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Inventory Control and Financial Performance of Private Health Institutions. a Case Study of Nsambya Hospital, Makindye Dwsion Kampala, Uganda

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Inventory Control and Financial Performance of Private Health Institutions. a Case Study of Nsambya Hospital, Makindye Dwsion Kampala, Uganda INVENTORY CONTROL AND FINANCIAL PERFORMANCE OF PRIVATE HEALTH INSTITUTIONS. A CASE STUDY OF NSAMBYA HOSPITAL, MAKINDYE DWSION KAMPALA, UGANDA. BY KAMUGISHA FLOWELL 1163-05014-06272 RESEARCH REPORT SUBMITTED TO THE COLLEGE OF ECONOMICS AND MANAGEMENT IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF A BACHELOR OF BUSINESS ADMINISTRATION OF KAMPALA INTERNATIONAL UNWERSITY AUGUST 2019 DECLARATION I, K~mugisha Flowell, declare that this work is entirely miiie and solely a result of my own effort. It has never been submitted in any institution for the academia award. Signed by Date APPROVAL This is to certify that this research report has been under my supervision and is now ready for submission to College of Economics and Management department of Accounting and Fi anc Signature Mrs. Florence frau (SUPERVISOR) Date ~ DEDICATION I dedicate this research report to my family especially my, Mr.Kamugisha Ben,My mother, Mrs. Kyomuhendo Jenifer, my sisters, Bridget, Tracy, Comfort and my brother Ricky, my friends, Ronnie, Gilbert, Julius, Harriet, Evas and Doris who have greatly played a good role in making me what I am as far as my education is concerned 111 ACKNOWLEDGEMENT First and foremost I would like to thank my supervisor Mrs. frau Florence for her knowledge, eye for detail, and way of pinpointing issues in a minimal time. I also thank you for the explanations and guidance which got me to the level of understanding required for the matter at hand. I would also like to thank my family whose encouragement, support and pride in me, have been constant not only throughout my degree, but right throughout my life. I believe that the independence and strength that I possess is due to my upbringing and surroundings. You are, and have always been, the central point of this. Thank you for always being there for me. iv TABLE OF CONTENTS DECLARATION APPROVAL DEDICATION ACKNOWLEDGEMENT iv TABLE OF CONTENTS LIST OF TABLES viii LIST OF FIGURES ix LIST OF ACRONYMS ABSTRACT ~D1J2~p’rE~R. ONE 1 1.0 INT~RODLJCTIOIN~ 1 1.1 Background of the study 1 1.1.1 Historical perspective 1 1.1.2 Theoretical Perspective 2 1.1.3 Conceptual Perspective 3 1.1.4 Contextual background 3 1.2 Problem statement 3 1.3 Purpose of the study 4 1.4 Specific objectives 4 1.5 Research Questions 4 1.6ScopeofStudy 4 1.6.1 Subject Scope 4 1.6.2 Geographical Scope s 1.6.3 Time scope s 1.7 Significance of the Study 5 1.8 Conceptual Review 6 1.9 Operational definitions 7 ~ ‘I’’~~7O 9 LITERATURE REVIEW 9 2.0 Introduction 9 2.1 Theoretical review 9 V 2.1.1 Theory of Inventory Management .9 2.2 Condeptual Review 10 2.2.1 Inventory control 10 2.2.2. Financial performance 12 2.3 Related Literature 13 2.3.1 Effect of material handling on the financial performance of private health institutions 13 2.3.2 Effect of purchase orders on the financial performance of private health institutions 15 2.3.3 Effect of Reverse logistics (RL) and financial performance of Private Health Institutions 17 2.4. Research gaps 19 CBi~.~P’I’ER. ‘I’~H~R~EE 20 ~1E’I’H~ODOLOG’Y 20 3.0 Introduction 20 3.1 Research Design 20 3.2 Population of the study 20 3.3 Sampling techniques and Sample Size 21 3.4 Data Collection Method 22 3.4.1 Primary Sources 22 3.4.2 Secondary Sources 22 3.4.3 Data Collection Instrument 22 3.5 Reliability and Validity of the Instruments 23 3.6 Data Processing and Analysis 23 3.7 Ethical Considerations of the Study 23 3.8 Limitations of the study 24 CHAPTER FOUR 25 PRESENTATION, DATA ANALYSIS AND INTERPRETATION OF FINDINGS 25 4.0 Introduction 25 4.1.3 Unit of operation 27 4.1.4 Level of education of respondents 28 v 4.5 Level of management .29 4.2: Effect of Material handling on the financial performance of piivate health institUtions 30 4.3 Effect of purchase orders on the financial performance of private health institutions 32 4.4 Effect of reverse Logistics on the financial performance of private health institutions 34 C~E1i~I~’I’KR. FI’V~F1 36 DISCUSSION OF THE FINDINGS, CONCLUSIONS AND RECO1~~II~1EN])A.’I’IONS 36 5.0 Introduction 36 5.1.1 Effect ofmaterial handling on the financial performance ofprivate health institutions in Makindye division 36 5.1.2 Effect of purchase orders on the financial performance of private health institutions in Makindye Division 36 5.1.3 Effect of reverse logistics on the financial performance of private health institutions of private hospitals in Makindye Division 36 5.2.2 Effect of purchase orders on the financial performance of private health institutions in Makindye Division 38 5.3 Recommendations of the study 38 5.3.1 Effect of material handling