AN ASSESMENT OF THE PRACTICE OF INVENTORY

MANAGEMENT SYSTEM IN AMAHARA NATIONAL

REGIONAL STATE: The CASE OF DESSIE CITY
CONSTRUCTION AND HOUSING
DEVELOPMENT OFFICE

A thesis submitted to the Department of management, College of

Business and Economics, Wollo University, in partial
Fulfillment of the Requirement for the Degree of
Master of Business Administration

BY

Fikremariam Teferi

Advisor: Prof. Sandeep Kumar (PhD.)

CO- Advisor: Yemre Ayalew (MBA.)

June, 2015

Dessie , Ethiopia
 Wollo University

Graduate Studies

This is to certify that the thesis prepared by Fikremariam Teferi entitled “A case study of Dessie
city construction and housing development office in Amahara national regional state” and
submitted in fulfillment of the requirements for the Degree of Master of Arts in MBA (Master of
Business Administration) complies with the regulations of the University and meets the accepted
standards with respect to originality and quality.

Signed by Examining Committee:

Internal Examiner ___________________ Signature __________Date______________

External Examiner ___________________ Signature _________ Date______________

Advisor ___________________ Signature __________Date_______________

Co-Advisor ___________________ Signature __________ Date ______________

Chairs of Department or Graduate program Coordinator

 DECLARATION
I, the undersigned, graduate student hereby declare that, this thesis is my original work, has not
been presented for a MBA degree in any other university and that all sources of material used for
the thesis have been duly acknowledged.

Name: Fikremariam Teferi Tibebu

Signature _____________

Advisor: Prof. Sandeep Kumar (PhD.)

Co –Advisor: Yimer Ayalew (MBA.)

Place: Graduate Program

Wollo University

Dessie

Date of Submission: 04/06/2015

 Letter of Certification
This is to certify that Fikremariam Teferi has carried out his research work on the topic
of“AnAssesment of the Practice of Inventory Management System in Amahara National
Regional State: The Case of Dessie City Construction and Housing Development Office under
my supervision. This work is original in its nature and it is suitable for Submission in partial
fulfillment of the requirement for the award of Masters Degree in Business Administration

(MBA).

________________________ ________________________
Prof. Sandeep Kumar (PhD.) Yiemre Ayalew (MBA.)

(Advisor) (Co-Advisor)
 ACKNOWLEDGEMENTS
First and for most I would like to express my deepest gratitude to my advisors Prof. Sandeep
Kumar and Ato Yimer Ayalew for their invaluable and constructive comments, suggestions and
feedback throughout the paper. Without their constructive comments and suggestions, this study
would not have been successful. I am very much indebted to the kindness, patience, and warm-
welcome they have shown me in the course of time.

I would like to take this opportunity to thank my colleagues and Ato Alayu Yirga without their
encouragement and support this research could not have been made possible. I would also like to

extend my thanks to the Dessie City Construction and Housing Development Office employees
who participated in this study.

Lastly, I own a special debt to my brothers, sisters, and all best friends for their unconditional
love, moral, financial and material support all through the years; if it were not their unlimited
support and encouragement, I wouldn’t have succeeded.

i
 Table of Contents

Contents Page
Acknowledgment---------------------------------------------------------------------------------i

Table of Contents------------------------------------------------------------------------------- ii
List of Figure--------------------------------------------------------------------------------------v

List of Tables ------------------------------------------------------------------------------------vi

List of Acronyms------------------------------------------------------------------------------------------------vii

Abstract ------------------------------------------------------------------------------------------viii

CHAPTER ONE...........................................................................................................1
1. INTRODUCTION.....................................................................................................1

1.1 Background of the study....................................................................................1

1.2 Statement of the Problem...................................................................................4

1.3 Objective of the Study........................................................................................7

1.4 Significance of the Study....................................................................................7

1.5 Scope or Delimitation of the study....................................................................8

1.6 Limitation of the study.......................................................................................8

1.7 Organization of the study...................................................................................8

CHAPTER TWO..........................................................................................................9
2. REVIEW OF RELATED LITERATURE..............................................................9

2.1 Definitions of Inventory and Inventory Management.....................................9

2.2 Objectives of Inventory Management...............................................................12

2.3 Functions of inventory........................................................................................14

2.4. Benefits and Cost of Holding Inventories........................................................15

ii
 2.5 Inventory problems and Material Losses.........................................................16

2.6 Tasks in Inventory Management system..........................................................17

2.7 Inventory Control...............................................................................................18

2.8 Martial Management (Control) Responsibility................................................20

2.9 Deciding an Approach in Inventory Strategy..................................................23

2.10 Inventory Control Models................................................................................23

2.11 Types of Inventory Control System.................................................................24

2.11.1The cyclical or fixed order interval system...................................................25
2.11.2 Just- in time Inventory Control System.......................................................26
2.11.3 Order point or fixed order quantity Inventory Control System...................27
2.11.4 Material Requirement Planning (MRP) Inventory Control System............28

2.12 Components of Inventory Control System.....................................................28

2.13 Control Device in Inventory Management.....................................................29

2.14Method for Determining Material Requirement............................................30

2.15 Inventory Record Accuracy.............................................................................30

2.16 Inventory /Stock Turn Over............................................................................31

CHAPTER THREE......................................................................................................33
3. RESEARCH METHODOLOGY............................................................................33

3.1 Research Design.................................................................................................33

3.2 Source of Data.....................................................................................................33

3.3 Population, Sample technique and Size............................................................33

3.4. Data Collection Instruments.............................................................................33

3.4.1 Questionnaires................................................................................................34
3.4.2 Interview........................................................................................................34
3.4.3 Document Analysis........................................................................................34

3.5 Methods of Data Analysis...................................................................................34

CHAPTER FOUR.........................................................................................................36
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4. PRESENTATION, ANALYSIS AND DISCUSSION OF DATA.........................36

4.1 Demographic profile of respondents.................................................................36

4.2 Data analysis and discussion from the questionnaire......................................37

4.3 Results of analysis from the interview.............................................................47

4. 4 Results of Document analysis............................................................................49

CHAPTER FIVE..........................................................................................................50
5. SUMMARY, CONCLUSION AND RECOMMENDATION..............................50

5.1 Summary..............................................................................................................50

5.2 Conclusion...........................................................................................................52

5.3. Recommendation..............................................................................................53

References
Appendix –A Questionnair
Appendix –B Interview questions
Appendix –C Important Documents used in inventory management system of the branch
office

iv
 List of Figures

Figure Page

Figure 2. 1. Typical Materials Management in Construction-----------------------18

v
 List of Tables

Table Page

Table 4.1: Demographic profile of respondents…………………………..36

Table4.2: Inventory policies and procedures……………………………..37

Table4.3: Inventory control systems……………………………………...38

Table4.4: Inventory handling systems……………………………………40

Table4.5: Perpetual inventory systems…………………………………...42

Table4.6: Inventories control techniques………………………………....43

Table4.7: Stock evaluation and performance measurement………………45

Table4.8: Inventory management constraints …………………………….46

vi
 List of Abbreviations/Acronyms

EOQ: Economic order quantity

IGC: International Growth Centre

IM Inventory management

JER: Just enough resources

JIC: Just-in-case

JIT: Just-in-time

MRP: Material Requirement Planning

U.S.A: United State of Amarica

vii
 ABSTRACT
This study attempted to assess the inventory management practice of Dessie Housing and
Development Agency branch office. The type of research design was descriptive survey. The
study employed both quantitative and qualitative methods (mixed method). The total number of
the target population was 54 among which 18 participants were selected using purposive
sampling. Two employees of the office were also purposively selected for an interview (Branch
manager and logistic manager). The data were collected through questionnaire, interview and
document analysis. The quantitative data were collected through self rated questionnaire where
the items are rated using Likert Scale ranging from 1= strongly disagree to 5=strongly agree.
The items are 49 in number, which are categorized into seven groups. Seven generalized
questions were designed for the interview. Necessary documents that are essential to carry out
inventory management were examined to perform the document analysis. The quantitative data
was analyzed using mean scores and standard deviations by categorizing the mean scores into
intervals. The qualitative data collected through interview and document analysis were analyzed
in word and paraphrased. The major findings of the study are : concerning inventory controlling
mechanisms materials are released from storerooms only on the basis of requisitions which are
approved by a responsible official of the department, strategies being followed by the branch office in
overcoming the problems of inventory are Standard price method, Weighted average cost method and
First in first out method. Among the C onstrains the main ones are a storage problem in its stock and
significant losses of construction materials. To generate inventory record reports the organization
conducts regular auditing inventory records and perpetual inventory records are updated
promptly. Finally, further research is recommended to investigate more the practice of inventory
management controlling system in the study area..

Key words: Inventory, Inventory Management,

viii
 CHAPTER ONE

1. INTRODUCTION

1.1 Background of the study

Inventories are unconsumed or unsold tangible goods purchased or manufactured according to
the International Accounting Standard two (IAS2). In its broad sense inventory includes stock
finished goods, work in process and raw materials and components. Inventory management (IM)
had defined in different ways by different authors. Banerjee (1991) IM as a systematic control
and regulation of purchase, storage and usage of materials in such a way so as to maintain an
even flow of production and at the same time avoiding excessive investment in inventories. IM is
the active control program, which allows the management of manufacturing, sales, purchase, and
payment. IM implies the establishment of strategic objectives and positioning for inventories
(Sprague & Wacker, 1996). One can define IM as the management of different inventory
components (raw materials, work-in-process and finished goods) by properly managing the
crucial determinants of inventory levels.
Materials and IM plays a definite role throughout construction process. It is because
construction materials contributed 50-60% of the total project costs. Materials and inventory
management is important especially in large and complex construction projects where there is
significant amount of money invested in every single process. Materials and inventory
management on-site are made complicated as increasing in project size and complexity (Song,
2005 and Nasir, 2008).
A study conducted on the area of resource management (Martin, Schelb, Snyder and Sparling,
1992) compared the practices of U.S.A and Japanese companies. The Japanese use the sub-
concept of just enough resources (JER), commonly referred to as just-in-time (JIT or Kanban)
for inventory. The idea is to squeeze out three kinds of waste including "muda" which represents
waste caused by idle resources and unnecessary motions (e.g., looking for misplaced tools),
"mura" which is waste caused by the irregular or inconsistent use of a resource, and "muri",
which is waste caused by placing excessive demands on resources.

1
 In the JER approach, all resources minimized, including inventory, workers, equipment, job
classifications, and product parts and subassemblies (Martin et al, 1992).

Meanwhile, U.S. managers use an entirely different concept that some authors have referred to as
just-in-case (JIC). In the JIC approach to resource management, large amounts of slack resources
kept on hand to guard against contingencies such as late deliveries, poor quality, production
bottlenecks and fluctuations in demand. Of course, these concepts have some very important
implications for the resources themselves. JER and JIT require highly skilled and highly
dedicated cross trained workers, as well as high quality raw materials and well maintained
equipment. In the JIC environment, high skill levels and high quality materials and equipment
are not as critical. For example, in the area of inventory and production lot sizes, the idea,
according to the applicable sub-concept of optimization, is to find the economic order quantity or
batch size (EOQ) that will minimize the conflicting costs involved in the decision, (e.g., ordering
and carrying costs or setup and carrying costs) (Martin et al, 1992).

Industrial surveys conducted in developing countries have shown that proper IM has a significant
role to play in promoting industrial development (Goonatilake, 1990). Economists have long
puzzled over astounding differences in productivity across both firms and countries. For
example, growth domestic product per capita in the US is about ten times that of India. A natural
explanation for these productivity differences lies in variations in management practices. In a
large project measuring management practices across firms and countries, finding large gaps in
management practices between developing countries and the US and Europe. A project funded
by International Growth Centre (IGC) to evaluate the impact on firm performance undertook a
management experiment in India with 20 textile firms of about 300 employees. The experiment
collected detailed performance metrics on aspects such as output, inventory and quality at the
firms to understand the productivity benefits of improved management. The evidence suggests
that Indian factories are typically disorganized, with inventories and spare parts chaotically
organized, inadequate performance tracking, and extremely poor quality control. The evidence
on management practices presented above suggests similar issues will arise in other developing
countries. In particular, the suspicion is that Indian firms are likely to be better managed than
most African firms (Bloom and Reenen, 2009).

2
Inventory management is concerned with keeping enough products on hand to avoid running out
while, at the same time maintaining a small enough to inventory balance to allow for a
reasonable return on investment. Proper inventory management is important to the financial
health of the organization. The overall efficiency of IM is extremely important for two reasons.
First it represents a significant segment of total assets for most business firm. Second they are

least liquid of current asset and thus errors in inventory management are not quickly remedied.
As a result, a business must control its material from the time they are ordered until the time they
are shipped to customers. No cost accounting system can effective without proper and efficient
control of inventory. This is also because, quite often inventory is the largest single element of
cost and as such an efficient system of inventory control leads to a significant economy in the
total cost (Arora, 2003).

