1 CHAPTER I
THE PROBLEM
Introduction
Recently, people have been relying on the benefits that technology is offering. Technology is derived from discoveries of man; therefore, it includes the use of both primitive and highly advanced tools and methods of works. The inventions and the development of technology permitted people to expand their work at the shortest possible time. With the assistance of technology, people are now using the most important and most highly developed machine man has ever invented: the computer.
Computer has changed the way people work specially in the field of industry and commerce. Most businesses have used this in carrying out different business transactions. Computer has been greatly valued for its skill to execute tasks more hastily and more accurately than any human being had. These tasks include solving numerical calculations, storing necessary information, and organizing files that can be used by management and other departments in the company in making economic decisions.
However, even with the existence of these highly developed technologies, some business firms still prefer the manual system, which requires more effort, time, costs, and resources, because of its simplicity. Yet, it is apparent that as the business gets larger, its processes becomes complicated and thus requires a more convenient tool, which will help attain the company’s goals and objectives.
2 Organizations have to consider, acquire, allocate and control certain factors which are necessary to achieve these goals and objectives. Inventory management, being one of these factors, has always been a major preoccupation for the company’s survival and growth.
The aim of inventory management is to hold inventories at the lowest possible cost, given the objectives to ensure uninterrupted supplies for on going operations. When making decisions on inventory, management has to find a compromise between the different cost components, such as the costs of supplying inventory, inventory-holding costs and costs resulting from insufficient inventories (Hugo, Badenhorst-Weiss and Van Rooyen 2002:169).
One example of an organization that has a wide range of inventories and still employs a manual system is Southbest Sales Center, which was established in 2002. It is operated by the owner himself, Mr. Edgar Sy. Southbest Sales Center offers a variety of construction supplies which has different classes for each item. Since then, this Sales Center uses manual inventory system in keeping its inventory records. It conducts a yearly physical count of its supplies which lasts for three to five days. However, this kind of manual process is time-consuming, labor-intensive and inaccurate.
Therefore, the researchers decided to come up with a study entitled ―Computerized Inventory System for Southbest Sales Center‖, that shall convert its manual process of managing the inventory into a computerized one. This modification could help the aforementioned business perform this essential function with more speed and accuracy.
3 This study aims to improve the inventory system of Southbest Sales Center by designing a computerized system. It shall help the Sales Center maintain an accurate and updated record of inventory on hand and at cost. Whenever a sale or purchase is being made, the Computerized Inventory System shall record the inflow and outflow of items. This will help lessen the time, effort and money consumed in conducting inventory count. This will provide convenience to the owner and staff of Southbest Sales Center because an updated inventory count would be available anytime. With this, Southbest Sales Center would be able to determine right away when to make an order to avoid inventory shortage.
The researchers conduct a step by step process in order to come up with an inventory system which will meet the objectives previously stated and to provide a program which will of great help to the Southbest Sales Center’s inventory management.
First, an interview was conducted in order to know the inventory operations of Southbest Sales Center such as the manner in which inventories are recorded, updated and purchased.
Second, previous studies in relation with the topic were gathered from books, past theses and net, to properly and fully comply with the current inventory needs of the said entity.
Third, an inventory system via Visual Basic was then created. This will not require any internet connection but only computer sets and the system itself. Using this, inventory sold and purchased can easily be monitored and recorded,
4 inventory shortage may be prevented, and high cost due to labor, inventory handling and ordering may be eliminated.
Through this, the researchers may be able to make a corresponding program that would answer the problem identified in the former part of this research.
Objectives of the Study
This study aims to accomplish the following:
1. Improve the inventory system of Southbest Sales Center
2. Maintain an accurate and updated record of inventory on hand and at cost
3. Lessen the time, effort and money consumed in conducting inventory count
4. Determine when will the said business make an order to avoid inventory shortage
Scope and Limitations
This study focuses mainly on the design and development of a computerized inventory system of a merchandising company. Besides, this is specifically designed for the use of Southbest Sales Center including its owner and staffs.
5 The procedure for inventory management will be considered and applied to the proposed system. Using the improved system, the staff can view the number of stocks remaining and the inventory that needs replenishment.
For every purchase, the staff would encode it in the system. If a new class of inventory is purchased, the system will allow the staff to add it in the inventory list. For every sale, the staff would have to encode the number of items sold daily. Each purchases and sale of inventories encoded by the staff will automatically compute and result to an updated inventory record.
However, the system would be limited to the inventory records of Southbest Sales Center. Moreover, the system is not accessible to the web because its network runs only through the vicinity of this entity and will only require sets of computer and the new system itself to work.
Significance of the Study
This study is deemed beneficial to the following:
1. Southbest Sales Center. The developed Computerized Inventory System would create positive impression towards the owner and staffs, revealing the entity’s perseverance to adopt technology advancement to improve their current system.
2. Owner and Staff. The developed system could lessen the difficulties in managing the inventory count which is a key activity of business logistics and a major preoccupation in the entity’s daily activities. This would also
6 minimize their time in doing a yearly physical count because of the computerized system that can search and update records quickly.
3. Customers. The system could lessen inconvenience to customers when they make a purchase. It would be easily known if the certain item they want to buy is still available or how many stocks are still available.
