Impact of economic order quantity model application on the operational performance of Training Heights Limited

Abstract

Poor inventory planning had been a real issue for companies as bad ordering procedures and unclear replenishment processes could lead to stock-outs, poor service and high operating costs. The study focused on the effect of application of Economic Order Quantity (EOQ) model on the operational performance of Training Heights Limited, Abuja. In particular, ordering cost management was evaluated in terms of cost efficiency and replenishment policy was evaluated in terms of inventory avail-ability. This study used a cross-sectional survey research design. The population consisted of all the workers (205) of which 34 were management staff and 171 were junior staff. The population was small enough that it was possible to use the census sampling method and representation was achieved by stratification of the population according to management and to junior staff categories. The primary data were gathered with a structured questionnaire, where the respondents could give uniform response about the studied variables. The instrument was validated based on content validity and reliability was obtained by Cronbach's alpha. The data obtained were analysed using regression analysis with the help of SPSS version 27. The results showed that ordering cost management had a positive and significant impact on cost efficiency, and replenishment policy had positive and significant impact on the availability of inventory. It was concluded that the use of EOQ model in the Training Heights Limited had a significant impact on performances of the operations. It suggested increasing the efforts in ordering cost records, and establishing a clear replenishment policy on reorder levels, lead time and material consumption.