Enhancing Inventory Optimization Strategies for SMEs: Addressing Key Challenges in Mzuzu, Malawi

This study investigated inventory management challenges among Small and Medium Enterprises (SMEs) in Mzuzu, Malawi, where SMEs represent over 80% of informal employment yet face critical operational inefficiencies. Using a quantitative survey of 30 SME operators from retail (56.7%) and service (43.3%) sectors, the research employed the Economic Order Quantity (EOQ) model to analyse inventory management practices. Findings revealed that 63.3% of SMEs relied on manual tracking methods, generating stock discrepancies averaging 22%; financial constraints ranked 4.03/5 and supplier delays 3.55/5 as the most severe barriers; and 60% experienced monthly stockouts that directly impacted customer retention. Three context-specific solutions were developed: (1) liquidity-adjusted EOQ models incorporating Malawi's average 14-day supplier lead times; (2) mobile-based Just-in-Time (JIT) systems leveraging the country's 76% mobile money penetration; and (3) collaborative Vendor-Managed Inventory (VMI) frameworks. Pilot implementation with five SMEs demonstrated a 28% reduction in stockout frequency over three months. The study validated the Resource-Based View and extended the Technology Acceptance Model by identifying cost-effectiveness as the primary driver of tool adoption. Policy recommendations include government-led training, subsidies for mobile inventory tools, and establishment of municipal inventory hubs.