of merchandise is maintained in a subsidiary ledger. Increases in inventory items are
recorded as debts to the proper accounts and decrease are recorded as credits. The balances of the

7
accounts are called book inventories of the items on hand regardless of the care with which the
perpetual inventory records are then compared with the actual quantities on hand and any differences
are corrected.

2.7 Inventory cost flow assumption

The term cost flow refers to the flow of costs when goods are purchased or manufactured and to the out
flow of costs when goods are sold. The cost remaining in inventories is the difference between the
inflow and outflow of costs during a specific accounting period such as a year or a month when
identical goods may be purchased or manufactured at different costs. Accountants then face the
problem of determining which cost supply to items in inventory and which apply to items that have
been sold. The critical issue in accounting for inventories is summarized below. An important goal of
accounting for inventories is the right dedication of earnings through the system of matching suitable
charges in opposition to revenue.

Cost for inventory purposes may be determine under any one of several assumptions as to the flow of
cost factors all method of inventory valuation are based on the cost no matter which method is selected
the inventory is stated at cost in selected the inventory is stated at cost in selected an inventory
valuation method (or cost flow assumption accountants are machines costs with revenue and the ideal
choice is the method that most clearly reflects periodic income "the most widely used method of
inventory valuation are listed below

1. First in first out method (FIFO)

2. Last in first out method (LIFO)

3. Weighted Average method

4. Specific identification method

2.7.1 First in first out method (FIFO)

The first in first out method assumes a flow of costs based on the assumption that the oldest good on
hand are sold first. This assumption about cost flow generally confirms to reality. Managements
usually find it desirable to keep the oldest goods moving out to customers to keep fresher or new goods
on hand the method is systematic and easy to apply it adheres to the cost principle and the cost

8
assigned to inventory is likely principle and the cost assigned to inventories is likely principle in close
harmony with the current price in paid.

2.7.2 Last in first out (LIFO) method

The last in first out method assumes a flow of inventory costs based on the assumption that the most
recently purchased goods are sold first because current costs are incurred to make current sales and to
maintain adequate inventories on hand under this view. The latest costs are most closely associated
with current revenue. Thus, the marching principle of income measurement is carried out in the balance
sheet inventory under the Life method are valued at the earliest costs incurred.

2.7.3 Weighted Average Method

The weighted average method of inventory valuation is based on the assumptions that all goods are
coming and that no batch of goods is retained in the inventories thus the inventories are valued based
on averages prices paid for the goods weighted according to the quantity purchased at each price given
the information.

2.7.4 Specific Identification Method

At first notion one may argue that every object of stock must be recognized with its actual cost and that
the total of those amounts should constitute the inventory value. Although such a technique might be
possible for a business enterprise handling a small number of items. For example, an automobile dealer
becomes completely in operable in a complex manufacturing enterprise when identify of the individual
item is lost practical considerations thus make specific identification in appropriate in most cases.

Even when specific identification is a feasible means of valuation it may be undesirable from a
theoretical point of view. The method permits income manipulation when there are identical items
acquired at varying prices. By choosing to sell the item that was acquired at a specific cost
management may cause material distortions in income (Mosich, 1998: PP).

2.8 Inventory Valuation

Inventories are tangible property of a firm held for resale or to be consumed in the production of goods
and services for sale. Regular income of a firm is generated by selling those inventories. Thus, their
valuation and proper recording are an important task in an enterprise. Generally, inventories are
classified in the balance sheet as follows: Raw materials, Stores and spares, Work in progress, and
Finished goods (Birendia Krishna Baherjee, 2010: PP).

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2.9 Other valuation methods

2.9.1 Valuation of inventory at replacement costs

The value of inventories at replacement costs has been advocated by accounts who believe that the
current asset section of the balance sheet should reflect current fair values. The cost method of
inventory valuation frequently under state the value of inventories. partially during period of rising
price, the significance of replacement costs as a measure of inventory value varies considerably
depending on the type of inventories involved in the retail market the selling price of staple
commodities, such as sugar, copper, cotton etc. tend to follow cost price closely. In such a situation,
replacement costs of inventories are important to management and outsiders.

Replacement-cost valuation of inventories in the preparation of financial statements is not generally

accepted. Perhaps the closest practical approach is the first in -first –out method. Unless prices are
rising rapidly, the FIFO method of pricing presents inventories in the balance sheet or near current
replacement costs without a departure from the cost principle. The need for disclosure of replacement
or current costs of inventories arises when the last-in-first-out method is used for pricing inventories.

