Customer value
Pearson’s product moment correlations showed a high positive correlation between stock availability and sales (at
R=+0.726) and a weak positive correlation between satisfactory delivery speed and sales (at R=+0.094).
The correlation between stock availability and sales (at R=+0.726) was significant at (.0001) 2-tailed significance
level. This indicated a strong positive relationship between stock availability and sales. Satisfactory delivery speed
had a weak positive correlation to sales. This was because a satisfactory delivery speed, being a subset of order cycle
time, tends to increase the speed of stock replenishment. Equally weak but negative was the correlation between
frequency of stock outs and sales in cases (R=-0.196). High frequency of stock outs reduces the stocks available for
sales holding other factors constant. Stock outs reflect a poor inventory policy and may result from insufficient
investment in stocks or from unpredictable order cycle times. The correlation between order cycle time and sales
was in the expected direction (R=-0.012) though weak. Shorter order cycle times translates to faster stock
replenishment at distributor warehouses. This avails stocks ready to produce sales hence profitability. Conversely,
longer order cycle times increases the stock replenishment times reducing the stocks available to produce sales.