Title: Impact of capital budgeting techniques for investment decisions on optimising cost, in light of implementing MRPII systems: evidence from Jordan

Authors: Ziyad Mustafa Shwiyat; Ashraf Bataineh; Nader Mohammad Aljawarneh; Omar Al-Bataineh

Addresses: Department of Financial and Administrative Sciences, Al-Huson University College, Al-Balqa Applied University, Jordan ' Department of Financial and Administrative Sciences, Al-Huson University College, Al-Balqa Applied University, Jordan ' Department of Business Administration, Business College, Jadara University, Jordan ' Department of Banking and Financial Sciences, Business College, Hashemite University, Jordan

Abstract: The study aims to measure impact of using capital budgeting practices for investment decisions on cost optimisation; in light of implementing manufacturing resource planning (MRPII) systems at the Jordanian industrial shareholding companies. Researchers developed a questionnaire that covered all study variables to achieve objectives and applied it on 35 industrial companies. Researchers distributed 140 questionnaires on companies' employees within the analysis unit (financial managers, accounting heads of departments, accountants, and internal control managers), and analysed study data using the appropriate statistical methods within PLS-4 software. Results showed that Jordanian industrial companies used capital budgeting techniques for investment decisions and had a significant impact on cost optimisation; in light of implementing MRPII systems. Results also showed that independent project decisions were the most used techniques while replacement decisions were the least used in these companies. The study recommended motivating Jordanian industrial companies to use techniques of capital budgeting more often whenever making capital investment decisions, as well as training accountants on using these techniques with increasing the interest of industrial companies on using modern manufacturing systems, such as MRPII due to its direct and indirect impact on improving costs to reach the competitive advantage of companies.

Keywords: capital budgeting practices; cost optimisation; investment decisions; manufacturing resource planning systems; MRPII; Jordan.

DOI: 10.1504/IJPM.2024.139681

International Journal of Procurement Management, 2024 Vol.20 No.4, pp.427 - 443

Received: 12 May 2023
Accepted: 24 Jun 2023
Published online: 05 Jul 2024 *

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