When a firm holds goods for future sale, it exposes itself to a number of risks and cost. The
effective management of inventory involves a tradeoff between having too little and too much
inventory that is optimum level of inventory. In achieving this trade off, the financial manager
should realize that risk and costs may be closely related. Some cost such as purchase price of
goods, involve little risk and may be calculated in advance with some accuracy. Other costs, such
as damage to goods in warehouse, are incurred only when a risk materials (Ibid, 2003).

When firm’s holds goods, they expose themselves to the possibility that the goods will not be
sellable this is due to current market factors deriving from change in styles, tastes, or other
factors. When the product is no longer wanted, the firm must sale it at a fraction of its value or
destroys it. The spoilage of goods also occur when a product is not sellable because of
deterioration during storage such as foods that rot plant that die ,garments that are attacked by
month, candies that discolor or chemical that decompose. (John & Hampton, 1989)

Construction industry makes significant contributions to the socio-economic development

process of a country. Its importance emanates largely from the direct and indirect impact it has

on all economic activities. It contributes to the national output and stimulates the growth of other
sectors through a complex system of linkages.

3
It is noted that about one-tenth of the global economy is dedicated to constructing and operating
homes and offices (UNEP, 1996).

Construction work in developing countries overwhelmingly involves simple physical labor. This
is the case in Ethiopia too. In 2005, only 7.19 percent of the employees are skilled. In terms of
female -male, lab our ratio, about 85 percent of the work force in the construction industry were
males, while the balance were female employees in 1999. Since Ethiopia is a country in
transition from public sector dominance to private sector, the share of public sector in the
economy has been significant in the construction industry, though gradually declining (Ethiopian
Economics Association Report, 2007).
To overcome the above problem effectively a firm should use a system approach to inventory
management. A system approach considers in a single model all the factors that affect the
inventory. As the goal of effective inventory management is to minimize the total cost – direct
and indirect that associated is on item considered important. If a firm can run out of an item
without losing a sale or disappointing a customer, it may waste money in keeping a close watch
on the item .Therefore, a careful consideration in inventory management should be given to the
following items. (1) High cost items, these items must be closely managed to prevent theft,
breakage or other loss, because the loss of single item can be costly. (2) High volume of sales, it
should be managed carefully (management of Amahara National Regional State Construction
and Housing Development Agency Dessie City Branch Office).

1.2 Statement of the Problem

A major problem, which encounters most business today, is determination of optimum stock
level, that is, a tradeoff between minimum and maximum level. Being out of stock forces
customer to run to competitors or resolute in losses of sales but, this problem is not seen in the
company. Excessive level of inventories result in large inventory carrying costs including the
cost of capital tied up in inventory, warehouse fee insurance etc. In addition to large inventory,
carrying cost in excessive investment in inventories there is also a high degree of obsolescence.

These conditions there by, adversely affect the profit and operation of the organization. This is a
very important issues to pay attention because exclusive investment in inventories result in an
illiquid corporations one that must continually borrow in order to have enough cash on hand
because of cost of capital tied up in inventories (Bhall, 2003).

4
In construction project, the tracking and locating of materials at the construction jobsites are the
most important problems related to construction materials and inventory management (Song,
2005; Navon & Berkovich, 2006; Nasir, 2008). Materials’ tracking and locating is important to
ensure that materials are available at the right time, in the right place (Song, 2005), and at the
quantity required. Issues regarding the tracking and locating of materials on-site have received a
great concern in construction industry as materials always come in bulk without proper
identification. The improper or inadequate management during the materials receiving process,
together with the traditional materials tracking has made it difficult to track materials location in
construction jobsite when the time they are needed.

Inventory management in construction project could be affected by several factors such as;
inadequate storage space (Sardroud, 2012), over ordering and double handling (Donyavi &
Flanagan, 2009); and incomplete and lack of up-to-date information regarding on-site stock
(Navon & Berkovich, 2006). The lack and incomplete of up-to-date information regarding on-
site stock is caused by the poor tracking and locating of materials in construction sites. Thus,
there is a need for a proper IM in order for the materials to be tracked and located easily; and
without employing additional costs.

A study conducted in India on Performance Analysis of IM System in Construction industries

(Sindhu, Nirmalkumar and Krishnamoorthy, 2014), few main inventory management risks
identified, which summarized below:

• Lack of storage space

• Problems with de-centralized processing
• Inadequate training practices
• Improper Financial support in ordering of materials
• Difficulty in delivery of long lead materials
According to the Ethiopian Economics Association report (2007) the country’s huge
infrastructure expansion and urban centers’ remarkable building construction activities provided
an opportunity for taking up the issue for further analysis.
5
The survey identified the performance of the construction industry was constrained by problems
and challenges the industry has been facing, namely; the difficulties in accessing land, sub-
standard quality of construction raw materials and hence construction output, limited access to
finance, widespread corruption, huge cost and time overrun, lack of periodically amended rules
and regulations of the industry, absence of Construction Industry Policy and lack of effective
rules and regulatory mechanisms that help ensure compliance of various actors in the
construction.
In any Construction as well as manufacturing firms, that hold inventories for smooth running of
operation losses of material can arise. Such losses or wastage can be normal or abnormal.
(BHALLA, 2000:357). When we came to Amahara National Regional State Construction and
Housing Development Agency Dessie City Branch Office both normal and abnormal losses can
occur but the frequency is different. Normal losses are unavoidable and which is necessary to be
incurred but may be controlled to a limited extent. Loss due to loading and unloading, and loss
due to breaking the bulk belongs to normal losses categories which occur in Amahara National
Regional State Construction and Housing Development Agency Dessie Branch Office. When we
came to abnormal losses, which showed in Amahara National Regional State Construction and
Housing Development Agency Dessie Branch Office breaking and improper storage resulting
in deteriorations are commonly shown. From these one can understood that, these losses may
arise due to inefficiency in operations, bad luck, mischief etc.
Though recently conducted research works were not available regarding the construction
industry constraints of Amhara Regional State in general and in Dessie branch office in
particular the problems identified by the survey conducted in Addis Ababa can be taken as
problems of the region and the branch office. Since the researcher is an employee of Dessie
Housing construction branch office, he has observed some of the problems identified by the
survey. Particularly, problems related to the purchasing process, quality and utilization of
construction materials are arguable. These were some of the reasons that initiated the researcher
to conduct this research on the practice of inventory management of the branch office.
In order to investigate the overall inventory management system and activities the following
basic questions were set for the study.

6
  What inventory controlling mechanisms does the agency use?
 What are the strategies being followed by the agency in overcoming the problems of
inventory?
 What constrains or a bottleneck does inventory management system face in the day to
day organizational activities?
 What are the systems the agency uses to record, store retrieve and generate reports of
inventory?

1.3 Objective of the Study

1.3.1 General Objective
The overall objective of the study is to assess the practice of inventory management system of
Amahara National Regional State Construction and Housing Development Agency Dessie City
Branch Office.
1.3.2 Specific objectives
In order to achieve the above general objective, the following specific objectives were set.

 To identify inventory controlling mechanisms the agency uses.

 To explore the strategies being followed by the agency in overcoming the problems of
inventory.
 To find out the constraints of the organization faces in inventory management of its day
to day organizational activities.
 Identify the systems used by the organization to record, store, retrieve and generate
reports of inventory.

1.4 Significance of the Study

The finding of this study was useful in improving the inventory management system of Dessie
Construction and Housing Development Agency Office. The employees of the company who are
working in stores, transportation, administration, and at project sites are beneficiaries of this
study. Furthermore, the study may serve as starting point to conduct research in a different
setting and environment.

1.5 Scope or Delimitation of the study

This study was geographically delimited in Dessie city area and investigated the inventory
management system of Dessie Construction and Housing Development Agency Office. In the
data collection process the study only targeted employees of the company. In addition, the study

7
particularly investigated only the material management aspect of the construction company.

1.6 Limitation of the study

The researcher tries to accomplish the objective of the study successfully. But time concern and
source of fund will be the main limitation that may hinder the successful accomplishment of the
paper. In addition to the above two factors data limitation and sample limitation are the other
sides to the limitation part of the study. Furthermore, during filling the questionnaire, there might
be hesitations from the respondents.

1.7 Organization of the study

The paper organized under five chapters. The first chapter contained introduction part of the
study. It included background of the study, statement of the problem, research objectives,
significance of the study, scope or delimitation of study, limitation of the study, and organization
of the research. The second chapter dealt with the review of literature, which provided the
theoretical and conceptual framework of the topic under study. Chapter three dealt with the
methodology of the study including data analysis and presentation of the study. Chapter four
dealt with data analysis and interpretations. The last chapter, chapter five, presented the summary
of the major findings, conclusion drawn and recommendations of the study.

8
 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

2.1 Definitions of Inventory and Inventory Management

Inventory management is defined as a science based art of ensuring that just enough inventory
stock is held by an organization to meet demand (Coleman, 2000; Jay & Barry, 2006).).
Inventory is the availability of any stock or resources used in an organization. An inventory
system is the set of policies that controls and monitors inventory level and determine what level
should be maintained, how large orders should be made and when stock should be replenished.
Inventory control is the supervision of the storage, supply and accessibility of items to ensure an
adequate supply without excessive oversupply (Miller, 2010).

Inventory control means availability of materials whenever and wherever required by stocking
adequate number and kind of stocks. The sum total of those related activities essential for the
procurement, storage, sales, disposal or use of material can be referred to as inventory
management. Inventory managers have to stock-up when required and utilize available storage
space resourcefully, so that available storage space is not exceeded. Maintaining accountability
of inventory assets is there responsibility. They have to meet the set budget and decide upon
what to order, how to order and when to order so that stock is available on time and at the
optimum cost (Benedict and Margeridis, 1999). Hence, Inventory management involves planning
organizing and controlling the flow of materials from their initial purchase unit through internal
operations to the service point through distribution (Smaros, et al., 2003).

Inventories constitute one of the largest and most tangible investments of any retailer or
manufacturing organization. Intelligent inventory management strategies can not only help boost
profit but they can mean the difference between a business thriving or barely surviving. Holding
inventories at the lowest possible cost and giving the objectives to ensure uninterrupted supplies
for on-going operations is the aim of inventory management. When making decisions on
inventory, management has to find a compromise between the different cost component, such as
the cost of supplying inventory, inventory holding cost and cost resulting from sufficient
inventories (Peterson & Silver, 1998; Zipkin, 2000). According to Miller (2010), inventory
control is the activity which organizes the availability of item to the customers.

9
It coordinates the purchasing, manufacturing and distribution functions to meet the marketing
needs.
This role include the supply of current building material items, new buildings, consumables,
obsolescent items and all other supplies. Inventory enables a company to support the customer’s
services, logistics or building activities in situation where purchasing or manufacturing of the
items is not able to satisfy the demand. Inventory plays a 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 building customers and quality 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 to increase it (Tersine, 1994; Potilen &
Goldsby, 2003). Kotler (2002), posits that inventory management refers to all the activities
involved in developing and managing the inventory levels of raw materials, semi-finished
materials (working-progress) and finished good so that adequate supplies are available and the
costs of over or under stocks are low.

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. The scope of inventory management
also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset
management, inventory forecasting, inventory valuation, inventory visibility, future inventory
price forecasting, physical inventory, available physical space for inventory, quality
management, replenishment, returns and defective goods and demand forecasting. Balancing
these competing requirements leads to optimal inventory levels, which is an on-going process as
the business needs shift and react to the wider environment (Ghosh & Kumar, 2003).

Rosenblatt (1977) says: “The cost of maintaining inventory is included in the final price paid by
the customer. Good in inventory represent a cost to their owner; the manufacturer has the
expense of materials and lab our. The wholesaler also has funds tied up therefore; the basic goal
of the manufacturers is to maintain a level of inventory that will provide optimum stock at lowest
cost. Morris (1995) stressed that inventory management in its broadest perspective is to keep the
most economical amount of one kind of asset in order to facilitate an increase in the total value
of all assets of the organization human and material resources.
10
Ogbo (2011) posits that the major objective of inventory management and control is to inform
managers how much of a good to re-order, when to reorder the good, how frequently orders
should be placed and what the appropriate safety stock, is for minimizing stock-outs. Thus, the
overall goal on inventory is to have what is needed, and to minimize the number of times one is
out of stock.

Ghosh & Kumar (2003) defined inventory as a stock of goods that is maintained by a business in
anticipation of some future demand. This definition was also supported by Brag (2005) who
stressed that inventory management has an impact on all business functions, particularly
operations, marketing, accounting, and finance. He established that there are three motives for
holding inventories, which are transaction, precautionary and speculative motives. The
transaction motive occurs when there is a need to hold stock to meet production and sales
requirements. A firm might also decide to hold additional amount of stock to cover the
possibility that it may have under estimated its future production and sales requirements. This
represents a precautionary motive, which applies only when future demand is uncertain. The
speculative motive for holding inventory might entice a firm to purchase a larger quantity of
materials than normal in anticipation of making abnormal profits. Advance purchase of raw
materials in inflationary times is one form of speculative.

