Unit of Competency : Perform Purchasing and Inventory of Production Materials
Module No. 3
Module Title : Performing Purchasing and Inventory of Production Materials Republic of the PhilippinesDepartment of Education PUBLIC TECHNICAL -VOCATIONAL
HOW TO USE THIS MODULE
Welcome to the Module “: Performing Purchasing and Inventory of Production Materials”. This module contains instructional materials and activities for you to complete.
The unit of competency, Perform Purchasing and Inventory of Production Materials contains the knowledge, skills and attitudes required for the course Entrepreneurship.
You are required to go through a series of learning activities in order to complete each of the learning outcomes of the module. Follow these activities on your own and answer the Self-Check at the end of each learning activity.
If you have questions, don’t hesitate to ask your teacher for assistance.
COURSE : ENTREPRENEURSHIP IV
UNIT OF COMPETENCY : Perform Purchasing and Inventory of Production Materials
MODULE TITLE : Performing Purchasing and Inventory of Production Materials
MODULE DESCRIPTION : This module covers the knowledge, skills and attitude required to perform the purchase of production materials. SUGGESTED DURATION : 10 Hours
SUMMARY OF LEARNING OUTCOMES:
At the end of this module, you are expected to:
L.O.1. identify criteria in purchasing production materials; and
WHAT WILL YOU LEARN?
At the end of this module, you are expected to:
• learn the criteria in purchasing production materials; and • utilizing standard inventory control of the production material.
WHAT DO YOU ALREADY KNOW? LESSON 1
I
DENTIFYC
RITERIA INP
URCHASINGP
RODUCTIONM
ATERIALSWHAT IS THE LESSON ABOUT?
This lesson will teach you how to identify criteria in the purchase of production materials. It will guide you on how to utilize a stock card for inventory control of production materials necessary in the continuous operation of the business.
WHAT WILL YOU LEARN?
At the end of the lesson, you are expected to:
1. learn the benefits and factors in purchasing goods and services by using the set of criteria cited in this lesson;
2. use a stock card for the inventory control of the production materials; and
3. identify local sources necessary in the purchase of production of materials.
LET US STUDY WORDS TO STUDY
Sourcing is a complete process of obtaining goods and services from preparation and processing of a requisition to receipt and
Services are intangible products that are not goods (tangible products),
such as accounting, banking, cleaning, consultancy, education, insurance, know how, medical treatment, transportation.
Stockpile is a comparatively large stock of essential goods or materials,
built up to withstand long holdups or scarcity due to natural calamities, strikes, or war.
Inventory is an itemized catalog or list of tangible goods or property, or
the intangible attributes or qualities.
PURCHASING OF GOODS AND SERVICES FROM THE LOCAL SOURCES
We are very lucky nowadays enjoying and benefiting from the advantages that technology brings to our life. When we go to the supermarkets and department stores, lots of goods and services are there available for your needs. With various shopping malls we have in the entire Philippines, you will not think of going abroad to purchase the things that you want.
As an entrepreneur, you must realize that there are things that are grown like the fruits, plants, vegetables and other natural resources. Other things made and manufactured according to the needs and wants of our target market or customers. Likewise, the services are also made and created according to the felt need of the community. Service is more delicate to manage because it is a work that someone has to provide to others with satisfaction.
Why do you prefer to purchase from local sources? Purchasing local
goods and services is patronizing our own products resulting to some of the following benefits:
• it stops the value of colonial mentality not only among young children;
• it gives additional income to the government through tax collection;
• it maximizes the use of our natural resources from raw materials to the finished products;
• it develops the skills of the Filipino people making them more innovative, creative and productive; and
• it gives affordable price for seasonal and quality products, fruits and vegetables.
Factors do you consider when purchasing goods and services from the local sources? Whether you sell PRODUCTS or sell SERVICES as part of
your business, skillful, careful and wise purchasing is an important part of your business. It can determine whether or not you will make a profit. Here are some important points to consider when purchasing goods and services:
• study the profile of the local producers
• research on the daily average consumption of the customers
• know your customers
• find out the right place to buy • determine how much to procure
• check the track record of each supplier • get the behavior of the patrons towards the products and services
• ensure the sustainability of the items LET US REMEMBER
In the purchasing activity of the business, the supply of goods and services are vital factors to consider. Supply is the amount of something the customers can avail from the producers who make or grow goods and services.
