Abstract:
The effects of inventory management practices of some agio-allied industries in
old Ondo State were investigated using an Economic Order Quantity (EOQ) Approach.
The industries were categorised into small, medium and large scale sizes.
Research questions on methods of inventory acquisition. methods of storing the
acquired inventory and the ratio of the proportion borne by raw materials to the total
The data collected on sources of inventory acquisition, storing methods, order
working capital were drawn. While standardized questionnaires supplemented with
oral interview and personal observations administered on the stratified sampled agroallied
industries were employed to elicit the information needed to answer the research
questions.
The data collected on sources of inventory acquisition, storing methods, order quantity stocked for production per annum, number of purchases made per year,
ordering costs, holding costs and ratio of the proportion borne by raw materials
inventories to the total working capital were analysed using methods of contents analysis
and simple percentage calculations.
The Economic Ordering Quantity (EOQ) models were used to test the validity of
inventory management of one company ,from each of the category of industries.
The study revealed that the small scale industries relying on direct purchase (25%),
direct production and supply contracting (25%) and medium scale employing supply
contracting (40%), supply contracting and credit lease back (200
/0). etc have been achieving some measures of successes. Similarly, the large scale relying on direct purchase (12.5%), direct purchase and just-in-time( 12.5%), etc have been achieving some measures of successes.
The study showed that the application of the EOQ models will not only lead to
substantial reduction in the level of investment in raw materials the agro-allied industries
are using but will as well lead to freeing excess money tied up in raw material purchases.
The results showed that reduction in the total inventory costs of 89.5% for company
C-3, 12% for company E - 1 and 78.4% for company K-2 by using model I were
possible, While a reduction of 81,5% for company C-3, 81.1250. 0 for company E-I
and 76% for company K - 2 were equally obtained by using EOQ model 2