4. Researchers. This study shall enhance their skills and knowledge in advance technology by developing a system, and become more aware of the existence and benefits of new technology.
5. Future Researchers. This study would serve as a guide in the area of Inventory Transaction Processing System and in the conduct of a similar study.
7 Chapter II
REVIEW OF RELATED LITERATURE
This chapter presents the proponents’ collected data and information that formed part of the research literature which are very useful in the development of this study.
Conceptual Literature
This study utilizes the following concepts about inventory management system.
Inventory Management. Inventory management is a vital part of any retail business. It provides information about the condition of the products, as to whether the said-products are below their safety stock or not. It also provides the customers with accurate information, especially when items are out-of-stock, back-ordered, or pre-orderable. Failure to provide the customers with this information may result to a loss of future business opportunities. Inventory management also determines which product is saleable and income-generating and which is not. This information allows managers to make better business decisions on how to market your products, and whether or not to carry them further.
According to Smith, Inventory System is capable of providing real-time inventory management for product catalogs, full integration into the Catalog System and Orders System, and integration into LOB systems through the Commerce Server BizTalk adapters.
8 "It is nearly impossible to overemphasize the importance of keeping inventory levels under control," Ronald Pachura wrote in an article for IIE Solutions. "Whether the problems incurred are caused by carrying too little or too much inventory, manufacturers need to become aware that inventory control is not just a materials management or warehouse department issue. The purchasing, receiving, engineering, manufacturing, and accounting departments all contribute to the accuracy of the inventory methods and records." It is little wonder that business experts commonly cite inventory management as a vital element that can spell the difference between success and failure in today's keenly competitive business world. Writing in Production and Inventory Management Journal, Godwin Udo described telecommunications technology as a critical organizational asset that can help a company realize important competitive gains in the area of inventory management.
Related Literature
According to Janes, computers are extremely reliable device and very powerful calculators with some great accessories applications like word processing problem for all of business activities, regardless of size, computers have three advantages over other type of office equipment that process information because computer are faster, more accurate more economical.
Reyes pointed out that tasks would be time consuming if done manually but would be more practical with the aid of computers.
9 According to Dioso, computer assist careful intelligent planning, organizing, actuating and controlling .This maybe observed from the past that they monitor production activities, solve scientific problem and help arrive in tentative answer to a multitude of involve conditions.
Ralph M. Stair emphasized that the development of technology through the years have enabled us to do more with less effort. From the orientation of the light bulb to the industrial revolution and beyond, we have continuously tried to in a more efficient means of doing tasks.
Lewis stated that the reason for using computers vary from person to person. Some of the computers in business are to perform accuracy, to be as productivity, to decrease bottle necks or hassles to alter cash flows or to simples elevate your status.
According to Sybex Inc. visual basic provide a graphical environment in which the users usually designed the forms and control that become the building block of tour application. Visual Basic support many useful tools that will help the user more productive.
Merchandising Companies. Some businesses nowadays are engaged in buying ready-made goods and reselling it, which is commonly known as merchandising. These entities use only one account - merchandising inventory, where purchases and sales of inventories are recorded either perpetually or periodically. Perpetual inventory system is used by businesses selling low-volume and high-priced goods, while periodic inventory system is for inexpensive
10 ones. In both systems, actual numbers of inventories are physically counted at the end of the period. However, the former needs only to reconcile it with its computed ending inventory, unlike the latter, which relies on it to establish the ending inventory (Ballada, 2007). With that, it would be quite difficult for hardware companies to monitor the changes in inventory involving large quantities.
Importance of Inventories. According to Brigham and Houston, inventories are the main source of a company’s revenue and profit. Sold inventories increase either cash or accounts receivable. The collected cash will then be used to purchase inventory and pay the operating expenses of a company such as agents, rent, insurance, utilities and so on. Thus, inventory serves as one of the lifebloods of a business.
Business Finance and Philippine Business Firms book points out that the size of inventory is related to the size and frequency of purchase orders. Meaning, seldom purchases in bigger volumes imply higher inventory level, lesser ordering and stock out costs but higher handling cost. Frequent purchases in smaller volumes, on the other hand, infer lower inventory level, higher ordering and stock out costs but lesser handling cost. Hence, failure to monitor the inventory may result to higher cost and eventually loss. To avoid these, inventory must be maintained at a level that reconciles turnover and profit, and maximizes return on investment. Besides, the working capital tied up in inventory and its opportunity cost can be reduced. This will enable the company to gain the
11
CASH SALES CREDIT SALES
Credit sales
Source: Ballada,W.&Ballada,S.(2007)Basic Acccounting.Manila: DomDane Publishers
opportunities to earn on its capital not used in this item, and avoid inventory shortage.
