1

CHAPTER I
THE PROBLEM

Introduction
Recently, people have been relying on the benefits that technology is
offering. Technology is derived from discoveries of man; therefore, it includes the
use of both primitive and highly advanced tools and methods of works. The
inventions and the development of technology permitted people to expand their
work at the shortest possible time. With the assistance of technology, people are
now using the most important and most highly developed machine man has ever
invented: the computer.
Computer has changed the way people work specially in the field of
industry and commerce. Most businesses have used this in carrying out different
business transactions. Computer has been greatly valued for its skill to execute
tasks more hastily and more accurately than any human being had. These tasks
include solving numerical calculations, storing necessary information, and
organizing files that can be used by management and other departments in the
company in making economic decisions.
However, even with the existence of these highly developed technologies,
some business firms still prefer the manual system, which requires more effort,
time, costs, and resources, because of its simplicity. Yet, it is apparent that as
the business gets larger, its processes becomes complicated and thus requires a
more convenient tool, which will help attain the companys goals and objectives.
2

Organizations have to consider, acquire, allocate and control certain factors
which are necessary to achieve these goals and objectives. Inventory
management, being one of these factors, has always been a major
preoccupation for the companys survival and growth.
The aim of inventory management is to hold inventories at the lowest
possible cost, given the objectives to ensure uninterrupted supplies for on going
operations. When making decisions on inventory, management has to find a
compromise between the different cost components, such as the costs of
supplying inventory, inventory-holding costs and costs resulting from insufficient
inventories (Hugo, Badenhorst-Weiss and Van Rooyen 2002:169).
One example of an organization that has a wide range of inventories and
still employs a manual system is Southbest Sales Center, which was established
in 2002. It is operated by the owner himself, Mr. Edgar Sy. Southbest Sales
Center offers a variety of construction supplies which has different classes for
each item. Since then, this Sales Center uses manual inventory system in
keeping its inventory records. It conducts a yearly physical count of its supplies
which lasts for three to five days. However, this kind of manual process is time-
consuming, labor-intensive and inaccurate.
Therefore, the researchers decided to come up with a study entitled
Computerized Inventory System for Southbest Sales Center, that shall convert
its manual process of managing the inventory into a computerized one. This
modification could help the aforementioned business perform this essential
function with more speed and accuracy.
3

This study aims to improve the inventory system of Southbest Sales
Center by designing a computerized system. It shall help the Sales Center
maintain an accurate and updated record of inventory on hand and at cost.
Whenever a sale or purchase is being made, the Computerized Inventory
System shall record the inflow and outflow of items. This will help lessen the
time, effort and money consumed in conducting inventory count. This will provide
convenience to the owner and staff of Southbest Sales Center because an
updated inventory count would be available anytime. With this, Southbest Sales
Center would be able to determine right away when to make an order to avoid
inventory shortage.
The researchers conduct a step by step process in order to come up with
an inventory system which will meet the objectives previously stated and to
provide a program which will of great help to the Southbest Sales Centers
inventory management.
First, an interview was conducted in order to know the inventory
operations of Southbest Sales Center such as the manner in which inventories
are recorded, updated and purchased.
Second, previous studies in relation with the topic were gathered from
books, past theses and net, to properly and fully comply with the current
inventory needs of the said entity.
Third, an inventory system via Visual Basic was then created. This will not
require any internet connection but only computer sets and the system itself.
Using this, inventory sold and purchased can easily be monitored and recorded,
4

inventory shortage may be prevented, and high cost due to labor, inventory
handling and ordering may be eliminated.
Through this, the researchers may be able to make a corresponding
program that would answer the problem identified in the former part of this
research.

Objectives of the Study
This study aims to accomplish the following:
1. Improve the inventory system of Southbest Sales Center
2. Maintain an accurate and updated record of inventory on hand and at
cost
3. Lessen the time, effort and money consumed in conducting inventory
count
4. Determine when will the said business make an order to avoid inventory
shortage

Scope and Limitations
This study focuses mainly on the design and development of a
computerized inventory system of a merchandising company. Besides, this is
specifically designed for the use of Southbest Sales Center including its owner
and staffs.
5

The procedure for inventory management will be considered and applied
to the proposed system. Using the improved system, the staff can view the
number of stocks remaining and the inventory that needs replenishment.
For every purchase, the staff would encode it in the system. If a new class
of inventory is purchased, the system will allow the staff to add it in the inventory
list. For every sale, the staff would have to encode the number of items sold
daily. Each purchases and sale of inventories encoded by the staff will
automatically compute and result to an updated inventory record.
However, the system would be limited to the inventory records of
Southbest Sales Center. Moreover, the system is not accessible to the web
because its network runs only through the vicinity of this entity and will only
require sets of computer and the new system itself to work.

