Pakurár, Miklós

Szabó, Bernadett

Bulletin of University of Agricultural Sciences and Veterinary Medicine Cluj-Napoca Agriculture

English

University of Debrecen Electronic Archive

 
 
THE MAIN CHARACTERISTICS OF INVENTORY MANAGEMENT 
IN THE NORTH GREAT PLAIN REGION 
 
Pakurár, M1. – B. Szabó2
 
University of Debrecen, Centre for Agricultural Sciences, Faculty of Agricultural Economics and 
Rural Development 
1  Associate Professor, Department of Management and Labour Sciences, 52/508-361, 
pakurar@agr.unideb.hu 
2 Associate Lecturer, Department of Farm Business Management and Marketing, 52/526-922, 
bszabo@agr.unideb.hu 
4032 Debrecen, Böszörményi St. 138. 
 
Keywords: inventory, Norther Great Plain Region 
 
Summary 
 
We undertook a project within the frame of Regional Operational Program which is called Investigations on 
Enterprises and on Operative Management in the Region of Northern Great Plain. The second subprogram of this 
project is Investigations on Operative Management, within this we deal with inventory management as third partial 
program. We carried out a survey among agricultural enterprises in the Northern Great Plain Region aiming at 
revealing the inventory management of these enterprises. According to our results, inventory management is rather 
a theoretical issue as it turned out that agricultural enterprises are hardly aware of methods, costs, special 
indicators relating to inventory management. Education, extension service, research results can help farmers and 
entrepreneurs in getting acquainted with the up-to-date knowledge on inventory management.  
 
INTRODUCTION 
 
Where material flows break in space or time, stock develops. Inventory with its 
establishments, installation and equipment serves to save the consistence of stock and to 
harmonize material flows. Traditionally, companies maintained generous inventory levels to 
meet long-term customer demand because there were fewer competitors and products in a 
generally sheltered market environment. In the current international business environment, 
with more competitors and highly diverse markets in which new products are rapidly and 
continually introduced. Thus the level of inventory has increased. In production firms besides 
final products, there are stock of materials and equipment which serve production. The high 
cost of inventory has motivated managers to make the supply chain efficient, due to the non-
harmonized transportations and much failure higher inventory level is necessary [1].  
In this study we aim at investigating the characteristics of inventory management in the 
Northern Great Plain Region in Hungary focusing on inventory costs, ordering time and 
ordering quantity.  
 
MATERIAL AND METHOD 
 
Within the subprogram, we made a survey among agricultural enterprises in the 
Northern Great Plain on the major features of their inventory management, and practical 
realization. Altogether 148 enterprises got into the investigation. The questionnaire contained 
three main issues. In the first issue, we asked information on their inventory registration, then 
in the second issue we inquired about their inventory costs, the ordering frequency, and the 
ordered quantity, and in the third issue we were interested in their storing methods. The 
survey was done in the autumn of 2006 and during the spring of 2007 by personally. The 
results were processed and analyzed by Excel for Windows. 
 
RESULTS AND DISCUSSION 
 
Inventory management is the enterprise activity which aims at ensuring the smoothness 
of material flows regarding the requirements of efficiency [2].  Usually, it is essential to 
reduce the level of inventory and to carry out a more effective and liquid production, as the 
costs of inventory are high. Though the entrepreneurs should consider the requirements of the 
consumers, too, as they expect that producers should have big and immediately available 
inventory stock. With respect to costs of inventory, 74% of the asked enterprises do not 
register the costs relating to inventory. The others tried to estimate the ratio of this cost from 
the whole cost of the production. It takes up about 20 to 25% from the total cost. 
They were asked about uncertainty factors in inventory management and to give a score 
to these factors from 1 to 5. Figure 1. shows the average of their answers.  
 
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5
Quality problem
Changes in
transportation
Production disorders
Incalculable
consumer demands
Bad forecast
Score
Figure 1. Uncertainty Factors in Inventory Management 
 
As Figure 1. reflects, the most relevant uncertainty factor is the problem in the quality, 
followed by changes in transportation time and production disturbances.  
The majority of the enterprises refills the inventory on their own and hardly asks for the 
help of transporters. It is crucial issue that how the products get to the consumers. 55% of 
them fulfill individual demands, 30% create products on the basis of a prepared plan for the 
consumers.  
The two main questions of inventory management are „When to order?” and „How 
much to order?”. We examined both questions at the investigated enterprises. First, we 
inquired about the factors that influence the ordering time of inventory (Figure 2.). As it 
shows, the enterprises usually set the time of ordering in harmony with reaching a certain, 
minimal stock level.  
Reaching a 
certain stock 
level
61%
Price discount
22%
Reaching a 
certain time
17%
 
Figure 2. Factors Influencing Ordering Time 
 
Then we asked about the factors influencing the ordering quantity. There are two main 
factors that determine the stock quantity, such as a fixed stock quantity determined in advance 
and a varying quantity necessary for reaching a certain, maximal stock level (Figure 3.). Price 
discount is not a significant factor in this case.  
Varying quantity
38%
Price discount
23%
Fixed quantity
39%
Figure 3. Factors Influencing Stock Quantity 
 
It happens that a greater quantity is ordered than the usual. The reasons were scored from 1 to 
5 in Figure 4. 
 
 
 
 
 
 
 
 
 
Discounted prices
Quantity price
discounts
Sell-out
High cost of
ordering often
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0
Score
Figure 4. Reasons for Ordering Bigger Quantity 
 
In general, the enterprises control the inventory continuously by bar-codes and Radio 
Frequ
 rotation speed of inventory that is 
how m
 
CONCL SIONS 
 
ccording to our results, inventory management is rather a theoretical issue as it turned out 
REFERENCES 
[1] PAKURÁR, M. – BAINÉ SZABÓ, B. – BERECZK , D.– LAKATOS, Z.: Inventory System of Enterprises. 
 
ency Identification. Sometimes they control it only at several times. However, none of 
the asked ventures uses the ABC classification method.  
Unfortunately, very few enterprises determine the
any times the inventory recovers from the revenue. Though it is an essential efficiency 
indicator in inventory management, the entrepreneurs are not aware of this.  
 
U
A
that agricultural enterprises are hardly aware of methods, costs, special indicators relating to 
inventory management. They hardly use any computer program for evaluating or registering 
the inventory, and are not familiar with the ABC classification at all. They register the stock 
at average purchase price and mainly both in quantity and value at the place of the 
production. The ventures tend to determine the stock at a certain moment. The quality 
problem is the factor which is the most significant uncertainty condition in inventory 
management. The ordering time is different; it happens if the stock level reaches a determined 
minimal stock level. The ordering quantity is either fixed or varying. Due to the economy of 
scale, entrepreneurs tend to order larger quantity than the usual if there is a price discount for 
bigger quantity. Education, extension service, research results can help farmers and 
entrepreneurs in getting acquainted with the up-to-date knowledge on inventory management.  
 
 
I
Within the European Union. III. Nemzetközi Konferencia. Mosonmagyaróvár, 2006. CD 
[2] CHIKÁN A.: Vállalatgazdaságtan, AULA kiadó, Budapest, 2003. 
 


The main characteristics of inventory management in the North Great Plain Region

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The main characteristics of inventory management in the North Great Plain Region

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