Managers act rationally in managing their inventory efficiently if they are convinced that the practice enhances firm performance.However, extant research in operations management has revealed divergent insights into the inventory-performance link.This study empirically examines the relationship between inventory management and firm performance and capital intensity on a sample of financial data for 82 construction firms in Malaysia for the period 2006-2010.By employing regression and correlation techniques, it was found that inventory management is positively correlated with firm performance.In addition, the results indicate that there is a positive relationship between inventory management and capital intensity.
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