LET US APPLY WHAT YOU HAVE LEARNED
Directions: Find out the available goods and services in your community and compare them with other communities using the Venn diagram in any of the following categories:
1. Profile of the Producers 5. Determine How Much to Procure 2. Customer’s Average Consumption 6. Check the Track record
3. Profile of the Customers 7. Behavior of the Patrons 4. Right Place to Buy 8. Sustainability of the items
VENN DIAGRAM
SIMILARITIES
DIFFERENCES DIFFERENCES
HOW MUCH HAVE YOU LEARNED FROM THIS LESSON?
Directions: Write capital letter “B” for benefits and “F” for
factors in purchasing activity. Copy and answer this evaluation activity on your quiz notebook.
CRITERIA IN PURCHASING MATERIALS RESPONSE
1. Knowing the customers you are prospecting 2. Having more tax collections
3. Checking the profile of the suppliers 4. Becoming more productive and creative 5. Maximizing the use of the resources
As a young entrepreneur, how can you show the responsible ways of purchasing activities on any of the possible situations you may consider? Write your answer on the blank sheets below.
1. ____________________________________________________________ _____________________________________________________________ 2. _____________________________________________________________ _____________________________________________________________ 3. _____________________________________________________________ _____________________________________________________________ 4. _____________________________________________________________ _____________________________________________________________ 5. _____________________________________________________________ _____________________________________________________________ LESSON 2
U
TILIZES
TANDARDI
NVENTORYC
ONTROL OF THE PRODUCTION MATERIALWHAT IS THIS LESSON ABOUT?
This lesson deals with the inventory control of production resources. You will learn some ways on how to do the controlling function of a business to ensure enough resources in the making of goods and services.
WHAT WILL YOU LEARN?
1. Determine the correct use of the business stock cards; 2. Conduct inventory control of the production materials for
the goods and services businesses using stock card.
LET US STUDY WORDS TO STUDY
Control is an approach or strategy that checks and balance resources needed in the continuous operation of the business.
Inventories are stocks of goods and materials available for production or manufacturing.
Process refers to the step – by - step manner of operation making product from raw materials into finished outputs.
Stocks are the inventory itself in various forms.
CONDUCTING INVENTORY CONTROL OF GOODS AND SERVICES
One delicate task of an entrepreneur is to maintain an inventory control of goods and services. There must be an assurance that the owner will not run out of stock in the production phase of his business. These are much accounted for from raw materials to the finished expected outputs. All related activities of purchasing require control management. There must be no shortages of materials since sources and supplies are locally checked and available for the business.
How do you control inventory of goods and services? It is imperative
to determine your production ability, capacity and responsibility. An enterprise must have reliable data about purchasing and manufacturing. A production chart on daily, weekly, monthly, quarterly and yearly basis would help to feed information as basis of parallel consumption of the materials.
The use of stock card is a good strategy to control records of stocks of goods and materials. There are three types of inventories described below:
1. Raw-Materials Inventory (RMI). These are stockpile of materials for
inputs of production. (Examples are textile in roll and threads in
2. Work-In-Process Inventory (WIPI). These are partially completed products requiring further processing including sets of unfinished goods for production process. These unfinished items are for fabrication or for further processing stocked in buffer storage. (Examples are the baby dress garments with body parts only waiting
for the sleeve and collar sewing operations)
3. Finished-Goods Inventory. These are the final outputs of production ready for delivery to the market or customers. (Examples
are bags, shoes, t-shirts, computers, calculators, books and others.)
To control is not only to check physically but to list down stocks and balances on a stock card before deciding to do the purchasing activity. It is important to declare the minimum and maximum stock of every item needed in the business operation. The important sources like the suppliers and stores (including business places) are reflected in the stock card including the date of purchase and the price as reference.
In this stock card, it is important to update the daily record to tally the actual stocks against what is reflected on the stock card. This would help an entrepreneur to know what, when, where and how many items are to be purchased at a time to sustain the inventory of goods and services. Every stock card must be a reliable piece of reference. All items received and used should be updated at all times.
Below are examples of stock cards that you may use. Of course, you may also design your own stock card. The stock card-1 is for itemized inventory record per item or individual; while stock card – 2 is for the collective inventory record of all the files of stock card - 1.
