The Role of Inventory Cost Management on the Performance of SMES: Evidence from Albania

Abstract

Objective: The objective of this study is to investigate the causal relationship between inventory value and sales revenue in small and medium enterprises (SMEs) in Albania. This research aims to understand how effective inventory management influences the economic performance of SMEs.   Theoretical Framework: Inventory management is a continuous process influenced by both internal and external factors, and its efficient handling is crucial for optimizing productivity and economic benefits. The study is grounded in the linear regression method, where inventory is treated as the independent variable and sales revenue as the dependent variable. The theoretical framework relies on the analysis of existing literature and financial statements from SMEs.   Method: This study uses a quantitative research methodology, employing linear regression analysis to explore the relationship between inventory and sales revenue. Data is collected from a combination of academic articles, financial statements of SMEs, and official websites that publish business performance reports. Inventory is considered the independent variable, and sales revenue is treated as the dependent variable, providing a clear focus for analysis.   Results and Discussion: The study reveals a significant relationship between inventory value and sales revenue in SMEs in Albania. Through the application of linear regression analysis, the findings suggest that effective inventory management directly influences the revenue generation capacity of SMEs. The discussion elaborates on how various factors, including technological advancements and inventory management systems, impact this relationship.   Research Implications: The implications of this research are significant for SMEs, as it provides insights into how inventory management systems can be optimized to increase sales revenues. The findings can guide companies in enhancing their operational strategies to reduce costs and improve productivity. Additionally, third-party stakeholders can utilize the results to support SMEs in improving their inventory practices.   Originality/Value: This study contributes to the literature on inventory management by specifically addressing the context of SMEs in Albania, a region that has not been extensively studied in this field. The originality of this research lies in its focus on the causal relationship between inventory value and sales revenue in a developing economy, providing valuable insights for both academics and practitioners.