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Article
Publication date: 14 March 2024

Jingbin Wang, Xinyan Yao, Xuechang Zhu and Baitong Li

This study explores the intricate relationship between inventory leanness, financial constraints and digital transformation in listed Chinese manufacturing firms.

Abstract

Purpose

This study explores the intricate relationship between inventory leanness, financial constraints and digital transformation in listed Chinese manufacturing firms.

Design/methodology/approach

Using a large panel data collected from 2,563 Chinese listed manufacturing enterprises over the period from 2012 to 2021, this research employs the instrumental variable method combined with two-stage least squares estimators to explore the U- shaped relationship between inventory leanness and financial constraints. Furthermore, the moderating role of digital transformation is demonstrated.

Findings

Contrary to traditional assumptions, our research uncovers a U-shaped relationship between inventory leanness and financial constraints, indicating that excessive inventory reduction can exacerbate financial constraints. Digital transformation plays a significant moderating role, particularly in highly digitalized environments.

Practical implications

Our findings have practical significance for top managers and policymakers. We advocate for a balanced approach to lean inventory management to mitigating financial constraints. The study emphasizes the pivotal role of digital transformation in alleviating the impact of inventory leanness on financial constraints, highlighting the need for digital transformation strategies.

Originality/value

This research provides a comprehensive analysis of inventory leanness, financial constraints and digital transformation dynamics. It challenges conventional thinking by revealing the nonlinear nature of the inventory leanness–financial constraints relationship. The concept of moderation highlights the moderating effect of digital transformation. This study offers practical guidance for practitioners and policymakers.

Details

Journal of Manufacturing Technology Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-038X

Keywords

Article
Publication date: 29 March 2024

Rashmi Ranjan Panigrahi, Avinash K. Shrivastava and Sai Sudhakar Nudurupati

Effective inventory management is crucial for SMEs due to limited resources and higher risks like cash flow, storage space, and stockouts. Hence, the aim is to explore how…

Abstract

Purpose

Effective inventory management is crucial for SMEs due to limited resources and higher risks like cash flow, storage space, and stockouts. Hence, the aim is to explore how technology and know-how can be integrated with inventory practices and impact operational performance.

Design/methodology/approach

The basis of the analysis was collecting papers from a wide range of databases, which included Scopus, Web of Science, and Google Scholar. In the first phase of the process, a search string with as many as nine related keywords was used to obtain 175 papers. It further filtered them based on their titles and abstracts to retain 95 papers that were included for thorough analysis.

Findings

The study introduced innovative methods of measuring inventory practices by exploring the impact of know-how. It is the first of its kind to identify and demonstrate how technical, technological, and behavioral know-how can influence inventory management practices and ultimately impact the performance of emerging SMEs. This study stands out for its comprehensive approach, which covers traditional and modern inventory management technologies in a single study.

Research limitations/implications

The study provides valuable insights into the interplay between technical, technological, and behavioral know-how in inventory management practices and their effects on the performance of emerging SMEs in Industry 5.0 in the light of RBV theory.

Originality/value

The RBV theory and the Industry 5.0 paradigm are used in this study to explore how developing SMEs' inventory management practices influence their performance. This study investigates the effects of traditional and modern inventory management systems on business performance. Incorporating RBV theory with the Industry 5.0 framework investigates firm-specific resources and technological advances in the current industrial revolution. This unique technique advances the literature on inventory management and has industry implications.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 19 March 2024

John Maleyeff and Jingran Xu

The article addresses the optimization of safety stock service levels for parts in a repair kit. The work was undertaken to assist a public transit entity that stores thousands of…

Abstract

Purpose

The article addresses the optimization of safety stock service levels for parts in a repair kit. The work was undertaken to assist a public transit entity that stores thousands of parts used to repair equipment acquired over many decades. Demand is intermittent, procurement lead times are long, and the total inventory investment is significant.

Design/methodology/approach

Demand exists for repair kits, and a repair cannot start until all required parts are available. The cost model includes holding cost to carry the part being modeled as well as shortage cost that consists of the holding cost to carry all other repair kit parts for the duration of the part’s lead time. The model combines deterministic and stochastic approaches by assuming a fixed ordering cycle with Poisson demand.