Figure 1 Inventory Cycle
In deciding whether to increase sales on account or not, R.Laman emphasized that inventories must also be considered (R. Laman, V. Laman, E. Evia, 2008). The reason is that prolonged credit terms increases not only sales but also accounts receivable and inventory. The higher is the inventory, the higher risk of obsolescence is assumed. Also, it would require more plant property and equipment that will incur repair and maintenance costs and depreciation. (Mejorada, 2006) CASH inventory Accounts receivable CASH inventory purchases Cash sales
12 Inventory Management Technique. Managing inventories is important to avoid waste and misuse due to its excessive quantity, and losses because of its shortage. The following techniques are commonly used (Guerrero, 2010):
1. Economic Order Quantity ( EOQ )
This reflects the quantity of order necessary to get the best price while keeping the inventory at an appropriate level to ensure uninterrupted production, that is, the level where ordering and carrying costs can be minimized. The formula is:
EOQ =√
2. Reorder Point
This determines the level of inventory by which reordering must be made. This is computed using:
Reorder Point = Lead Time Usage + Safety Stock where,
13 Figure 2
Graphical Representation of Reorder point Without Safety Stocks
Graph 1 represents businesses without safety stock. As days passed, the inventory level decreases by the company’s normal usage until it reach the end of the lead time, when inventory level is equal to 0. Hence, the company will have nothing to sell at that time unless the order was duly delivered.
without safety stock
in ven to ry le vel 1 2 3 4 5 6 7 lead time in 6 days no. of days Graph 1
14 With safety stock
1 2 3 4 5 6 3 4 5 6 No. of Days In ven to ry Leve l Safety Stock Lead Time in 5 Days Figure 3
Graphical Representation of Reorder point With Safety Stocks
Graph 2 represents those with safety stock. This possesses the same behaviour shown in Graph 1. However, at the end of the lead time, the inventory level will equal the safety stock, thus, it can still sell goods at the time through the delivery of order is delayed. When the inventory reaches the reorder point, the business must order inventory equal to the economic order quantity (EOQ), in both cases.
15 Manual versus Computerized. Most entities handle their business transactions manually by recording it in paper-based journals. However, this can be time-consuming, error-bearing and labor intensive. Besides, market demands which are heightened be modernization call for change in business operations. The emerge of technologies and new thoughts makes their old beliefs and processes inefficient and irrelevant. With such more competitive market, it is apparent that some businesses started to uphold these advancements and think of better ways to survive. (Paul Franson, 1998)
According to Liberty Enerio Solomon, profitability and growth can only be achieved when modern technology is given importance. The reason is that it affects the competitive capabilities and the capital investment of a company. Besides, the intangible benefits of technology such as labor cost and obsolescence risk reduction, speed of delivery , and information processing, and flexibility, will help the company generate more profit and satisfy the suppliers and customers as well.
Related Studies
Inventory System Review – Water ware Group Ltd.
The objectives are to (1) investigate the corporation’s inventory control system, (2) provide some solutions to minimize the complexity of the system and (3) make some suggestions on how to reduce over-stocking.
The stock problem as identified through measurement of stock’s turn-over for the previous five years and comparing it with other successful importing or
16 distributing organizations. The results showed that the corporation’s stock turn-over had slowed turn-over the previous five years and was well below other organizations benchmarked.
A number of sol-based initiatives were developed and implemented resulting in significant financial savings for Walterware.
Inventory Management: A Tutorial Canadian Publications, Practical Applications and Suggestions for Future Research
Questions:
(1) How often should the inventory status be determined, that is, what is the review interval? (2) When should a replenishment order be placed? (3) How large should be replenishment order be?
Objectives of concern to inventory managers:
1. Cost minimization (with or without discounting) 2. Profit maximization (with or without discounting) 3. Maximization of rate of return on stock investment 4. Determination of a feasible solution
Constraints:
1. Supplier constraints – minimum order sizes, restrictions to certain pack sizes, maximum order quantities (particularly under allocation schemes in times of tight supply), restrictions on replenishment terms
17 3. Internal constraints – storage space limitations, maximum budget for inventory purchases during a period, maximum workload (number of replenishment per period), personnel involved
Objectives and constraints is important in the applicability of solution obtained.
Costs:
1. Replenishment cost – cost incurred each time a replenishment action is taken
2. Carrying cost – cost of borrowing the capital tied up or foregoing its use in some other investment, warehouse operation cost, insurance, taxes, potential spoilage or obsolescence
3. Costs of insufficient supply in short-run – backordering cost or loss, goodwill
4. System control cost – training, new system, changing plans costs
Synthesis
The previously listed researches are needed to determine how the researchers will meet the requirements for inventory management namely (1) establish a system of accounting for inventory, (2) make decisions regarding how much and when to order, and consequently make a program for it. The following requirements according to Production and Operation Management 1998 are needed to achieve these:
18 2. Knowledge of lead times
3. Classification system for inventory items
These related literatures and studies will guide the researchers in making the necessary program to effectively and efficiently comply with the requirements stated above.
Conceptual Framework
In able to develop the proposed system, the researchers took the above-mentioned studies for consideration. These studies added to the ideas and concepts necessary to be able to complete this study.
The researchers designed a Computerized Inventory System for Southbest Sales Center using the inventory system. This program aims to easily monitor the inventory records of Southbest Sales Center since the owner had only used the traditional inventory counting, the physical counting. A paradigm identifies a program’s input, output and the processing steps required to transform the inputs into the outputs. The Input-Process-Output (IPO) model developed by Harris and Taylor (1997) was used to serve as guide in the general direction of the study.
The researchers had the knowledge in programming, and the cycle of the inventory system. They used Visual Basic 6.0 and their knowledge on the foresaid topic.
