International Journal of Education and Research Vol. 3 No.

3 March 2015

EFFECT OF INVENTORY MANAGEMENT PRACTICES ON

ORGANIZATIONAL PERFORMANCE IN PUBLIC HEALTH INSTITUTIONS IN
KENYA: A CASE STUDY OF KENYATTA NATIONAL HOSPITAL

Dorothy Oballah
Jomo Kenyatta University of Agriculture and Technology, Kenya
EMAIL [email protected]
P.O BOX 62000 NAIROBI
(Main Author)

Dr. Esther Waiganjo

Jomo Kenyatta University of Agriculture and Technology, Kenya
P.O BOX 62000 NAIROBI
EMAIL [email protected]

Elizabeth Wangu Wachiuri

Jomo Kenyatta University of Agriculture and Technology, Kenya
P.O BOX 1455 KARATINA
EMAIL [email protected]

ABSTRACT
The purpose of this study was to investigate the effect of inventory management practices on
organizational performance in public health institutions in Kenya. The specific objectives were to
establish: the effect of inventory shrinkage, inventory investment, inventory turnover, and
inventory records accuracy on organizational performance of Kenyatta National hospital: A
descriptive case study design was used. Statistical analysis was carried out using SPSS. The study
revealed that inventory investment and inventory records accuracy have a positive influence on
organizational performance while inventory shrinkage have a negative effect on organizational
performance of Kenyatta National hospital thus this study recommends that the hospital should
ensure that losses resulting to inventory shrinkage related to medicines are reduced. This can be
done by ensuring that inventory records are accurately kept. The hospital need to manage its
inventory investment by ensuring that the right amount of stock is kept at all times.
Key words: inventory shrinkage, inventory investment, inventory turnover, inventory records
accuracy, organizational performance

INTRODUCTION
With the ever increasing expenditure in healthcare sector, there is need to curb this challenge while
ensuring that available resources are used to provide essentials medications to the ever increasing
population. Pharmacy department is one of the most consumers of the hospital budget and one of the
few areas where a large amount of money is spent on buying medicines and drugs. It is therefore
important that hospitals ensure smooth supply of the required stock to ensure uninterrupted supply. This
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calls for the effective and efficient inventory management of pharmacy stock by keeping a close
supervision on important drugs, prevention of pilferage, and priority setting in purchase and distribution
of drugs.
According to Miller (2010), inventory management involves all activities put in place to ensure that
customer have the needed product or service. It coordinates the purchasing, manufacturing and
distribution functions to meet the marketing needs and organizational needs of availing the product
to the customers. Inventory management is primarily involved with 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. The scope of inventory
management also involves managing the replenishment lead time, replenishment of goods, returns
and defective goods and demand forecasting, carrying costs of inventory, asset management,
physical inventory, available physical space, demand forecasting, inventory valuation, inventory
visibility, future inventory price forecasting and quality management. With a balanced of these
requirements, it is possible to reach an optimal inventory level, which is an on-going process as the
business needs shift and react to the wider environment. Ogbo et al, (2014)

