Dissertation (MA Business Administration)This study aimed at finding out how effectiveness inventory management reduces stock-outs in health organization. The study adopted the cross sectional research design and employed both probability and non-probability random sampling. The sample size of 100 respondents was adopted that include healthcare providers, inventory managers and healthcare receivers in the study area. Data were analyzed descriptively, whiles the qualitative responses were analyzed thematically. Based on the results form data analysis and findings of the research, majority of respondents said they understand the term inventory management. Most of the respondents established that Dodoma referral hospital manage essential medicine as inventory and most of the respondents documented that Dodoma referral hospital were added inventory to the system manually. Lastly, study recommended the following areas to be improved: determination of health commodities need should be based on quantity of commodities requested and not only the past consumption; health commodities must be delivered directly to the facilities from the upper level facilities (MSD); PPRA should strengthens hospitals‟ tendering processes; all facilities must use the first expiry first out (FEFO) method in the storage and issuance of health commodities; DRRH should ensure proper inventory control methods by setting accurate stock levels for all commodities and request accurate quantities of commodities from the MSD on time.