Computerized inventory system

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.

1

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.

2

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,

3

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.

4

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

5

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.

6

Chapter II

REVIEW OF RELATED LITERATUREThis 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.

7

"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.

8

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

9

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

10

CASH SALES CREDIT SALES

collections purchases

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)

11

CASH

inventoryAccounts

receivable

CASH

inventory

purchasesCash sales

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 x annual¿demand xcost per order)÷carrying cost per unit ¿

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,

Lead Time Usage = Lead Time * Daily Usage

12

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.

13

no. of days

lead time in 6 days

1 2 3 4 5 6 7

inventory level

without safety stock

Graph 1

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.

14

Lead Time in 5 Days

Safety Stock

Inventory Level

No. of Days

1 2 3 4 5 6 3 4 5 6

With safety stock

Graph 2

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

15

distributing organizations. The results showed that the corporation’s stock turn-

over had slowed 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

2. Marketing constraints – minimum tolerable customer service levels

16

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:

1. A system to keep track of the inventory on hand and on order

17

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.

18

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

19

Computerized Inventory System

Programming design using Visual Basic. Applying the knowledge learned from DBMS

To check & monitor the inventory flow

To update the inventory records

Knowledge on programming System Development regarding inventory system

Authorized User Login

Operator Knowledge

CASH SALES CREDIT SALES

collections purchases

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.

20

Cash sales purchases

inventory

CASH

Accounts receivableinventory

CASH

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)

21

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,

22

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

23

CHAPTER III

RESEARCH METHODOLOGYThis 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















research.

24

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.

25

Data Gathering Instruments & Procedures

JULY AUGUSTSEPTEMBER

Week 1 2 3 4 1 2 3 4 1 2 3 41. PLANNING1.1. Proposing Title (choosing of project)1.2. Preparation of Sample Chapter 12. SYSTEM ANALYSIS2.1. Making DFD & ERD2.2. Initial Interview2.3. Outline of Interview3. SYSTEM DESIGN & DEVELOPMENT3.1. Chapter 13.1.1. Introduction3.1.2. Objectives of the Study3.1.3. Scope and Limitations3.1.4. Significance of the Study3.1.5. Definition of Terms3.2. Chapter 23.2.1. Related Literature3.2.2. Related Studies3.3. Chapter 33.3.1. Planning and Selection3.3.2. Analysis3.3.3. Design3.3.4. Implementation and Operation3.4 Program3.4.1. Screen Design3.4.2. Coding3.4.3. initial testing3.4.4. Debugging3.4.5. Final testing3.5. final paper

Table 1

Gantt Chart

26

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


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

27

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.

28

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 Software10000

Total 183782 115000

Table 2

Cost and Benefit Analysis

Proposed System’s Scope

29

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.














research.

30

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.

Hardware Specifications

Requirement Specification (Minimum) Specification (Recommended)

31

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 betterOR ATI Radeon 8500, 9250, or better

NVIDIA Graphics cards6000 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

Hardware Specifications

Software Specification

32

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 6Database

Table 4

Software Specification

33

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

34

respective attributes that is involved in Southbest Sales Center Inventory

System.

ENTITY ATTRIBUTES

SUPPLIER

Company Name

Address

Transaction Date

Contact Number

PRODUCT

Size

Color

Materials

Stock Number

SOUTHBEST SALES CENTER

Name

Municipal Permit

Contact Number

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.

35

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

represented by a rectangle. When a purchase is needed to be made, a purchase

36

SOUTHBEST SALES CENTER

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.

37

MAIN MENU

FILE

LOGIN

EXIT

INVENTORY

INVENTORY LIST

INVENTORY SUMMARY

RECORD

TRANSACTION

EOQ

ABOUT

AUTHOR

SYSTEM

Design

38

Figure 7

HIPO

Figure 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.

8

the

39

Process: If click on Login,

Then go to main menu

Else if click cancel,

Then go to splash screen

Log-in form Mouse / Key control

Log-inSplash screen

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:

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.

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.

42

Process: If click on Product 1,

Then go to Product 1 formElse if click on Product 2,



Then go to Product 4 formElse,

No action

Product 1Product 2Product 3Product 4

Mouse control

Inventory (units)Main Menu



CALLED OR INVOKED: CALLS OR INVOKES:

INPUT: OUTPUT:



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.

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.

44

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.

Inventory Summary Report

Mouse control

Inventory SummaryInventory (units)




INPUT: OUTPUT:

Figure 8.6

IPO

The figure shows the IPO for generate report. The user is allowed to print

out the inventory summary report.

45

Process: Allows the user to print the inventory summary report.

Printed Inventory Summary Report

Mouse control

Generate ReportInventory summary




INPUT: OUTPUT:

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


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

61

which are not often found in books, magazines, journals and others. On the other

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.

62

3. User Interface. The researchers used Visual Basic 6.0 in designing the

interface of the system.

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.

63

2. This study is recommended for implementation since this inventory system

will be beneficial not only to the owner but also to the staffs.

3. The future researchers can enhance the inventory system by adding

purchase order system and sales system.

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

Heating & Refrigeration News. 24 October 2005.

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

66

http://www.technologyevaluation.com/search/for/thesis-for-%09inventory-system.html

http://www.technologyevaluation.com/search/for/thesis-for-%09inventory-system.html

http://smallbusiness.chron.com/advantages-disadvantages-%09computerized-inventory-management-system-22513.html

http://smallbusiness.chron.com/advantages-disadvantages-%09computerized-inventory-management-system-22513.html

http://smallbusiness.chron.com/benefits-using-computerized-%09inventory-system-2044.html

http://smallbusiness.chron.com/benefits-using-computerized-%09inventory-system-2044.html

Retrieved from http://www.ctp.bilkent.edu.tr/ctp108/ctp108_ln_w1.pdf Dated

September 1, 2013

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

http://www.ctp.bilkent.edu.tr/ctp108/ctp108_ln_w1.pdf

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?

68

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.

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.

69

Computerized inventory system

Documents

Transcript of Computerized inventory system