ABSTRACT: In today’s world of intense competition managing inventory efficiently has become an important operational weapon for products and service firms wishing to survive the competitive pressures. The main aim of this study was to analyze the effect of economic order quantity adoption on organizational performance of sugar manufacturing firms in Kenya. The study was guided by Economic order theory. This study was anchored correlational research design. The target population for this study was 144 respondents consisting of; procurement managers, stores managers, chief engineers, dry production managers, field supervisors, volume supervisors, finance managers, marketing managers and factory managers. The study used simple random sampling to select 108 respondents. Primary data was collected through the use of questionnaires while secondary data were collected from financial statements. Expert analysis and factor analysis were used to assess the construct validity of the questionnaire. Reliability of primary data was measured using Cronbach alpha. Descriptive statistic such as frequencies and percentages were generated. Inferential statistics consisted of multiple regression and Pearson correlation coefficient. Results were presented in form of tables’ charts and graphs. The results show that economic order quantity adoption had a positive and significant effect on organizational performance with a regression coefficient of 0.988. Economic order quantity causes 61.6% variation in organizational performance. The results will help managers of sugar firms to come up with regulations that enhance cost reductions and improve organizational efficiency. The study would also act as a source of reference material for future researchers on inventory management practices. The study concluded that economic order quantity adoption had positive and significant effect on financial performance. The study recommended that sugar firms should train procurement officers who will be able to adopt economic order quantity effectively.