Abstract:
An effective inventory management improves the firm’s total performance through matching
inventory management practices and a competitive advantage especially now that most
organizations operates in a more competitive industries or sectors all over the world. So the
main purpose of this study was to identify factors affecting the effectiveness of inventory
management practice in the study area. Based on personal observation and different literature
identified factors were: age, sex, educational background, service year, qualified staff, funds,
information technology and documentation. Primary and secondary sources were used to collect
both qualitative and quantitative data. Survey consists of structured questionnaire, key informant
interview was carried out to achieve the research objectives. The target population of this study
were 85 employees of in Jimma University. The researcher used census sampling technique
because Census is a process of collecting data by distributing questionnaire to all population in
the study area. The collected data was analyzed via SPSS version (20). In addition, descriptive
and inferential statistical tools such as mean, percentage, frequency, normality test, correlation
and multiple regressions were used to analyze the collected data from questionnaires. To test the
reliability, Cronbach’s alpha coefficients were calculated. The analysis result implies that
effective inventory management practice has large positive correlation with qualified staff,
funding and information technology documentation. Besides, the finding of this study shows that
regression analysis funding had relatively strongly significant and direct effect on effectiveness
of inventory management with beta value of 0.333 and followed by qualified staff with beta value
of 0.262, information technology with beta value of 0.190 and documentation with beta value of
0.164respectively.Therefore, it’s recommended that the documentation system of the study area
needs improvements of the manual documentation systems through by automating system.