Findings

The results show that optimal service levels vary as a function of repair demand rate, part lead time, and cost of the part as a percentage of the total part cost for the repair kit. Optimal service levels are higher for inexpensive parts and lower for expensive parts, although the precise levels are impacted by repair demand and part lead time.

Social implications

The proposed model can impact society by improving the operational performance and efficiency of public transit systems, by ensuring that home repair technicians will be prepared for repair tasks, and by reducing the environmental impact of electronic waste consistent with the right-to-repair movement.

Originality/value

The optimization model is unique because (1) it quantifies shortage cost as the cost of unnecessary holding other parts in the repair kit during the shortage time, and (2) it determines a unique service level for each part in a repair kit bases on its lead time, its unit cost, and the total cost of all parts in the repair kit. Results will be counter-intuitive for many inventory managers who would assume that more critical parts should have higher service levels.

Details

Journal of Quality in Maintenance Engineering, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1355-2511

Keywords

Article
Publication date: 30 September 2013

Pu Liu and Yingying Shao

The purpose of this paper is to empirically examine the relationship between firms' inventory accumulation and financial structure. It further investigates the impact of…

1823

Abstract

Purpose

The purpose of this paper is to empirically examine the relationship between firms' inventory accumulation and financial structure. It further investigates the impact of geographical locations on firms' inventory investment decision after controlling for firms' financial structure.

Design/methodology/approach

This paper uses a large panel of over 1,400 Chinese listed firms that issued.

Findings

Firms' financial structure, as reflected in the availability of internal and external capital, has significant impact on firms' inventory decisions. In addition, it is found that firms headquartered in major economic development areas (EDA) tend to have slower inventory growth than firms located in rural areas. Moreover, the results reveal that locating in major EDA facilitates firms' stockpiling of inventories through easy access to external capital.

Originality/value

This study not only contributes to the studies on the interactions between firms' location and their financing and investment policy, but also improves our understanding about emerging markets such as China.

Details

Studies in Economics and Finance, vol. 30 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 1 March 1999

Don P. Holdren and Craig A. Hollingshead

Integrates inventory control issues with corporate financial management and commercial lending practices. The first part of the paper considers inventory management techniques…

2722

Abstract

Integrates inventory control issues with corporate financial management and commercial lending practices. The first part of the paper considers inventory management techniques used by inventory holding businesses, then explains how inventory segmentation techniques may be used by financial credit managers. Suggests ways inventory management influences the cost of working capital to businesses. Commercial loan officers can use this information to adopt a market‐based lending strategy that segments inventory and closely matches inventory loan risks and return.

Details

Journal of Business & Industrial Marketing, vol. 14 no. 1
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 1 June 1991

M. Tawfik Mady

Both inventory investments and structure in a sample of 44manufacturing companies representing five industry groups in Egypt areinvestigated. The study reveals that the type of…

Abstract

Both inventory investments and structure in a sample of 44 manufacturing companies representing five industry groups in Egypt are investigated. The study reveals that the type of industry is a determinant factor of both the Inventory to total Assets Ratio (AIR) and the inventory structure at the firm level. AIR indicates significant positive correlation with the Materials Cost Ratio (MCR), the Finished Product inventory Ratio (FPR), and the “Others” Inventory Ratio (OTR), but a negative correlation with the Raw Materials inventory Ratio (RMR). The study shows that raw materials and purchased components deserve the most attention in Egyptian industry. The study also shows a negative correlation between RMR and the company′s Value Added (VAD). With more vertical integration a firm can reduce its RMR. The study confirms the effect of the type of production‐inventory system on the company′s Work‐in‐Process inventory Requirements (WPR). WPR was relatively low in both the engineering and food groups.