Bailey & Farmer (1982) define inventory as the goods purchased from sources out of the
organization that are used to produce finished products. Stukhart (1995) defines inventory as the
items that are used to produce a product and which include raw materials, parts, supplies and
equipment items. Stukhart (1995) defines IM as the activities involved to plan, control, purchase,
expedite, transport, store, and issue in order to achieve an efficient flow of materials and that the
required materials are bought in the required quantities, at the required time, with the required
quality and at an acceptable price. Plemmons & Bell (1995) define IM as the plan and control of
all activities to ensure the correct quality and quantity of materials and equipment to be installed
as specified in timely manner, obtained at reasonable cost and are available when needed.
Dobler & Burt (1996) state that IM is designed to improve the activities related to the flow of
materials. They add that inventory management should coordinate purchasing, inventory control,
receiving, warehousing, materials handling, planning, and transportation. As it is described
above, different researchers provide different definitions for inventory management. In the
context of the construction industry inventory management is concerned with the planning,
11
identification, procuring, storage, materials handling, receiving, transportation and distribution of
materials.

2.2 Objectives of Inventory Management

The purpose of inventory management is to assure that the right materials are in the right place,
in the right quantities and the right quality when needed. The responsibility of one department,
i.e. material management department or logistics for the flow of materials from the time the
materials are ordered, received, and stored until they are used is the basis of IMt. In addition, the
objective of good inventory management is to maintain a steady supply to operating units while
minimizing the costs of holding inventory and managing procurement.

The first consideration is the overall objective of the work of stock control. Like all other
activities in the company, IM has to contribute to the welfare of the whole organization. The
logistic operation must aim to 'contribute to profit by servicing the marketing and financial needs
of the company. The aim is not to 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 at a minimum cost. 'The aim of long term profitability has to be translated into
operational and financial targets which can be applied to daily operations. The purpose of the
inventory control function in supporting business activities is to optimize three targets: Customer
service, Inventory costs .Operating costs Tony Wild (1997:6).

According to Tony Wild targets, the first target, customer service, can be considered in several
ways, depending on the type of martial demand. In a general stores environment the service will
normally be taken as 'availability ex stock', whereas in a supply to martial specification, the
service expected would be delivery on time against customer requested date. The second target,
inventory costs, requires a minimum of cash tied up in stock. This target has to be considered
carefully, since there is often the feeling that having any stock in stores for a few months is bad
practice. In reality, minimizing the stock usually means attending to the major costs; very low
value items are not considered a significant problem. Low inventory can also be considered in
terms of space or other critical resources. Where the item is voluminous or the stores space
restricted, the size of the items will also be a major consideration. The third target, avoiding
operating costs, has become more of an issue as focus has been placed on stock management.
The prime operating costs are the stores operations, stock control, purchasing and associated
services. The development of logistics, linking distribution costs with inventory, has added a new
set of transportation costs to the analysis.

12
Optimizing the balance between these three objectives is the focus of stock control.

Generally speaking the objective of IM is to maintain investment in inventories at optimum level

to avoid risk of both under and over stocking Arora (2003:41) further states the objective of IM
as follows:

1. No under stocking: - Under stoking leads inevitable to materials running out of stock at
the same time or the other. Shortage of materials may arise at a time when they are
urgently needed. The delay or stoppage in production due to non availability of materials
is very costly and result in loss of profit.
2. No over stocking: - Inventory in materials must be kept as low as possible considering
the production requirement and financial resources of the business. Over stocking locks up
capital and causes high storage cost there by results adverse affect on profit.
3. Economy in purchasing: - By purchasing materials at the most favorable prices the
purchases is able to make available contribution to reduction in cost.
4. Minimum wastage: - In order to minimize loss of materials proper storage condition
should be provided to different types of inventory. Loss of materials occurs due to
deteriorations, obsolescence, theft, broken etc. all round efforts should be made to keep
these losses at the minimum.
5. Proper quality: - While purchasing materials, due consideration should be given to the quality.
It is no use purchasing material of inferior quality or very superior quality or very superior
quality. In business and construction activities, generally quality is first defined in terms of
relationship to need or function. That is the suitability of the items in satisfying the particular
need at hand.

2.3 Functions of inventory

Every construction needs inventory for smooth running its activates. It serves as a link between
building and martial distribution process.

Some function of agency, such as purchase of raw materials, physical dependency. Maintenance
of inventories allows the agency to decouple these functions so that each can be planned,
customers with selection choices and decouples the purchasing function from materials function.
Organization invests a substantial portion of its capital in inventory and stocks inventory as
optimal level to perform its operation on continuous basis. Economists have establish three
motives for holding inventories, however, depending on the nature of business and objective they
try to achieve there is also a contractual reason for holding inventories. Bhalla (2000:353) wrote
about motives of holding inventory the following.
 1. Transaction motives for holding inventory: - Is to satisfy the expected level of activities
of the firm.
2. Precautionary motives for holding inventory:-Is to provide a cushion in case the actual
level of activity is different than anticipated. If demand exceed expectations (either in
total or for a particular ingredient sales will probably either be lost or if made less
profitable.
3. The speculative motive for holding inventory: - Might entice a firm to purchase a large
quantity of materials than normal anticipation of making abnormal profits. Advance purchase of
raw materials in inflationary times is one form of speculative behavior. A second reason for
speculative inventory purchases may involve an anticipated change in a product. Occasionally
there may be necessary to carry a certain level of inventory to meet contractual agreement.

2.4. Benefits and Cost of Holding Inventories

The advantages of increased inventories they are several. The agency can affect economies of
building and purchasing martial and can fill order more quickly. In short the organization is more
flexible. The obvious disadvantages are the total cost of holding inventory, including storage and
handling costs, and the required return on capital tied up in inventory. In additional disadvantage
is the danger of broken and obsolescence. Because of the benefits, however, the logistic manage
and contraction manager are biased toward relatively large inventories moreover, the purchasing
mange often can achieve quantity discount with large orders, and there may be a bias here as
well. It falls on logistic manager to dampen the temptation for large inventories. This is done by
forcing consideration of the cost of funds necessary to carry inventories as well as perhaps the
handling and storage cost. Organization must maintain inventory at optimum level, after taking
in to consideration pressure for low and high inventory. Pressures for both low and high
inventories may arise, to reduce costs and risks associated with both high and low inventory
level. Krajewski & Pitzman (2000) argued that an inventory manager’s job is to balance the
conflicting costs and pressures those argues for low and high inventories and determines
appropriate inventory levels. The primary reason for keeping inventories low is that inventory
represents a temporary monetary investment in goods on which a firm must pay (rather than
receive) cost is the variable cost of keeping items on hand, including interest, storage and
handing, taxes, insurances and shrinkage. In achieving a tradeoff between low and high
inventory level organization makes decision regarding when to order and how much to order. To
avoid stock out costs a firm must maintain inventory at optimum level.

13
Bhalla (2000) described stock out costs incurred when ever a business is unable to fill orders
because the demand for an item is greater than the amount currently available in the inventory.
Inventory shortage may result in one or more of the following:
 high costs commit and with ‘crash’ procurement,
 less efficient and economic building schedules,
 and customer dissatisfaction and loss of quality.
When a stock out in row materials occurs, for example, stock cost include the expense of placing
special orders (back ordering). The organization holds inventory of high level as depend on the
following factors as the Pitzman (2000:596) argues.
1. Customer service: - Creating inventory can speed delivery and improve to time delivery.
Inventory reduces the potential for stock outs, and back orders, which are key concern of
whole sellers and retailers. A back order is a customer ode that cannot be filled when
promised or demanded but filled late.
2. Ordering cost: - Each time organization places a new order, it incurs an ordering cost or the
cost of preparing a purchase orders for supplies. This ordering cost force put pressure for
high inventories.
3. Transportation cost: - Sometimes, out bound transportation cost can be reduced by increasing
inventory levels. Having inventory on hand allows more carload shipments and minimizes
the need to expedite shipments by more expensive mode of transportation. Bhar (1991)
summarized the solution to the holding inventory to be hold by the agency. He advised the
quantity of inventory to be decided after taking the availability of finance, the quantity
discount allowed, the cost of storage and storage space available, order placing and receiving
costs, risk of loss due to falling prices, deteriorations. Obsolescence, theft, broken materials
etc, are taken into consideration.

2.5 Inventory problems and Material Losses

As Bhalla (2000) stated, depending on the characteristics of products involved, there are two
inventory problems in merchandizing as well as manufacturing companies.
1. Static inventory problem: in these inventory problems, the goods have one period life;
there can be no carryover of goods from one period to the next. Inventory situation where
decisions involve the number of news papers to print, the number of greeting cards to
purchase, or number of calendars to produce are static inventory problems.

14
 2. Dynamic inventory problem: in dynamic inventory problems, the goods have value
beyond the initial period; they do not loss their value completely over time. Dynamic
inventory problem results a martial losses that affect a firms operation negatively.
Losses of materials may arise during handling storage or during process of manufacture such
losses or wastage is classified in to two categories: normal and abnormal losses. Normal losses
are losses which is necessary to be incurred and thus is on avoidable but, may be controlled to a
limited extent. Loss due to breaking the bulk, when materials are purchased in large quantity and
issued to production in small lots, some differences likely to normal loss categories, while
abnormal losses are theft or pilferage, breakage, fire accident, improper storage resulting in
deterioration of materials etc.

2.6 Tasks in Inventory Management system

The role that a materials manager plays in an organization is strictly economical since the
materials manager should keep the total cost of materials as low as possible. The person in
charge of handling materials should keep in mind the goals of the agency and insure that the
company is not paying extra money for materials. The goal of every constriction agency is to
make a profit. This is the basis for organization survival, costs should not exceed income, but

keeping in mind customer's expectations. The typical tasks associated with an inventory
management system are (Tersine & Campbell (1977), Ammer (1980), Stukhart (1995)).

• Procurement and purchasing

• Expediting
• Materials planning
• Materials handling
• Distribution
• Cost control
• Inventory management / Receiving/ Warehousing
• Transportation

15
 Fig 2. 1. Typical Materials Management in Construction (Thabet, 2001).

Figure (2.1) depicts the different phases of the material management process including the
relationship and interdependency between the different activities in each phase. From this figure
it can be seen that decisions taken at each phase in the system, directly affect the activities of the
phases that follow (Thabet, 2001).
Arora (2003) further states an efficient system of materials control should be comprehensive
enough to cover purchase system, storage system, issue to production and determining stock
level for each item of materials.

2.7 Inventory Control

In inventory management system both accounting control and operational controls of material
are necessary for both merchandizing as well as manufacturing firms. Arora (2000) described
that the accounting control of materials is concerned with safeguarding of undertakings property
in the form of materials by proper recording of receipt and issuance and balance in the stock.
Meanwhile the operating control is concerned with maintaining materials at optimum level,
keeping in a view the operational requirements of financial resources of business. By keeping
stocks with in maximum and minimum limits, materials are automatically kept at the optimum
level. In addition to accounting and operating control, control over purchase, receiving and
inspection, storing and issue is essential. Banerjee (1991) wrote about this issue and stated that
control over purchase means that the purchase requisition and the purchase order should in
writing forms and shall be dully authorized by the executives concerned.
16
Further he pointed the quality of material to be according to specification or design and prices
should be related to quality and market condition. In short it should ensure materials of right
quality and quantity at right price from right source and at right time. He depicted how the
control systems, over receiving and inspection can be achieved through the following ways:
A. Materials received and cheeked with delivery note and copy of purchase orders.
B. Quality as revealed by physical verification agrees with the shown in the delivery note and,
C. Quality is as per specification mentioned in purchase order. On the other hand control over
storing and issue will include the following.
D. To insure the good received are in accordance with the instruction detailed in the purchase
order and goods received note.
E. To insure material received is placed in appropriate bins, rocks etc, and quantities are
entered in the respective bin cards to facilitate easy location and perpetual records of stores
and received.
F. Materials to be issued only against properly authorized requisitions and appropriate bin cards
should be credited with the quantity issued.
G.Checking the bin card balance with that shown by stores ledger and physical verifications.
In inventory management system attention is given to detect slow and nonmoving materials and
there stock must be kept at low level because slow moving materials have low turnover ratio
and their rate of sale is low compared to their stock while, dormant materials have no demand at
percent due to seasonal demand. Arora (2000) devised the following formula about how to
detect the slow and non moving materials. In order to detect slow and non moving materials,
standard materials the following standard material turnover rate may be computed as follows:
Budgeted Consumption
Standard material turnover rate= Average Stock Level

This standard rate should be compared with actual turnover rate. If the actual turnover rate is less
than the standard, it implies that its actual rate of consumption is less than the stipulated rate and
the item is thus slow moving. Monthly or quarterly reports on such material should be prepared
for presentation of management. This report should show turnover rate, purchase and
consumption of these items is quantities as well as values. This will help in not only detecting
but also controlling slow and non moving items.

2.8 Martial Management (Control) Responsibility

Although inventory management usually is not the direct operating responsibility of logistic

17
manager, the investment of funds in inventory is an important aspect of logistic management.

Consequently, the logistic manager must be familiar with why to control inventories effectively,
so that, capital may be allocated efficiently. And the other responsibilities of inventory Control
are Stores play a vital role in the operation of organization. Generally un worked material is
stored and the place where it is stored is called Store Room. It is in direct touch with the user
departments in its day-to d ay activities. The chief aim of the stores is to ensure the smooth flow
of production without any interruption. Stores generally include raw materials, work in progress
and finished goods. Effective storekeeping and inventory control are indispensable to the control
of material cost. Further, stores often equated directly with money, as capital is blocked in
inventories. (U.S. Small Business Administration Edited by SCORE 471).

