ASSESSING THE EFFECTIVENESS OF THE INVENTORY MANAGEMENT SYSTEM IN A SERVICE ORGANIZATION: A CASE STUDY OF BARAN AFGHANISTAN
The project work entitled Inventory Management includes detail study about inventory, its importance and effectively it should be managed for smooth operations of organization. Inventories are assets of the firm and require and hence involve the commitment of firm’s resources, every organization is required to manage the inventories in such a way as to get the best returns. The objective of inventory management is to determine the optimum level of the inventory that is the level at which the interest of all the departments is taken care of. The inventory management seeks to maximize the wealth of the shareholders by minimizing the cost of procuring and maintaining, The objective behind the inventory management is maintaining sufficient stock of goods, materials ensuring continuous supply to available stocks process for uninterrupted to schedule and minimizing the total annual cost of maintaining inventories, Inventories are assets of the firm and hence involve the commitment of organizations resources; managers must ensure that the organization maintains inventories at the correct level, Inventory management is a challenging problem area in supply chain management, Organizations need to have inventories in warehouses in order to fulfil policy of inventory management, meanwhile these inventories have holding costs, safeguards of items. Therefore, the task of inventory management is to find the quantity of inventory that will fulfil the request, avoiding overstocks. This paper presents a case study for the health aiding services organization on inventory management. The relationship between the inventory management and organization performance was determined based on inventory days and return on asset (ROA) analysis. The research found that company had a few inventory problems such as unorganized inventory arrangement, large amount of inventory days / no cycle counting and no accurate records balance due to unskilled workers. The study also proved that there was a significant relationship between return on asset (ROA) and inventory. This paper also provides recommendation to the organization and for further research.
Inventory management, logistics, procurement & inventory section