Inventory Managementand Profitability of Quoted Food and Beverage Firms in Nigeria

ABSTRACT

Thestudy examined the relationship between inventory management and profitability in quoted food and beverage firms in Nigeria. It was carried out to find out the effect of inventory management on profitability of quoted food and beverage firms in Nigeria.

To achieve the objectives, two food and beverage firms were purposively selected from fifteen quoted food and beverage firms in Nigeria using judgemental sampling technique. In so doing, the study employed a longitudinal research design, in which data was collected within the period of 2008 to 2017. The data collected were analyzed with descriptive statistics, correlation analysis and multivariate panel data analysis.

The study concluded that there is significant relationship between inventory management and profitability. It revealed that inventory holding cost and inventory ordering cost are negatively related to profitability. It also revealed that inventory turnover is positively related to profitability. Based on the finding, the study, recommended that food and beverage firms should strive to adopt modern and current inventory management techniques so as to reduce inventory cost. Also, managers of these firms should ensure that their staff understand and embrace inventory management practices in order to achieve substantial reductions in inventory cost and also to strengthen competitiveness and business performance.In addition, food and beverage firms and other manufacturing firms should ensure that substantial amount of their resources are devoted to factors that improve inventory turnover in order to improve the firms’ profitability.