Purpose of Storekeeping
(1) Storekeeping helps to examine carefully all goods and materials on receipts.
(2) It is essential to arrange for a systematic and efficient storing of materials.
(3) Storekeeping ensures accurate and prompt distribution of materials to user departments as per
issue requisition note.
(4) It is essential because stores often equated directly with money, as capital is blocked in
inventories.
Functions of the Storekeeper
The store is a service department headed by the storekeeper who holds the responsible position
in the organization of the stores department.
He is as much responsible for the articles in charge as a cashier for the cash .It functions are
(1) He must receive raw materials, components, tools, equipment and other items and account for
them properly.
(2) He must provide adequate and proper storage and preservation to the various items.
(3) He must check, and provide proper classification and codification of materials.
(4) Issue the materials as per material issue requisition duly signed by an authorized person.
(5) He has to take steps to prevent leakage, theft, wastage and deterioration.
'(6) He must ensure good storekeeping.
(7) He should not permit any person without authorization.
(8) He should maintain proper records in order to know desired quantities available.
(9) He must provide adequate in formations to the top executives for verifications and effective
decision making.
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Stores Layout
In order to achieve the objectives of effective inventory control, well planned layout of stores
should be required. A planned stores layout will facilitate easy movement of materials, good
housekeeping, sufficient space for materials handling. It ensures effective utilization of storage
space and judicious use of storage equipments. The stores department should be equipped with
shelves, racks, pallets and proper preservation from rain, light and other such elements. An ideal
location of stores should facilitate the volume and variety of goods to be handled. In order to
bring down the transport cost it should be close to roads or railway stations. And also as far as
possible, the stores department should be near to the receiving department. In the case of large
organizations usually stores attached to each consuming department, whereas receiving is done
centrally.
Types of Stores
The types of stores depend on the size, types and policy of the organization. Organization of
stores varies from concern to concern. As per the requirement of the firm the stores organization
(a) Centralized Stores.
(b) Decentralized Stores.
(c) Combination of both, i.e., Centralized Stores with Sub Stores.
(a) Centralized Stores: This system is suitable to small-scale industries where it is desirable to
centralize the materials in one department. Under this system, the store room will be most
conveniently situated where it is near to all the departments.
(b) Decentralized Stores: Under this system each department has its own stores. It is suitable to
large concern where there are several departments each using a different type of material from its
own stores. In this system all the disadvantages of centralized stores can be eliminated.
(c) Combination of Both: This system is also termed as Imp rest System or stores’ control.
Centralized Stores with Sub Stores is usually adopted in large factories where departments are
situated at a distance from the central stores. In order to minimize the cost of transportation and
materials handling, this type of organization would be located nearer to the receiving department.
Under this system material receipts are stored in the central stores and issues are made to the
sub-stores. Under imp rest system of stores control sub stores which are located nearer to the
central stores for the purpose of draw supplies from central stores and issue the required quantity
to production. To maintain the stocks at the predetermined level, the sub-stores make requisition
from the central stores.

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Fixation of Stock Level
Material control involves physical control of materials, preservation of stores, minimization of
Obsolescence and damages through timely disposal and efficient handling. Effective stock
control system should ensure the minimization of inventory carrying cost and materials holding
cost. Level of stock is the important aspect of inventory control. Stock level may be overstocking
or under stocking. Overstocking requires large capital with high cost of holding. In the case of
under stacking, production and overall performance of the concern as a whole will affect.
Thus, fixation of stock level is essential to maintain sufficient stock for the smooth flow of
production and sales. The greater the opportunity cost of funds invested in inventory, the lower
the optimal level of average inventory and the lower the optimal order quantity

2.9 Deciding an Approach in Inventory Strategy

To formulate an inventory strategy the firm first considers the cost and characteristics of popular
inventory item involved. What costs are important? What are the characteristics of inventory
situation?

Once this are assessed, the analysts then choose a basic approach either risk are addressed
separately, or the uncertainly approach, in which these faces are simultaneously. The certainty
approach is tractable, well tasted and easy to implement. However, because of the way it handles
risk the certainly approach is not applicable to static inventory problem. In certainty approach
risk is usually addressed though the use of safety stock. The uncertainty approach on the other
hand, is applicable in these static inventory problems, because this approach can also address
dynamic inventory problems, but simulation is required and the resulting methodology does not
lead to a definitive strategy (Bhalla, 2000).

2.10 Inventory Control Models

Given the significance of the benefits and costs associated with holding inventories it is
important that the firm efficiently control the level of inventory investments. Number of
inventory control model are available that can help in determining the optimal inventory level of
each items. This model range from the relatively simple to extremely complex. Their degree of
complexity depends on primary on the assumptions made about the demand or use for the
particular item and the lead time required to secure additional stock.

The classical inventory model, which includes both simpler deterministic model and more
complex probabilistic models, it is assumed that demand is either uniform or dispersed and
independent or to fluctuate over time due to random elements.

20
These types of demand situation are common in retailing and some service operations.

1. Deterministic inventory control models such as economic order quantity model,

assumes that both demand and lead times are constant and known with certainty. Thus
deterministic model eliminate the need to consider stock outs.
2. Probabilistic inventory control model
Thus for the analysis has assumed that demand or usage is uniform though out the time
and known with certainty, as well as that the lead time necessary to procure additional
inventory is also fixed, known value however in most practical inventory management
problem. These assumptions may not be strictly correct. Typically demand fluctuates over
time due to seasonal, cyclical and “random” influences and imprecise to forecast future
demands often are all that can be made. Similarly lead times are subject to uncertainty
because of such factors transportation delays, strikes, and natural disasters. Under these
conditions the possibilities of stock out costs, most companies use a standard approach of
adding a safety stock to their inventory. Determining the optimal safety stock and order
quantities under these more realistic conditions is a fairly complex process. However, the
factor that has to be considered in these types of analysis can be identified briefly. All
other thing being equal the optimal safety stock increase as the uncertainty associated with
the demand forecast and leads time increase (Bhalla, 2000).
2.11 Types of Inventory Control System

In managing inventories, the firm’s objective should be in consonance with the share holder’s
wealth maximization principle. To achieve this, the firm should determine the optimal level of
inventory. Efficiently controlled inventories make the firm flexible. In efficient inventory control
result in unbalanced inventory and inflexibility, the firm may sometimes run out of stocks and
sometimes may pile up unnecessary stock. This increase the level of investment and makes the
firm un profitable.

To manage inventory efficiently, answer should be sough to the following two questions. How
much should be order? When should it be ordered?

Generally speaking, four types of inventory control system are in use (Pandy, 1999).

21
2.11.1 The cyclical or fixed order interval system
When most business was small and uncomplicated, this control system was used in all types of
operation manufacturing, service, whole sale, and retail. It is time based operation which
involves scheduled periodic review of the stock level of all inventory items, stock levels can be
monitored by physical inspection, by visual review of perpetual inventory cards, or by automatic
computer surveillance. In most operation perpetual record is maintained.

The first operating questions when to order is answered or controlled by the review dates
established by inventory manager. If material usage has remained reasonably stable, an order (or
release against order) is usually placed each time the item is reviews. The to be ordered generally
is to be determined by three factors the number of days between reviews, the anticipated daily
usage during the cycle period, and the quantity which is actually on hand and on order at the time
of the review. In this system a small safety stock is generally carried, based on the observed lead
time variability. Inventory levels and tightness of control thus determined by the establishment of
the cycle. High value A and B items typically are placed on short cycles and C items on longer
cycles.

How firms classify inventory items in to A, B and C categories?

In most inventories a small proportion of items accounts for a very substantial usage (in terms of
monetary value of annual consumption) and large proportion of items accounts for a very small
usage. ABC analysis advocates in essence a selective approach to inventory control which calls
for a greater concentration of on inventory items for the bulk of usage of value. ’A’ item
represents the most important items, generally consists of 10 to 15 percent of inventory items and
accounts for 60 to 75 percent of annual usage value, category ‘B’ representing items and
accounting for 20 to 30 percent of annual usage value. Category ‘C’ representing of lest
importance, generally, consist of 40to 60 percent of inventory items and accounts for 10 to 15
percent of annual usage value.

The following procedures may be used for determining the three categories.

 Rank the item of inventory, in descending order, on the basis of annual

consumption value and number of them.

22
  Record the running cumulative totals of annual consumption value and express
them as percentage of the total value of consumption express each number in the
list, through, as percentage of n (these percentage are actual cumulative
percentage).

 Look at cumulative percentage of consumption value against the cumulative

percentage of number and classify items in to three broad categories ‘A’ ‘B’ and
‘C’ (Chandra, 1986).

The aim of classifying in to A, B and C categories is to exercise careful control on items

considered important to the firms operation, because not all inventory items deserve careful
management.

2.11.2 Just- in time Inventory Control System

Just in time inventory control system, originally developed by Tailchi okno of Japan, simply
implies that the firm should maintain a minimal level of inventory and relay on suppliers to
provide parts and components “just in time” to meet its assembly requirement. This may be
contrasted with the traditional inventory management system which calls for maintain a healthy
level of safety stock to provide a reasonable protection against uncertainty of consumption and
supply.

The just in time inventory control requires:

 A strong a dependable relationship with supplies who are geographically not very
remote from transportation system.
 A reliable transportation system
 An easy physical access in the form of enough doors and conveniently located
docks and storage areas to dovetail in coming supplies to the needs of assembly
line.

2.11.3 Order point or fixed order quantity Inventory Control System

Recall that, manager faces confiding pressure to keep inventories low enough to avoid excess
inventory holding cost but high enough to reduce the frequency of order and set up. A good
starting pant for balancing this conflicting pressure and determining the best cycle- inventory
level for an item is finding economic order quantity.

23
 Economic Order Quantity: EOQ is one of the important techniques used to determine the
optimum quantity or number of orders to be placed from the suppliers. The main objectives of
economic order quantity are to minimize the cost of ordering cost of carrying materials and total
cost of production. Ordering costs include cost of stationery, salaries of those engaged in
receiving and inspecting, general office and administrative expenses of purchase departments.
Carrying costs are incurred on stationery, salaries, rent, materials handling cost, interest on
capital, insurance cost, risk of obsolescence, deterioration and wastage of materials and . In
general economic order quantity model also can be useful to the logistic manager for planning
inventory financing (Banerjee, 1991). When demand or usage of inventory is uncertain, the
logistic manager may try to effect policies that will reduce the average lead time require
receiving inventory, once an order is placed. The logistic manage risk involved in caring
inventory. The major risk is that the market value of specific inventory will be less than the value
at which they were acquired certain types of inventories are subject to obsolescence, whit her it
be in technology or in customer tastes (Vanhorne, 1991).

The approach in determining the EOQ is based on the following assumptions (Karajewski &
Pitzman, 2000).

 The forecast usage/ demand for a given period, usually one year is known.
 The usage or remand is even through the period
 Inventory orders can be replenished immediately (there is no delay in placing and
receiving orders.
 The cost per order is contrast
 The cost of caring is a fixed percentage of the average value of inventory

2.11.4 Material Requirement Planning (MRP) Inventory Control System

The inventory that is carried in this system is a function of three factors.
 The quantity purchased when each order is placed
 The purchase lead time specified by the buyer
 Any safety stock that is routinely carried.
The objective of time passing the order point is to keep the inventory as close to zero as it is
practical unit the material is actually needed for production. Consequently using MRP system,
the average inventory level of must materials is relatively low over the long term.

24
2.12 Components of Inventory Control System
Adequate records are must in any control system, but too many records can have a disastrous
effect. No one inventory control system will work in all plants. Each system must be developed
to fill specific requirement. Practically every system, however, make use of certain forms that
have proved to be essential to good inventory control. These include:

 Store requisitions: Is a request from store or inventory control to purchasing

department authority to buy the quantity and types of material specified
 Receiving report: This form is usually executed in triplicate, with the original
going to purchase, one copy retained in store and one sent to receiving for use in
expediting the order.
 Balance of store form: The balance of store from is maintained for each account.
It usually contains information on material specification and description, quantity,
unit price, usage rate, recorder point, procurement and max and min inventory
level. If properly maintained, the balance of stores form permit easy checking of
stock level at all times, regardless of where material is physical stored.
 Material requisitions: This form authorizes the store keeping issuing specified
quantity of certain items for use in manufacture or sale (Bhalla, 2000).

2.13 Control Device in Inventory Management

As far as Bhalla (2000) is concerned there are five types of control device that use inventory
management process.

 Control account: is maintained in general ledger by accounting. All material

purchased are charge against the account and all issuance are credited to it. The
control account is frequently maintained for each transaction that affects the
inventory receipt, issuance and adjustments.
The cards are than collected by part number and the information on each card is
mechanically transferred to ledger sheets.
 Physical counting: all companies take periodic inventory at least ones each a year.
Physical counting of stock on hand necessary for tax and cost accounting
functions and the control account maintained by accounting.