1.2 Statement of the Problem

Effective inventory management in health care supply chains is one of the key factors for success.
The challenge in managing inventory is to balance the supply of inventory with demand. An
organization would ideally want to have enough inventories to satisfy the demands of its customers
and not to loss customers due to inventory stock-outs. On the other hand, the organization does not
want to have too much inventory staying on hand because of the cost of carrying inventory. Enough
but not too much is the ultimate objective according to (Coyle, Bardi & Langley, 2003).
Office of the Auditor General, (2012)states that, “although the Hospital has established re-order
levels for all types of drugs that it stocks, it occasionally experiences shortages of vital and essential
drugs. For example, an analysis of the stock of drugs maintained at the pharmacy that serves the
Accident and Emergency Centre indicated that the pharmacy did not have in store some vital and
essential drugs for several periods lasting up to three months. Likewise, Ward 4B which caters for
cardiac patients did not have in stock critical drugs (such as those used for blood thinning) for a
period of three months”.
Despite the establishment of re-order levels order, quantities are still determined somewhat based
on past usage. Yet, there is no specific policy to facilitate the determination of the quantities to be
ordered, meaning that orders are placed based on the staff’s familiarity of the process. Improper
quantities ordered occasionally leads to unexpected situations of stock out and overstocking.
Shortage of medicines are occasionally attributed to long procurement procedures, occasional
shortages of vital drugs in the market, lack of sufficient funds with which to purchase new supplies,
unwillingness of suppliers to supply hospitals due to delayed payments, inadequately trained staff in
the inventory management section and the inadequacies of the Hospital’s stock management system
that is Office of the Auditor General, (2012).
Problems are likely to raise when inventory is not tracked properly, inefficiency and additional costs
mount. Supplies get lost, shrinkage can go unchecked, stock-outs occur, critical equipment locations
are uncertain, billing is inefficient since supplies are used without being associated to patient’s
record, and on-hand inventory can balloon unnecessarily. All of this leads to inefficiency and
additional costs.

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1.3 Objectives of the Study

1.3.1 General Objective
The general objective of the study is to determine the effect of inventory management practices on
organizational performance of health institutions in Kenya. A case study of Kenyatta national
hospital

1.3.2 Specific Objectives

1. To determine the effect of on inventory shrinkage organizational performance of Kenyatta
National hospital.
2. To establish the effect of inventory records accuracy on organizational performance of
Kenyatta National hospital.
3. To determine the effect of inventory investment on organizational performance of Kenyatta
National hospital.
4. To establish the effect of inventory turnover on organizational performance of Kenyatta
National hospital.

1.4 Research Questions

1. What is the effect of inventory shrinkage on organizational performance of Kenyatta

National hospital?
2. What is the effect of inventory records accuracy on organizational performance of Kenyatta
National hospital?
3. What is the effect of inventory investment on organizational performance of Kenyatta
National hospital?
4. What is the effect of inventory turnover on organizational performance of Kenyatta National
hospital?

1.5 Significance of the study

From the findings of the study the researcher hope that the findings will help the hospital (KNH)
identifies areas where costs can be reduced while ensuring overall efficiencies in the hospital is
maintained. The study therefore seek to propose to the management of the hospital the current
inventory control systems to implement in order to reduce costs associated with drugs inventories of
the hospital without reducing the service level while improving efficiencies at the same time.
The researcher hopes that the findings of this research will enlighten the inventory management
practitioners in healthcare industries on the effect of inventory management and its importance in
improving the organisational performance and also help the inventory mangers in decision making
concerning the suitable level of inventory to be kept in the hospital so as to ensure the customers are
accorded appropriate service level.
The study can also be used as basic information by pharmacist and inventory control staff to
develop friendly policies and procedures for purchasing drugs and controlling their levels as well.
Therefore, this paper serves as a proposal to propose the feasible improvements to the pharmacy
department in the area of drugs inventory management at KNH and the healthcare industry. The
researcher also hopes that the findings of this study will form the basis on which future researchers
could be built in the area of inventory.

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LITERATURE REVIEW

2.1 Introduction
This chapter reviews the literature of the study. It’s organized under the following parts: theoretical
framework, conceptual framework. Literature will be reviewed in line with the stated study
objectives. The review will relay greatly on data obtained from published reference materials such
as books, online magazines, and journals. The review will provide an overview of major past
activities that had earlier been studied in relation to inventory management and how it affects
organizational performance.

2.2 Theoretical framework

2.2.1 Strategic choice theory (SCT)

Strategic choice theory shows the relationship between top management choices and organization
performance as well as interaction of the internal and external organization. The theory stresses the
importance of management decisions on organizational performance, Child (1972). Campling and
Michelson (1998) established a strategic choice model that depicts the interdependence among the
environment and organizations, actions and overall firm performance. The model aim at achieving
high performance standards in order to increase efficiency where there are a limited resource, the
theory failed to give much importance contextual factors like environment, technology and scale of
operation into consideration and only considered how organizational structure aid in performance
of organization. Child (1972) further suggest that any organization with managers given power and
responsibilities to direct and make decision regarding factors like inventory investment and the
amount of inventory to carry have significant effects on organizational outcomes as well as
performance SCT argues that the right management choice will depend on environmental factors
like suppliers, purchasing and inventory management decision made by the management. Ketchen
& Hult (2007) suggest that SCT views managers as personnel who are downstream decision makers
directing decision and changing process in organization. Change or variations can be caused by
contextual factors including environmental conditions and technology. Using new technology in
inventory management such as RFID, bar codes and ERP systems are some technological changes
that require decision making at corporate level with support from both business and functional level.