2.9.2 Valuation of inventories at net selling prices

The valuation of inventories at net selling costs (earnings costs a whole lot much less direct costs very
last contact and disposal) has some appeal, especially when one considers that economic value is added
as the goods are brought to market. For example, in a retail store, goods are more valuable than they
were at the wholesaler’s warehouse, value is added by the process of bringing the goods nearer the
ultimate market in a manufacturing enterprise of bringing the goods nearer the ultimate market in a
manufacturing enterprise, costs are blended together and a product emerges that is more valuable than
the sum of the production costs however this method of inventory valuation has not been widely
adopted for two reasons, The lack of objectivity in determines the net selling price.

The fact that the selling price has not been realized in cash or cash equivalents Accountants generally
consider revenue to be resized at the time of sale of a good. Not at the time of production.

The valuation of inventories at net selling price is appropriate for some types of business enterprises
producing commodities that have readily determinable market prices when the production of such
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commodities is complete. Revenue may be considered realized. In some enterprises having selling
prices established by contract. The sale is reasonably assured and completed inventories may be valued
at net selling prices (Mosich, 1998: PP).

2.10. Estimate the cost of inventory

2.10.1 Retail method

According to (fess n warren 21st edition) In using the retail method to estimate inventory, the retail
prices of all merchandise acquired are accumulated. The inventory at retail is determined by deducting
sales for the period from the retail price of the goods that were available for sale during the period. The
inventory at retail is then converted to cost based on the ratio of cost to selling (retail) price for the
merchandise available for sale.

2.10.2 Gross profit method

In the use of the gross earnings technique to estimate inventory, the envisioned gross earnings is
deducted from the income to decide the envisioned value of products sold. This amount is then
deducted from the cost of merchandise available for sale to determine the estimated ending inventory.

2.11 Internal control of inventories

Inventory is used to indicate merchandise held for sale in the normal course of business and materials
in the process of production or held for production. The cost of merchandise is its purchase price, less
any purchases discount these costs are usually the largest portion if the inventory cost. Merchandise
inventory also includes other costs, such as transportation, import duties and insurance against losses in
transit.

Not handiest have to the fee stock be decided however correct inner manage over stock must
additionally be maintained. Two number one targets of inner manipulate over stock are safeguarding
the stock and nicely reporting it with inside the economic statements. This inner manager may be both
preventive and detective in nature.

2.11.2 Detective control

Is designed to detect an error or misstatement after it has occurred. Control over inventory should begin
as soon as the inventory is received renumbered receiving reports should be completed by the
11
company’s receiving department to establish the initial accountability for the inventory (Fess and
warren, 21st.ed: PP).

2.12 Inventory behavior

It must be clear now that in the corporation stage manufacturing of completed merchandise can
infrequently be impartial of stock holding. Generally, a high level of inventories would lead to lower
prices and low prices would in turn result in a cutback in production so that in the following period
opening inventories will be much less than in the current period. At times due to unavoidable
circumstances a firm may be required to hold excessive inventories. It may also be the result of
inefficient inventory management (flabby inventory)

2.13 Inventory costs

2.13.1 Purchase or acquisition cost

Goods can be bought directly (e.g., raw materials for the manufacturers and finished products for
retailers) or manufactured in–house. When it is purchased the purchase price net of quantity discounts
plus freight insurance loading, unloading etc. should be the acquisition cost for goods manufactured
in–house the unit cost of production inclusive of factory overheads shall constitute the acquisition cost.

2.13.2 Ordering or set – up costs

When goods are outsourced, the costs associated with writing and placing an order following it up with
the vendors, receiving and inspecting the materials and costs of all others job necessary for taking the
goods to store shall be treated as ordering costs.

The set – up value shall encompass gadgets including making ready the store order, scheduling the
work, preproduction inspection, etc. ordering or set-up costs do not vary with the size of the order but
with the number of orders or set–ups.

2.13.3 Holding cost

This cost has two parts: –

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A. Cost of physical carrying of inventories like storage cost. Insurance, rates and taxes, handling,
shrinkage, deterioration, and obsolescence.

B. Financial cost of foods engaged in inventories which is generally the opportunity cost of alternatives
investments.

Holding cost is found to be proportional to the value of the inventories held, and hence it is assured to
be a variable cost in inventory management.

2.13.4 Stock – out- cost

As indicated before, this is an implicit cost of loss sales due to shortage of supplies. It includes such
costs of losing good will of the firm which affect future sales and project.

