Raymond Proposal
Raymond Proposal
Raymond Proposal
REG NO : 2022-01-09174
COURSE : DBA
SEMESTER : ONE
SESSION : WEEKEND
QUESTION
Find a research problem and write a proposal (15-20 pages)
STOCK MANAGEMENT (IV) AND ORGANIZATIONAL PERFORMANCE (DV). A
CASE STUDY OF RWENZORI BOTTLING COMPANY
BY
FEBRUARY, 2023
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CHAPTER ONE
INTRODUCTION
1.0 Introduction
This chapter covers the background of the study, statement of the problem, objectives of the study,
the scope of the study, significance of the study and the operational definition of terms.
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In South Africa, stock and/or inventory management as a supply chain driver has for instance has
been found to exert direct influence on performance (Ambe, 2012). Moreover, inventory
management is listed as a supply chain strategy that may impact positively on the performance of
the wine industry in South Africa (Jooste et al., 2015). A number of inventory management
practices that include Economic Order Quantity (EOQ), Just In Time (JIT), Marginal analysis,
vendor managed inventory, and Order batching are reported to significantly predict performance
in the agricultural sector (Mwangi, 2013) and also in retail institutions (Omondi & Namusonge,
2015). In addition, when referred to as material flow, inventory control has also had a direct
effect on the performance of road construction projects (Ang’ana, 2012). On the basis of such
evidence, the researcher conceptualized that inventory management could equally have a direct
effect on performance of textile firms.
In Uganda the scenario of inventory management involves determining the purchasing practice and
techniques and strategy. A supply strategy is seen by Porter (1999) as an integral part of the
general competitive strategy of a firm. Determining the relationship to have with suppliers is
therefore crucial in inventory management (Bain, 1959, Lenders, 1965). Nair (1999) explains that
inventory management involves stock control, purchasing, stock losses, stock cover, stock turnover
and general stores operations and materials handling.
According Reuters S. (2010), Rwenzori Beverages (U) Ltd is one of the biggest mineral water
Manufacturing Company in Uganda as well as East Africa. It is the first company in Uganda to
manufacture Mineral water and have 80% market share in mineral water industry in Uganda. The
factory is located on plot 588,592 block 111 Kiwanga Mukono District. It is 16kms from Kampala
city centre on the road to Jinja. Rwenzori focuses its future on innovation and excellence in
business. It has a well – equipped PET bottling plant, which can produce over 400,000 bottles per
day. The water bottling lines can produce over 300,000 bottles per day. This reflects Rwenzori’s
desire to keep a pace with technological advances. The company keeps different categories of
stock including raw materials, finished products and maintenance repair and operations supplies
(MROs), some of which include 500 ml, 1000 ml and 1500 ml water bottles, PET bottles for soft
drinks, Plastic containers for cosmetics, chemicals and plastic bottles for medicines. Rwenzori
looks forward to strengthening its market leadership through constant enhancement of excellence
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of its products through innovative manufacturing and marketing, reinvestments and an efficient
countrywide distribution network and focuses on extending its market leadership up to at least 95%
courtesy of company profile. The company has however not achieved the extra desired 15% of the
market share probably because of poor inventory management system in place. It is therefore
feared that inventory management could impact on the success of this organization (Rwenzori
Internal Report, 2018)
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1.5 Research Questions
i. What is the effect of stock planning on organizational performance of Rwenzori
Beverages (U) ltd
ii. What is the effect of stock allocation on organizational performance of Rwenzori
Beverages (U) ltd
iii. What is the effect of stock control on organizational performance of Rwenzori
Beverages (U) ltd
1.6 Scope of the study
1.6.1 Content Scope
The study will encompass stock management as an independent variable while organizational
performance as the dependent variable.
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Conceptual framework
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Organizational Performance: An assessment of how performance is on three specific areas of
firm outcomes: financial performance, market performance, and customer value added (Richard,
Devinney, Yip, & Johnson, 2009).
Stock control can be broadly defined as "the activity of checking a shop's stock". It is the
process of ensuring that the right amount of supply is available within a business.
Stock planning is the process of determining the optimal quantity and timing of inventory for
the purpose of aligning it with sales and production capacity. Inventory planning affects a
company's cash flow and profits while contributing to an efficient supply chain.
Stock allocation is about ensuring that the right stock is available at the right time in each of the
retailer's outlets. Stock allocation is the decisions made about how quantities held at a central
point will be distributed amongst several outlets in a retail chain.