2.2.2 Theory of Economic Order Quantity (Wilson’s EOQ Model)

F.W.Haris is among authors within operation management who have developed models to
determine optimal inventory levels that should be kept by organization. Blackburn (2010), is among
authors who agree that EOQ is one of the models widely used to manage inventory in many
industries.EOQ model was developed by F.W.Haris in 1913 and is also known as Wilson EOQ
model, who critically analyzed the model in detailed, that is according to Arsham (2006) . The use
of the model has shown increase in some costs as other costs decline, an example of ordering costs
decline with the inventory holdings, while holding costs rise and the total inventory associated costs
curve have a minimum point. It is also known as the point where total inventory costs are
minimized.EOQ is the level of inventory that minimizes the total of inventory holding costs and
ordering costs.

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Coleman (2002) and Ogbo (2011) define the model as one that order quantities which minimize the
balance of cost between inventories holding costs and re-order costs. Ogbo (2011) describes the
basic EOQ, assumptions that are necessary to calculate EOQ as follows: That stock holding costs
are known, and constant; there is a known, constant ordering costs; the rate of demand are known
and constant; lead time cycle is known and constant; the price per unit constant; the replenishment
is made instantaneously, the whole batch is delivered at once and no stock-outs are allowed. One
disadvantage of EOQ is that it ignores the need to have buffer stocks, which are maintained to cater
for variations in lead-time and demand making it difficult to be observed in practice.

The EOQ model requires that for every item stocked in the stores, there is need to determine the
point of order and that of the most cost effective quantity to order. The model assumes that all other
variables are constant even though uncertainties are common and regular all business. For example
uncertainty includes change in demand, damage during transportation and delay in delivery.
Uncertainty in demand, will therefore force EOQ to be adjusted to buffer against uncertain business
atmosphere.
Due to uncertainties experienced in business environment adjusted economic order quantity is an
EOQ model that can be used where fluctuation in demand is a common occurrence. Especially in
healthcare industry where demand cannot be accurately forecasted since it depends on several
external factors. Regarding hospital pharmacy, there are several key factors, both internal and
external, that affect inventory level in the pharmacy store. These factors can influence fluctuation in
drug consumption rate in hospital pharmacy, some internal factor, for instance, prescribers‟
preference, can be controlled, but it is impossible to control some external factors such as war.
As previously noted regarding the restrictive assumptions of simple EOQ model, the situation that
would meet all the assumptions is an ideal. The fact that uncertainty in demand seems to be
encountered in most situations, EOQ model should be fixed to cope with this uncertainty.

2.2.3 Transaction Cost Analysis (TCA)

The study of inventory management calls for an organization to ensure all costs are kept at a
minimum hence the need to apply the theory of (TCA). According to Halldorsson et al (2007),
(TCA) is a theory that ensures that costs across the supply chain are kept at a minimal. Transaction
cost approach– has been widely used in different areas, especially in economics and organizational
studies. In the early 1970s, the mathematical economist, Williamson, incorporated TCA into the
general equilibrium model and set up his transaction cost economics in the new theory of the firm.
Williamson (1975, 1981) suggests that organizations can reduce their transaction costs by vertical
integration and increasing the level of trust at the same time. This kind of integration can reduces
the costs of inventory management while increasing the service level of both internal and external
customers while releasing capital to be used in other areas of the organization. Organizational
supply chain can however reduce transaction not only through vertical integration and increasing
the level of trust among supply chain participants, but also though horizontal integration and
economy of scale gained from the aggregation of supply and/or demand.
TCA has some criticisms and one of the criticisms focuses mainly on dependent and independent
economic factors and fails to include personal and social relations. Another criticism suggested by
(Skjoett-Larsen (1999).