Internal shortage cost occurs when the requirement of production department is not fulfilled or it is
delayed resulting in delayed completion, lost production, idle time, etc. it is difficult to place a
monetary value on stock-out-cost thought it is clearly understood conceptual by all business managers.
The extent of this cost depends up on the reaction of customer who may cancel the order agree for a
substitution or delayed shipment lost two types of cost can be enormous and difficult to estimate
similarly for internal shortage; cost may be very high if the item ordered is critical for production or
without which the plant may shut down. (Hrishikes Bhatta, 2003: PP)

2.14 Objective for Inventory Control

The first attention is the general goal of the paintings of inventory manipulate like several different
sports within the company. Inventory management must contribute to the welfare of the whole
organization. The logistic operation must aim to contribute to profit by servicing the marketing and
financing needs of the company the aim is not make all items available at all times as this may well be
detrimental to the finances of the company the normal role for stock control is to meet the required
demand a minimum The purpose of the inventory control function in supporting the business activities
is to optimize the three targets: Customer service, Inventory costs, and Operating costs

The most profitable policy is not to optimize one of these at the expense of the others. The inventory
controller must make value judgments. If profit is lacking the company fees out of business in the short
term, if customer service is poor then the customer disappears, and the company goes out of business
in the long term. Balancing the financial and marketing aspects is the answer.

13
The stock controller has a fine judgment to make the first target customer’s service can be considered
in several ways depending on the type of demand. (Tony Wild, 2007)

2.15 Inventories Defined

In a vending organization includes all items owned and held on the market to customers. Inventory is
predicted to be transformed into every with inside the company’s working cycle. In the stability sheet
stock is indexed straight away after bills receivable. Because it's far simply one step farther eliminated
from conversion in to every than consumer receivables. (Williams, 2006)

2.16 Benefits of holding inventory

The major benefit of holding inventory is the basic functions of inventory. In other words, inventories
perform certain basic functions which are of crucial importance in the firm’s production and marketing
strategies. The fundamental characteristic of inventories is to behave as a buffer to decouple or
uncouple the numerous activities of a firm so that all do not have to be purchased at the same rate. The
key activities are - Purchasing, Production, and Selling

The time uncouple approach that those interrelated turns on of a corporation may be carried on
independently. Without inventories, buying and manufacturing might rely on be absolutely managed
with the aid of using the income schedules. If the income of a company growth, those might
additionally growth and vice-versa. In different words, buying and manufacturing features might rely
upon the extent of sales. It is of course real that with inside the lengthy run the shopping and
manufacturing turns on are and in fact, need to be tied to the income hobby of a firm. But if within the
quick time period they're rigidly associated the 3 key sports cannot be executed efficiently. Inventories
permit short term relaxation so that each activity may be pursued efficiently. Stated differently
inventories enable firms in the short run to produce at a rate greater than purchase of raw material and
vice versa or to sell at a rate greater than production and vice versa.

Since stock permits uncoupling of the important thing sports of a firm, every of them operated on the
maximum green rate. This has beneficial effects on the firm’s operation. In other words, three types of
inventories, raw material, work in process and finished goods, perform certain useful functions.
14
Alternatively, rigid tying (coupling) of purchase and production to sales schedules is undesirable in the
short run as it deprives the firms of certain benefits. The effect of uncoupling (maintaining inventory)
is as follows.

2.16.1 Benefits in purchasing

If the buying of uncooked substances and different items isn't tied to production, that is an organization
should buy independently to make certain the maximum green buy numerous blessings might come to
be available. In the primary area a corporation can buy large portions than is warranted through
utilization in manufacturing or the income level. This will permit it to avail itself of reductions which
are to be on bulk purchases. Moreover, it'll decrease than ordering fee as companies should purchase
items earlier than predicted or introduced rate increases. This will lead to a decline in the cost of
production. Inventory thus serves as a hedge against price increases as well as shortages of raw
materials.

2.16.2 Benefits in production

A finished goods inventory serves to uncouple production and sale this enables production at rate
different from that of sales. That is, production can be carried on at a rate higher or lower than the sales
rate. This could be of unique gain to corporations with a seasonal income pattern. In their case, the
sales rate will be higher than the production rate during a part of the year (peak season) and lower
during the off-session the choice before the firm is either to produce at a level to meet the actual
demand that is higher production during peak season and lower (or nil) production during off-season or
production constantly all through the 12 months and increase stock so that you can be bought
throughout the duration of seasonal demand.

The former entails discontinuity within the manufacturing timetable at the same time as the latter
guarantees degree manufacturing. The degree manufacturing is extra within your means because it
permits the organization to lessen the price of discontinuities with inside the manufacturing system that
is viable due to the fact extra manufacturing is saved as stock to fulfill destiny demands Thus, stock
enables a company to coordinate its manufacturing scheduling that allows you to keep away from
disruptions and the accompanying.