Significance of the Study
This study is deemed beneficial to the following:
1. Southbest Sales Center. The developed Computerized Inventory System
would create positive impression towards the owner and staffs, revealing
the entitys 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 entitys daily activities. This would also
6

minimize their time in doing a yearly physical count because of the
computerized system that can search and update records quickly.

3. Customers. The system could lessen inconvenience to customers when
they make a purchase. It would be easily known if the certain item they
want to buy is still available or how many stocks are still available.

4. Researchers. This study shall enhance their skills and knowledge in
advance technology by developing a system, and become more aware of
the existence and benefits of new technology.

5. Future Researchers. This study would serve as a guide in the area of
Inventory Transaction Processing System and in the conduct of a similar
study.









7

Chapter II
REVIEW OF RELATED LITERATURE
This chapter presents the proponents collected data and information that
formed part of the research literature which are very useful in the development of
this study.

Conceptual Literature
This study utilizes the following concepts about inventory management
system.
Inventory Management. Inventory management is a vital part of any
retail business. It provides information about the condition of the products, as to
whether the said-products are below their safety stock or not. It also provides the
customers with accurate information, especially when items are out-of-stock,
back-ordered, or pre-orderable. Failure to provide the customers with this
information may result to a loss of future business opportunities. Inventory
management also determines which product is saleable and income-generating
and which is not. This information allows managers to make better business
decisions on how to market your products, and whether or not to carry them
further.
According to Smith, Inventory System is capable of providing real-time
inventory management for product catalogs, full integration into the Catalog
System and Orders System, and integration into LOB systems through the
Commerce Server BizTalk adapters.
8

"It is nearly impossible to overemphasize the importance of keeping
inventory levels under control," Ronald Pachura wrote in an article for IIE
Solutions. "Whether the problems incurred are caused by carrying too little or too
much inventory, manufacturers need to become aware that inventory control is
not just a materials management or warehouse department issue. The
purchasing, receiving, engineering, manufacturing, and accounting departments
all contribute to the accuracy of the inventory methods and records." It is little
wonder that business experts commonly cite inventory management as a vital
element that can spell the difference between success and failure in today's
keenly competitive business world. Writing in Production and Inventory
Management Journal, Godwin Udo described telecommunications technology as
a critical organizational asset that can help a company realize important
competitive gains in the area of inventory management.

Related Literature
According to Janes, computers are extremely reliable device and very
powerful calculators with some great accessories applications like word
processing problem for all of business activities, regardless of size, computers
have three advantages over other type of office equipment that process
information because computer are faster, more accurate more economical.
Reyes pointed out that tasks would be time consuming if done manually
but would be more practical with the aid of computers.
9

According to Dioso, computer assist careful intelligent planning,
organizing, actuating and controlling .This maybe observed from the past that
they monitor production activities, solve scientific problem and help arrive in
tentative answer to a multitude of involve conditions.
Ralph M. Stair emphasized that the development of technology through
the years have enabled us to do more with less effort. From the orientation of the
light bulb to the industrial revolution and beyond, we have continuously tried to in
a more efficient means of doing tasks.
Lewis stated that the reason for using computers vary from person to
person. Some of the computers in business are to perform accuracy, to be as
productivity, to decrease bottle necks or hassles to alter cash flows or to simples
elevate your status.
According to Sybex Inc. visual basic provide a graphical environment in
which the users usually designed the forms and control that become the building
block of tour application. Visual Basic support many useful tools that will help the
user more productive.

Merchandising Companies. Some businesses nowadays are engaged in
buying ready-made goods and reselling it, which is commonly known as
merchandising. These entities use only one account - merchandising inventory,
where purchases and sales of inventories are recorded either perpetually or
periodically. Perpetual inventory system is used by businesses selling low-
volume and high-priced goods, while periodic inventory system is for inexpensive
10

ones. In both systems, actual numbers of inventories are physically counted at
the end of the period. However, the former needs only to reconcile it with its
computed ending inventory, unlike the latter, which relies on it to establish the
ending inventory (Ballada, 2007). With that, it would be quite difficult for hardware
companies to monitor the changes in inventory involving large quantities.

