Developing a POS

Perpetual Help College of Manila

Developing a Point-of-Sale Inventory Management System

for Lord's Grace General Merchandising

using pHp and MySQL

A Thesis Proposal Presented to

Perpetual Help College of Manila

In Partial Fulfilments

of the Requirements for the Degree of

Bachelor of Science in Information Technology

by:

Antonio, Leona Ela R.

Bautista, Lalli P.

Maglunog, Marvin Ian C.

Santos, Ruben Gervey L.

Trambulo, Aida Meleen E.

This thesis is all about “Point-of-Sales and Inventory system for Lord’s Grace General

Merchandising” for the improvement of the manual processing system with regards to the monitoring

of sales and inventory. Businesses at present time are innovative and competitive. They make their

business process transaction into computerized one. The most commonly used system by the

companies today is the sales system and integrates it with an inventory system.

POS Inventory for Lord’s Grace General Merchandising using pHp and MySQL

Table of Contents

Chapter I .......................................................................................................................................... 3

Introduction................................................................................................................................. 3

1.1 Background of the Study ........................................................................................................ 4

1.2 Statement of the Problem .................................................................................................... 4

1.3 Objectives of the Study .......................................................................................................... 5

1.4 Significance of the Study ........................................................................................................ 6

1.5 Scope and Limitation ............................................................................................................. 7

1.6 Definition of Terms ................................................................................................................ 8

Chapter II ....................................................................................................................................... 10

Related Literature ...................................................................................................................... 10

2.1 Review of Related Studies .................................................................................................... 10

2.2 Conceptual Framework ........................................................................................................ 12

Chapter III ...................................................................................................................................... 13

Methodology ............................................................................................................................. 13

Data Gathering Procedures and Outputs ................................................................................... 14

3.2 Inquiry............................................................................................................................ 14

CHAPTER IV ................................................................................................................................... 16

DOCUMENTATION OF THE CURRENT SYSTEM ........................................................................... 16

4.1 Profile of the Client .............................................................................................................. 16

4.2 Description of the Existing System ....................................................................................... 16

4.3 Cost Estimation .................................................................................................................... 16

4.4 Data Flow Diagram .............................................................................................................. 18

4.5 Entity Relationship Diagram ................................................................................................. 20


Chapter I Introduction

Point of sale (POS) (also sometimes referred to as point of purchase (POP))

or checkout is the location where a transaction occurs. A "checkout" refers to a POS terminal

or more generally to the hardware and software used for checkouts, the equivalent of an

electronic cash register. A POS terminal manages the selling process by a salesperson

accessible interface. The same system allows the creation and printing of the receipt.

A General Merchandising carries a broad selection of products from staple food items

to various household goods to medicine and also miscellaneous items such as candy,

cosmetics, and magazines, as well as light refreshments.

A sale refers to the exchange of product or services for an amount of money or its

equivalent while inventory in business, is a total amount of goods and the act of counting

them. A company owner must know the precise number of items in their storage areas in

order to place orders and control losses. Computerizing both Sales and Inventory System will

make an easier and faster transaction with the customers as well as monitoring the stocks of

the products.

The benefit of Point-of-Sale Inventory System is that this system makes a business

much more efficient, lowering the costs of running the business while improving customer

service and making the business more pleasant to work Computerized inventory system helps

management control the inventories, in turn lowering overall operating costs in the areas of

labour, facilities and logistics. A computerized inventory system also improves customer-

service metrics and fulfilment rates.


1.1 Background of the Study One of the business owners that wish to make an improvement on her business

process is entrepreneur, Mrs. Sally Bermudo, Lord’s Grace General Merchandising owner.

She owned a total of five (5) stores, two (2) Zagu franchise, two (2) reloading stations, and a

Sari Sari Store which started at around 1999. From then, every transaction is being done

manually. It solves the previous problem, being from a tiresome manual system, into a

computerized POS inventory management system wherein its main function is to check and

monitor the sales, income and stock availability. It could also generate reports that would aid

in the management decision making process in making future purchase by providing

information regarding their stock turnover.

