ABSTRACT

Inventory management and control is pivotal in effective organization. It is also

vital in control of materials and goods that have to be held for latter use in the

case of production or exchange activities in the case of services. The system of

inventory control is to measure and monitor the stocks on which is a constant and

growing entrepreneur to find formulas to reduce inventories without compromising

the production process and without increasing costs factor. Applying a system of

inventory control leads to an improvement in production, tighter control of assets

really important, flexible manufacturing environments, greater responsibility to lower

levels with the consequent staff demand with higher education. Invariably, a company

must neither keep excess inventories to avoid an unnecessary tying down offunds as

well as loss in fund due to pilferage spoilage and obsolescence nor maintain too low

inventories so as to meetproduction and sales demand as at when needed. Therefore,

the mere fact that ineffective inventory management and control affect virtually the

organizational objectives necessitates this type of research work. The main issue is to

evaluate the impact of inventory management and operating cost on financial

performance of manufacturing firms. The study employed ex-post facto research

design. The inferential statistics were used for the data analysis and the hypotheses

were tested using Pearson Correlation Coefficient and the simple regression model.

The statistical package for social sciences (SPSS) software version 20.0 was

employed in the analysis of data and test of hypotheses. The results reveal that

inventory management and control has influence on firm performance. It also

showed that operating cost as factor has a significant impact on inventory

management and control. It hereby recommended that the sales and marketing

department of the company should pay closer attention to the growth pattern of

inventory usage and operating costs and incorporate it into its sales forecasting

technique.