In brief, since inventory permits least cost production scheduling production can be carried on more
efficiently.

15
2.16.3 Benefits in work –in-process
The inventory of work-in-process performs two functions. In the primary location its miles vital due to
the fact manufacturing methods aren't instantaneous. The quantity of such stock relies upon generation
and its performance of production. The steps worried with inside the manufacturing system the bigger
work-in-system stock and vice-versa. via way of means of shortening the manufacturing time
performance of the manufacturing manner may be progressed and the scale of this form of stock
reduced. In a multi-level manufacturing procedure, the work-in-procedure stock serves a 2d reason
also. It uncouples the numerous levels of manufacturing so that every one of them do now no longer
needs to be accomplished at the identical rate. The tiers associated with higher set-up may be most
efficaciously accomplished in batches with a work- in-gadget inventory amassed in some unspecified
time in the future of a production run.

2.16.4 Benefits of sales

The protection of inventory moreover enables an organization to decorate its earnings efforts for one
factor if there are not any inventories of finished goods the level of sales will depend upon the level of
current production a firm will not be able to meet demand instantaneously. There could be a lag relying
upon the manufacturing process. If the firm has inventory actual sales will not have to depend on a
lengthy manufacturing process. Thus, inventory serves to bridge the gap between current production
and actual sales. A related aspect is that inventory serves as a competitive marketing tool to meet
customer demands. A basic requirement in a firm’s competitive poison is its ability vis-à-vis its
competitors to supply goods rapidly. If is not able to do that the customers are likely to switch to
suppliers who can sully goods at short notice. Inventory thus ensures continued patronage of
customers. Moreover, in the case of firms having a seasonal pattern of sales there should be a
substantial finished goods inventory prior to the peak sales season. Failure to do so may mean loss of
sales during the peak season. (Khan, Jain, 2005: PP)

2.17. Empirical Literature

Punam Khobragode, Et Al (2018) argues that an Inventory Management System is a useful piece of
software for businesses that operate hardware stores, where store owners keep records of purchases.
Poorly managed inventory means frustrated customers, too much cash stuck in stock, and slower sales.
This project eliminates paperwork, human errors, manual delays and speeds up the process. An
inventory management system will be able to track sales and available inventory, letting store owners
know when to re-order and how much to buy. Inventory Management System is a Windows
16
application developed for Windows operating systems focusing on inventory control and generating
the various reports required.

FENG XU (2017) In the search for the optimal inventory control policy, the goal is to minimize the
total expected costs involved, of which shortfall costs are a key component. Because of the difficulty in
calculating the indirect costs of losing customers due to shortages, practitioners and researchers often
simply assume a fixed penalty cost when out of stock or switch to an alternative method. by assigning
a specific level of service to the customer. Developing a suitable tool to measure shortfall costs can
help a company control total costs and improve productivity more effectively. This article proposes
probabilistic measures of shortfall costs, based on the mathematical relationship between costs and
shortages. Then, derived closed form estimates of the expected shortfall cost value can be applied to
assist in determining the optimal inventory control policy.

Dr. Rakesh Kumar, (2016) states that inventors are business assets and describes an investment. Such
an investment requires capital commitment, so the company must maintain inventory at the correct
level. If the inventory is too large, the business will lose the opportunity to use capital more efficiently.
Likewise, if they are too small, then the firming product will reduce sales. So there is an optimal
reserve level. Economic order quantities are used to calculate the optimal quantity that can be
purchased to reduce shipping and ordering costs.

(Ackah & Ghansha, 2016) Their study, titled “Assessment of Inventory Management,” assessed the
performance of manufacturing departments to determine how effective inventory management was in
their operations and how effective it was in their operations and how much of an impact it had on their
profitability. (Koumanakos, 2008), titled Managing Inventory Levels in Local Manufacturing, found
that among the various inventory management methods, the most used method among manufacturers
was continuous and turned out to be the review model and the MRP method. Various authors have
made various efforts to clarify the relationship between inventory management practices and
organizational efficiency. Factors in his study included inventory control samples as the independent
variable and cost savings as the dependent variable. Findings showed a positive relationship between
factors. (Koumanakos, 2008) examined the impact of inventory control on the sound performance of
assemblers operating in Greece. A theory that leans toward inventory management stimulates
fluctuations in the company's budget execution. The findings suggest that the higher the level of
inventory a company protects, the lower its profitability. (Eckert, 2007) analyzed inventory
management and its role in increasing customer value. He found a positive relationship between

17
inventory management practices and customer loyalty due to fewer out-of-stocks. An effective
inventory management process helps a company improve operational efficiency. Improve customer
service. Reduce inventory and distribution costs. It also allows businesses to track products and their
expiration dates, thus balancing availability, and demand (Pandey, 2004).