Importance of Inventories. According to Brigham and Houston,
inventories are the main source of a companys revenue and profit. Sold
inventories increase either cash or accounts receivable. The collected cash will
then be used to purchase inventory and pay the operating expenses of a
company such as agents, rent, insurance, utilities and so on. Thus, inventory
serves as one of the lifebloods of a business.
Business Finance and Philippine Business Firms book points out that the
size of inventory is related to the size and frequency of purchase orders.
Meaning, seldom purchases in bigger volumes imply higher inventory level,
lesser ordering and stock out costs but higher handling cost. Frequent purchases
in smaller volumes, on the other hand, infer lower inventory level, higher ordering
and stock out costs but lesser handling cost. Hence, failure to monitor the
inventory may result to higher cost and eventually loss. To avoid these, inventory
must be maintained at a level that reconciles turnover and profit, and maximizes
return on investment. Besides, the working capital tied up in inventory and its
opportunity cost can be reduced. This will enable the company to gain the
11






CASH SALES CREDIT SALES
Credit sales
Source: Ballada,W.&Ballada,S.(2007)Basic Acccounting.Manila: DomDane Publishers
opportunities to earn on its capital not used in this item, and avoid inventory
shortage.










Figure 1
Inventory Cycle

In deciding whether to increase sales on account or not, R.Laman
emphasized that inventories must also be considered (R. Laman, V. Laman, E.
Evia, 2008). The reason is that prolonged credit terms increases not only sales
but also accounts receivable and inventory. The higher is the inventory, the
higher risk of obsolescence is assumed. Also, it would require more plant
property and equipment that will incur repair and maintenance costs and
depreciation. (Mejorada, 2006)

CASH
inventory
Accounts
receivable
CASH
inventory
purchases
Cash sales
12

Inventory Management Technique. Managing inventories is important to
avoid waste and misuse due to its excessive quantity, and losses because of its
shortage. The following techniques are commonly used (Guerrero, 2010):
1. Economic Order Quantity ( EOQ )
This reflects the quantity of order necessary to get the best price while
keeping the inventory at an appropriate level to ensure uninterrupted
production, that is, the level where ordering and carrying costs can be
minimized. The formula is:

EOQ =

2. Reorder Point
This determines the level of inventory by which reordering must be made.
This is computed using:
Reorder Point = Lead Time Usage + Safety Stock
where,
Lead Time Usage = Lead Time * Daily Usage






13














Figure 2
Graphical Representation of Reorder point Without Safety Stocks

Graph 1 represents businesses without safety stock. As days passed, the
inventory level decreases by the companys normal usage until it reach the end
of the lead time, when inventory level is equal to 0. Hence, the company will have
nothing to sell at that time unless the order was duly delivered.



without safety stock
i
n
v
e
n
t
o
r
y

l
e
v
e
l

1 2 3 4 5 6 7
lead time
in 6 days
no. of days
Graph 1
14


With safety stock
1 2 3 4 5 6
3 4 5 6
No. of Days
I
n
v
e
n
t
o
r
y


L
e
v
e
l

Safety Stock
Lead Time in
5 Days














Figure 3
Graphical Representation of Reorder point With Safety Stocks

Graph 2 represents those with safety stock. This possesses the same
behaviour shown in Graph 1. However, at the end of the lead time, the inventory
level will equal the safety stock, thus, it can still sell goods at the time through the
delivery of order is delayed. When the inventory reaches the reorder point, the
business must order inventory equal to the economic order quantity (EOQ), in
both cases.
Graph 2
15

Manual versus Computerized. Most entities handle their business
transactions manually by recording it in paper-based journals. However, this can
be time-consuming, error-bearing and labor intensive. Besides, market demands
which are heightened be modernization call for change in business operations.
The emerge of technologies and new thoughts makes their old beliefs and
processes inefficient and irrelevant. With such more competitive market, it is
apparent that some businesses started to uphold these advancements and think
of better ways to survive. (Paul Franson, 1998)
According to Liberty Enerio Solomon, profitability and growth can only be
achieved when modern technology is given importance. The reason is that it
affects the competitive capabilities and the capital investment of a company.
Besides, the intangible benefits of technology such as labor cost and
obsolescence risk reduction, speed of delivery , and information processing, and
flexibility, will help the company generate more profit and satisfy the suppliers
and customers as well.