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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter consists of related literature on inventory management following the research
objectives set in chapter one. It shows what has been written about inventory management and how
it impacts on the organization. The chapter covers the meaning of stock management, types of
stock held in an organization, reasons why organizations hold stocks, inventory management
methods, costs involved in stock management, determination of stock levels, factors affecting
stock levels, modern techniques, contribution of stock management, conclusion.
The international dictionary of management (1995) defines inventory management as the use of
management techniques designed to determine and implement the holding of optimum level of
stock, whether stock, bought out goods, work in progress or finished goods. Lewis and Trevin
(200) also define inventory management as the process of regulating and monitoring the amount of
goods available for sale so that there are always sufficient to meet demand. Inventory management
is essentially concerned with ensuring that the acquisition, storage, holding and usage of all types
of stock are fully controlled at all times. That is making sure that firm has the right quantity of
stock at the right place and at the right time.
2.3 Organizational Performance
Organizational Performance is a measure of the results achieved. Performance efficiency is the
ratio between effort extended and results achieved. The difference between current performance
and the theoretical performance limit is the performance improvement zone. Performance assumes
an actor of some kind but the actor could be an individual person or a group of people acting in
concert. The performance platform is the infrastructure or devices used in the performance act
(Malcom, S. 2005). Performance of an organization is measured basing on many variables
regarding customer satisfaction, sales volume, total cost reduction and meeting industry standards.
According to Host (1992), sales volume and growth rate of change in sales are used to evaluate
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organizational success. They are determined by evaluating marketing factors that influence sales,
including marketing strategies, competition, promotional programs and distribution decisions.
Sales problems are determined in order to understand seasonal variations, turnover rates for
merchandise and customer profiles.
Frazelle, 2002, Jessop, 1986, explains that good inventory management by a firm will lower costs,
improve efficiency and ensure production can meet fluctuations in customer demand. It will give
the firm a competitive advantage as more efficient production can feed through to lower prices and
also customers should always be satisfied as products will be available on demand. Poor inventory
management systems may lead to dependency on the efficiency of the suppliers, missed sales
incase of stock outs, high costs of obtaining materials and poor customer service.
Stock management is very crucial to any organization that is improving on its performance and
attaining high levels of customer satisfaction. According to Nzuza (2015), the material held by
an organization makes up for most of the organization assets. Most organization invests so much
money in materials and it is important for the organization to put in place a good material
management system in order to manage the stock properly. Poor inventory management system
can negatively affect the profitability of an organization. The management has very devastating
effect on the performance of the organization about the material management system put in place
to determine the performance of the said material and the general performance of the
organization.
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2.4.1 Stock control and organizational performance
Inventory control systems enable a business to determine and maintain an optimum level of
investment in inventory in order to achieve required operational performance. Sila (2006)
expressed that the inventory management of inventory control is to meet customer demand.
Further, Fawcett, Ogden, Magnan, and Bixby Cooper (2006) argue that to meet customer
demand, firms have to ensure that stock-outs are avoided without incurring high inventory costs.
Stocking level variability is caused by factors such as deficient information sharing and deficient
forecasts. He found out that variability of inventory majorly results due to firms not applying the
inventory control systems. He enumerated the effects of inventory variability as inaccurate
forecasting leading to periods of not having enough capacity leading to inadequate customer
service and high inventory costs.
According to Miller, (2010), inventory control is the supervision of the storage, supply and
accessibility of items to ensure an adequate supply without excessive oversupply. To him,
inventory control means availability of materials whenever and wherever required by stocking
adequate number and kind of stocks. However, Lau and Snell (2006) argued that inventory
control is primarily about specifying the size and placement of stocked goods. Inventory control
is required at different locations within a facility or within multiple locations of a supply network
to protect the regular and planned course of production against the random disturbance of
running out of materials or goods for improved performance.
According to Jeff, (1998), from a financial perspective, inventory control is no small mailer.
Oftentimes. inventory is the largest asset item on a manufacturer's or distributor's balance sheet.
As a result, there should be a lot of management emphasis on keeping inventories. Companies
face a dilemma in today's competitive market Place, where on one hand, customers demand
customized products and services and require that their orders are filled quickly, hut on the other
hand they do not want to pay a premium for this customization and availability (Grarnan and
Magazine, 2006). Therefore, organizations are exploring ways toward postponement strategy in
response to constantly changing demands (Yang et al. (2004 ). On the other hand, inventory as
defined by Tersine (1988) refers to any idle resource or tangible asset which can be seen,
weighed, and counted. This includes supplies, raw materials, work in process (WIP). and
finished goods".