The proponents are to develop a new POS Inventory Management System that is

“Client-based”, meaning, it incorporates a bar code system to account for inventory sales and

acquisition of inventory. The proposed POS Inventory Management System would be able to

check and monitor for sales and income as well as stock availability with the use of a search

function, it could also reduce inventory within the database in the event of a sale by using a

barcode scanner, it could also generate sales forecasts reports, inventory turnover reports and

would be able to issue purchase orders upon the “Auto-Management” System that is

incorporated within the algorithms of the system.

1.2 Statement of the Problem 1.2.1 General Problem

1.2.1 .1 How to design, develop, and implement a POS Inventory

Management System for Lord's Grace General Merchandising that will

improve their current sales operation and inventory process.

1.2.2 Specific Problem

The specific problem that would be encountered by this relates to the

following:

1.2.2.1 How to create sales module that will accurately compute for

the total amount of item/s ordered by the customer?

1.2.2.2 How to develop a module that will monitor items that reaches

critical level?


1.2.2.3 How to create report generation module that will print

necessary reports?

1.2.2.4 How to design a module for management of product records?

1.3 Objectives of the Study The objectives are presented to provide the proponent an accurate estimate on

needs to be done in order for the system to be accurately represented. These

are:

1.3.1 General Objective

1.3.1 To design, develop and implement a POS Inventory

Management System for Lord’s Grace General Merchandise that will

improve the current sales and inventory transactions and maximize the

company's performance in terms of sales process and inventory

transactions by creating a program using PHP and My SQL.

1.3.2 Specific Objective/s

The proponent would like to address several specific objectives:

1.3.2.1 To develop a sales module that will accurately compute for the

total amount of item/s purchased by a customer.

1.3.2.2 To incorporate features such as monitoring of the stock

availability, recording and summarizing of inventory wherein it alerts

the user if any of the inventory item is in critical level.

1.3.2.3 To enable the generation of reports that assists the management

in making timely decision.

1.3.2.4 To create a database that will store the records of the products,

sales and reports


1.4 Significance of the Study The study is to solve the previous problem of the company by making the company's point-

of-sale inventory management system policies more efficient. A common problem for small

business owners is that they fail to address the proper management of their stocks. On the

event that they do take note of the problem, it becomes a tedious task of manually recording

and summarizing information that they fail to come up with reports to make quick

management decisions.

The study seeks to benefit the following:

1. Students and Faculty

The system would help both the students and faculty of Perpetual Help College of

Manila a s teaching reference with regard to conceptualizing stand-alone programs

primarily, regarding point-of-sale inventory management and its database design.

2. Lord's Grace General Merchandising

The study seeks to assist the client's management by creating a point-of-sale inventory

management system that automates their recording and summarizing of their

inventory. It allows the generation of reports that assists the management in making

timely-decisions. it could help the decision making process by incorporating an "auto-

management" feature wherein it alerts the user if any of the inventory item is in their

critical level. It will also prevent theft by just being there.

3. Small Business Retailers

In an event that small business retailers would automate their point-of-sale inventory,

this study would give them an insight on sales and inventory automation. This would

serve as a tool to make a computerized POS Inventory management system work for

according to their needs.

4. Future Researchers

Future researchers of information technology topics might refer to this study for any

of their respective research.


1.5 Scope and Limitation As per the system's scope, the proponents are to develop a new Point-of Sale

Inventory Management System of Lord's Grace General Merchandising that is "Client-

based", meaning, it incorporate a bar code system to account for the inventory sales and

acquisition of inventory. It would only cater to checking and monitoring of the stock

availability, sales, and income and also the recording and summarizing of inventory. This

includes the addition, reduction and editing of items and stocks, recommendation of the

"auto-management" purchasing feature whether the product has already reached the critical

number of stocks. It could be able to determine the price of an item and could also generate

sales forecasts reports and inventory reports. Also, with the designated system administrator

could add, reduce and edit the inventory names and details found on the database and user

accessibility.