Related Studies
Inventory System Review Water ware Group Ltd.
The objectives are to (1) investigate the corporations 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 stocks turn-over
for the previous five years and comparing it with other successful importing or
16

distributing organizations. The results showed that the corporations 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
17

3. Internal constraints storage space limitations, maximum budget for
inventory purchases during a period, maximum workload (number of
replenishment per period), personnel involved
Objectives and constraints is important in the applicability of solution
obtained.
Costs:
1. Replenishment cost cost incurred each time a replenishment action
is taken
2. Carrying cost cost of borrowing the capital tied up or foregoing its
use in some other investment, warehouse operation cost, insurance,
taxes, potential spoilage or obsolescence
3. Costs of insufficient supply in short-run backordering cost or loss,
goodwill
4. System control cost training, new system, changing plans costs

Synthesis
The previously listed researches are needed to determine how the
researchers will meet the requirements for inventory management namely (1)
establish a system of accounting for inventory, (2) make decisions regarding how
much and when to order, and consequently make a program for it. The following
requirements according to Production and Operation Management 1998 are
needed to achieve these:
1. A system to keep track of the inventory on hand and on order
18

2. Knowledge of lead times
3. Classification system for inventory items
These related literatures and studies will guide the researchers in making the
necessary program to effectively and efficiently comply with the requirements
stated above.
Conceptual Framework
In able to develop the proposed system, the researchers took the above-
mentioned studies for consideration. These studies added to the ideas and
concepts necessary to be able to complete this study.
The researchers designed a Computerized Inventory System for
Southbest Sales Center using the inventory system. This program aims to easily
monitor the inventory records of Southbest Sales Center since the owner had
only used the traditional inventory counting, the physical counting. A paradigm
identifies a programs input, output and the processing steps required to
transform the inputs into the outputs. The Input-Process-Output (IPO) model
developed by Harris and Taylor (1997) was used to serve as guide in the general
direction of the study.
The researchers had the knowledge in programming, and the cycle of the
inventory system. They used Visual Basic 6.0 and their knowledge on the
foresaid topic.
19

The administrators are the owner of the sales center and one of his
operators/staffs. They are considered authorized to login. The owner is
responsible for checking the inventory system and the operator is responsible for
updating the inventory records. The system can be accessed every time the
owner wants to. The system intends to make the inventory counting easier.
INPUT PROCESS OUTPUT










Figure 4
Conceptual Framework
Knowledge on
programming
System
Development
regarding
inventory system

Authorized User
Login



Operator
Knowledge

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

To check &
monitor the
inventory flow


To update the
inventory records

Computerized
Inventory
System

20






CASH SALES CREDIT SALES
Illustration 1.0 Inventory Cycle
Theoretical Framework
Inventories, indeed are considered one of the companys 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 statements bottom line.
The desire of the management to improve the inventory system gave birth
to the development of various techniques and methods regarding inventory
counts and maintenance of inventory system with the aid of new technological
advances. Illustration 1.0 shows how cash outflows are converted into goods, sell
those goods to customers, collect the receivables then ends up with cash inflows.
This only shows the essentiality of inventory in the business operation cycle.











CASH
inventory
Accounts
receivable
CASH
inventory
purchases Cash sales
21

According to the 2010
th
edition of the book of Guerrero, managing
inventories is important to avoid waste and misuse due to its excessive quantity,
and losses because of its shortage. Thus, the following techniques are used to
properly manage the right number of inventory inflows and outflows. The
following are the Economic Order Quantity (EOQ) and the Reorder point.
EOQ reflects the quantity of order necessary to get the best price while
keeping the inventory at an appropriate level to ensure uninterrupted production,
that is, the level where ordering and carrying costs can be minimized. EOQ may
be computed by multiplying the annual demand to the cost per order multiplied
by 2, and dividing the numerator yield to the carrying cost per unit. Meanwhile,
Reorder Point determines the level of inventory by which reordering must be
made. This is computed by adding the Lead Time Usage to Safety Stock. When
the inventory reaches the reorder point, the business must order inventory equal
to the economic order quantity (EOQ), in both cases.

Definition of Terms
The following are the terms used in this study:
Backorder specific quantity of a specific item that could not be filled on the
requested date
Bad debts recognizes doubtful collection of accounts
Carrying Cost or Handling Cost cost of maintaining inventories (Mejorada,
2006)
22

Credit term standard or negotiated terms offered by a seller to a buyer that
control the monthly and total credit amount, maximum time allowed for
management, discount for cash or early payment and the amount or rate of late
payment penalty
Depreciation - systematic collection of the depreciable asset
Economic Order Quantity determine the most effective quantity to order or
produce
Effective lead time period that includes the lead time, plus additional time
factors that may occur between the time the need for an order is known, and the
inventory is in stock and available
Inventory are assets which are held for sale in the ordinary course of
business, in the production for such sale or in the form of materials or supplies to
be consumed in the production process or in the form of materials or supplies to
be consumed in the production process or in the rendering of services (PAS 2)
Inventory Turnover the number of times the average inventory is sold per
year (Horngen, Sundem, Straton, 2000)
Lead time amount of time required to an item to be available for use from the
time it is ordered.
Opportunity Cost the maximum available contribution to profit foregone by
using limited resources for a particular purpose (Horngren, Sundem, Straton,
23

2000). It is the best return that can be earned on assets the firm already owns if
those assets are not used for the new project (Brigham, Houston, 2011)
Ordering Cost - cost incurred in making an order
Stockout Cost cost incurred in failure to serve customer due to unavailability
of inventories
Working Capital is the amount of current assets, financed by long-term
capital, used in conducting its business operations















24

CHAPTER III
RESEARCH METHODOLOGY
This chapter of the study focused on how the research is done and to
whom it is developed.