CHAPTER THREE

3. DATA PRESENTATION, ANALYSIS, AND INTERPRETATION

This chapter discusses presentation of the analysis, and interpretation of the research’s findings. The
main objective of the study was to assess the inventory management practice in MOHA Soft Drinks
S.C. Questionnaire was distributed to the employees of the company and an interview was also
conducted. To analyze the data SPSS V.24 was used.

3.1 Response Rate of Respondents

Table 3.1: Response Rate

Number of Target Number of

Response Rate (%)
Questionnaire Returned Respondents
71 79 89.8%

As shown in the table above, the participants who participated in the questionnaire were 71 as the
response rate was good with a rate of 89.8%. However, the targeted number was 79.

18
3.2. Demographic Characteristics

Table2: Respondent’s Demographic Profile

Freque
ncy Percent
Male 45 63.4
Gender Female 26 36.6
Total 71 100.0
18-23 19 26.8
Age
24-33 39 54.9
34-49 13 18.3
Over 50 - -
Total 71 100.0
Educational College Diploma 12 16.9
level Bachelor’s degree 52 73.2
Masters 7 9.9

Total 71 100.0

Years of 1-3 years 13 18.3

Employmen 4-6 years 32 45.1
t 7 years & above 26 36.6

Total 71 100.0

Number of respondents- 71, Own Survey Result, 2023

19
Indicated above in table 2, it summarizes the common characteristics of the participants in this study.
The participants were different in terms of gender, age, education, and years of employment in this
questionnaire. Forty-five (45) men and twenty-six (26) women have filled out the questionnaire and
returned. This indicates how equally distributed male and female employees are at MSDI.

Out of seventy-nine employees of MSDI seventy-one (71) people responded, and the majority i.e.
54.9% was varied between the ages of 24-33, 26.8% were among the ages of 18-23, 18.3% were
between the age of 34-49 and above 50 years of age weren’t available on the returned questionnaire
filled out by the respondents in MSDI.

Regarding the educational background, 73.2% had a bachelor’s degree, which is a significant
percentage. In addition, 16.9% of respondents had a college diploma, whilst 9.9% had a master’s
degree. The researcher concluded from this information that the topics of the questions were easily
understood by the responders.

Regarding the year of employment, 45.1% were employed for four to six years, 36.6% were employed
for seven years and above, and years of employment for 1-3 years were 18.3% filled out in the
company MSDI.

3.3 Questions related with inventory costing method

Table 3.3: Inventory costing method

Strongly Agree Strongly

STATEMENT Neutral Disagree
Agree Disagree
The company Manages the
8.5% 18.3% 36.6% 36.6% 0.0%
inventory costs
The company follows the
flow of cost when goods are 0.0% 54.9% 16.9% 19.7% 8.5%
manufactured and sold
Number of respondents- 71, Own Survey Result, 2023

The above table represents employees’ assessment of the inventory costing method of the company. It
states that 8.5% strongly agree, 18.3% agree, 36.6% were neutral, 36.6% disagree to the inventory
management practices of the company. On the second question related to inventory costing 54.9%
agree, 16.9% were neutral, 19.7% disagree, 8.5% strongly disagree on whether the company follows
20
the flow of cost when goods are manufactured and sold. This shows that the company has a good flow
of cost mechanism for goods manufactured and sold.

3.4 Questions related with inventory valuation method

Table 4: Inventory Valuation Method

Strongly Agree Strongly

STATEMENT Neutral Disagree
Agree Disagree
The company makes a
8.5% 46.5% 45.1 % 0.0 % 0.0 %
valuation at a given period
The company uses different
types of inventory valuation
method i.e., FIFO, LIFO, 0.0 % 45.1 % 18.3 % 28.2 % 8.5 %
Weighted average, and
Specific identification
Number of respondents- 71, Own Survey Result, 2023

As represented above 8.5% strongly agree, 46.5% agree, 45.1% were neutral on the company’s
valuation practice. In relation to using different types of valuation methods 45.1% agree, 18.3% were
neutral, 28.2% disagree, and 8.5 % strongly disagree. The results show that the company has a good
inventory valuation method.