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2.3 Conceptual Framework

Jabareen (2009) defines “Conceptual framework as a network, or “a plane,” of interlinked concepts
that together provide a comprehensive understanding of a phenomenon or phenomena” The
conceptual framework isa set of broad ideas used to explain the relationship between the
independent variables (factors) and the dependent variables (outcome). Conceptual framework
provides the link between the research title, the objectives, the study methodology and the literature
review Jabareen (2009). Figure 2.1 highlights the relationship between the independent and
dependent variables.

Inventory Shrinkage

 Expired medications
 Stock outs at wholesalers
 Employees theft
Inventory Shrinkage
Inventory Records Accuracy
 Expired medications
 Completeness of information
Stock outs at wholesalers
 Up to date records
Employees theft
Organizational performance
 Stock position/No. of stock
 Cost reduction
Inventory investment
 Customer satisfaction
 Capital invested
 Cash flow
 Value of goods in store

Inventory turnover

 Number of times inventory

is used
 Number of days inventory is
available in store room

Independent variables Dependent variable

Figure 2.1 conceptual framework

RESEARCH METHODOLOGY
The study adopted a case study approach to investigate the current phenomenon in the organization.
According to (Yin, 1994), a case study approach is an appropriate methodology when one wishes to
answer the study’s research question from the perspective of current practice, versus theoretical
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reasoning. Mustaffa. N.H & Potter.A.(2009), wrote that a case study can help the researcher gain
an in depth knowledge and understanding on what is going on within an organization .According to
Lockesh (1984), descriptive research studies are designed to obtain pertinent and precise
information concerning the current status of phenomena and whenever possible to draw valid
general conclusions from the facts discovered. The target population for this study included 2 senior
stores managers, 10 stock controllers, 10 pharmisits, 15 stores and supplies officers, 10 senior stores
assistant, 12 stores assistant and 15 stores clerks making a total of 74 respondents. The research
study used census method for the study due to the limited number of respondent which allowed for
the whole population to be included in the study.
The researcher used open and closed questionnaire as research instrument for this study. The data
collected was analysed using descriptive statistics in form of tables. Quantitative data was analysed
using the statistical package for social sciences (SPSS). Pearson’s correlations coefficients were run
to examine the relationship among the study variables which are set out in the objectives of the
study.

5.2 Summary
The study explored contributions of inventory management to organizational performance. The
reason was to establish whether respondents were aware that inventory management practices
would greatly contribute to the performance of KNH. The study deduced that performance metrics
help organization to ensure that performance objectives agreed upon by the inventory management
team helps achieve organizational performance that is, if the performance metrics are met. Further,
organization considering to achieve inventory objectives must evaluate their performance metrics in
doing so such aspects like clear inventory objectives must be established and aligned to business
strategy and organizations strategic plan, the performance criteria must be agreed upon by the
concerned management team. This is in agreement with the assumption of Franceschini and Varetto
(2009) who indicate that performance metrics assist firms in determining the performance levels in
the process under scrutiny. Another aspect of inventory management that contribute greatly to
performance is inventory planning and scheduling in KNH whereby, of respondents agree that it
greatly contribute to inventory management practices
Further the hospital must consider the effects of long procurement procedures and how it impacts
inventory management. It is therefore necessary for the hospital to consider doing away with
unnecessary procurement procedures which leads to delays in procurement thus impacting
negatively on inventory management.
The study further deduced that inadequately trained staff in the inventory management section and
insufficient funds given for Inventories use contribute greatly to the poor performance of KNH
.The study further found out that improved customer service can be realized with proper inventory
management at KNH . These findings agree with those of A yad(201) who reported that majority of
workers in Taso Mbarara Hospital in Uganda agree that inventory management practices contribute
greatly to the performance of the hospital.