19 The administrators are the owner of the sales center and one of his operators/staffs. They are considered authorized to login. The owner is responsible for checking the inventory system and the operator is responsible for updating the inventory records. The system can be accessed every time the owner wants to. The system intends to make the inventory counting easier.
INPUT PROCESS OUTPUT
Figure 4 Conceptual Framework Knowledge on programming System Development regarding inventory system Authorized User Login Operator Knowledge Programming design using Visual Basic. Applying the knowledge learned from DBMS To check & monitor the inventory flow To update the inventory records Computerized Inventory System
20
CASH SALES CREDIT SALES
Illustration 1.0 Inventory Cycle Theoretical Framework
Inventories, indeed are considered one of the company’s arms and legs that act mainly for the generation of revenue and profit. Inventory management is one of the critical aspects in business operations that a company has to achieve with great precautions and accuracy. Whether sale of inventories, purchases, loss purchases due to theft, spoiled goods, product shortage and other inventory issues can directly add effect on the profit statement’s bottom line.
The desire of the management to improve the inventory system gave birth to the development of various techniques and methods regarding inventory counts and maintenance of inventory system with the aid of new technological advances. Illustration 1.0 shows how cash outflows are converted into goods, sell those goods to customers, collect the receivables then ends up with cash inflows. This only shows the essentiality of inventory in the business operation cycle.
CASH inventory Accounts receivable CASH inventory purchases Cash sales
21 According to the 2010th edition of the book of Guerrero, managing inventories is important to avoid waste and misuse due to its excessive quantity, and losses because of its shortage. Thus, the following techniques are used to properly manage the right number of inventory inflows and outflows. The following are the Economic Order Quantity (EOQ) and the Reorder point.
EOQ reflects the quantity of order necessary to get the best price while keeping the inventory at an appropriate level to ensure uninterrupted production, that is, the level where ordering and carrying costs can be minimized. EOQ may be computed by multiplying the annual demand to the cost per order multiplied by 2, and dividing the numerator yield to the carrying cost per unit. Meanwhile, Reorder Point determines the level of inventory by which reordering must be made. This is computed by adding the Lead Time Usage to Safety Stock. When the inventory reaches the reorder point, the business must order inventory equal to the economic order quantity (EOQ), in both cases.
Definition of Terms
The following are the terms used in this study:
Backorder – specific quantity of a specific item that could not be filled on the requested date
Bad debts – recognizes doubtful collection of accounts
Carrying Cost or Handling Cost – cost of maintaining inventories (Mejorada, 2006)
22 Credit term – standard or negotiated terms offered by a seller to a buyer that control the monthly and total credit amount, maximum time allowed for management, discount for cash or early payment and the amount or rate of late payment penalty
Depreciation - systematic collection of the depreciable asset
Economic Order Quantity – determine the most effective quantity to order or produce
Effective lead time – period that includes the lead time, plus additional time factors that may occur between the time the need for an order is known, and the inventory is in stock and available
Inventory – are assets which are held for sale in the ordinary course of business, in the production for such sale or in the form of materials or supplies to be consumed in the production process or in the form of materials or supplies to be consumed in the production process or in the rendering of services (PAS 2)
Inventory Turnover – the number of times the average inventory is sold per year (Horngen, Sundem, Straton, 2000)
Lead time – amount of time required to an item to be available for use from the time it is ordered.
Opportunity Cost – the maximum available contribution to profit foregone by using limited resources for a particular purpose (Horngren, Sundem, Straton,
23 2000). It is the best return that can be earned on assets the firm already owns if those assets are not used for the new project (Brigham, Houston, 2011)
Ordering Cost - cost incurred in making an order
Stockout Cost – cost incurred in failure to serve customer due to unavailability of inventories
Working Capital – is the amount of current assets, financed by long-term capital, used in conducting its business operations
24 CHAPTER III
RESEARCH METHODOLOGY
This chapter of the study focused on how the research is done and to whom it is developed.
Research Design
The researchers conduct a step by step process in order to come up with an inventory system which will meet the objectives previously stated and to provide a program which will of great help to the Southbest Sales Center’s inventory management.
First, an interview was conducted in order to know the inventory operations of Southbest Sales Center such as the manner in which inventories are recorded, updated and purchased.
Second, previous studies in relation with the topic were gathered from books, past theses and net, to properly and fully comply with the current inventory needs of the said entity.
Third, an inventory system via Visual Basic was then created. This will not require any internet connection but only computer sets and the system itself. Using this, inventory sold and purchased can easily be monitored and recorded, inventory shortage may be prevented, and high cost due to labor, inventory handling and ordering may be eliminated.
Through this, the researchers may be able to make a corresponding program that would answer the problem identified in the former part of this research.
25 Subject of the Study
Southbest Sales Center is a hardware store that offers a wide variety of construction and electronics supplies. It is owned and managed by Mr. Edgar Sy which started to operate since 2002. Since then, this entity uses manual system of operation. The store sells on a one-on-one basis and issues receipt manually. It keeps a logbook where all the inventories are listed. In purchasing inventories, they just wait for the supplier and check their records whether their offered goods are below their safety stock. The entity adopts an annual manual inventory counting to update its record. All of the staffs and the owner himself conduct the inventory counting which lasts for 3-5 days if they keep the store open, which they usually do. However, the entity offers a number of hardware supplies which make their inventory counting difficult, time consuming, labor intensive and costly. With these, there is a need for a more simplified and advance system that would solve the problems listed previously.