25
  Visual review: a highly subjective method of determining when to recorder is
visual review of stock in inventory. For example in old time general store, the
owner would inspect his inventory and determine what should be reorder. This
techniques still has limited application where the cost of inventory is low and the
cost control need to be minimizing control is base up on the judgment of the
individual and the period review of the item being ordered.
 Two –bin system: the two bin system divides each items of inventory in to two
groups or bins. In the first, a sufficient supply is kept to meet current demand
over designed period of time, in second; enough additional items are available to
meet the demand during the lead time necessary to fill being order. The advantage
of this form of control is minimum control expense and positive physical
recognition of reorder points. The principal disadvantages are the limited
information available regarding inventory status of items, lack of monthly usage
date and reliance on store room personal.
 Periodic order system: under this system, the stock level for all inventory
accounts are reviewed at established interval and orders and placed to bring all
accounts up to their maximum level. Since, order are automatically placed, at the
reviewed periods the system greatly simplifies the ordering process.
 This advantage may however, sometimes be a disadvantage because of heavy
paper work burden it places periodically on purchasing department.
2.14Method for Determining Material Requirement
As the ultimate goal of inventory control program is to provide maximum customer service at
minimum cost, the organization must select a method of determining material requirement that is
suitable for its operation. The following are the most important points that must be taken into
account.
 Explosion process: In many manufacturing organization material requirements are
relies on directly on sales forecast. For each of its product the company prepares a
bill of materials a list of parts (and their quantities) needed for various products to
determine the overall material requirements.
 Past usage method: Inventory or material requirements are relies on past usage
rather than on the sales forecast. If a creasing item were used at rate of 100 units
per month during the past year or using some other representative period, it is
likely to be use at the same rate in future.
26
 Change in product mix or product design may adversely affect the results of the
usage method
 Value volume analysis: Many organization use value volume analysis to
determine which inventory account should be controlled by explosion method and
which should be controlled by past usage method.
Those items with a high level of activity must be more closely controlled than the ones with
relatively low activity levels. Their requirements must be determined by accurate explosion
process. While requirements for low activity items can be determined by the accurate and less
costly past usage method (Bhalla, 2000).

2.15 Inventory Record Accuracy

More sophisticated techniques may be used to hand inventory management problem more
efficiency and effectively. It should however, realized that inventory management, more than use
of techniques, is a managerial process of continuous planning coordinating, control and
monitoring, motivation etc, to achieve inventory record accuracy.

Regardless of the inventory system in use, record accuracy is crucial to its success. One method
of achieving and maintaining accuracy is to assign responsibility to specific employee for issuing

an receiving materials and accurately reporting each transaction. A second method id to secure
inventory behind locked doors or gates to prevent un authorize or un reported with dowels. This
method also guard’s receipts in the wrong authorize or un reported with dowels. This method
also guards receipts in the wrong locations, where they can be lost for months.

Cycle accounting is a third method, whereby, store room personnel physically count a small
percentage of the total number of items each day, correcting errors that they find. Class a times
counted most frequently. A final method for computerized systems is to make logic error checks
on each transaction reported and fully investigate any is discrepancies. Discrepancies may
include:

 actual receipt when there is no record of should receipt

 disbursement that exceeds the current on hand balance and

 receipts with an in accurate (non existence) part number (Kpajewski & Pitzman, 2002).

27
2.16 Inventory /Stock Turn Over
Stock turnover ratio tells how many times in year stock are used up and replaced. The greater the
stock over, the more efficient is the stock policy. High stocks turn over saves money and it is
thus an indicator of efficiency.

Stock turnover ratio is an indicator of the rate of consumption: i.e. the fast moving and slow
moving materials. A high inventory turnover ratio indicates fast moving materials and low ratio
indicates slow moving materials. The tarn over of different materials may be compared to detect
those items which do not move regularly. This will enable the management to avoid keeping
capital locked up in undesirable items of materials. Stock turnover rate may also be calculated in
terms of days. This is done by dividing 365 days by inventory turnover ratio.

Days in years
Stock turnover in terms of days= Inventory turnover

If the length of stock turnover period is short, the material is considered to be fast moving, and if
the length of stock turnover period is long, the material is considered to be slow moving. The
stock turnover is a good measure of the efficiency of material utilizations (Arora, 2003:52)

28
 CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1 Research Design

The design employed in this research was descriptive method. Descriptive research is vital to
investigate the situations, find out the problems, and recommend specific solutions to the
problems that have been identified (Singh, 2006). The study used quantitative methods to
describe and analyze the information that obtained using different data collection instruments.

3.2 Source of Data

The study employed mainly primary and secondary sources. The primary data sources include
the employees that have direct relationship in the inventory management system of the Agency.
The secondary data sources were key documents archived in different departments of the Agency
that reflect previous inventory management history of the Agency.

3.3 Population, Sample technique and Size

The target populations for this study were 54 employees of Dessie Construction and Housing
Development Agency branch Office. 18 company employees who were participating in the
inventory management system were selected using purposive sampling technique. This sampling
technique is a non-probability sampling method, which enabled the researcher to include relevant
respondents who have direct relation to the issue under study by his personal judgment. This
sampling technique helped the researcher to include all members of the target population under
investigation.

3.4. Data Collection Instruments

To gather data the researcher employed three types of data collecting tools. These were
questionnaires, interviews, and secondary documents related to inventory and controlling
systems of the company. These instruments were helpful in triangulating the responses obtained
from the respondents. Triangulation assumed uses of multiple methods to measure the sample
phenomena to make sure the validity of findings based on the collected data.

3.4.1 Questionnaires
Questionnaires have been widely used for descriptive and analytical surveys in order to find out
facts, opinions and views (Naoum, 2007).
29
 In this study, the questionnaires were designed to get the factual information about local
inventory and construction resource management practices of the company. The questionnaires
consisted of two parts. The first part described the demographic profiles of the respondents and
the second part portrays 49 closed ended queries, which were presented in a table using a Likert
scale ranging from 1=strongly disagree to 5= strongly agree. Likert scale was employed to
describe the responses of the closed questions quantitatively.

3.4.2 Interview
A first general principle in data collection was that the inclusion of multiple sources of data
collection in a research project is likely to increase the reliability of the observations. Denzin
(1978) coined the term triangulation to refer to the use of multiple methods of data collection. As
Kvale (1996: 14) remarks, as an inter-view, an interchange of views between two or more people
on a topic of mutual interest, sees the centrality of human interaction for knowledge production,
and emphasizes the social situations of research data. For the purpose of triangulation, this study
used structured interview to collect pertinent information from two purposefully selected
respondents (branch office manager and logistics manager) because they were known the
administration systems inventory management in directly and indirectly.

3.4.3 Document Analysis

Documents are important sources of data in many areas of investigation. When document
analysis used in descriptive research it took records, reports and minutes as a source of data. In
this regard, this study took such documents as a source of data that related to the inventory
management system of the company.

3.5 Methods of Data Analysis

In this study, the data obtained through questionnaires were quantitatively analyzed using
percentages, mean scores and standard deviations. In order to facilitate the interpretation of the
quantitative data based on the mean scores using the following intervals were used based on the
suggestions of Agresti (2002)

From 4.5 – 5.0 strongly agreement

From 3.45 – 4.45 agreement

From 2.45 – 3.45 undecided (unable to give opinion)

From 1.45 – 2.45 disagreement, and

30
Less than 1.45 strong disagreements on the items in each category.

Qualitative data analysis involved organizing, accounting for and explaining the data; in short,
making sense of data in terms of the participants’ definitions of the situation, noting patterns,
themes, categories and regularities. The data collected through interview and documents are
analyzed qualitatively and summarized in words.

31
 CHAPTER FOUR

4. PRESENTATION, ANALYSIS AND DISCUSSION OF DATA

This chapter describes the demographic profile of respondents and the analysis and discussion of
the data collected through questionnaires, interviews and document analysis.

4.1 Demographic profile of respondents

Table 4.1 Demographic profile of respondents

Variables No. of Respondents Percentage

Sex M 15 93.75%
F 3 6.25%
Total 18
100%
Manager 2 11.11%
Auditor 2 11.11%
Occupation Store man 5 27.78%
Purchaser 2 11.11%
Accountant 3 16.67 %
Engineer 4 22.22%
Total 18 100%
Educational 2nd Degree 1 5.56%
Status
First Degree 15 83.33%
Diploma 2 11.11%
Certificate - -
HighSchoolComplete - -
Total 18 100%
Work 1 Year 1 5.56%
Exper
ience 2 Years - -
3 Years - -
4 Years 3 16.67%
Above 5 Years 14 77.77%
Total 18 100%
(Source: Researcher’s Survey)

As depicted in the table 93.75% of the respondents are males and 6.25% are female. This
indicates most of the human resource working in the branch office is dominated by males. As
shown in above table the occupations of the respondents 27.78% are store man, 22.22% are
32
engineers, 16.67% are accountants and 11.11% are managers, auditors and purchasers each
respectively. This indicates most of the respondents are store man. As depicted in the same tables
83.33% of the respondents are first degree holders, 11.11% are in diploma level and the
remaining 5.56% are 2nd degree holders. This indicates most of the human resources in the
branch office are educated. On the same table the respondents were also asked to indicate
whether they have experience on their job. The study shows that 77.78%are above five years,
16.67% are four years experience and 5.56% are one year work experience. This shows the
majority of the employees have at least five year experience in their respective occupations.

4.2 Data analysis and discussion from the questionnaire

Table 4.2 Inventory Policies and Procedures

No. Items Mea S.D

n
1 The organization has Inventory policies, procedures and manuals. 4.00 0.52

2 The policies and procedures are current, in writing, and properly approved. 3.53 0.96

3 These policies and procedures are clearly stated and systematically 3.6 0.94
communicated to the respective departments.

4 These policies and procedures support internal control. 3.71 0.87

5 Receiving, issuing, accounting and storing responsibilities are properly 3.88 0.74
segregated for the responsible departments.
(Source: Researcher’s Survey)

As one can understood from the above table, the mean score X = 4.00 shows the respondents
expressed their agreement that the organization has inventory policies, procedures and manuals

with the least response variation as compared to the other items. The mean score X =3.88 shows
the agreement of the respondents concerning receiving, issuing, accounting and storing
responsibilities are properly segregated for the responsible departments. Moreover, the
respondents have shown their agreement on these policies and procedures in supporting the
internal control system of the office with mean score 3.71 and slight response variation among
themselves. The respondents of this study have shown their agreement that these policies are

clearly stated and are systematically communicated to the respective departments with mean X
= 3.6 and relatively higher response variation. Finally, the respondents have shown their accord
on the policies and procedures confirming they are current in writing and properly approved with
33
the least mean score X =3.53 and the highest response variation as compared to the other items..
In general, the agency has its own currently written, well approved, inventory policies,
procedures and manuals, which are systematically communicated to the respective departments.
This means each department has implemented its own inventory Policies and Procedures in a
better and organized way based on their level of activities. Therefore, the agency used these
policies, procedures and manuals in each departments to support its internal controlling system
by making the inventory management documents (Receiving, issuing, accounting and storing
responsibilities) familiar to its employees. As described by Miller (2010) an inventory system is
the set of policies that controls and monitors inventory level and determine what level should be
maintained, how large orders should be made and when stock should be replenished. Hence,
having policies and manuals help the office in performing inventory controls.
Table 4.3 Inventory Control mechanisms
Items Mean S.D
1 The management takes the appropriate steps to safeguard goods against risk 2.76 1.41
of loss by theft (e.g., goods kept in locked buildings, rooms, or cages, access
to which is granted only to authorize personnel).
2 Inventory records are reconciled (and differences explained) to advantage 3.90 1.28
reports on a regular basis. (Current inventory is adjusted at year-end by
fiscal year-end physical counts.)
3 Departments compare quantities received against receiving reports 2.82 1.05

4 Materials are released from storerooms only on the basis of requisitions 3.88 0.92
which are approved by a responsible official of the department.

5 Adequate provisions are made for obsolete and inactive items in 3.06 1.12
inventories.

(Source: Researcher’s Survey)

As the above table shows the participants of the study agreed that inventory records are
reconciled (and differences explained) to advantage reports on a regular basis and adjusted at

year-end by fiscal year-end physical counts with mean score X =3.90 and materials are released
from storerooms based on a formal request for official services and approved by a responsible

person in each department of the agency with the highest mean score X =3.88 and least response
variation(S.D= 0.92). This indicated us the agency implemented efficient material management
and effective control of inventories that help to achieve better operational results and reduce the
34
risk of construction material loss or working capital on annual basis. It has a significant influence
on the profitability of the agency. Meanwhile, the respondents were not willing to give their
opinion(since the mean scores fall in the interval from 2.45 – 3.45 undecided) concerning the

risk taken to prevent loss or theft (Item 1 with X = 2.76), comparison of quantities received

against receiving reports (Item 3 with X = 2.82) and the provisions made for obsolete and

inactive items in inventories (Item 5 with X = 3.06). Since sufficient information is not given on
these items it is very difficult to explain the inventory control system of the branch office at this
stage. Even though the respondents confirmed the existence of inventory policies and manuals to
conduct inventory in the organization and are communicated for each department, the writer of
this study is suspicious on the practical use of these documents. Arora (2000) described that the
accounting control of materials is concerned with safeguarding of undertakings property in the
form of materials by proper recording of receipt and issuance and balance in the stock.