The limitations presented in the study of Lord's Grace General Merchandising's POS

Inventory System are as follows:

The Research Setting

The proponents believes that this study is applicable only for Lord's Grace General

Merchandising sales and inventory operations. Any similarities with its business

policies and recommended implementation of its POS inventory management are

encouraged as a part of the system study.

The Availability of Data

In this study, the proponents would refer to the availability of data found during

inquiry of Sally Bermudo, owner of the business. The questions asked deals about the

sales and inventory management policies of the store. Specifically, methods of

recording and summarizing sales and inventory information, company's safety stock

level policy, company background, and day to day operations such as the in and out of

products, sales report and inventory.

Bank to bank transaction is not covered by this proposal

Inventory of processed foods will not be covered in this proposal


1.6 Definition of Terms

Client. A customer; a person, company, that seeks the advice of a professional man or

woman.

Computer. It is a machine that manipulates data according to a set of instructions.

Computerized System. A functional unit, consisting of one or more computers and

associated software, that (a) uses a common storage for all or part of a program and also for

all or part of the data necessary for the execution of the program, (b) executes user-

written or user-designated programs, and (c) performs user-designated date manipulation,

including arithmetic and logic operation. Note: A computer system may be a stand-alone

system or may consist of several interconnected systems.

Information Technology. IT is the study, design, development, implementation, support or

management of computer-based information system, particularly software applications.

Internet. It is a global system of interconnected computer networks that use the standardized

Internet Protocol Suite (TCP/IP), serving billion of users worldwide. It is a network of

network that consists of millions of private and public, academic business, and government

networks of local to global scope that are linked by cooper wires, fiber-optic cables, wireless

connections, and other technologies. The internet carries a vast array of information resources

and services, most notably the inter-linked hypertext documents of the World Wide Web

(WWW) and the infrastructure to support the electronic mail. In addition, it supports popular

services such as online chat, file transfer and file sharing

Inventory Management. Inventory management is primarily about specifying the size and

placement of stocked goods. Inventory management is required at different locations within a

facility or within multiple locations of a supply network to protect the regular and planned

course of production against the random disturbance of running out of materials or goods.

The scope of inventory management also concerns the fine lines between replenishment lead

time, carrying costs of inventory, asset management, inventory forecasting, inventory

valuation, inventory visibility, future inventory price forecasting, physical inventory,

available physical space for inventory, quality management, replenishment, returns and

defective goods and demand forecasting.

Manual System. It is a system involving data processing which does not make use of stored-

program computing equipment; by this somewhat arbitrary definition, system using other

types of tabulating equipment, such as the card-programmed calculator, are considered to be

manual.

Point-of Sale. Point of sales systems are checkout locations in business operations where

transactions occur. The checkout location is a point of sale or POS terminal, which is just a

computer used as a cash register. Point of sales terminals and systems make perpetual

inventory control systems possible.


Point of Sale Inventory Management. A point of sale inventory management system is a

step up from the use of a cash register. Small, start-up businesses who sell services and not

products may be able to survive with just a cash register and a simple accounting system. If

your business is product-based, chances are you will eventually have to switch to at least a

basic point of sale inventory system. With a point of sale system, you don't have to worry

how much inventory you have on hand. The point of sale system keeps track of that and you

have the information at a glance. A point of sale inventory management system allows a

business owner to have more than one business location and adequately keep track of

inventory at each without being present. No more worries about employee theft or pricing

inconsistency between one location and another. The boss can be away and not worry about

employee theft. Employee efficiency can be maintained. Point of sale systems take care of

those problems that result when management isn't present.


Chapter II

Related Literature In exploration, we find new techniques, new knowledge, even develop new substances,

gadgets, equipment, processes or procedures, imagination and skill is employed by the

researchers. The commodities, new devices, services, in technology are needs of man for a

better, fuller life which is the concern of the research. These useful arts are the products of

the technological environment and the end-user is society in general. The fast growing trend

and innovation in technologies today prompts researchers to conduct studies about, both local

and foreign that is related to those studies.