TENEZA’S MEAT & FISH PRODUCT COMPANY
S
T O C KC
A R D -1
(Individual/Per Item)
Stock Card No. Min. Stock Supplier:
Item: Max. Stock Re-Order Stock
TENEZA’S MEAT & FISH PRODUCT COMPANY
S
T O C KC
A R D -2
(Collective Items from Stock card – 1)
Operation Year: ________
Month Item Beginning Balance +Total Deliveries-Total Withdrawals CumulativeBalance
Below is an example of a filled-up stock card,
TENEZA’S MEAT & FISH PRODUCT COMPANY
S
T O C KC
A R D -1
(Individual/Per Item)
Stock Card No. 1 Min. Stock: 3 bags Supplier: MVC Company
Item: TVP/Textured
Vegetable Protein Max. Stock: 25 bags Re-Order Stock: 20 bags
Date + Deliveries(qty./units) Withdrawals-
(qty./units)
BALANCE
(qty./units) (Person/Department)Withdrawn by:
Balance Forwarded 20 bags Ms. Sol Saldivar
2009
May 25 5 bags 15 Mr. Rene Delfino
26 8 7 Jun (Mixing Section)
27 4 3 Reynaldo (Receiving Sec)
28 20 bags (OR#1221, P750/bag) 23 Leony (MVC Co.)
29 5 18 Perchy (DepEd)
June 2 16 2 Marian (Packaging Dept)
3 20 bags (OR#1221, P750/bag) 22 Leony (MVC CO.)
4 1 21 Jenny (Shipping Dept.)
10 2 19 Via (Manufacturing Dept)
11 2 17 Jun (Mixing Section)
13 1 14 Via (Manufacturing Dept)
14 1 13 Reynaldo (Receiving Sec)
15 1 12 Jun (Mixing Section)
16 17 18 19 20 LET US REMEMBER
In the successful inventory control management, always remember to take note of the date, items received and withdrawn, supplier sources, minimum and maximum stocks, re-order stock, the price and other data important in the inventory control. The stock card should always be maintained as a tool or basis to control inventory.
LET US APPLY WHAT YOU HAVE LEARNED
Directions: Following the Stock Card No. 1 (above) for Textured Vegetable Protein of Teneza’s Meat & Fish Product Company, assume business operation and consider your own business reflecting data on the appropriate columns available. Copy the stock card on your activity notebook and use it on your business now.
Name of your business: ________________________________________
S
T O C KC
A R D -1
(Individual/Per Item)
Stock Card No. Min. Stock: Supplier:
Item: Max. Stock: Re-Order Stock:
Date + Deliveries(qty./units) - Withdrawals(qty./units) (qty./units)BALANCE (Person/Department)Withdrawn by:
Balance Forwarded
HOW MUCH HAVE YOU LEARNED FROM THIS LESSON
Directions: Choose the correct answers from the ITEM BANK below and write your answers on your quiz
ITEM BANK
Finished-Goods Inventory Stock Card – 1 Inventory of Goods and Services Stock Card – 2 Inventory of Services Stock Card - 3 Raw-Materials Inventory Stock Card - 3 Work-In-Process Inventory Stock Card – 3 1. These are stockpile of materials for inputs of production.
2. These are partially completed products requiring further processing including sets of unfinished goods for production process.
3. These are the final outputs of production ready for delivery to the market or customers.
4. This is the stock card for the collective items of stocks.
5. It is an inventory tool designed for individual item of stocks.
POST-TEST
Directions: Let us find out how much you already know about production cost and pricing of products or services. Answer the questions below honestly and write the letter of the corresponding answer in your activity notebook.
1. Things or products like apple, cucumber, carrots, tomatoes and corn are examples of what products?
a. grown products
b. manufactured products c. processed products
2. The dresses we have, bags we use and shoes we wear, are examples of what products?
a. grown products
b. manufactured products c. processed products
3. Maximized use of the natural resources, nurturing entrepreneurial skills of the Filipino people and additional income of the government through tax collection are examples of what in purchasing activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services c. guidelines in purchasing process
4. Assessing the profile of the producers and customers and checking the track record of the suppliers are examples of what in purchasing
activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services c. guidelines in purchasing process
5. These are stock files of materials for the inputs of production. a. finished-goods-inventory
b. raw-materials-inventory c. work-in-process inventory
6. These are partially completed products requiring further processing including sets of unfinished goods for production process.
a. finished-goods-inventory b. raw-materials-inventory c. work-in-process inventory
7. These are the final outputs of production ready for delivery to the customers.
a. finished-goods-inventory b. raw-materials-inventory c. work-in-process inventory
8. Stock card #1 has information and data that are categorized in what cluster of items?
a. collective b. group c. individual
9. Stock card #2 has information and data that are categorized in what cluster of items?
a. collective b. group c. individual
10. When you need to purchase or avail of goods and services without the need to leave the country, how do you classify these resources?