Research Design
The researchers conduct a step by step process in order to come up with
an inventory system which will meet the objectives previously stated and to
provide a program which will of great help to the Southbest Sales Centers
inventory management.
First, an interview was conducted in order to know the inventory
operations of Southbest Sales Center such as the manner in which inventories
are recorded, updated and purchased.
Second, previous studies in relation with the topic were gathered from
books, past theses and net, to properly and fully comply with the current
inventory needs of the said entity.
Third, an inventory system via Visual Basic was then created. This will not
require any internet connection but only computer sets and the system itself.
Using this, inventory sold and purchased can easily be monitored and recorded,
inventory shortage may be prevented, and high cost due to labor, inventory
handling and ordering may be eliminated.
Through this, the researchers may be able to make a corresponding
program that would answer the problem identified in the former part of this
research.
25

Subject of the Study
Southbest Sales Center is a hardware store that offers a wide variety of
construction and electronics supplies. It is owned and managed by Mr. Edgar Sy
which started to operate since 2002. Since then, this entity uses manual system
of operation. The store sells on a one-on-one basis and issues receipt manually.
It keeps a logbook where all the inventories are listed. In purchasing inventories,
they just wait for the supplier and check their records whether their offered goods
are below their safety stock. The entity adopts an annual manual inventory
counting to update its record. All of the staffs and the owner himself conduct the
inventory counting which lasts for 3-5 days if they keep the store open, which
they usually do. However, the entity offers a number of hardware supplies which
make their inventory counting difficult, time consuming, labor intensive and
costly. With these, there is a need for a more simplified and advance system that
would solve the problems listed previously.
This fast-phased world calls for the use of technological advancements
hence, the researchers decided to improve their system by making a program
through the aid of computers.






26

Data Gathering Instruments & Procedures
JULY AUGUST SEPTEMBER
Week 1 2 3 4 1 2 3 4 1 2 3 4
1. PLANNING
1.1. Proposing Title (choosing of
project)
1.2. Preparation of Sample
Chapter 1
2. SYSTEM ANALYSIS
2.1. Making DFD & ERD
2.2. Initial Interview
2.3. Outline of Interview
3. SYSTEM DESIGN &
DEVELOPMENT
3.1. Chapter 1
3.1.1. Introduction
3.1.2. Objectives of the Study
3.1.3. Scope and Limitations
3.1.4. Significance of the Study
3.1.5. Definition of Terms
3.2. Chapter 2
3.2.1. Related Literature
3.2.2. Related Studies
3.3. Chapter 3
3.3.1. Planning and Selection
3.3.2. Analysis
3.3.3. Design
3.3.4. Implementation and
Operation
3.4 Program
3.4.1. Screen Design
3.4.2. Coding
3.4.3. initial testing
3.4.4. Debugging
3.4.5. Final testing
3.5. final paper

Table 1
Gantt Chart
27

This table shows the process followed by the researchers in conducting
the study and accomplishing the written output. The researchers started to
propose and select feasible projects, sample chapter 1 and programs 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 Centers
inventory management.
Operational. Tracking inventory efficiently is an important factor to a
business success. By having up-to-date data regarding all needed office
supplies, raw manufacturing materials and merchandise for sale, an organization
will drastically increase its bottom line. In addition to the money saved by not
reordering unnecessary goods, an enterprise will be better positioned to services
customers quickly, as well as navigate any unexpected changes in business,
such as a supplier abruptly going out of business. Although many companies
28

maintain this information manually, there are benefits in using a computerized
inventory system.
Cost and Benefit Analysis. A computerized inventory management
system makes everything from inputting information to taking inventory easier.
Doing a hand count of inventory can take days, but with a computerized
inventory management system, the same process can be done in a matter of
hours. With this, managers can use much of their time on serious problems
rather than that of inventory counting. Once the computerized inventory
management system is in place, managers and workers can use it to
automatically generate the updated inventory record. Managers can also use the
system to know easier when there is a need to order products when they run low.
In this case, the system helps in increasing the managements profitability by
preventing shortage of stocks. On the other hand, it also prevents obsolescence
of goods.
This shows the total expenses incurred by the Southbest Sales Center in
using manual system of inventory counting.