2.1 Review of Related Studies The following statements given are related to our study about the point of sale inventory

management system which is found very useful for the proponents in making the system.

"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. According to Udo,

companies that make good use of this technology are far better equipped to succeed than

those who rely on outdated or unwieldy methods of inventory and sales control.

Automation can drastically affect all phases of inventory management, including counting

and monitoring of inventory items; recording and retrieval of item storage locations;

recording changes to inventory; and anticipating inventory needs, including inventory

handling requirements. This is true even of stand-alone systems that are not integrated with

other areas of the business. But many analysts indicate that productivity and hence

profitability aims that are garnered through use of automated systems can be increased when

a business integrates its inventory control systems with other systems, such as accounting and

sales, to better manage inventory levels. According to Dennis Eskow in PC Week, business

executives are "increasingly integrating financial data, such as accounts receivable, with sales

information that includes customer histories. The goal: to control inventory quarter to quarter,

so it doesn't come back to bite the bottom line. Key components of an integrated system are

general ledger, electronic data interchange, database connectivity, and connections to a range

of vertical business applications." David Cahn, a director of product strategy for business


applications at a firm in New York, confirmed this view in an interview with Eskow: "What

drives business is optimization of working capital. The amount of control you have on

inventory equals the optimization of the capital. That's why it's so important to integrate the

inventory data with everything else."

Point of sale (POS) systems are electronic systems that provide businesses with the capability

to retain and analyse a wide variety of inventory and transaction data on a continuous basis.

POS systems have been touted as valuable tools for a wide variety of business purposes,

including refining target marketing strategies; tracking supplier purchases; determining

customer purchasing patterns; analysing sales (on a daily, monthly, or annual basis) of each

inventory item, department, or supplier; and creating reports for use in making purchases,

reorders, etc. Basic point of sale systems currently in use include standalone electronic cash

registers, also known as ECRs; ECR-based network systems; and controller-based systems.

All function essentially as sales and cash management tools, but each has features that are

unique.

Point of sale systems, like many other computer based innovations, continue to change and

develop at a rapid pace. In addition, the demand for POS systems has spawned many new

manufacturers, each of which offer a dizzying array of standard and optional POS features to

their customers. For example, some electronic POS systems now cover hand-held scanning

devices, customer promotions, credit-card confirmations, counterfeit money checks, and staff

scheduling. Given the expense involved and the proliferating number of POS software

packages, small business owners should make sure that they adequately research both their

current and future needs before making a purchase, so that they are able to acquire a

customized POS system that best fills their current operating requirements and can

accommodate future changes in the business. "Consider value don't make your decision on

price alone," counselled National Petroleum News. "Look for a high level of connectivity and

compatibility with a multitude of peripherals. Demand customization capabilities. Don't

accept a system that's almost what you want when today's technology makes it possible to

customize one to exactly what you need."

Sources:

Blair, Adam. "POS Data to Power Efficient Distribution." Supermarket News. March

22, 1999.

Durocher, Joseph. "Point of Departure: Don't Think of Your POS System as Merely a

Cashbox but Rather as a Management Tool." Restaurant Business. September 1,

1994.

Eskow, Dennis. "Rising Stock: Integrated Inventory Systems Help Companies Shoot

Economic Rapids." PC Week, 5 June 1995.

Field, Christopher. "POS Man Always Rings Twice." Computing. October 22, 1998.


Murphy, Patricia A. "Cash Management Issues Foster Electronic Payments at Point of

Sale."Stores. July 1999.

"Systems to Keep the Checkout Counter Humming." Chain

Store Age Executive. October 1990.

Pachura, Ronald. "When Is Enough, Enough? Inventory Control Contributes Directly

to a Company's Profitability." IIE Solutions, October 1998.

Udo, Godwin J. "The Impact of Telecommunications on Inventory

Management." Production and Inventory Management Journal, spring 1993.