21
3.5 Questions Related with Inventory Control Method

Number of respondents- 71, Own Survey Result, 2023

Table 5: Inventory Control Method

Strongly Agree Strongly

STATEMENT Neutral Disagree
Agree Disagree
The company uses effective
28.2% 45.1% 26.8% 0.0% 0.0%
inventory control method
The company controls and
maintains the production 18.3% 46.5% 16.9% 18.3% 0.0%
level
The company storekeeper
checks and balances when 0.0 % 19.7 % 43.7 % 26.8 % 9.9 %
finished goods are sold
The company follows the
9.9 % 16.9 % 63.4 % 9.9 % 0.0 %
inventory system
The company controls and
removes the defective and
0.0 % 64.8 % 26.8 % 8.5 % 0.0 %
expired items from the
inventory
The company controls the
price level of each product 8.5 % 35.2 % 29.6 % 26.8 % 0.0 %
items
22
The company’s manager
continuously controls the 0.0 % 54.9 % 18.3 % 18.3 % 8.5 %
activities of the department
The company uses stock bin
card to control stock items 0.0 % 18.3 % 73.2 % 8.5 % 0.0 %
in the warehouse
The company Protects
inventory from unreliable 0.0 % 45.1 % 36.6 % 18.3 % 0.0 %
suppliers
The company Protects error
or misstatement that occurs 0.0 % 52.1 % 38 % 9.9 % 0.0 %
on record
There is Error between
ledger and physical 0.0 % 63.4 % 9.9 % 26.8 % 0.0 %
existence
The company Employees
follow their responsibility 8.5 % 56.3 % 16.9 % 18.3 % 0.0 %
on their department
The company attends the
16.9 % 36.6 % 36.6 % 9.9 % 0.0 %
year end stock
There is a problem that
occurs on steep of
production i.e., Raw 8.5 % 46.5 % 45.1 % 0.0 % 0.0 %
materials, Work in progress
and Finished goods
The company follows up
written policy and
0.0 % 26.8 % 36.6 % 36.6 % 0.0 %
procedure for acquisition of
inventory items
Number of respondents- 71, Own Survey Result, 2023

As shown above on the table 45.5% agree, 28.2% strongly agree, 26.8% were neutral related with the
inventory control method of the company. This shows that there is an effective control method for

23
inventories. In response to whether the company controls and maintains the production level 46.5%
agree, 18.3% strongly agree, 16.9% were neutral. 43.7% were neutral on the effectiveness of checks
and balances. 63.4% were neutral related to the company’s inventory system. Related to removing
defective and expired items 64.8% agree. This shows that there is an effective control mechanism
implemented in the company. On the company’s price level of each product item, 8.5% strongly
agreed, 35.2% agreed, 29.6% were neutral, 26.8% disagreed. 54.9% of respondents believe the
management controls the activities of the department. In relation to using stock bin items 73.2% were
neutral, 18.3% agree, 8.5% disagree. Related to the company’s approach in using reliable suppliers
45.1% agree, 36.6% were neutral and 18.3% disagree. 52.1% of respondents believe that the company
protects against error or misstatement that occurs on record. 63.4% agree, 9.9% were neutral, 26.8%
disagree on whether there is an error between ledger and physical existence. In relation to following
their responsibilities 8.5% strongly agree, 36.6% agree, 36.6% were neutral, 9.9% disagree. This shows
that employees believe they follow their responsibility in their respective departments.

46.5% agree, 45.1% were neutral, and 8.5% strongly agree that there is a problem that occurs on the
steep of production. Related with whether the company follows up written policy and procedure for the
acquisition of inventory items 26.8% agree, 36.6% were neutral, 36.6% disagree.

3.6 Questions related with maintaining the inventory

Table 6: Inventory Maintenance

Strongly Agree Strongly

STATEMENT Neutral Disagree
Agree Disagree
The company maintains
18.3 % 64.8 % 0.0 % 16.9 % 0.0 %
their quality level
The company maintains
0.0 % 35.2 % 36.6 % 19.7 % 8.5 %
their level of inventory
The company maintains the
size or the amount of the 0.0 % 46.5 33.8 19.7 0.0
recorder level
The company follows 0.0 % 64.8 % 18.3 % 16.9 % 0.0 %
different types of principles
i.e. Generally Accepted

24
Accounting Principles and
International Financial
Reporting Standards
Number of respondents- 71, Own Survey Result, 2023

As shown above 64.8% agree, 18.3 % strongly agree, 26.9 % disagree that quality level is maintained
in the company. This shows that the company maintains a quality level. 35.2% agree, 36.6% were
neutral, 19.7% disagree, 8.5% strongly disagree related with if the company maintains an inventory
level. 46.5% agree, 33.8% were neutral, 19.7 % disagree related with if the company maintains the size
or amount of reorder level. 64.8% agree, 18.3 % were neutral, 16.9 % disagree that the company
follows different principles. This shows that the company follows different types of principles to
perform its operations.

3.7 Responses from the Interview

In an interview conducted for the purpose of this study the following responses were taken.