35
Table 4.4 Inventory Handling Systems
Items Mean S.D
1 Procedures for physical counts provide the use of adequate written instructions. 2.41 0.95
2 Procedures for physical counts provide a room for adequate supervision. 3.94 0.94
3 The procedures for physical counts provide for clearly marking damaged and obsolete 3.76 0.91
inventory.
4 The procedures for physical counts provide for the use of pre-numbered tags which are 2.29 1.03
accounted for.
5 The procedures for physical counts provide for the counting of the items and access to 2.17 0.76
the tags only by employees who are not responsible for custody of the particular items.
6 The procedures for physical counts provide for the rechecking of counts and 3.58 1.29
descriptions (dual counts) where perpetual records are not maintained and where
variations from the perpetual records are significant.
7 The procedures for physical counts provide for careful investigation of significant 3.52 1.30
overages and shortages.
8 The procedures for physical counts provide for prompt adjustment of records for 2.11 0.99
inventory discrepancies after approval by a responsible official other than stores
personnel.
9 The procedures for physical counts provide for recording counts on permanent 3.82 0.93
inventory count sheets.
10 The procedures for physical counts provide for the signing and dating of inventory 3.70 1.33
count sheets by the person supervising the count.
11 The procedures for physical counts provide for properly accounting for goods that are 4.00 0.88
consigned in and out.
12 The management reviews the reconciliation of physical inventory counts to the 3.88 0.93
inventory records.
13 Adequate provisions are made for cut-off of receipts and issues. 3.41 1.01
14 If applicable, issuing and billing procedures are designed and correlated so as to ensure 3.64 1.06
the billing of all items
15 There is physical segregation and proper accounting control of merchandise on hand 2.35 0.86
that is not property of the entity.
(Source: Researcher’s Survey)

As it depicted in the above table the respondents have reflected their agreement on the inventory

36
handling systems of the organization for most of the items related to procedures for physical

counts. According to their responses the procedures for physical counts have provided the

opportunity for properly accounting the goods that are consigned in and out (with mean X

=4.00), provided a room for adequate supervision (with mean X =3.94), helped the management

to make reviews and reconciliation to the inventory records (with mean X =3.88), helped the

organization in recording counts on permanent inventory count sheets (with mean X =3.82), were

used for clearly marking damaged and obsolete inventory (with mean X =3.76), helped to clearly

see the signing and dating of inventory count sheets by the person supervising the count (with

mean X =3.70), were applicable in issuing and billing procedures are designed and correlated so

as to ensure the billing of all items(with mean X =3.64), the physical counts were useful in the

process of rechecking of counts and descriptions (with mean X =3.58) and helped to make

careful investigation of significant overages and shortages(with mean X =3.52) with slight

response variations respectively. On the other hand, the respondents have reflected their

disagreement on the use of the procedures of physical counts in adequate written instructions

(with mean X =2.41) and the use of pre-numbered tags which are accounted for the counting of
the items and access to the tags only by employees who are not responsible for custody of the

particular items (with mean X =2.29 and X =2.17 respectively). They have also insisted their

disagreement on the procedures of physical counts concerning adjustment of records for

inventory discrepancies after approval by a responsible official other than stores personnel and
physical segregation and proper accounting control of merchandise on hand that is not property

of the entity(with means X =2.11 and X =2.35 ). Finally, the respondents hesitated to show
their position regarding the role of the procedures for physical counts in adequate provisions for

cut-off of receipts and issues (with mean X =3.41). Generally, the employees’ response reflected

the use of physical counts of inventories for different purposes. As far as Bhalla (2000) is
concerned there are five types of control devices that are used inventory handling system.
Among these Physical counting is the one where all companies take periodic inventory at least
ones each a year.

Physical counting of stock on hand necessary for tax, cost accounting functions gives a room for
adequate supervision and provide for careful investigation of significant overages and shortages.
 37
Table 4.5 Perpetual Inventory Systems
Items Mean S.D
1 Detailed perpetual inventory records are periodically reviewed for slow- 2.29 0.91
moving items.
2 A perpetual inventory system is (including quantities and value) in use as to 3.41 1.16
all major classes of inventory.
3 Perpetual inventory records are updated promptly. 3.52 1.16
4 The postings to the perpetual inventory records made promptly are from 2.41 1.05
Pre-numbered, signed receiving reports.
5 a. The postings to the perpetual inventory records are made promptly from 3.56 1.14
issue requisitions.
6 In additions to perpetual inventory, records are referenced to supporting 3.88 0.84
invoices to insure easy verification of the records.
7 Inventories are taken without prior reference to quantities on perpetual 2.35 0.93
records.
8 There are discrepancies between physical counts and perpetual records 3.58 0.95
investigated and resolved.
(Source: Researcher’s Survey)

As shown in the above table the mean scores X =3.88, X =3.58, X =3.56 and X =3.52 with

their minor differences among the respective standard deviations have shown their agreement on

the use of perpetual inventory systems are referenced to supporting invoices to insure easy
verification of the records, helped the organization to identify discrepancies between physical
counts and perpetual records investigated and resolved, gave chance to review posts using
requisitions and update helped to update the records promptly. On the other hand, the
respondents reflected their disagreement concerning regular inventory records of slow –moving

items (with X =2.29). That means, regular inventory records are not made for slow-moving
items in this organization. Similarly, the perpetual inventory records made promptly are not from

Pre-numbered, signed receiving reports (with X =2.41) and inventories are not taken without

prior reference to quantities on perpetual records (with mean X =2.35). Concerning the usage of

perpetual inventory to all major classes of inventory the respondents position is neither

agreement nor disagreement (with mean X =2.41). When the remaining responses are examined

on can see that perpetual inventory is no conducted for all inventories.

 38
Pandy (1999) discusses four types of inventory control systems. Among these the cyclical or
fixed order interval system is one of these systems. When most business was small and
uncomplicated, this control system was used in all types of operation manufacturing, service,
whole sale, and retail. It is time based operation which involves scheduled periodic review of the
stock level of all inventory items, stock levels can be monitored by physical inspection, by visual
review of perpetual inventory cards, or by automatic computer surveillance. In most operation
perpetual record is maintained.
Table 4.6 Inventories Control Techniques
Items Mean S.D
1 The organization uses the ABC analysis of Inventories (in this approach of 3.37 1.16
inventory control high value items are more closely controlled than low
value items).
2 The highest value items are under the tight control and under responsibility 3.58 0.95
of the most experienced personnel.
3 In the organization Materials received first are issued first (First in first out). 3.52 1.06

4 In the organization materials received last are issued first (Last in first out). 2.35 0.88

5 In the organization materials issued are priced at the weighted average cost 3.64 0.82
of material in stock (Weighted average cost method).
6 In purchasing materials the organization takes anticipated market trends, 3.76 0.83
transportation charges, and normal quantity of purchase into consideration
(Standard price method).
(Source: Researcher’s Survey)

As shown Table 4.6 the mean scores X =3.76, X =3.64, X =3.58 and X =3.52 with their minor

differences among the respective standard deviations the respondents have shown their

agreement on the different usage of inventory control techniques by the branch office. According

to the magnitudes of the mean scores, standard price method, weight average cost method and

First in First out (FIFO) method are in practice in this organization. Furthermore, the respondents

indicated that the highest value items are under the tight control and under responsibility of the
most experienced personnel. They are unable to decide concerning the use of ABC analysis of
Inventories. As the function of this method is to control high valued items than low valued items,
it can be said that this method is also applied in some extent since respondents have shown their
agreement on Item (2).
39
In conclusion, the agency focused first on the items that require the most frequent attention, thus
ensuring that there are enough of these items on hand when needed. Items that require less
attention are focused on next, and items that require the least amount of attention are focused on
last. This grouping of items help the agency to improve overall material availability while
reducing excess and obsolete material, focus on material with the highest value effect, minimizes
the probability and severity of stock outs, and use effectively inventory management staff time.
Therefore, the agency control high value items more closely than low value items. This allows
the agency to overcome poor planning and control of materials, lack of materials when needed,
poor identification of materials, re-handling and inadequate storage cause losses in labor
productivity and overall delays that can indirectly increase total project costs. These findings are
supported by literature. Bhalla, (2000) pinpointed that those items with a high level of activity
must be more closely controlled than the ones with relatively low activity levels. Their
requirements must be determined by accurate explosion process. While requirements for low
activity items can be determined by the accurate and less costly past usage method. One way or
the other the organization is not using a single inventory controlling technique. Using different
inventory controlling technique may help to compensate the drawbacks of the techniques and
exploit their advantages.
Table 4.7 Stock evaluation & performance measurement

Items Mean S.D

1 Targets are often arbitrarily set by management without full understanding and due 2.35 0.93
consideration of whether they are realistic
2 The organization gives priority for accurate recording of inventories to assure 2.23 1.03
material availability when orders are released.
3 The organization conducts regular auditing inventory records. 3.52 1.06
4 The organization uses strong cycle counting program, which leads to complete or 2.41 1.10
partial elimination of the annual physical inventory with its high costs and
questionable accuracies.
5 The internal control systems appear to be adequate for the overall inventory 3.58 1.00
system of the organization.
(Source: Researcher’s Survey)
As depicted in the above table the respondents are in agreement concerning adequacy of the

overall inventory system (with mean X = 3.58) and regular auditing inventory practice of the

organization (with mean X = 3.52) having slight response differences.

40

Meanwhile, the respondents have shown their disagreement on the arbitrary target setting (with

mean X = 2.35) and in giving priority for Inventory Record Accuracy (with mean X = 2.23).

Finally, the respondents were unable to share views regarding strong cycle counting program,
which leads to complete or partial elimination of the annual physical inventory with its high

costs and questionable accuracies (with mean X = 3.41).

In general, the agency used such stock evaluation & performance measurement to complete or
partial elimination of the annual physical inventory problems that are preventing the store man
from risks, to know the kind and numbers of items in the store, to identify usable and despoiled
materials. This shows that having stock evaluation & performance measurement in the agency
prevented the overall inventory managing systems of the agency. These create problems of
knowing the amount and specific numbers of materials in the storerooms and create problems of
inventory management.
Table 4.8 Inventory management constraints
Items Mean S.D
1 The organization has a storage problem in its stock management system. 4.18 0.85

2 There are significant losses of construction materials in the company due to 3.65 0.80
lack of quality production by industries/producers.
3 The organization respective departments have qualified personnel who can 3.18 1.09
properly manage their duties in inventory handling.
4 Due to work overload the organization has a problem of delivering inventory 3.82 0.99
reports to the regional housing and construction Agency.
5 The organization has a day to day recording system of stock and bin card. 2.70 1.15
(Source: Researcher’s Survey)

As the above table shows, the mean score X =4.18 signifies the respondents agreement that the
agency has a storage problem in its stock management system with a slight response variation.

The mean score X =3.82 for item(4) shows the respondents agreement on the reporting problem
to the regional housing and construction Agency due to work overload with the least response

variation as compared to the other items. In addition, the mean score X = 3.65 revealed
agreement among the respondents regarding significant losses of construction materials in the
company due to lack of quality production by industries/producers. On the other hand the mean

score X =3.18 for item (3) describes the respondents were unable to decide concerning the
41
organization respective departments have qualified personnel who can properly manage their

duties in inventory handling. In addition to these, the mean score X = 2.70 for item(5) shows the
respondents were unable to give their opinion (undecided) concerning the organization day to
day recording system of stock and bin card with the highest response variation as compared to
the other items. These means the agency may not use systems of records, so the storekeeper and
the respective departments have faced problems of quantitative record of stores materials and
their cost, receipt, issue and balance of each item in the store. Dainty et al. (2001) explain that
the construction sector faces wide fluctuating demand cycles, project-specific product demands,
uncertain production conditions, and there are also evidences of a combined diverse range of
professional skills. This might be the reason the respondents rated these items as problems in the
branch office. Thomas et al. (2002) also define problems in the flow of equipment and
information is critical to improve the productivity in the construction sector. They also indicate
that potential improvement areas are widely found in both the planning of how to organize the
construction site and of the logistic of the building itself. Some of these inventory management
constraints are mentioned in some studies. Inventory management in construction project could
be affected by several factors such as; inadequate storage space (Sardroud, 2012), over ordering
and double handling (Donyavi & Flanagan, 2009); and incomplete and lack of up-to-date
information regarding on-site stock (Navon & Berkovich, 2006).

4.3 Results of analysis from the interview

The following interview were took place with Dessie Construction and Housing Development
Agency Office branch manager and logistic managers. It was held in their office by using face-
to-face interview. The method is helpful for the researcher to have opportunity for detailed
investigation manager’s experience towards inventory management in their office. Roles of the
researchers during the interview were keep participants focused, listen them more and talk less,
tolerate their silence and wait to learn about their perspectives, follow up on what they say and
ask questions when it was not clear for details, ask open ended questions by avoiding leading
questions, interruptions, personal judgments and debate over their views.