This fast-phased world calls for the use of technological advancements hence, the researchers decided to improve their system by making a program through the aid of computers.
26 Data Gathering Instruments & Procedures
JULY AUGUST SEPTEMBER
Week 1 2 3 4 1 2 3 4 1 2 3 4
1. PLANNING
1.1. Proposing Title (choosing of
project)
1.2. Preparation of Sample
Chapter 1
2. SYSTEM ANALYSIS
2.1. Making DFD & ERD
2.2. Initial Interview
2.3. Outline of Interview
3. SYSTEM DESIGN &
DEVELOPMENT
3.1. Chapter 1
3.1.1. Introduction
3.1.2. Objectives of the Study
3.1.3. Scope and Limitations
3.1.4. Significance of the Study
3.1.5. Definition of Terms
3.2. Chapter 2
3.2.1. Related Literature
3.2.2. Related Studies
3.3. Chapter 3
3.3.1. Planning and Selection
3.3.2. Analysis 3.3.3. Design 3.3.4. Implementation and Operation 3.4 Program 3.4.1. Screen Design 3.4.2. Coding 3.4.3. initial testing 3.4.4. Debugging 3.4.5. Final testing 3.5. final paper Table 1 Gantt Chart
27 This table shows the process followed by the researchers in conducting the study and accomplishing the written output. The researchers started to propose and select feasible projects, sample chapter 1 and program’s DFD and ERD during the month of July. The system analysis stage is done on the last week of July until first month of August. During the month of August and September, the researchers started the system design and its and also the documentation of the project.
Feasibility Study
Technical. In terms of the technical aspect of the study, the researchers analyzed and assessed the possible data, processes and programming language to be utilized for the making of the computerized inventory system. The researchers conducted a wide research about the propose system. They research about the features, specifications and design to be use in the computerized inventory system to make it fit for the Southbest Sales Center’s inventory management.
Operational. Tracking inventory efficiently is an important factor to a business’ success. By having up-to-date data regarding all needed office supplies, raw manufacturing materials and merchandise for sale, an organization will drastically increase its bottom line. In addition to the money saved by not reordering unnecessary goods, an enterprise will be better positioned to services customers quickly, as well as navigate any unexpected changes in business, such as a supplier abruptly going out of business. Although many companies
28 maintain this information manually, there are benefits in using a computerized inventory system.
Cost and Benefit Analysis. A computerized inventory management system makes everything from inputting information to taking inventory easier. Doing a hand count of inventory can take days, but with a computerized inventory management system, the same process can be done in a matter of hours. With this, managers can use much of their time on serious problems rather than that of inventory counting. Once the computerized inventory management system is in place, managers and workers can use it to automatically generate the updated inventory record. Managers can also use the system to know easier when there is a need to order products when they run low. In this case, the system helps in increasing the management’s profitability by preventing shortage of stocks. On the other hand, it also prevents obsolescence of goods.
This shows the total expenses incurred by the Southbest Sales Center in using manual system of inventory counting.
29
Budgeted Annual Cost Manual Computerized
File Cabinet 550 - Ballpen 240 - Pencil 192 - Folder 500 - Record Book 500 - Journal 500 - Ledger 500 - Calculator 800 - Employees Salary 180000 90000 Computer Unit 15000 Inventory Software 10000 Total 183782 115000 Table 2
30 Proposed System’s Scope
The proposed system will only be limited to the needs of Southbest Sales Center, which is a merchandising company. The program will only focus on data encoding but not in data storing.
Software Development
Description and Methodology
The researchers used the descriptive method of researching by observing what the client needs, creating a solution for it, and explaining the benefits of its usage.
First, an interview was conducted in order to know the inventory operations of Southbest Sales Center such as the manner in which inventories are recorded, updated and purchased.
Second, previous studies in relation with the topic were gathered from books, past theses and net, to properly and fully comply with the current inventory needs of the said entity.
Third, an inventory system via Visual Basic was then created. This will not require any internet connection but only computer sets and the system itself. Using this, inventory sold and purchased can easily be monitored and recorded, inventory shortage may be prevented, and high cost due to labor, inventory handling and ordering may be eliminated.
31 Through this, the researchers may be able to make a corresponding program that would answer the problem identified in the former part of this research.
Users and Function
The user of this study is the company, Southbest Sales Center. By improving their manual inventory system, the said- company may be able to execute, monitor and record their operations smoothly and quickly. Besides dissatisfaction of customers due to unavailability of needed goods can be minimized. Handling and ordering cost brought by changing inventory demands can also be reduce because a specific number of required inventories will be computed and provided by the improved system – computerized inventory system.
System Requirements Specifications
The users of this study are currently not aware of the benefits that technology may give and hence, the researchers would like to show that the computerized system is better than the manual system in the aspect of speed and accuracy.