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Inventory management is primarily about specifying the size and placement of stocked goods.
Inventory management is required at different locations within a facility or within multiple
locations of a supply network to protect the regular and planned course of production against the
random disturbance of running out of materials or goods for improved performance (Garry,
1997).
According to Halachmi and Bouck.art, (2005), the aim of inventory control system is to maintain
the quantities of stock held by a business at a level which optimizes some management criteria
such as minimizing the costs incurred by the whole business enterprise for improved
performance. The primary goals of organizational inventory management are to increase
organizational effectiveness and efficiency to improve the ability of the organization to deliver
goods and or services (Ronald, H., 1999).
According to Miller (2010), inventory control is the activity which organizes the availability of
item to the customers. It coordinates the purchasing, manufacturing and distribution functions to
meet the marketing needs. This role include the supply of current sales items, new product,
consumables, spare parts, obsolescent items and all other supplies. Inventory enables a company
to support the customer's services, logistics or manufacturing activities in situation where
purchasing or manufacturing of the items is not able to satisfy the demand. Inventory plays an
un-negligible row in the growth and survival of an organization in the sense that failure to an
effective and efficient management of inventory, will mean that the organization will lose
customers and sales will decline. In other to attain its organizational objectives, a business is to
meet customer's needs. Customer desire has always been a vital issue in a company not only to
maintain sales but also to increase it (Tersine, 1994; Potilen & Goldsby. 2003).
According to Perez (2017) Proper inventory allocation can save you significantly on storage
costs by optimizing inventory levels without overstocking or not stocking enough to meet
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demand.In ecommerce, inventory levels constantly fluctuate — especially if you sell through
more than one channel — which is why most brands use technology and automation to track
inventory in real time, so they can stay informed while spending less time manually tracking
inventory.
In the study of Moe, (2018) it was found that A solid inventory allocation strategy that’s tech-
enabled and offers valuable insights can help you reduce a number of risks and streamline your
distribution network
Inventory allocation becomes more complex as you expand into new sales channels, which is
known as multichannel inventory management or the oversight of stock levels, reorders, and
inventory forecasting across different sources (Monroe, 1998).
Proper inventory allocation impacts the speed of order fulfillment and costs associated with
shipping orders. For instance, if you notice that sales of laptop sleeves are through the roof in
San Francisco and Chicago, then warehouses located in or near those cities is where you should
aim to allocate more inventory, as compared to storing units in facilities in the middle of
nowhere.
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using the Taro Yamane formula for sample size determination from a finite population. Data
were generated using questionnaire, oral interviews, observations, books, journals and the
internet. Data were presented in tables and analyzed using simple percentages. Pearson product
moment correlation coefficient and linear regression were used in the hypotheses testing. From
the analyses, it was discovered that irrespective of the fact that the organizations studied, painted
the picture that they were applying the tenets of good inventory planning, they from time to time
run into the problems of inventory inadequacy. This consequently affected their production,
leading to the scarcity of one brand of their products or the other, thereby affecting their
profitability and consequential effectiveness negatively. The Findings indicate that there is a
significant relationship between good inventory planning and organizational effectiveness.
Inventory planning has a significant effect on organizational productivity. There is a highly
positive correlation between good inventory management and organizational profitability. The
study concluded that Inventory Management is very vital to the success and growth of
organizations
Koin, Cheruiyot, and Mwangangi ,( 2014) conducted a study on the effect of inventory
management on an organization's performance. The study will employ a descriptive research
design the study population too is 459 employees and care will be taken to ensure that the
accessible population sampled is of a sizeable to inform the researcher on the formulated
research objectives. a sample of 56 employees will be obtained from the target population the
data will be collected from the company’s supply chain department in liaison with the various
integrated functions in the chain using questionnaires. The questionnaires will be dropped to all
the heads of the various business process owners linked to the supply chain and their staff the
collected data will be compiled for analysis the data will be analyzed using descriptive statistics
and this will be done using a statistical package for analysis (specs). the findings indicate that e
inventory management system, supplier relation affects the supply chain effectiveness in the
manufacturing sector to a great extent while order management and warehouse management
affects it to a moderate extent .this study shall demonstrate the practicality and effectiveness of
the proposed approach by means of this research, valid solutions for harmonization of inventory
management and procurement performance shall be availed to the decision makers.