In relation to the inventory management practice implemented in the company the company uses the
latest technology and tools to perform its activities. Today, there are a variety of software’s available
on the market where MOHA uses to assess the inventory management practice. To perform this
company trains its staff so that they perform accordingly. The perpetual inventory system is mainly
practiced in the company. The company tracks inventory from purchase to the sale of goods.

25
 CHAPTER 4

4. Summary of Findings, Conclusion and Recommendations

This chapter discusses and summarizes the study as stated in the objectives. It will also provide
recommendations for improved performance.

4.1 Summary of Findings

The main purpose of the study was to assess the inventory management practice in MSDI S.C. The
following summarizes and shows the primary data obtained by the questionnaire.

Regarding the respondent’s demographic characteristics large numbers of the participants in the
questionnaire were males, the education level was bachelor’s degrees, the age category was 24-33 and
year of employment was categorized under 4-6 years in the MSDI S.C.

The research design applied for this study was descriptive. Stratified sampling was adopted to draw a
sample from the total population of 98 employees at the company. Primary data collection was
conducted through questionnaires designed to assess the inventory management practice of a company.

Regarding the inventory management practice applied in the company there is a system where the
company effectively manages inventory in which it involves the staff, using tools to assess its
inventory. Employees are a part of this in which they participate in the activities under the supervision
of the managers.

Regarding the inventory costing method, the company does have a system of management of inventory
costs, but it needs to be implemented by the whole company. The company uses different valuation
methods like FIFO and LIFO to keep records of the accounts.

26
In relation to the inventory control method there is a good inventory control mechanism by proactively
managing inventory levels, removing defective items in a manner that improves the performance of the
company. To maintain the quality level, the company uses different principles to help it ahead of the
competition.

4.2 Conclusion

The main objective of the study was to assess the inventory management practice in MSDI S.C.
Capable management of inventory system needs an appropriate system of making decisions to know
items in inventory, how much and when the order is applied. Every organization requires the decision
on inventory which is based on the facts about the balance of inventory on hand, forecasting demand
information, lead time and time variation, stock cost, ordering cost and shortage cost (Naliaka &
Namusonge 2015).

Based on the findings the following conclusions can be drawn. In relation to the inventory costing
method employees have different attitudes. 36.6% disagree that the company manages the inventory
costs. Regarding following the flow of cost when goods are manufactured and sold 54.9% agree. In
relation to inventory valuation the company has good practices including the use of FIFO, LIFO
methods to ease the process of inventory management. Inventory control is effectively practiced in
MSDI S.C. But the use of stock bin cards and other tools will enhance the performance of the
inventory control. The price level of items is not considered enough. The company’s employees
perform their responsibility effectively and it enhances the company’s performance.

4.3 Recommendations

The researcher recommends or suggests the following for the effective performance of the company.

The company shall implement effective stock bin cards to record inventory. It records the stock of each
store. Every item gets updated after receipt or use. This helps in maintaining and monitoring inventory
quickly.

27
To benefit from the inventory management practices the company shall ensure there is no error
between ledger and physical existence.

For the acquisition of inventory items, the company shall have an effective policy that manages how
each task is accomplished regarding managing inventory.

References

Ackah, R.A. & Ghansaha E. 2016. Assessing Inventory Management on the Performance of the
Production Sector in Ghana, Dama International Journal of Researchers Vol. 1,
Khobragade, P., Selokar, R., Maraskolhe, R., & Talmale, M. (2018). Research paper on inventory
management system. International Research Journal of Engineering and Technology (IRJET), 5(4),
252-25
Weldeyes, L. (2019). The effect of inventory management practice on logistics performance,
Department of Logistics and Supply Chain Management in Partial Fulfillment of the Requirements for
the Award of the Degree of Master of Arts in Logistics and Supply Chain Management, Addis Ababa
University).
Naliaka, V.W. & Namusonge G.S. (2015). Role of Inventory Management on Competitive Advantage
among Manufacturing Firms in Kenya, International Journal of Academic Research in Business and
Social Sciences Vol. 5, No. 5.
Mosich, A-N, 1989: Intermediate Accounting 7th ed. USA Vikas Publishing house PVT LTD.
Bringham, F.Eugene and Louisc-Gapenski, 1996: Intermediate Financial Management 4th ed. USA:
Dryden press Harcourt brace collage publishers.
Fess warren, 21st ed.
Hishikes bhatta, 2003: Modern production of operation management 8 th ed. New York: John will and
Sons
Tony Wild, 2007; Cost Accounting 12th ed. Prentice, hall of india private limited.
Williams, 2006; Financial Accounting 3rd ed. Prentile-Hall, Inc
28
Khan Tain,2005: Cost Accounting 12th ed. Prentice, hall of india private limited.
Malcoln, 2003: purchasing and supplies Management 6th ed.
Sulanson, 2000: operations Management.
Dyckman, R Thomas, Ronald E. Dukens and Charles J. Davis, 1998: Intermediate accounting4th ed.
USA MC Graw-Hill
Tersine, R, 1994: Introduction to management. 4thed. New York USA
Yearly magazine of MOHA Soft Drinks Industry S.C