Both the branch manager and the logistic manager were responded as the agencies have policy,
procedures and inventory manuals. From this it is possible to conclude that even though the
agency followed the regional inventory management policy, procedures and inventory manuals,
it may faced to some gabs because the context of various organization is different and need its

42

own context of implementing activities more specifically based on its rules and regulations, so
the agency cannot make it.

For this question, the manager responded that as his organization has its own inventory control
systems. That were implemented by setting committee and by providing unique activities for
auditors to count and check through inspection. On the other hand, the logistic manager was
expressed as the agency partially follows its own Inventory Control Systems. Among them
receiving, issuing, accounting and storing materials were properly implemented by the
responsible departments in the agency.

The branch manager responded that his organization was implemented different inventory
handling systems. When materials are needed immediately to release from the store, the one who
wants to get the material issuing them and give it to his boss and logistic manager for approval.
As that time, the store person checked whether the materials were present in the store or not.
After that based on model 19 the materials were released from the store by putting his/her
signature on it. The logistic managers also assure this idea by saying when materials were
needed by some body, first checked its availability in the store or it purchased by the concerned
body and then the person who need that materials issued them by stating for what purpose do
he/she want to use them. After the person had got approval for the responsible body and then
he/she took the materials by putting his/her signature on model 19.

The branch manager responded that counting materials were implemented in his organization
once a year in June. The purpose of counting materials at this month was that to know the
amount of materials in the coming year and to identify which materials can be functional and
which one spoiled. The logistic managers also answered that to identify the amount of materials
based on their items the agency counted them annually. However, the agency also counted
materials unexpectedly, when the organization believed the store person have faced the
organization to various problems.

The manager expressed that the agency did not implemented all material controlling techniques
in the best way, but we try to use some of them. Similarly, the logistic manager was stated that
the agency used different material controlling techniques, but the store persons have their own
workloads and lack of time due to that they could not use all of them. Because of that, the store
persons developed and used their own controlling systems which are comfortable for them.

43

The branch manager responded that his organization evaluated it’s stoke materials based on the
counting reports of auditors and by observing them in the store. The logistic managers also stated
that as they were observing the store and checked which material items have enough storage and
which items have scarcity and take any necessary measures. In addition to these frequently
observation and evaluating stoke materials the agency also apply counting these materials
annually.

The branch manager stated that, there were many problems that affect inventory management in
his organization among them: the agency used so many kinds of construction materials due to
that they had lack of enough store to identify and put them based on their items, problems of
getting quality materials in the market, problems of workload and having enough number of
store persons were some of the main obstacles that affect their inventory management systems in
the agency.

The logistic manager also assured that the agency is one of the huge construction offices in the
region, so it used various items and many numbers of construction materials. As a result, the
agency faced to problems of store and put them on the field. When these materials were found on
filed they spoiled by sun and rain. In addition to this, they faced to theft. The agency also has
lack of store person, so those who were working became loaded by various works and unable to
record their daily stoke balance. Consequently, they have problems of preparing reports when the
responsible bodies needed it.

4. 4 Results of Document analysis

As indicated in Chapter 3 under instruments/tools in this study document analysis was one of the
tools in addition to Questionnaire and interview. The writer of this study has tried to explore the
most important documents that are essential in inventory management system. As confirmed by
the respondents in the questionnaire response the writer of this study has also witnessed the
availability of a store management manual, which depicts policies and store management
procedures and inventory control system of the organization. The writer of this study has
confirmed that this document is used in all branches of the Amhara housing and development
agency branch offices throughout the region. Furthermore, other necessary documents in
inventory management system such as good receiving voucher, store issuing voucher, store
return note, bin card, stock card and requisition documents are available in the store
management system are in practical use by the office. (See Appendix C)

44

CHAPTER FIVE

5. SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary
This study attempted to assess the inventory management practice of Amahara National Regional
State Construction and Housing Development Agency Dessie City Branch Office. The type of
research design was descriptive survey. The study employed both quantitative and qualitative
methods (mixed method). The total number of the target population was 54 among which 18
participants were selected using purposive sampling. Two employees of the office were also
purposively selected for an interview (Branch manager and logistic manager). The data were
collected through questionnaire, interview and document analysis. The quantitative data were
collected through self rated questionnaire where the items are rated using Likert Scale ranging
from 1= strongly disagree to 5=strongly agree. The items are 49 in number, which are
categorized into seven groups. Seven generalized questions were designed for the interview.
Necessary documents that are essential to carry out inventory management were examined to
perform the document analysis. The quantitative data was analyzed using mean scores and
standard deviations by categorizing the mean scores into intervals. The qualitative data collected
through interview and document analysis were analyzed in word and paraphrased.

In order to assess the inventory management practice of the branch office the following four
questions were foreshadowed and investigated.

1) What inventory controlling mechanisms does the agency use?

According to the analysis the inventory controlling mechanisms of the branch office are found to
be:
 Materials are released from storerooms only on the basis of requisitions which are
approved by a responsible official of the department.
 Inventory records are reconciled to advantage reports on a regular basis and current
inventory is adjusted at year-end by fiscal year-end physical counts.
2) What are the strategies being followed by the agency in overcoming the problems of
inventory?

45

 In purchasing materials the organization uses Standard price method and takes
anticipated market trends, transportation charges, and normal quantity of purchase into
consideration
 The organization also uses weighted average cost method where materials issued are
priced at the weighted average cost of material in stock.
 In the organization the highest value items are under the tight control and under
responsibility of the most experienced personnel.
 In the organization Materials received first are issued first (First in first out).
As shown above the organization is not using a single inventory controlling technique. Using
different inventory controlling techniques may help to compensate the drawbacks of the
techniques and exploit their advantages.

3) What constrains or a bottleneck does inventory management system face in the day to day
organizational activities?

 The organization has a storage problem in its stock management system.

 There are significant losses of construction materials in the company due to lack of
quality production by industries/producers.
 Due to work overload the organization has a problem of delivering inventory reports to
the regional housing and construction Agency.
4) What are the systems the agency uses to record, store retrieve and generate reports of
inventory?

 The organization conducts regular auditing inventory records (Auditing inventory

records).
 Perpetual inventory records are updated promptly.
 The postings to the perpetual inventory records are made promptly from issue requisitions.
 In additions to perpetual inventory, records are referenced to supporting invoices to insure
easy verification of the records.
 There are discrepancies between physical counts and perpetual records investigated and
resolved.
 46

4.2 Conclusion
This paper has presented a brief overview of inventory management practices on Amahara
National Regional State Construction and Housing Development Agency Dessie City Branch
Office. It intended to provide a short and precise conclusion and implications of findings. A
conclusion is done to indicate the outcome of the study and forward implications.
However, the agency has its own currently written, well approved, inventory policies, procedures
and manuals, which are systematically communicated to the respective departments. This means
each department has implemented its own inventory Policies and Procedures in a better and
organized way based on their level of activities. Therefore, the agency used these policies,
procedures and manuals in each departments to support its internal controlling system by making
the inventory management documents (Receiving, issuing, accounting and storing
responsibilities) familiar to its employees. According to the respondents, sufficient information is
not given on these items it is very difficult to explain the inventory control system of the branch
office at this stage. Even though the respondents confirmed the existence of inventory policies
and manuals to conduct inventory in the organization and are communicated for each
department, the writer of this study is suspicious on the practical use of these documents. In
addition to these, the employees’ response reflected the use of physical counts of inventories for

different purposes.Even though most business was small and uncomplicated; this control system
was used in all types of operation manufacturing, service, whole sale, and retail. It is time based
operation which involves scheduled periodic review of the stock level of all inventory items,
stock levels can be monitored by physical inspection, by visual review of perpetual inventory
cards, or by automatic computer surveillance. In most operation perpetual record is maintained.

According to the respondents, the agency focused first on the items that require the most frequent
attention, thus ensuring that there are enough of these items on hand when needed.

Items that require less attention are focused on next, and items that require the least amount of
attention are focused on last.

The major of the respondents agree with the agency used such stock evaluation & performance
measurement to complete or partial elimination of the annual physical inventory problems that
are preventing the store man from risks, to know the kind and numbers of items in the store, to
identify usable and despoiled materials. This shows that having stock evaluation & performance
measurement in the agency prevented the overall inventory managing systems of the agency.
 47

These create problems of knowing the amount and specific numbers of materials in the
storerooms and create problems of inventory management. In addition, the agency may not use
systems of records, so the storekeeper and the respective departments have faced problems of
quantitative record of stores materials and their cost, receipt, issue and balance of each item in
the store

5.3. Recommendation
Based on the major findings and conclusions the following recommendations were forwarded to
Amahara National Regional State Construction and Housing Development Agency Dessie City
Branch Office and other stakeholders.
 Effective inventory management is recognized, as one of the areas management of any
organization should acquire. The ability of any organization to evolve effective inventory
management system will depend on the extent to which it perceives the benefits it stands
to gain from such program.
 Even though the agency used the regional inventory management policy, procedures and
manuals, it faced to some gaps. That is due to its context is differ from the other
organizations’ in the region and need its own conditions for implementing activities
more specifically based on its rules and regulations, so the researcher recommended the
agency to have its own inventory policies, procedures and manuals rather than using the
others.
 Providing unique activities for auditors to count and check through inspection. It also
controls its stock by taking physical counts annually for the advantage of reports at the
end of the fiscal year. As a result, problems with the inventory do not correct until the
count could do, typically at the end of the fiscal year, so the agency should improve its
inventory control systems.
 In addition to this, although the agency try to minimize the loss of materials by using
periodic inventory records and annual physical counts, it did not take appropriate steps to
safeguard goods from risk of loss by theft because its department could not compare
quantities received against receiving reports. Therefore, the managers should encourage
and control the concerned department to implement inventory controlling systems
properly and solve these problems.

48
 Even though the agency had so many strong sides in having written instructions and
procedures to provide physical counts, it had some weakness to make them familiar and
applicable all of them by its employees. Therefore, the agency had faced to some
problems of inventory handling systems in its day-to-day activities because of those
employees who did not implement the agency’s written instructions and procedures that
enable them to provide physical counts. As a result, the agency should make more
familiar its policy, procedures and manuals to its employers and improve their inventory
handling system.
 As some of the respondents stated that, perpetual inventory records did not periodically
review to detect slow moving. This means the work of recording an inventory did not
implement properly by the concerned bodies. Thus, it could be difficult for the manager
to make correct decisions about the disposal, replacement, or discontinuance of different
segments of the inventory base. To solve problems of Perpetual Inventory Systems, the
agency should take its own measures.

 According to the research participants, the agency used different material controlling
techniques, but it did not implement all of them in the best way due to store persons
workloads and lack of time. Because of that, the store persons sometimes developed and
used their own controlling systems, which are comfortable for them. Therefore, the
researcher recommended that the agency should add store personals to reduce their
workload and create comfortable conditions to implement all inventories control
techniques.
 The agency used stock evaluation & performance measurement to complete or partial
elimination of the annual physical inventory problems that are preventing the store man
from risks, to know the kind and numbers of items in the store, to identify usable and
despoiled materials.

This shows that having stock evaluation & performance measurement in the agency
prevented the overall inventory managing systems. However, respondents stated that the
agency did not give priority for accurate recording of inventories to assure material
availability when orders are released. These create problems of knowing the amount and
specific numbers of materials in the storerooms and create problems of inventory
management. Therefore, the agency should take measures to solve this problem.
49
 Most respondents stated that the agency faced to problems of storeroom, put materials on
the field, and spoiled by sun or rain, problems of identifying and putting materials based
on their items and created over workload on the concerned body in order to deliver
inventory reports to the regional housing and construction Agency. Due to that, it faced
to significant losses of construction materials. To solve this problem of inventory
management the agency should fulfill with appropriate personals and built enough store
rooms.

50
 References
Agresti A. (2002). Categorical data analysis (2nd ed.). Hoboken, New Jersey: John Wiley &

Sons. Bloom N., and Reenen J. V. (2009) ‘Why do management practices differ

across firms and countries’, Journal of Economic Perspectives.

Burns, N. & Grove, S.K., (1987). The practice of nursing research. W.B. Saunders Company,
Philadelphia.
Dainty, Andrew R.f., Briscoe, Geoffrey H., and Millett, Sarah f., 2001. New perspectives on
construction supply chain integration. Supply Chain Management: An International
Journal. Volume 6 (4), page 163-173
Donyavi, S. & Flanagan, R. (2009). The Impact of Effective Material Management on

Construction Site Performance for Small and Medium Sized Construction

Enterprises. Proc. of the 25th Annual ARCOM Conference, Nottingham, UK.

Goonatilake, L. (1990). Inventory management in the manufacturing sector in developing

countries. Engineering costs and production economics, 1990: 19–24.
Martin J. R., Schelb W. K., Snyder R. C. and Sparling J. C. (1992). Comparing the practices

of U.S. and Japanese companies: The implications for management

accounting. Journal of Cost Management (Spring): 6-14.