a. export resources b. imported resources c. local resources
RESOURCES:
Individual Stock Card for Inventory Purpose Stock Card for the Collective Items REFERENCES:
Fajardo, Feliciano R., Entrepreneurship
Jorge A. Camposano, Jorge A., MBA, Ph.D., Entrepreneurship for Modern Business
San Gabriel, Nati C., Business Finance and Business Firms SEDP, Business Management
Teneza, Celedonia T., Ed.D., Worktext in Technology &
Livelihood Education in Business Management III, published by Shekinah Publishing and Printing Press Co., Copyright, 2006 Teneza, Celedonia T., Ed.D., & Baes, Ma. Gradiva S., Worktext in Technology & Livelihood Education in Business Management IV, published by Shekinah Publishing and Printing Press Co., Copyright, 2006
Villanueva, Cristina R. & Rojo, Luz V., Technology & Livelihood Education
Internet Sources:
www.wikipedia.com www.econolib.org www.brittanica.com
MODULE 3
Engaging in the Purchase of Goods and Services PRE-TEST/POST-TEST
K
EY TOC
ORRECTION 1. A 2. B 3. A 4. B 5. B6. C 7. A 8. C 9. A 10. C
ACKNOWLEDGMENT
Copyright Department of Education 2009This module was based on the Writeshop on the Development of the Competency-Based Curriculum (CBC) for Entrepreneurship for Technical Vocational High School conducted at Marikina Hotel Marikina City, May 25 – 30, 2009
This learning instrument was developed by the following personnel: Dr. Reynaldo M. Valdez
Jones Rural School Group Leader
Dr. Celedonia T. Teneza Benigno Aquino High School
Mr. Gilbert Camayang
Cabrroguiz National School of Arts and Trade Mr. Alfonso P. Rodriguez Jr.
Muntinlupa Business High School Mr. Fernando C. Agustin
Mrs. Leona M. Tomas
San Pedro National High School Writer/Facilitator:
Mr. Rene G. Delfino
Muntinlupa Business High School Editor: Dr. Estrellita Evangelista Encoder: Mrs. Marisol E. Saldivar
Funding: Department of Education
ACKNOWLEDGMENT
Copyright Department of Education 2009This module was based on the Writeshop on the Development of the Competency-Based Curriculum (CBC) for Entrepreneurship for Technical Vocational High School conducted at Marikina Hotel Marikina City, June 5 -7, 2009
This learning instrument was developed by the following personnel: Dr. Reynaldo M. Valdez
Jones Rural School Group Leader
Dr. Celedonia T. Teneza Benigno Aquino High School
Mr. Alfonso P. Rodriguez Jr. Muntinlupa Business High School Writer/Facilitator:
Mr. Rene G. Delfino
Editor: Dr. Estrellita Evangelista Encoder: Mrs. Marisol E. Saldivar
Funding: Department of Education
ACKNOWLEDGMENT
Copyright Department of Education 2009This module was based on the Writeshop on the Development of the Competency-Based Curriculum (CBC) for Entrepreneurship for Technical Vocational High School conducted at Marikina Hotel Marikina City, July 1to 5, 2009
This learning instrument was developed by the following personnel: Dr. Reynaldo M. Valdez
Jones Rural School Group Leader
Dr. Celedonia T. Teneza Benigno Aquino High School
Writer/Facilitator:
Mr. Rene G. Delfino
Muntinlupa Business High School
Editor: Carolina F. Chavez, Aida T. Galuran, Beatriz A. Adriano & Dr. Corazon C. Echano
Encoder: Mrs. Marisol E. Saldivar
Funding: Department of Education
TABLE OF CONTENTS
Module Title: Determining Production Cost Page and Price of Products and Service
How to Use This Module . . . . . . 1 Summary of Learning Outcome . . . 2 What Will You Learn
What Do You Already Know
Pre – Test . . . . . . 3 Lesson 1: Identify Criteria in Purchasing
Production Materials . . . 5 What is this Lesson About
What Will You Learn . . . 5 Let Us Study . . . . . . . 5 Let Us Remember
Let Us Apply What You Have Learned . . . . . . 7 How Much Have You Learned . . . . . . 8 Lesson 2: Utilize Standard Inventory Control
of the Production Materials . . . . . . . . . . 9 Let Us Study . . . . . . . 9 Let Us Remember . . . 12
Let Us Apply What You Have Learned . . . 13
How Much Have You Learned . . . 13
Post – Test . . . . . . 14
Resources . . . 16
References . . . 16
Key to Correction . . . . . . . . . . . . . . . . 17