Inventory Management And Profitability Of Companies In Kampala: A Case Study Of Mega Standard Supermarket

ABSTRACT

The major aim of this research was to find out the relationship between inventory

management and profitability of companies. The research topic was "Inventory

management and profitability of Companies in Kampala" A Case study of Mega

Standard Supermarket. The objectives of the study were; to examine the inventory

management practices used in Mega standard Supermarket, to examine the factors

affecting profitability of Mega standard Supermarket and to study the relationship

between inventory management and profitability of Mega standard Supermarket.

Cross sectional and correlational research designs were used. The researcher

applied purposive sampling on 70 employees from Mega Standard Supermarket who

constituted the survey population. To achieve the objectives, the researcher collected

data from both primary and secondary sources. Primary data was obtained from

respondents through questionnaires and interviews while secondary data was

obtained using existing literature like books, magazines, brochures, journals and

internet. Data from the field was analyzed using frequencies and percentages. The

data was also edited, coded and well arranged in order to ensure accuracy and

completeness.

According to the research findings, the researcher discovered that most factors

examined had a negative impact on profitability of the company. The factors included

cost of acquiring raw materials, tax liability on the profits and cost of production.

Profitability of Mega Standard Supermarket was mainly affected by high costs of

acquiring raw materials, high tax liability on profits, low productivity per employee and

increasing cost of production. It was also established that there is a positive

relationship between inventory management and profitability of companies. This

implied that the more effort Mega Standard Supermarket channels towards improving

the inventory management practices, the higher will be its profits.

One of the recommendations was that management of Mega Standard Supermarket

should understand all the factors that affect profitability of the company and then come up with feasible measures and solutions for each. This will help to maintain high profits in the company.