Naoum, S, (2007). Dissertation research and writing for cons traction students, Oxford:
Butterworth – Heinemann.
Nasir, H. (2008). A Model for Automated Construction Materials Tracking. University of
Waterloo: Master Thesis.
Navon, R. & Berkovich, O. (2006). An Automated Model for Materials Management and

Control. Journal of Construction Management and Economics, 24, pp. 635-646.

Sardroud, J. M. (2012). Influence of Technology on Automated Management of Construction

Materials and Components. Journal of Scientis Iranica A, vol. 19(3), pp. 381-392.

Sindhu S., Nirmalkumar K., Krishnamoorthy V. (2014). Performance Analysis of Inventory

Management System in Construction Industries in India. International Journal of
Innovative Research in Science, Engineering and Technology (An ISO 3297: 2007
Certified Organization Vol. 3, Issue 4, April 2014.
Singh,Y.K(2006). Fundamental of Research Methodology and statistics. Newdelhi New Age
International pld publisher.

Song, J. (2005). Tracking the Location of Materials on Construction Projects. University of

Texas: PhD Thesis.

Sprague, L. and Wacker J. (1996). Macroeconomic analyses of inventories: Learning from

practice. International Journal of Production Economics, 1996, 45: 231–237.
UNEP. 1996. Report of the Regional Consultations held for UNEP s first Global
Environment

Outlook. Nairobi. (UNEP -United Nations Environmental Program)

(Thabet , 2001). (should searched in google)

Thomas, H. Randolph. Horman, Michael J., de Souza, Ubiraci Espinelli Lemes. and Zavřski,

Ivica. (2002). Reducing Variability to Improve Performance as a Lean Construction

Principle. Journal of Construction Engineering and Management. Volume 128(2), page

144-154

Tony W., (1997). Best Practices in Inventory management.

Appendix –A Questionnaire
WOLLO UNIVERSITY
 COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF
MANAGEMENT

Self Report Questionnaire to be filled by Dessie City Housing and Construction Branch
Office Employees

This questionnaire is part of a research project used to examine and explore the inventory
management practice by Dessie City Housing and Construction Branch Office. The worth
of the study completely depends on the true and factual answers you provide. Therefore,
you are kindly asked to fill in the questionnaire, honestly, genuinely and carefully. I would
like to stress that the information you provided is completely confidential and used by the
researcher only. For that matter, you don’t have to write your name.
Thank you in advance!!!
General instruction: There are two parts in this questionnaire. The first part is about
personal information and the second part is about close ended questions.

Part I. Demographic profile of respondents

Direction: Put “” sign in the box

1. Sex: A. Male  B. Female 

2. Occupation: A. Manager  B. Auditor  C. Store man 

D. Purchaser  E. Accountant  F. Engineer 

3. Educational status: A. MA or MSc. Degree  B. First Degree  C. Diploma

D. Certificate  E. High school Complete

4. Work Experience in the Company

1 year  2 years  3 years  4 years  above 5 years 

Part II: The following table consists of a listing of inventory management and control systems
that might have been practised in your company. For each item a Liker scale of one (1) to five
(5) is given. Rate your agreement on the listed items using:

1= Strongly Disagree
2= Disagree
3= Undecided
4= Agree
5= Strongly Agree
 Direction: Put “” sign in the table

No.
Inventory policies and procedures 1 2 3 4 5
1 The organization has Inventory policies, procedures and manuals..

2 The policies and procedures are current, in writing, and properly approved.

3 These policies and procedures are clearly stated and systematically

communicated to the respective departments.
4 These policies and procedures support internal control.
5 Receiving, issuing, accounting and storing responsibilities are properly
segregated for the responsible departments.
Inventory Control Systems
6 The management takes the appropriate steps to safeguard goods against risk of
loss by theft (e.g., goods kept in locked buildings, rooms, or cages, access to
which is granted only to authorize personnel).
7 Inventory records are reconciled (and differences explained) to advantage
reports on a regular basis. (Current inventory is adjusted at year-end by fiscal
year-end physical counts.)
8 Departments compare quantities received against receiving reports, etc.

9 Materials are released from storerooms only on the basis of requisitions which
are approved by a responsible official of the department.

10 Adequate provisions are made for obsolete and inactive items in inventories.

Inventory Handling Systems

11 Procedures for physical counts provide the use of adequate written

instructions.
12 Procedures for physical counts provide a room for adequate supervision.

13 The procedures for physical counts provide for clearly marking damaged
and obsolete inventory.
14 The procedures for physical counts provide for the use of pre-numbered
tags which are accounted for.
15 The procedures for physical counts provide for the counting of the items
and access to the tags only by employees who are not responsible for
custody of the particular items.
16 The procedures for physical counts provide for the rechecking of counts
and descriptions (dual counts) where perpetual records are not maintained
and where variations from the perpetual records are significant.
17 The procedures for physical counts provide for careful investigation of
significant overages and shortages.
18 The procedures for physical counts provide for prompt adjustment of
 records for inventory discrepancies after approval by a responsible official
other than stores personnel.
19 The procedures for physical counts provide for recording counts on
permanent inventory count sheets.
20 The procedures for physical counts provide for the signing and dating of
inventory count sheets by the person supervising the count.
21 The procedures for physical counts provide for properly accounting for
goods that are consigned in and out.
22 The management reviews the reconciliation of physical inventory counts
to the inventory records.

23 Adequate provisions are made for cut-off of receipts and issues.

24 If applicable, issuing and billing procedures are designed and correlated

so as to ensure the billing of all items.

25 There is physical segregation and proper accounting control of

merchandise on hand that is not property of the entity.

No.
Perpetual Inventory Systems
Detailed perpetual inventory records are periodically reviewed for slow-
26 moving items.
A perpetual inventory system is (including quantities and value) in use as
27 to all major classes of inventory.

28 Perpetual inventory records are updated promptly.

29 The postings to the perpetual inventory records made promptly are from
Pre-numbered, signed receiving reports.
30a. The postings to the perpetual inventory records are made promptly from
issue requisitions.
31 Additions to perpetual inventory records are referenced to supporting
invoices to insure easy verification of the records.

32 Inventories are taken without prior reference to quantities on perpetual

records.

33 There are discrepancies between physical counts and perpetual records

investigated and resolved.

Inventories Control Techniques

34 The organization uses the ABC analysis of Inventories (in this approach of
inventory control high value items are more closely controlled than low
value items).
35 The highest value items are under the tight control and under
responsibility of the most experienced personnel.
36 In the organization Materials received first are issued first (First in first
out).
37 In the organization materials received last are issued first (Last in first
out).
38 In the organization materials issued are priced at the weighted average cost
of material in stock (Weighted average cost method).
39 In purchasing materials the organization takes anticipated market trends,
transportation charges, and normal quantity of purchase into consideration
(Standard price method).

Stock evaluation & performance measurement

40 Targets are often arbitrarily set by management without full understanding

and due consideration of whether they are realistic (Target setting).
41 The organization gives priority for accurate recording of inventories to
assure material availability when orders are released (Inventory Record
Accuracy)
42 The organization conducts regular auditing inventory records(Auditing
inventory records)
43 The organization uses good strong cycle counting programme, which leads
to complete or partial elimination of the annual physical inventory with its
high costs and questionable accuracies.
44 The internal control systems appear to be adequate for the overall inventory
system of the organization.
Inventory management constraints

45 The organization has a storage problem in its stock management system.

46 There are significant losses of construction materials in the company due

to lack of quality production by industries/producers.
47 The organization respective departments have qualified personnel who can
properly manage their duties in inventory handling.
48 Due to work overload the organization has a problem of delivering
inventory reports to the regional housing and construction Agency.
49 The organization has a day to day recording system of stock and bin card.

Appendix –B Interview questions

1. Does your agency have its own policy, procedures and inventory manuals?
2. Does your agency follow its own materials management controlling system?
3. What kinds of inventory handling system does your agency implement?
4. How often does your agency count materials? How?
5. Does your agency apply material controlling techniques?
6. . How your organization evaluate it’s stoke materials?
7. Are there any factors that affect inventory management in your organization?
Appendix –C Important Documents used in inventory management
system of the branch office
በደሴ ከተማ አስተዳደር
 /
ቤቶች ልማት ፕሮጀክት ጽ ቤት

STOCK BIN CARD

ITEM
DATE VOUCHER UNIT OF IN OUT BALANCE REMARK
NO MEASURE
ገቢ ወጪ ቀሪ ምርመራ

Golden Printing Press ☎ 0331111213

አባሪ 12
 የንብረት ገቢና ወጪ መመዝገቢያ መዝገብ

ተ.ቁ ቀን የገቢ የወጪ የእቃ ብዛ ነጠ ጠቅላ ገቢ/ወጪ ያደረገው ከወጭ ምርመራ

ሰነድ ሰነድ ው ት ላ ላ ዋጋ ሰው ስም ቀሪ
ቁጥር ቁጥር አይነ ዋጋ
ት
 አባሪ 18

የቋሚ ንብረት ቆጣራ ቅጽ

ቁጥር-------------

ቀን----------------

የመ/ቤቱ ስም ------------------------

የበጀት ዓመቱ -----------------

የተቆጠረበት ቀን ----------------

ተ.ቁ የዕቃው የንብረ ተጠቃሚ የንብረት ሁኔታ ምደባ ምርመራ

ዝርዝር ት መለያ
ቁጥር የስራ ስም በጥሩ የሚሰራ መጠገን የማይሰራ
(PIN) ሂደት ሁኔታ ያለበት
ያለ

አበሪ 19
 የቋሚ ንብረት በር መውጫ ፈቃድ

ቁጥር -------------------

ቀን ---------------------

የመስሪያ ቤቱ ስም ----------------------

ተ. የቋሚ ንብረት ዝርዝር የቋሚ ንብረት መለያ ቁጥር ምርመራ

ቁ

ዕቃው እንዲወጣ የጠየቀው ዕቃው የሚወጣበት ምክንያት ------------------------

ለጥገና

ለስራ ጉዳይ

የፈቀደውና ያፀደቀው የግል ንብረት

------------------------ በትውስት

ማሳሰቢያ፡- ቅፁ በ 3 ኮፒ ተዘጋጅቶ፣

 የመጀመሪያው የበር መውጫ በር ላይ ላለ ዘብ ይሰጣል፣

 ሁለተኛው ለንብረቱ ባለቤት የስራ ሂደት ይሰጣል፣
 ሶስተኛው በመንግስት ግዥ ክፍያና ንብረት አስተዳደር የስራ ሂደት ይቀመጣል፣

በአማራ ብሄራዊ ክልላዊ መንግስት

 በደሴ ከተማ አስተዳደር

የደሴ ከተማ ቤ/ል/ፕ/ጽ/ቤት

የእቃ ወጪ መጠየቂያ ቅጽ

የብሎክ ቁጥር

የህንጻው አይነት

የጠያቂው ስም የተቋራጭ ድርጅት/ጥ/አ/ኢ/ማህበራ

የግንባታ ሳይት ቀን

ብዛት
ተ .ቁ ዕቃው ዝርዝር መለኪያ ምርመራ
የተጠየቀው የተፈቀደ

የጠያቂው ስም ያረጋገጠው ኃላፊ ስም

ፊርማ ፊርማ

ቀን ቀን
የፈቀደው ኃላፊ ስም

ፊርማ

ቀን

ማሳሰቢያ፡- ይህ ቅጽ በ 2 ኮፒ ለንብረት ክፍል 2 ኛው ኮፒ ብሎጅስቲክና ክፍል ይሆናል፡፡

ደሴ፤

እኔ ለ አገልግሎት ሚውል
ከዚህ በታች የተዘረዘሩትን እቃዎች እንዲፈቀድልን አመለክታለሁ፡፡

ብዛት ያንዱ ዋጋ ጠቅላላ ዋጋ

ተ .ቁ ዕቃው ዝርዝር መለኪያ
የተጠየቀው የተፈቀደ ብር ሣ ብር ሣ
የጠያቂው ስም ያጸደቀው ኃላፊ ስም

ፊርማ ፊርማ

ቀን ቀን
 ከደሴ ከተማኮን/ቢ/ል/ኤጀንሲ የንብረት ቆጠራ የዕቃ መዘርዘሪያ ቅጽ መደበኛ

ተ.ቁ የእቃው አይነት መለኪያ ብዛት ዕቃው ያለበት ሁኔታ ምርመራ

ከላይ በተዘረዘሩት እቃዎች በትክክል የቆጠረን መሆኑን በፊርማችን እናረጋግጣለን፡፡

የቆጣሪ ኮሚቴ አስቆጣሪ ንብረት ስርጭት ኦፊሰር
1. ስም ስም
ፊርማ ፊርማ
ቀን ቀን
1. ስም
ፊርማ

ቀን

ከደሴ ከተማኮን/ቢ/ል/ኤጀንሲ ግዜያዊ የርክክብ ፎርም

ተ.ቁ የእቃው አይነት መለኪያ ብዛት ዕቃው ያለበት ሁኔታ ምርመራ

ከላይ በተዘረዘሩት እቃዎች በትክክል የተረከብኩ መሆኔን በፊርማችን እናረጋግጣለን፡፡

ተረካቢ አስረካቢ
ስም ስም
ፊርማ ፊርማ

ቀን ቀን