32 Hardware Specifications
Requirement Specification (Minimum) Specification (Recommended) Computer Processor 800 MHz Pentium III or Athlon, or better 1.5 GHz or better
Computer Memory 512 or more 1 GB or more
Screen Resolution 1024 x 768 pixels 1024 x 768 pixels or higher
Graphics Card NVIDIA GeForce 6600, or better
OR ATI Radeon 8500, 9250, or better
NVIDIA Graphics cards
6000 Series, 7000
Series,
8000 Series, GeForce Go Series
Hard Disk 80 Gb 160 Gb
Monitor CRT or LCD Monitor CRT or LCD Monitor
Keyboard PS2 or USB Mouse PS2 or USB Mouse
Mouse PS2 or USB Mouse PS2 or USB Mouse
Printer Standard or USB Printer Standard or USB Printer Network Interface
Card
10-100 Mbps 100 Mbps
Table 3
33 Software Specification
Requirement Specification (Minimum) Specification (Recommended) Operating System A reasonably modern
32-bit Windows environment is required. If you are running a 64-bit Windows distribution then you will
need its 32-bit
compatibility environment installed.
A reasonably modern 32-bit
Windows environment is
required. If you are running a 64-bit Windows distribution then you will need its 32-bit
compatibility environment
installed.
Language Visual Basic 6 Visual Basic 6
Database
Table 4
34 Figure 5
Entity Relationship Diagram
This diagram shows the relationship among entities on inventory system. It shows how the system works and passes information from one entity to another.
Every entity in this diagram has its on specific attributes that can determine it to others. The table below shows the following entities with its
35 respective attributes that is involved in Southbest Sales Center Inventory System.
Table 5
ENTITIES AND ATTRIBUTES
The Inventory System of Southbest Sales Center shows that a supplier transacts with Southbest Sales Center by means of delivering of products for them to purchase it. This cycle goes on and on.
ENTITY ATTRIBUTES SUPPLIER Company Name Address Transaction Date Contact Number PRODUCT Size Color Materials Stock Number
SOUTHBEST SALES CENTER
Name
Municipal Permit Contact Number
36 Figure 6
Data flow diagram
Figure 6 shows the Data Flow Diagram of the Computerized Inventory System. Entity, Customer and Supplier are the entities in the diagram which is
SOUTHBEST SALES CENTER
37 represented by a rectangle. When a purchase is needed to be made, a purchase order is issued by the entity to the supplier. Once the supplier processes the order, it issues the official receipt and delivers the items purchased. Purchased items are then stored in the inventory. When a sale is made, customer orders from the entity. The item from the inventory is then delivered to the customer.
38
MAIN MENU
FILE
LOGIN
EXIT
INVENTORY
INVENTORY
LIST
INVENTORY
SUMMARY
RECORD
TRANSACTION
EOQ
ABOUT
AUTHOR
SYSTEM
Design Figure 7 HIPOFigure 7 shows the main menu options that will prompt to the users in the beginning of the process. It includes the File tab, Inventory tab, Record tab, and About tab. Under the File tab, the user is allowed to log-in first to access the other tabs. The Inventory tab allows the user to view and update the inventory list and inventory summary.
39 8
the
Figure 8.1 IPO
This figure shows the IPO for log-in form. The user must enter a valid username and password in order to access the system.
System: Computerized Inventory System Date: September 20, 2013 Module: Mouse / Key Control Programmed by: Group 4 CALLED OR INVOKED BY: CALLS OR INVOKES:
INPUT: OUTPUT:
Splash screen Log-in
Mouse / Key control Log-in form
Process: If click on Login,
Then go to main menu Else if click cancel,
40 Figure 8.2
IPO
The figure shows the main menu of the system. The form has the inventory buttons which has units and inventory summary sub menu; record button which has transaction and EOQ sub menu; and about button which has system and author sub menu.
41 Figure 8.3
IPO
The figure shows the IPO for Inventory List in which the user may choose what products to be updated.
System: Computerized Inventory System Date: September 20, 2013 Module: Mouse / Key Control Programmed by: Group 4 CALLED OR INVOKED: CALLS OR INVOKES:
INPUT: OUTPUT:
Main Menu Inventory (units)
Mouse control Product 1
Product 2 Product 3 Product 4
Process:
If click on Product 1,
Then go to Product 1 form Else if click on Product 2,
Then go to Product 2 form Else if click on Product 3,
Then go to Product 3 form Else if click on Product 4,
Then go to Product 4 form Else,
42 Figure 8.4
IPO
This figure shows the IPO for Product1. The user is allowed to access the inventory summary, go to main inventory list form, compute and clear the form.
System: Computerized Inventory System Date: September 20, 2013 Module: Mouse / Key Control Programmed by: Group 4 CALLED OR INVOKED: CALLS OR INVOKES:
INPUT: OUTPUT:
Inventory (units) Product 1
Mouse control Back to Main
Inventory Summary Compute
Clear
Process:
If click on Back to Main,
Then go to inventory list Form Else, click on Inventory Summary
Then go to Inventory Summary Else, click on Compute,
Then shows computed number of inventory Else, click on Clear,
Then clear the form Else,
43 Figure 8.5
IPO
The figure shows the IPO for inventory summary report form with summary of each product showing beginning inventory, purchases, total units available for sale, units sold and ending inventory.
