Global Journal of Management and Business Research, C: Finance, Volume 22 Issue 5

II. L iterature R eview The earliest scientific inventory management research date back to the second decade of the past century (Vipul, 2013), interestingly, research on inventory management practice has continued to attract modern research focus. Several authors offer definitions for inventory, for instance, Yang, Yang and Wu (2021) offer that inventory refers to any kind of resource having economic value and is maintained to fulfil the present and future needs of the retail store for the ultimate purpose of resale. Adding that, inventory takes the form of raw materials, work-in-progress goods and finished goods that are considered to be the portion of the business’s assets that are ready or will be ready for sale assets held for sale in the ordinary course of business, in the process of production for sale, or in the form of materials or supplies to be consumed in production or rendering service. Vipul (2013) on the one hand explains inventory management as controlling the business stock or controlling the flow of goods and services as per their demand. On the other hand, the essence of inventory management according to Orga (2006) is therefore to have the quality and quantity of the right goods, at the right place and time. Inventory management is essentially the process through which materials of the correct quantity and quality are made available when required with due regard to storage costs, ordering costs and working capital. In the current business climate, increasing competition exerts pressure on the retail store to reduce cost and improve effectiveness, hence managers look for areas where they can improve their inventory management by reducing unnecessary costs without negatively impacting the level and quality of service delivery and product offered (Mwangi, 2016). Therefore, knowledge about inventory management in academia and the business environment is vital for effective cost management, enhancing product and service quality, and improving competitive ability and operational flexibility through different relevant inventory models and techniques such as pull systems and lead time reduction. These systems are often described in the operations management literature as arising from initiatives such as JIT or lean production (Yang et al., 2021). a) Activities of Inventory Management Inventory management covers a wide variety of activities in retail store management processes that range from carrying adequate stock to avoid stock out, ensuring optimum level of stock so that total inventory cost is minimised, to ordering sufficiently higher quantity at a time so that repeated ordering and costs incurred in b) The Purpose of Inventory Management According to Wild (2002), the purpose of inventory management in the retail store is first, to provide both internal and external customers with required service levels in terms of quantity and quality order rate fill, to ascertain present and future requirements for all types of inventories and to avoid stocking while avoiding bad in production and lastly to keep the cost to a minimum by variety reduction economical lot sizes and analysis of costs incurred in obtaining and carrying inventories. Thus, the basic objective of inventory management is to maximise customer service by maintaining appropriate levels of inventory at minimum cost. c) Types of Inventory System There are two types of inventory systems that aid the effectiveness of inventory management practice. Ile (2002) identified the following: i. Perpetual Inventory System This system controls the movement of each item of inventory as it goes in and out of stock and shows the current balance at hand. ii. Physical Inventory System According to the physical inventory system, some discrepancies between inventory records and quantities at hand cannot be ruled out. An actual count of all items at hand is periodically necessary for effective inventory control. In sum, the method selected between perpetual and physical inventory methods, depends upon the size and diversity of stock, the degree to which the work process is standardised and the processing methods employed in a particular plant. d) Tools of Inventory Management On the one hand, Nirmala et al (2022) identified two tools related to inventory management through inventory classifications. ABC analysis: The ABC analysis categorises products based on importance. Once the ranking factor is chosen, breakpoints are chosen for classes A,B,C and so on. The systems ensure that products are ranked according to their strategic importance, therefore, not all product items receive equal logistics treatment (Nirmala et al., 2022) Critical value analysis: The CVA pays more attention to the C items. Although it ranks products similarly to ABC, CVA analyses products based on stock-out rates. Stock-out rates are assigned subjectively to each category. Furthermore, Rajeev (2008) identified other inventory management tools including barcoding, radio frequency identification (RFID) and inventory software. 2 Global Journal of Management and Business Research Volume XXII Issue V Version I Year 2022 ( ) C © 2022 Global Journals Analysis of the Impact of Inventory Management Practices on the Effectiveness of Retail Stores in South Africa (Yang et al., 2021). In concert, International Accounting Standard (IAS) 2 paragraph 8 defines inventories as such manner can be reduced (Nirmala, Vijila & Gnanaraj 2022).