2.2 Conceptual Framework

ENHANCED POINT OF SALE

INVENTORY MANAGEMENT SYSTEM

MANAGEMENT

CURRENT POINT OF SALE INVENTORY MANAGEMENT SYSTEM POLICIES AND PROCEDURES

PURCHASING

RECEIVING

STORAGE

ISSUING

REPORTING

ENHANCEMENT OF POINT OF SALE

INVENTORY MANAGEMENT SYSTEM

F E E D B A C K

SWOT

ANALYSIS

REQUIREMENTS

MANAGEMENT &

ACCOUNTINGTHEORI

ES CONCEPTS

TECHNIQUES


Chapter III

Methodology The POS Inventory Management System for Lord’s Grace General Merchandising calls for a

Rapid Application Development. As coined by James Martin, Rapid Application

Development (RAD) is a development lifecycle designed to give much faster development

and higher-quality results than those achieved with the traditional lifecycle. It is designed to

take the maximum advantage of powerful development software that has evolved recently.

(Hsu, 1997-2000) The development is divided into 4 phases: Requirements Planning phase,

User design phase, Construction phase, and Cutover phase.

Table 2.1 Rapid Application Development (RAD) Lifecycle in comparison to the Traditional System

Development Life Cycle.

In the “Requirements Planning” phase, the proponent divides it into two important

procedures: the system analysis and the system planning. For the system analysis, the

proponents conduct an observation and an inquiry about the client’s existing process. Here,

the proponents gather data about the existing system. In system planning, the proponents

determine the client’s need, the system development objectives, scope and limitations,

systems requirements. In this phase, a management authorization is required from the client

to continue the system development process.


The “User design” phase, the proponents formulate a prototype with a user design that

would allow the client to understand, modify and approve the user interface that the client

needs.

In the “Construction” phase, this focuses on the hard coding of the logarithms

embedded on system. On this phase, the system is being tested in a module setting where

after a requirement has been met, the application is sent back to the “User design” phase to

apply the certain revisions that could affect the user interface.

In the “Cutover” phase, the proponents conduct an implementation plan where the old

recording of inventory would be replaced by the new automated POS Inventory Management

System. In this phase, the proponents also initiate a maintenance plan where the Inventory

Management System would be checked and tested regularly upon the agreed time for bugs

and errors.

Data Gathering Procedures and Outputs From the “Requirements Planning” phase, the proponents are to conduct one data

gathering procedures and this was: inquiry.

Inquiry is done in order to determine additional requirements analysis for the

proposed POS inventory management system.

3.2 Inquiry The proponent interviewed Mr. & Mrs. Phoebus and Sally Bermudo, owners, of

Lord's Grace General Merchandising. Inquiry is done to acquire supporting information in the

inventory management system of the client.

The inquiry process is documented as follows:

Interview happened on August 2, 2012, Thursday, at 3:00 PM.


The following are the questions asked:

◦ Give a brief background of your company

Name of your company?

Who manages the company?

What kind of business is your company in?

How long has your company been in business?

◦ Project Specific Questions

What is the purpose of this project?

Describe how you envision the finished project

Is there any existing documentation or other introductory information

for this project? (This could include user's manuals, functional

specifications, design specifications, or even memos and emails.)

How much, if any, of this project is already complete or underway?

Who are the primary users of the product, and what is their technical

level? Are they familiar with this technology already?


CHAPTER IV

DOCUMENTATION OF THE CURRENT SYSTEM

4.1 Profile of the Client Lord’s Grace General Merchandising is owned by, husband and wife, Phoebus and

Sally Bermudo. The business started around the 1990’s where Sally Bermudo was asked by a

friend to help her recover a nearly bankrupt sari-sari store. From here, she got around 20,000

and started the business again in Manotok, Quezon City.

The company later grew into a Mini Grocery and expanded its business throughout

the Metro. As of now, the Bermudo’s owns a total of five stores: Two Zagu Franchise, two

reloading stations and a mini grocery.