On effects of inventory management practices on inventory shrinkages, the research findings

deduced that losses resulting from medicine expiration leads to increased inventory shrinkage,
losses resulting from medicine damages leads to increased inventory shrinkage, losses resulting
from medicine obsolesce (medicine purchased not meeting intended purposes leads to increased
inventory shrinkage and that losses resulting from medicine theft leads to increased inventory
shrinkage. Healthcare Distribution Management Association report (2009). Inventory shrinkage
results from a number of issues including employee theft, backorder/ drug shortages, stock outs at
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the wholesalers and manufacturing points, product recalls, expired medication, medication spills,
broken pills and obsolescence, Healthcare Distribution Management Association report
(2009).Thus, inventory shrinkage in the long run is uneconomical to the organization and largely
affects performance negatively.
Further the study observed that apart from losses resulting from medicine obsolesce (medicine
purchased not meeting intended purposes leads to increased inventory shrinkage where respondents
from other department strongly agree, all the departments’ rating show that they agree to all the
items measuring the effects of inventory management practices on inventory shrinkage.
The study deduced that accuracy of records has a positive effect on inventory management with, the
majority of the respondents strongly agreeing that up to date records and proper accounts records
have a positive effect on inventory accuracy. Further, majority agree that stock taking and inventory
spot check/surprise check have a positive effect on inventory accuracy. However the percentage of
agreement on the effect of record accuracy on inventory management varied across department.
According to (Brooks et al 2007).Inventory recording is undertaken by organizations to reduce the
errors of stock management. To ensure accurate and reliable stock records there is need to do spot
checks/ surprise checks, stock taking, which is the physical counting and measuring of quantity of
each item in stock and recording the results. It is therefore apparent that effective record
management is essential function of inventory management thus in order to improve inventory
process there is need to ensure that all records kept by the organization are accurate.
In an effort to find out the effect of inventory turnover on organizational performance, the
researcher evaluated whether Inventory turnover have effect on insurance cost ,Inventory turnover
have effect on holding costs , Inventory turnover have effect on service level and Inventory
turnover leads to low cost of operation of KNH.The findings also indicates that majority of the
respondents agree that inventory turnover have an effect on insurance cost, holding costs and
service level of KNH and also that high asset turnover leads to low cost of operation of KNH.
Depending on the ratios of inventory turn, the hospital can have a positive or negative impact on its
performance. The high the turnover the better the performance of the organization and Vis versa

5.3 Conclusions
The role of inventory management has been consistently increasing in the healthcare industry arena
and in pharmacy purchasing and inventory management. It should therefore be understood that
proper inventory management starts with an understanding of purchasing rights products in the right
quantity at the right price, and the right time from the right vendor. Applying these concepts along
with the practices such as the right stock valuation, and ABC results in optimal inventory levels and
ensures customer satisfaction. The hospital pharmacy management teams should adopt inventory
management practices which have positive effects on the performance of the hospital. Using these
key concepts and practices to gain insight will enhance pharmacy inventory record accuracy,
inventory investment and inventory turnover in the pharmacy purchasing departments and will go a
long way to improve optimal inventory management as well as organizational performance.

5.4 Recommendations
The researcher established that inventory management practices had a positive influence on the
organization performance, but for the practices to effectively make a positive impact on
organizational performance, a number of recommendations have been made here;

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The hospital management need to modernize its inventory management system to increase
efficiency. Improving inventory practices calls for a high degree of collaboration and visibility
across all parties as well as utilizing sophisticated technologies. Use of technologies such as bar-
code scanners, point-of-sale/use scanners, and web-based technologies in the pharmacy and stores
should be adopted.

The researcher recommends that the management should constantly expose its staff to training in
order to improve their skills on inventory management. The research recommends that the
management of the KNH invest in training of its staff to enable the employees to understand the
current inventory systems which when used will help the organization reduce on costs associated
with holding inventory.