System: Computerized Inventory System Date: September 20, 2013 Module: Mouse / Key Control Programmed by: Group 4
CALLED OR INVOKED: CALLS OR INVOKES:
INPUT: OUTPUT:
Inventory (units) Inventory Summary
Mouse control Inventory Summary
Report
Process: Shows inventory summary report form with summary of each product showing beginning inventory, purchases, total units available for sale, units sold and ending inventory.
44 Figure 8.6
IPO
The figure shows the IPO for generate report. The user is allowed to print out the inventory summary report.
System: Computerized Inventory System Date: September 20, 2013 Module: Mouse / Key Control Programmed by: Group 4
CALLED OR INVOKED: CALLS OR INVOKES:
INPUT: OUTPUT:
Inventory summary Generate Report
Mouse control Printed Inventory
Summary Report Process: Allows the user to print the inventory summary report.
45 Input or Output Design
Figure 9.1 Monitor Interface
Figure 9.1 shows the monitor interface from which the user may choose the task to do such as logging in and access the inventory record.
46 Figure 9.2
Log in Interface
Figure 9.2 shows the log in form were user required to input the username and the password to access the system.
47 Figure 9.3
Inventory List
Figure 9.3 shows the inventory list in where he user may choose the product to be updated.
48 Figure 9.4
Per product list
Figure 9.4 shows the list of product categories under a product chosen to which the user may update the inventory record by recording the purchases and sales made by the entity during a period. This form also include the computation of the purchases and sales of inventories which updates the inventory record.
49 Figure 9.5
Inventory Summary Interface
Figure 9.5 shows the inventory summary form which shows the updated inventory record after updating and computing each product transactions made by the entity.
50 Program Flowchart
Figure 10.1 Program Flowchart
The figure shows the flow chart of the program. The user will start to access the other process only if the user logged-in with correct password. If not, it automatically shows the log-in form unless the password is correct. The user, once logged-in may access the file, inventory, record and about tabs.
51 Figure 10.2
Program Flowchart
This figure shows the flow chart once the user click on the inventory button. The user may view the inventory summary and units on hand of each product.
52 Figure 10.3
Program Flowchart
The figure shows the flow chart once the user click on the record button. The user is allowed to make transactions or simply record the purchases and sales made by the store.
53 Figure 10.4
Program Flowchart
The figure shows the flow chart if the user click on the about button. The user may access the system and the author sub menus.
User Training and Support
The researchers and the system developers of the proposed inventory system for Southbest Sales Center implemented its training and support to the principal users, owner and staffs of the said entity with an effective way of teaching them the proper way of using the system. In this manner, the said users of the program will be able to conduct their inventory counting and monitor their inventory easily and accurately.
54 CHAPTER IV
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA This chapter contains presentation, analysis and interpretation of the data regarding the present study.
Development of the Computerized Inventory System. The project focused on the design of a system which will make the Southbest Sales Center’s inventory management effective. In order to achieve the aforementioned objectives of the study, the researchers considered the theories and concept regarding the effective inventory management. The researchers considered the concept of safety stocks and economic order quantity (EOQ) in order to monitor accurately the level of inventory of the said entity.
Accessibility. The developed system can be accessed by the owner and staffs in charge of the inventory management.
User Interface. The researchers used Visual Basic 6.0 in designing the interface of the system.
Computerized Inventory System. The system designed by the researchers and the developer allow its user to generate information about its inventory level of Southbest Sales Center easier. The system computes for the amount of the inventory the entity has and allows it to know when to order because of considering the concept of reorder point and safety stock for better inventory management.
55 Figure 11.1
Monitor Interface
Figure 11.1 shows the monitor interface from which the user may choose the task to do such as logging in and access the inventory record.
56 Figure 11.2
Log in Interface
Figure 11.2 shows the log in form were user required to input the username and the password to access the system.
57 Figure 11.3
Inventory List
Figure 11.3 shows the inventory list in where he user may choose the product to be updated.
58 Figure 11.4
Per product list
Figure 11.4 shows the list of product categories under a product chosen to which the user may update the inventory record by recording the purchases and sales made by the entity during a period. This form also includes the computation of the purchases and sales of inventories which updates the inventory record.
59 Figure 11.5
Inventory Summary Interface
Figure 11.5 shows the inventory summary form which shows the updated inventory record after updating and computing each product transactions made by the entity.
60 CHAPTER V
SUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATION
This chapter presents the summary, findings, conclusions and recommendation of the study.
Summary
Southbest Sales Center uses the manual process of keeping track of its inventory for years ever since it was established since 2002. The manual inventory system can hardly keep up with the thousands of inventory that Southbest Sales Center manages. Moreover, with the growing number of purchases and sales to record every transaction, it was getting difficult to manage. Physical count is the only way to assess the number of inventory wherein it takes 3-5 days to finish inventory count. If the owner wanted an accurate count, it would need to close the store for the day wherein he would have to lose that day’s income.
To solve this problem of Southbest Sales Center, the researchers came up with a computerized inventory system that is designed to simplify the process of keeping track of inventory count. This is to help the owner ease the burden of manually counting inventories annually.