29


Budgeted Annual Cost Manual Computerized
File Cabinet 550
-
Ballpen 240
-
Pencil 192
-
Folder 500
-
Record Book 500
-
Journal 500
-
Ledger 500
-
Calculator 800
-
Employees Salary 180000
90000
Computer Unit
15000

Inventory Software

10000
Total 183782
115000

Table 2
Cost and Benefit Analysis






30

Proposed Systems Scope
The proposed system will only be limited to the needs of Southbest Sales
Center, which is a merchandising company. The program will only focus on data
encoding but not in data storing.

Software Development
Description and Methodology
The researchers used the descriptive method of researching by
observing what the client needs, creating a solution for it, and explaining the
benefits of its usage.
First, an interview was conducted in order to know the inventory
operations of Southbest Sales Center such as the manner in which inventories
are recorded, updated and purchased.
Second, previous studies in relation with the topic were gathered from
books, past theses and net, to properly and fully comply with the current
inventory needs of the said entity.
Third, an inventory system via Visual Basic was then created. This will not
require any internet connection but only computer sets and the system itself.
Using this, inventory sold and purchased can easily be monitored and recorded,
inventory shortage may be prevented, and high cost due to labor, inventory
handling and ordering may be eliminated.
31

Through this, the researchers may be able to make a corresponding
program that would answer the problem identified in the former part of this
research.

Users and Function
The user of this study is the company, Southbest Sales Center. By
improving their manual inventory system, the said- company may be able to
execute, monitor and record their operations smoothly and quickly. Besides
dissatisfaction of customers due to unavailability of needed goods can be
minimized. Handling and ordering cost brought by changing inventory demands
can also be reduce because a specific number of required inventories will be
computed and provided by the improved system computerized inventory
system.

System Requirements Specifications
The users of this study are currently not aware of the benefits that
technology may give and hence, the researchers would like to show that the
computerized system is better than the manual system in the aspect of speed
and accuracy.




32

Hardware Specifications

Requirement Specification (Minimum) Specification
(Recommended)
Computer
Processor
800 MHz Pentium III or
Athlon, or better
1.5 GHz or better
Computer Memory 512 or more 1 GB or more
Screen Resolution 1024 x 768 pixels 1024 x 768 pixels or
higher
Graphics Card NVIDIA GeForce 6600, or
better
OR ATI Radeon 8500,
9250, or better
NVIDIA Graphics cards
6000 Series, 7000
Series,
8000 Series, GeForce
Go Series
Hard Disk 80 Gb 160 Gb
Monitor CRT or LCD Monitor CRT or LCD Monitor
Keyboard PS2 or USB Mouse PS2 or USB Mouse
Mouse PS2 or USB Mouse PS2 or USB Mouse
Printer Standard or USB Printer Standard or USB Printer
Network Interface
Card
10-100 Mbps 100 Mbps

Table 3
Hardware Specifications






33

Software Specification

Requirement Specification (Minimum) Specification
(Recommended)
Operating System A reasonably modern 32-
bit Windows environment
is required. If you are
running a 64-bit Windows
distribution then you will
need its 32-bit
compatibility environment
installed.
A reasonably modern 32-bit
Windows environment is
required. If you are running a
64-bit Windows distribution
then you will need its 32-bit
compatibility environment
installed.
Language Visual Basic 6 Visual Basic 6
Database
Table 4
Software Specification













34



Figure 5
Entity Relationship Diagram

This diagram shows the relationship among entities on inventory system.
It shows how the system works and passes information from one entity to
another.
Every entity in this diagram has its on specific attributes that can
determine it to others. The table below shows the following entities with its
35

respective attributes that is involved in Southbest Sales Center Inventory
System.


Table 5
ENTITIES AND ATTRIBUTES
The Inventory System of Southbest Sales Center shows that a supplier
transacts with Southbest Sales Center by means of delivering of products for
them to purchase it. This cycle goes on and on.


ENTITY ATTRIBUTES
SUPPLIER
Company Name
Address
Transaction Date
Contact Number
PRODUCT
Size
Color
Materials
Stock Number
SOUTHBEST SALES CENTER
Name
Municipal Permit
Contact Number
36



Figure 6
Data flow diagram

Figure 6 shows the Data Flow Diagram of the Computerized Inventory
System. Entity, Customer and Supplier are the entities in the diagram which is
SOUTHBEST
SALES CENTER
37

represented by a rectangle. When a purchase is needed to be made, a purchase
order is issued by the entity to the supplier. Once the supplier processes the
order, it issues the official receipt and delivers the items purchased. Purchased
items are then stored in the inventory. When a sale is made, customer orders
from the entity. The item from the inventory is then delivered to the customer.


