To curb various challenges in the hospital, the hospital should consider implementation of a vendor
managed inventory to lower incidences of stock-out situations, increase the levels of customer
services and reduce costs due to an increase in inventory turns and a decrease in the levels of safety
stock and greater transparency in supply chain management. VMI also helps in the establishment of
a long trustworthy relationship between the supplier and customer resulting in more loyal customers
and thus secured sales

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Rome-Italy, Vol. 5 No 10 June 2014
Coyle.J.J, Bardi.E.J, & Langley. C .Jr, (2003) The Management of Business Logistics: A Supply
Chain Perspective (7th ed.).Manson South –Western
Child, J., (1972) “Organizational structure, environment, and performance: the role of strategic
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Campling, J. T., & Michelson, G. (1998).” A strategic choice–resource dependence analysis of
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Ketchen Jr., G., & Hult, T.M. (2007). “Bridging organization theory and supply chain management:
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Carr, A. S., & Smeltzer, L. R. (1999). “The relationship of strategic purchasing to supply chain
management”. European Journal of Purchasing & Supply Management, 5(1), 43-51.
Yin, R. K. (2003). Case Study Research: Design and Methods (3rd ed.). Thousands Oaks:
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Monczka, R. M., Handfield, R. B., Giunipero, L. C., Patterson, J. L., & Waters, D. (2010).
“Purchasing & Supply Chain Management”. South-Western Cengage Learning
Blackburn .J. (2010)”Fundamentals of Purchasing and Inventory Control for Certified Pharmacy
Technicians “Texas Tech University, Health Sciences Center, School Of Pharmacy. Available at
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Coleman, B. (2000),” Determining the Correct Service Level Target”. Production and Inventory
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Halldorsson.A. Kotzab.H, Mikkola.H.J & Skjøtt-Larsen.T (2007) “Complementary theories to

supply chain management” Supply Chain Management: An International Journal 12/4 (2007) 284–
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Coase, R.H. (1937). The nature of the firm. Economica, New Series 4(16), 386–405.
Nollet, J., Ponce, S., & Campbell, M. (2005). “About “strategy” and “strategies” in supply
management”. Journal of Purchasing and Supply Management, 11(2), 129-140
Halldorsson, Arni, Herbert Kotzab & Tage Skjott-Larsen (2003). “Inter-organizational theories
behind Supply Chain Management – discussion and applications”, In Seuring, Stefan et al. (eds.),
Strategy and Organization in Supply Chains, Physica Verlag
Skjoett-Larsen Tage (1999) “Supply Chain Management: A new Challenge for Researchers and
Managers in Logistics”. The International Journal of Logistics Management, 10(2), 41-54
Jabareen.Y. (2009) “Building a Conceptual Framework: Philosophy, Definitions, and
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Mustaffa. N.H & Potter.A.(2009),”Healthcare supply chain management in Malaysia: a case
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Ayad .K. Ali. (2011)Inventory Management in Pharmacy Practice; A Review of literature.
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Office of the Auditor General, (2012) Performance Audit Report of the Auditor-General Specialized
Healthcare Delivery at Kenyatta National Hospital

Table 4.1: Effects of Inventory Management on Organization Performance of KNH

Effects of Inventory Management on Strongly Agree Not Sure Disagr Strongly
Organization Performance of KNH Agree ee Disagree
f % f % f % F % f %
Inventory Management practices 40 64.5 21 33.9 1 1.6 0 0.0 0 0.0
contribute greatly to the performance of
KNH
Inventory Management practices helps 25 40.3 33 53.2 4 6.5 0 0.0 0 0.0
in inventory planning and scheduling in
KNH
Long Procurement procedures affect 13 21.0 45 72.6 4 6.5 0 0.0 0 0.0
inventory management and
performance of KNH.
Insufficient funds towards Inventories 25 40.3 31 50.0 6 9.7 0 0.0 0 0.0
contribute greatly to the poor
performance of KNH
Inadequately trained staff in the 10 16.1 40 64.5 11 17.7 1 1.6 0 0.0
inventory management section at KNH
contribute greatly to the poor
performance of KNH
Improved customer service can be 17 27.4 27 43.5 17 27.4 1 1.6 0 0.0
realized with proper inventory
management at KNH
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Table 4.3: Effects of Inventory Management Practices on Inventory Shrinkage