APPENDIX A
SAINT MARY’S UNIVERSITY SCHOOL OF UNDERGRADUATE STUDIES

FACULTY OF BUSINESS

DEPARTMENT OF MANAGEMENT

QUESTIONNAIRE ON ASSESSMENT OF INVENTORY MANAGEMENT

PRACTICE IN MOHA SOFT DRINKS INDUSTRY S.C.

Dear respondents,

This questionnaire is designed to obtain information about an assessment of inventory management

practice, case study on Moha Soft Drink Industry. The information shall be used as a primary data
in conducting survey, which will help the researcher to fulfill partial requirement for BA degree in
Management. The study is entirely for academic purpose, and the information you provide will be kept
confidential not to be transferred for a third party.

General Instruction

There is no writing your name.

In all cases where answer options are available, please tick.

29
Thanks for your cooperation.

Section 1: Demography Information

Please Make a (✔) For the applicable box below

1. Gender. Male Female

2. Age. 1. 18-23. 2. 24- 33 3. 34- 49 4. 50 & above

3. Educational level Diploma Degree master’s & Above

4. Years of Employment 1-3 years 4-6 years 7 years & above

Section 2: Questions related with inventory costing method

Please Make a (✔) For the applicable table below

STATEMENT Strongly Agree Neutral Disagree Strongly

Agree Disagree
The company Manages the
inventory costs
The company follows the
flow of cost when goods are
manufactured and sold

Section 3: Questions related with inventory valuation method

Please Make a (✔) For the applicable table below

STATEMENT Strongly Agree Neutral Disagree Strongly

Agree Disagree

30
The company makes a
valuation at a given period
The company uses different
types of inventory valuation
method i.e., FIFO, LIFO,
Weighted average and
Specific identification

Section 4: Questions related with inventory control method

Please Make a (✔) For the applicable table below

STATEMENT Strongly Agree Neutral Disagree Strongly

Agree Disagree
The company uses effective
inventory control method
The company controls and
maintains the production
level
The company storekeeper
checks and balances when
finished goods are sold
The company follows the
inventory system
The company controls and
removes the defective and
expired items from the
inventory

31
The company controls the
price level of each product
items
The company’s manager
continuously controls the
activities of the department
The company uses stock bin
card to control stock items
in the warehouse
The company Protects
inventory from unreliable
suppliers
The company Protects error
or misstatement that occurs
on record
There is Error between
ledger and physical
existence
The company Employees
follow their responsibility
on their department
The company attends the
year end stock
There is a problem that
occurs on steep of
production i.e., Raw
materials, Work in progress
and Finished goods
The company follows up
written policy and
procedure for the
acquisition of inventory

32
items

Section 5: Questions related with maintaining the inventory

Please Make a (✔) For the applicable table below

Strongly Agree Strongly

STATEMENT Neutral Disagree
Agree Disagree
The company maintains
their quality level
The company maintains
their level of inventory
The company maintains the
size or the amount of the
recorder level
The company follows
different types of principles
i.e. Generally Accepted
Accounting Principles and
International Financial
Reporting Standards

33
 APPENDIX B

Interview Questions
1. How do you assess the inventory management practice implemented in the company?
2. What is the best way to manage inventory?
3. What inventory management tools does the company use?
4. If you have any suggestions, please specify here.

34
 Declaration
I, Kirubel Birhanu, hereby declare that the senior research essay entitled: “An Assessment of Inventory
Management Practice in the case MOHA Soft Drinks Industry S.C” is my original work and this senior
research has not been presented in part or full before and was prepared under the guidance of Jifar
Bogale and all sources of materials used for the senior research have been duly acknowledged.

Kirubel Birhanu

________________

Signature

______________________

Date

35
 Submission Approval Sheet
I, approve that a senior research essay entitled: “Assessment of Inventory Management Practice in
Moha Soft Drink Industry S.C” written by Kirubel Birhanu under my supervision is original work
submitted in partial fulfillment for the requirement of BA degree in Management.

_____________________________________ ___________________

Name Signature

______________________________________

Date

36
37