Details

International Journal of Operations & Production Management, vol. 11 no. 6
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 22 April 1989

Carol Lee Stamm, Damodar Y. Golhar and Wayland P. Smith

Inventory control practices in medium‐sized midwestern manufacturing firms (75 to 500 employees) were investigated. Items concerning inventory model used, shortages, number of…

1655

Abstract

Inventory control practices in medium‐sized midwestern manufacturing firms (75 to 500 employees) were investigated. Items concerning inventory model used, shortages, number of suppliers and quality assurance were included in the survey. The total number of respondents was 212 (a 54 percent response rate). Our findings identify MRP as a widely used model at present, and MRP and JIT as the inventory models of choice for the future. These findings dictate appropriate educational emphasison MRP and JIT inventory models for both students and practitioners.

Details

American Journal of Business, vol. 4 no. 1
Type: Research Article
ISSN: 1935-5181

Keywords

Article
Publication date: 1 August 2001

Seyed‐Mahmoud Aghazadeh

The inventory management system of a discount retail store was examined. A just‐in‐time inventory management model and a quantity discount model were used to determine the…

6313

Abstract

The inventory management system of a discount retail store was examined. A just‐in‐time inventory management model and a quantity discount model were used to determine the appropriateness of each model for the retail outlet. Based on the calculations performed, it was determined that utilizing a retail just‐in‐time (JIT) policy is unrealistic. Customer demands constantly change, and shortages due to stock‐outs can cause huge losses in profits, especially when customers are lost to competitors. Additionally, the quantity discount model provides the lowest total cost for a retail outlet. Not only are the prices cheaper when inventory is bought in large quantities, but shortages or stock‐outs are rare. The optimal solution for a retail store is implementing the quantity discount method.

Details

Logistics Information Management, vol. 14 no. 3
Type: Research Article
ISSN: 0957-6053

Keywords

Article
Publication date: 1 January 1978

Michael Schiff

A recent article by Bartels presents a theoretic discussion of the need for avoiding the fragmentation of marketing and distribution. What follows is a rationalisation and…

Abstract

A recent article by Bartels presents a theoretic discussion of the need for avoiding the fragmentation of marketing and distribution. What follows is a rationalisation and description of a practical approach to an associating of inventory carrying costs with the field sales organisation within marketing thus closing the loop between marketing and physical distribution. The integration of inventory control and marketing, a phase of bringing marketing and physical distribution together, can be viewed as a problem of overall management. Top corporate executives have in recent years stressed the importance of cash flow management to all levels of management, not merely financial managers. A frequently mentioned, obvious variable in improving cash flow is improved inventory control interpreted to mean reduced inventory levels to meet given service levels, thus releasing cash for other uses. To achieve this objective of improved inventory control, one needs to involve decision makers affecting the levels of inventory, specifically the field sales organisation.

Details

International Journal of Physical Distribution & Materials Management, vol. 8 no. 4
Type: Research Article
ISSN: 0269-8218

Article
Publication date: 1 March 1990

M. Tawfik Mady

The inventory performance in industry in Egypt over a six‐yearperiod for a sample of 44 manufacturing companies representing fiveindustry groups is analysed. This will help in…

Abstract

The inventory performance in industry in Egypt over a six‐year period for a sample of 44 manufacturing companies representing five industry groups is analysed. This will help in highlighting areas of opportunity to improve inventory management in the industrial public enterprises (IPEs) with an ultimate goal of increasing profitability and productivity. The conventional inventory turnover ratio (ITR) and the value added inventory turnover rate (ITR2) were used as measures of inventory performance in this study. Kruskal‐Wallis H‐Test was utilised to compare the different industry group means. An effort was also made to identify some independent variables that might have an effect on inventory performance at the company level. This study revealed that type of industry is a determinant factor of the achieved ITR at the firm level. When compared with some industrial nations, it was clear that manufacturing companies in Egypt were suffering from a relatively low ITR, and a very low ITR2. Another important finding of this study is that ITR2 was always significantly correlated with the return on investment ratio at the company level. This finding shows the significant role that the inventory management function could play in improving profitability and productivity in the industrial public enterprises in the country.

Details

Industrial Management & Data Systems, vol. 90 no. 3
Type: Research Article
ISSN: 0263-5577

Keywords

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