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Ogbo, Onekanma and Wilfred (2014) carried out a study on the effect of the effective system of
inventory management on organization performance in the seven-up bottling company, Nile Mile
Enugu. The researchers were motivated to embark on this study, in order to bring to fore the
importance of effective inventory control system on organizational performance as it relates to
the bottling company. A total of eighty-three respondent constitute the sample for the study. Four
research questions and Four hypotheses were generated and tested at 10% (that is 0.10)
significant level using descriptive statistics and a non-parametric test (chi-square that is, X2 ).
The result of the analysis showed that flexibility in inventory control management is an
important approach to achieving organizational performance. It was found that organizations
benefits from inventory control management by way of easy storage and retrieval of material,
improved sales effectiveness, and reduced operational cost. The study also found that there is a
relationship between operational feasibility, the utility of inventory control management in the
customer related issues of the organization and cost effectiveness technique are implemented to
enhance the return on investment in the organization. Effective inventory control management is
recognized as one of the areas management of any organization should acquire capability. It is
recommended that organizations should adopt the inventory keeping method that best suits their
operations.
Kamauand Assumpta (2008) carried out a study on the influence of inventory management on
organizational competitiveness, with a particular focus on Safaricom Ltd Kenya. The specific
objectives of the study were to determine the effects of inventory shrinkage, inventory
investment and inventory turnover on the competitiveness of Safaricom Ltd.
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CHAPTER THREE
METHODOLOGY
3.0 Introduction
This chapter presents the research design, study population, study sample, instrument, sources of
data administration, data analysis and limitations of the study.
The research will target 30 respondents; that is, 13 from stores department, 12 from Procurement
department and 8 from Production and 7 Accounting Department also a sample of 28
respondents whereby 11will come from stores, 10 from procurement, 4 from production and 3
from Accounting Department.
The Sloven’s Formula will be used here to determine the sample size;
N
n= 2
1+ N (e)
30
n=
1+30 (0.05)2
30
n=
1+30 (0.0025)❑
14
30
n= ❑¿
1+0.075 ¿
30
n= ¿
1.075 ¿❑
Therefore n = 28 Respondents
3.4 Source of data
The researcher will use both primary and secondary sources. Primary data will be collected
physically from the respondents through interviews; questionnaires will be distributed to the staff
of Rwenzori Beverages (U) Ltd. Secondary data will be collected through reading various
literature of the organization and the research work of other researchers.
3.5 Sampling procedure
The study used purposive and simple random sampling, where the names of respondents will be
written on small pieces of papers for each respondent and mixed up in a box and then be picked
one by one at random. All samples will have the same and equal probability of being picked.
Table 1 : Showing the sample size of respondents
Department Target population Sample size
Stores department 13 11
Procurement 12 10
Production 8 4
Accounting department 7 3
Total 30 28
Source: Primary Data, 2022
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variables regarding customer satisfaction, sales volume, total cost reduction growth rate of change
in sales and meeting industry standards.
3.8.2 Analysis
Percentages and tables will be used for quantified items into frequencies and judgmental facts.
Other methods will be used to enhance simplicity and good understanding.
3.8.3 Editing
The data collected will be edited for accuracy and completeness and to find out how well
respondents answered the questions. This was done in line with due considerations paid to
questionnaires sent to the respondents so as to detect the gaps which may have been left to ensure
data quality of this study.
Informed consent will be sought from the respondent before any step was taken. The data will be
collected by use of reliable and valid tools, coded and data collection tools which will be burnt to
avoid any form of information misuse. The researcher will maintain the confidentiality of the
respondents and protect their privacy at all times. The researcher will try to be professional when
presenting himself to the respondents as this may affect the attitude and expectations of the
respondents. The researcher will use the language that is as neutral as possible regarding the
terminology involving people and will avoid discriminative language. Lastly, the researcher will
try to be considerate during the interactions with respondents.
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Difficulties in meeting the intended respondents. Some respondents may be unwilling to give
information needed by the researcher
Financial costs, the financial requirements of this research may be so high due to the distance
between the researcher and the study area. Other costs to be incurred prior to the completion of the
state, printing, photocopying, phone calls for making appointments with the respondents.
There might be little time to carry out the research because of conflict between work, studies and
research itself.
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