on the financial performance of private health institutions in Makindye division 38 5.3.1 Effect of purchase orders on the financial performance of private health institutions in Makindye division 38 5.3.1 Effect of reverse logistics on the financial performance of private health institutions in Makindye division 38 REFERENCES 39 APPENDICES 44 APPENDIX I: QUESTIONNAIRES 44 APPENDIX II 47 Time and Budget Frame; 47 APENDIX III 48 Estimated budget; 48 vii LIST OF TABLES Table 4.1 Gender of respondents 25 Table 4.2: Age of respondents 26 Table 4.3: Unit of operation 27 Table 4.4Level of Education of respondents 28 Table 4.5. Level of management 29 Table 4.6: Distribution of the responses on the Effect Material handling on the financial performance ofprivate health institutions 30 Table 4.7: Distribution of the responses on the Effect of purchase orders on the financial performance of private health institutions 32 Table 48: Distribution of the responses on the Effect of reverse logistics on the financial performance of private health institutions 34 viii LIST OF FIGURES Figure 4.1: Bar graph showing gender of respondents 25 Figure 4.2 Age of respondents 26 Figure 4.3:Unit of operation 27 Figure 4.4: Level of education of respondents 28 Figure 4.5: Level of management of employees 29 x LIST OF ACRONYMS NMS National Medical Stores NDA National Drug Authority NTV National Television NHP National Health Policy MOH Ministry of Health USAID United States Agency for International Development WIPO Work in Progress MRO Maintenance repair and overhaul FIFO First in first out LIFO Last in First out MRP material requirements planning DRP District Resource Planning JIT Just in Time WIP work-in-progress EOQ Economic Order Quantity ERP Enterprise Resource Plan RMS Regional Medical stores KEMSA Kenya Medical Supplies Agency °C Degrees centigrade °F Fahrenheit degrees x ABSTRACT The general purpose of the study was to determine the relationship between inventory control and financial performance of private health institutions in Uganda and the specific objectives were; to examine the effect of material handling on financial performance of Nsambya hospital, Makindye division, to establish the effect of purchase orders on the financial performance ofNsambya hospital, Makindye division and to determine the effect of reverse logistics on the financial performance of Nsambya Hospital, Makindye division. The study used a survey research design and data was collected from the 50 employees of Nsabya Hospital. The findings of the study revealed that there is a positive relationship between material handling and financial performance of private health institutions as the respondents agreed with most of the statements that were used to measure this objectives and it was found out that Materials are not well stored under the right temperature and the respondents also revealed that the hospital does not have enough store for all the materials. The findings of the steady also greatly revealed that purchase orders improve the financial performance of private health institutions in Makidye division if well used as respondents agreed with all the statements that were used to measure this objective. The findings of the study further revealed that reverse logistics have a positive impact on the financial performance of private health institutions in Makindye division. The study however revealed that materials are not reused at Nsambya hospital and also that proper disposal of the used materials is not ensured. The study recommended that the hospital should construct a spacious store for keeping all the materials, the management should ensure that materials are well stored under the right temperature, more emphasis should be put on thorough use of purchase orders as it was revealed that they enhance the financial performance of private health institutions greatly, the management should ensure that materials are reused in order to reduce on over expenditure and that the management should ensure that there is an improvement in disposal of the used materials. xi CHAPTER ONE 1.0 INTRODUCTION This chapter covers the background of the study, statement of the problem, purpose of the study, objectives of the study, research questions, operational definitions of the study and the significance of the study. 1.1 Background of the study 1.1.1 Historical perspective Globally, Inventory control is highly recommended that Managing stock effectively is important for any organization, running a health institution because without enough stock, health services to patients will come to a halt and financial performance will be low in private health institutions (UN, 2016). Stock represents the largest single investment in assets for most organizations. In most organizations, employees have become habituated with high levels of commodity availability resulting in higher stock holding levels (Chopra and Meindi, 2007).
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