Effects of Inventory Management Strongly Agree Not Sure Disagree Strongly

Practices on Inventory Shrinkage Agree Disagree
f % f % f % F % f %
Do you think that losses resulting 8 12.9 52 83.9 1 1.6 0 0.0 1 1.6
from medicine expiration leads to
increased inventory shrinkage?
Do you think that losses resulting 6 9.7 51 82.3 4 6.5 1 1.6 0 0.0
from medicine damages leads to
increased inventory shrinkage?
Do you think that losses resulting 15 24.2 44 71.0 3 4.8 0 0.0 0 0.0
from medicine obsolesces (medicine
purchased not meeting intended
purposes) leads to increased
inventory shrinkage?
Do you think that losses resulting 17 27.4 42 67.7 2 3.2 1 1.6 0 0.0
from medicine theft leads to
increased inventory shrinkage?

Table 4.5: Challenges Faced in Management of Drugs/Medicine at the Hospital

Challenges f %
Delays in delivery of drugs leading to insufficient inventories 1 1.6
Use of outdated storage facilities 11 17.7
Use of manual inventory management system/Lack of technology 33 53.2
Lack of training 15 24.2
Holding too much/too little inventory 1 1.6
Bureaucratic process in procurement 4 6.5
Loss of drugs through inventory shrinkages 7 11.3
Conflict of interest 2 3.2
Weak management system 6 9.7
Insufficient funds for procurement 1 1.6
Purchase of drugs with a near expiration date 1 1.6
Overstocking/under stocking 1 1.6

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Table 4.8: Effects of Inventory Management Practices on Inventory Records Accuracy

Effects of Inventory Management Strongly Agree Not Sure Disagree Strongly
Practices on Inventory Records Agree Disagree
Accuracy f % f % f % F % f %
Do you think that up to date records 39 62.9 20 32.3 3 4.8 0 0.0 0 0.0
have an effects on inventory records
accuracy?
Do you think that complete accounts 32 51.6 25 40.3 5 8.1 0 0.0 0 0.0
records have an effect on inventory
records accuracy?
Do you think that proper records 9 14.5 39 62.9 14 22.6 0 0.0 0 0.0
management have an effect on
inventory records accuracy?
Do you think that regular updating of 5 8.1 35 56.5 22 35.5 0 0.0 0 0.0
records has an effect on inventory
records accuracy?

Table 4.10: Effects of Inventory Management Practices on Inventory Investment

Effects of Inventory Management Strongly Agree Not Sure Disagree Strongly
Practices on Inventory Investment Agree Disagree
f % f % f % F % f %
Proper procurement/reorder practices 31 50 27 43.6 1 1.6 0 0.0 3 4.8
contribute greatly to inventory
investment of KNH
Effective stores management 24 38.7 34 54.8 4 6.5 0 0.0 0 0.0
contribute greatly to inventory
investment of KNH
Inventory turnover contribute greatly 10 16.1 34 54.9 16 25.8 0 0.0 2 3.2
to inventory investment of KNH
Proper management of inventory 9 14.5 30 48.4 20 32.3 3 4.8 0 0.0
holding costs contribute greatly to
inventory investment of KNH
Table 4.14: Effects of Inventory Management Practices on Inventory Turnover

Effects of Inventory Management Strongly Agree Not Sure Disagree Strongly

Practices on Inventory Turnover Agree Disagree
f % f % f % F % f %
Inventory turnover has an effect on 16 25.8 43 69.4 2 3.2 1 1.6 0 0.0
insurance cost of KNH
Inventory turnover has an effect 11 17.7 43 69.4 7 11.3 1 1.6 0 0.0
on holding costs of KNH
Inventory turnover has an effect on 6 9.7 31 50.0 23 37.1 2 3.2 0 0.0
service level of KNH
Inventory turnover leads to low cost 8 12.9 33 53.3 16 25.8 3 4.8 2 3.2
of operation of KNH

714