4.2 Description of the Existing System Lord’s Grace General Merchandising uses a manual recording of its inventory system. The

process starts upon acquisition of inventory where the manager issues a purchase order.

Upon approval by the owner, the purchase order is sent to the supplier.

When the inventory is received from the supplier, the assistant-in-charge records the

transaction in a journal by indicating the date received along with the product name and

quantity of the product received. This information is cross-referenced to the purchase order to

see if the quantity delivered is equal to the approved purchase order.

The release of inventory to the warehouse is last process to the client’s inventory system. The

client does not keep a manual record for the sale nor the release of the inventory and only

relies on gut-feel and memory.

A manual inventory count is also conducted twice times a week to record inventory data.

4.3 Cost Estimation Existing Inventory Management System

Log Book (Php 80.00x6) PHP 480.00

Ball pen (Php 20.00x12) PHP 240.00

Bond Paper (Php 30.00x12) PHP 360.00

Total Existing Cost PHP 1080.00


Proposed Inventory Management System

HARDWARE

Cash Register PHP 20,000

Bar Code Scanner PHP 1,990

Printer PHP 4,100 PHP 25,090.00

SOFTWARE

Operating System (Windows XP) PHP 3,000

Spreadsheet and Word Processor (Open Office) FREE

Program Development Cost PHP 25,000 PHP 28,000.00

TOTAL CASH OUTLAY PHP 53,090.00

BENEFITS

The proponents believes that with the aid of the new Inventory Management System,

the company could increase its annual profit by PHP 40,000. Due to the timely purchases and

better reports to aid in the decision making process.

TOTAL BENEFIT / ANNUM PHP 40,000.00

PAYBACK PERIOD

PHP 55,090 / PHP 40,000 = 1.38 YEARS

This means that Lord’s Grace General Merchandising can recover the cost of

investment in 1.38 years after purchase.


4.4 Data Flow Diagram

4.4.1 Existing System

Figure 1.0 Existing System DFD

The process starts on acquisition of inventory where the manager issues a purchase order.

Upon approval by the owner, the purchase order is sent to the supplier.

When the inventory is received from the supplier, the assistant-in-charge records the

transaction in a journal by indicating the date received along with the product name and

quantity of the product received.

The release of inventory to the warehouse is last process to the client’s inventory system.


4.4.2 Proposed System

Figure2.0 Proposed System DFD

The process starts on the initial acquisition of the inventory. The manager fills up an order

form and it goes through the Inventory Management System software where the data from the

order from will be inputted. The resulting information will then be transferred to the purchase

order database and the hard copy of the purchase order would be sent to the supplier.

Upon receipt, the employee records the inventory information to the product database and the

information about the details of the inventory to the receipt database. The next process is the

release of the inventory from the warehouse. The actual inventory is released to the

customers and the inventory release information will be stored in the release database. The

final process is about the auto-management feature of the system. The system would initiate a

suggested order form that the manager could approve in order to generate a purchase order

form to send to the supplier.


4.5 Entity Relationship Diagram

Figure 3.0 Entity Relationship Diagram

The entity-relationship diagram of Lord’s Grace General Merchandising consists of 6 tables.

The first interaction is where the administrator records the following: the employee’s

personal information and access, the product information and the supplier name and code on

the system’s database. Following that, the supervisors from the purchasing department,

receiving department and the warehouse releasing department interacts with the system as to

provide the information that would be coming from their work (i.e. purchasing department

supervisor supplies purchase order transactions).

PRODUCT

PK – Product Name

Product ID Price

Quantity Safety Stock

PURCHASE ORDER

PK – Purchase Order #

Product ID Supplier ID Quantity

Date Employee #

RECEIPT

PK – Bill of Lading #

Product ID Supplier ID

Quantity Received Date

SUPPLIER

PK – Supplier ID Supplier Name

EMPLOYEE

PK – Employee ID Employee Name

Username Password

RELEASE

PK – Release # Product ID

Employee ID Quantity Released

Date

Developing a POS

Documents

Transcript of Developing a POS