38

MAIN MENU
FILE
LOGIN
EXIT
INVENTORY
INVENTORY
LIST
INVENTORY
SUMMARY
RECORD
TRANSACTION
EOQ
ABOUT
AUTHOR
SYSTEM
Design






Figure 7
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.



39











8
the


Figure 8.1
IPO
This figure shows the IPO for log-in form. The user must enter a valid
username and password in order to access the system.






System: Computerized Inventory System Date: September 20, 2013
Module: Mouse / Key Control Programmed by: Group 4

CALLED OR INVOKED BY: CALLS OR INVOKES:



INPUT: OUTPUT:


Splash screen Log-in
Mouse / Key control Log-in form
Process: If click on Login,
Then go to main menu
Else if click cancel,
Then go to splash screen

40


Figure 8.2
IPO
The figure shows the main menu of the system. The form has the
inventory buttons which has units and inventory summary sub menu; record
button which has transaction and EOQ sub menu; and about button which has
system and author sub menu.
41



















Figure 8.3
IPO
The figure shows the IPO for Inventory List in which the user may choose
what products to be updated.



System: Computerized Inventory System Date: September 20, 2013
Module: Mouse / Key Control Programmed by: Group 4

CALLED OR INVOKED: CALLS OR INVOKES:


INPUT: OUTPUT:
















Main Menu
Inventory (units)
Mouse control
Product 1
Product 2
Product 3
Product 4

Process:
If click on Product 1,
Then go to Product 1 form
Else if click on Product 2,
Then go to Product 2 form
Else if click on Product 3,
Then go to Product 3 form
Else if click on Product 4,
Then go to Product 4 form
Else,
No action

42




















Figure 8.4
IPO
This figure shows the IPO for Product1. The user is allowed to access the
inventory summary, go to main inventory list form, compute and clear the form.


System: Computerized Inventory System Date: September 20, 2013
Module: Mouse / Key Control Programmed by: Group 4

CALLED OR INVOKED: CALLS OR INVOKES:



INPUT: OUTPUT:
















Inventory (units) Product 1
Mouse control Back to Main
Inventory Summary
Compute
Clear
Process:
If click on Back to Main,
Then go to inventory list Form
Else, click on Inventory Summary
Then go to Inventory Summary
Else, click on Compute,
Then shows computed number of inventory
Else, click on Clear,
Then clear the form
Else,
No action
43















Figure 8.5
IPO
The figure shows the IPO for inventory summary report form with
summary of each product showing beginning inventory, purchases, total units
available for sale, units sold and ending inventory.






System: Computerized Inventory System Date: September 20, 2013
Module: Mouse / Key Control Programmed by: Group 4


CALLED OR INVOKED: CALLS OR INVOKES:



INPUT: OUTPUT:









Inventory (units) Inventory Summary
Mouse control Inventory Summary
Report
Process: Shows inventory summary report form with summary of
each product showing beginning inventory, purchases, total units
available for sale, units sold and ending inventory.
44















Figure 8.6
IPO
The figure shows the IPO for generate report. The user is allowed to print
out the inventory summary report.






System: Computerized Inventory System Date: September 20, 2013
Module: Mouse / Key Control Programmed by: Group 4


CALLED OR INVOKED: CALLS OR INVOKES:



INPUT: OUTPUT:









Inventory summary Generate Report
Mouse control Printed Inventory
Summary Report
Process: Allows the user to print the inventory summary report.
45


Input or Output Design


Figure 9.1
Monitor Interface
Figure 9.1 shows the monitor interface from which the user may choose
the task to do such as logging in and access the inventory record.



46








Figure 9.2
Log in Interface
Figure 9.2 shows the log in form were user required to input the username
and the password to access the system.






47

















Figure 9.3
Inventory List
Figure 9.3 shows the inventory list in where he user may choose the
product to be updated.



48
















Figure 9.4
Per product list
Figure 9.4 shows the list of product categories under a product chosen to
which the user may update the inventory record by recording the purchases and
sales made by the entity during a period. This form also include the computation
of the purchases and sales of inventories which updates the inventory record.


49

















Figure 9.5
Inventory Summary Interface
Figure 9.5 shows the inventory summary form which shows the updated
inventory record after updating and computing each product transactions made
by the entity.