The interviews conducted with the owner of the hardware store became the primary source of information for the study to obtain valid and accurate data which are not often found in books, magazines, journals and others. On the other
61 hand, secondary data were collected from printed materials like research studies, related books, and internet sources.
The study was conducted in a period of four months, from the planning of the system to design up to the finalization of the paper and the program interface itself.
The researchers used the descriptive method of research. They used interview questionnaires in gathering data.
Microsoft Visual Basic 6.0 was used in programming.
Findings
Based from the analysis of the data presented, the following findings were stated:
1. Computerized Inventory System. In order to achieve the
aforementioned objectives of the study, the researchers considered the theories and concept regarding the effective inventory management. The researchers considered the concept of safety stocks and economic order quantity (EOQ) in order to monitor accurately the level of inventory of the said entity.
2. Accessibility. The developed system can be accessed by the owner and staffs in charge of the inventory management.
3. User Interface. The researchers used Visual Basic 6.0 in designing the interface of the system.
62 4. Computerized Inventory System. The system designed by the researchers and the developer allow its user to generate information about its inventory level of Southbest Sales Center easier. The system computes for the amount of the inventory the entity has and allows it to know when to order because of considering the concept of reorder point and safety stock for better inventory management.
Conclusions
The conclusions drawn from the findings were the following:
1. The computerized system was more efficient than the manual system. 2. The system could be of great help in locating and managing the inventory
records of Southbest Sales Center.
3. The system could help the hardware store in minimizing the time consumed in physically counting inventories.
4. The monitoring of inventory record was easier.
5. The system was easy to learn and use though it was new to everyone.
Recommendation
Based on the conclusions, the proponent recommended the following:
1. The owner and staff may utilize the program to improve and enhance the method of keeping inventory records.
2. This study is recommended for implementation since this inventory system will be beneficial not only to the owner but also to the staffs.
63 3. The future researchers can enhance the inventory system by adding
64 APPENDICES
A. Bibliography
Books
Andel, Tom, and Daniel A. Kind. "Flow It, Don't Stow It." Transportation and Distribution. May 1996.
Baljko, Jennifer. "As VMI Programs Proliferate, Some Questions Come to Fore." EBN. 25 November 2002.
Bergin, Sarah. "Make Your Warehouse Deliver: New Developments iWarehouse
Management Systems Inspire New Productivity in Needy Operations."
Transportation and Distribution. February 1997.
Eskow, Dennis. "Rising Stock: Integrated Inventory Systems Help Companies
Shoot Economic Rapids." PC Week. 5 June 1995.
Haaz, Mort. "How to Establish Inventory Levels." Gift and Decorative
Accessories. April 1999.
Harris, Angela D. "Vendor-Managed Inventory Growing." Air Conditioning,
65 Safizadeh, M. Hossein, and Larry P. Rizman. "Linking Peformance Drivers in
Production Planning and Inventory Control to Process Choice." Journal of
Operations Management. November 1997.
Udo, Godwin J. "The Impact of Telecommunications on Inventory Management."
Production and Inventory Management Journal. Spring 1993.
Weisfeld, Barry. "Automated Ordering Puts Profits in Sight." Transportation and
Distribution. February 1997.
Christopher Valix and Christian Valix, ―Financial Accounting Volume 1‖
Websites
Retrieved from
http://smallbusiness.chron.com/benefits-using-computerized-inventory-system-2044.html Dated August 20, 2013
Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-computerized-inventory-management-system-22513.html
Retrieved from
http://www.technologyevaluation.com/search/for/thesis-for-inventory-system.html Dated September 1, 2013
Retrieved from http://www.ctp.bilkent.edu.tr/ctp108/ctp108_ln_w1.pdf Dated September 1, 2013
66 Retrieved from http://www.studymode
.com/essays//foreign-and-local-literature-about-sales—4439148.pdf Dated September 1, 2013
Unpublished Studies
Inventory Management as a Determinant for Improvement of Customer Service by Musenga Francis Mpwanya
67 B. Interview Outline
Q: What is your name? A: Edgar Sy
Q: What is the name of your business? A: Southbest Sales Center
Q: How do you conduct your Sales System? A: One-on-one basis. One customer, one seller
Q: Do you issue receipts? Do you do it manually or automatically? A: Yes we issue receipts and we do it manually.
Q: How about your inventory system? A: Physical count, manually.
Q: So, all your staffs do inventory count? A: Yes.
Q: Do you close your store when you do inventory count?
A: Usually, no. But if we want an accurate inventory count, we close the store for the day. If we don’t close the store, it takes 3-5 days to do physical count.
Q: How about your purchase? How do you do it?
A: If a supplier comes, we consult the logbook on what product they supply that is below the margin of safety stock. We issue purchase order to the suppliers then they will deliver what we purchased and the receipt.
68 Q: We observed that you have many products, does each product have its own logbook?
A: No, we only have one logbook for all products. Q: How many products do you have?
A: More than 1000 because every product has its own classifications. Q: If a delivered product is defective, do you still return it?
A: Not all.
Q: Are your products consigned?
A: No, all of them are purchased. If ever we weren’t able to sell it, we couldn’t return it anymore. The products don’t deteriorate thus the loss is shouldered by the other products, which still provide revenue.
