Investigation and analysis of inventory management in a construction company - a case study of Hi-Tech Nigeria Limited

Abstract

This study investigated the inventory management in a construction company – a
case study of Hi-Tech Nigeria limited. In a quest to find out how inventory is
being managed in Nigeria construction companies. The ABC Pareto principle
was successfully used to classify the parts into three broad categories according
to the following criteria, fast movers, average movers and slow movers. Using
statistical analysis done with SPSS tool, basic classification of the 118 items
recorded, based on 3 points sale, A=1, B=2, C=3, based on paretus principle,
tagged critical items, moderate and non-critical items, the outcome of the
PARETO analysis which has demonstratively confirmed the validity of 20/80,
Rule. It was quite apparent form the study, that low-cost items comprise 80% of
the bulk of the inventory. But, as the PARETO principle avers, this class of items
accounts for only 20% of the inventory cost, the critical items A= 3, displayed
maximum mean value or the highest total cost of #123,062.0, skewness statistic
4.4 and standard error of 0.223. It is therefore clear that theory and practice
have a meeting point. It is evident from the result that the firm studied does not
practice an optimal inventory policy as observed from the research results and
the real-life practice of their daily operations. The research has determined the
optimal lot size for each item in the inventory studies.