50


Program Flowchart



Figure 10.1
Program Flowchart
The figure shows the flow chart of the program. The user will start to
access the other process only if the user logged-in with correct password. If not,
it automatically shows the log-in form unless the password is correct. The user,
once logged-in may access the file, inventory, record and about tabs.
51






Figure 10.2
Program Flowchart
This figure shows the flow chart once the user click on the inventory
button. The user may view the inventory summary and units on hand of each
product.

52







Figure 10.3
Program Flowchart
The figure shows the flow chart once the user click on the record button.
The user is allowed to make transactions or simply record the purchases and
sales made by the store.



53




Figure 10.4
Program Flowchart
The figure shows the flow chart if the user click on the about button. The
user may access the system and the author sub menus.

User Training and Support
The researchers and the system developers of the proposed inventory
system for Southbest Sales Center implemented its training and support to the
principal users, owner and staffs of the said entity with an effective way of
teaching them the proper way of using the system. In this manner, the said users
of the program will be able to conduct their inventory counting and monitor their
inventory easily and accurately.

54

CHAPTER IV
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
This chapter contains presentation, analysis and interpretation of the data
regarding the present study.

Development of the Computerized Inventory System. The project
focused on the design of a system which will make the Southbest Sales Centers
inventory management effective. In order to achieve the aforementioned
objectives of the study, the researchers considered the theories and concept
regarding the effective inventory management. The researchers considered the
concept of safety stocks and economic order quantity (EOQ) in order to monitor
accurately the level of inventory of the said entity.
Accessibility. The developed system can be accessed by the owner and
staffs in charge of the inventory management.
User Interface. The researchers used Visual Basic 6.0 in designing the
interface of the system.
Computerized Inventory System. The system designed by the
researchers and the developer allow its user to generate information about its
inventory level of Southbest Sales Center easier. The system computes for the
amount of the inventory the entity has and allows it to know when to order
because of considering the concept of reorder point and safety stock for better
inventory management.


55



Figure 11.1
Monitor Interface
Figure 11.1 shows the monitor interface from which the user may choose
the task to do such as logging in and access the inventory record.





56






Figure 11.2
Log in Interface
Figure 11.2 shows the log in form were user required to input the
username and the password to access the system.








57















Figure 11.3
Inventory List
Figure 11.3 shows the inventory list in where he user may choose the
product to be updated.





58














Figure 11.4
Per product list
Figure 11.4 shows the list of product categories under a product chosen to
which the user may update the inventory record by recording the purchases and
sales made by the entity during a period. This form also includes the computation
of the purchases and sales of inventories which updates the inventory record.




59















Figure 11.5
Inventory Summary Interface
Figure 11.5 shows the inventory summary form which shows the updated
inventory record after updating and computing each product transactions made
by the entity.




60

CHAPTER V
SUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATION
This chapter presents the summary, findings, conclusions and
recommendation of the study.
Summary
Southbest Sales Center uses the manual process of keeping track of its
inventory for years ever since it was established since 2002. The manual
inventory system can hardly keep up with the thousands of inventory that
Southbest Sales Center manages. Moreover, with the growing number of
purchases and sales to record every transaction, it was getting difficult to
manage. Physical count is the only way to assess the number of inventory
wherein it takes 3-5 days to finish inventory count. If the owner wanted an
accurate count, it would need to close the store for the day wherein he would
have to lose that days income.
To solve this problem of Southbest Sales Center, the researchers came
up with a computerized inventory system that is designed to simplify the process
of keeping track of inventory count. This is to help the owner ease the burden of
manually counting inventories annually.
The interviews conducted with the owner of the hardware store became
the primary source of information for the study to obtain valid and accurate data
which are not often found in books, magazines, journals and others. On the other
61

hand, secondary data were collected from printed materials like research studies,
related books, and internet sources.
The study was conducted in a period of four months, from the planning of
the system to design up to the finalization of the paper and the program interface
itself.
The researchers used the descriptive method of research. They used
interview questionnaires in gathering data.
Microsoft Visual Basic 6.0 was used in programming.
Findings
Based from the analysis of the data presented, the following findings were
stated:
1. Computerized Inventory System. In order to achieve the
aforementioned objectives of the study, the researchers considered the
theories and concept regarding the effective inventory management. The
researchers considered the concept of safety stocks and economic order
quantity (EOQ) in order to monitor accurately the level of inventory of the
said entity.
2. Accessibility. The developed system can be accessed by the owner and
staffs in charge of the inventory management.
3. User Interface. The researchers used Visual Basic 6.0 in designing the
interface of the system.
62

4. Computerized Inventory System. The system designed by the
researchers and the developer allow its user to generate information about
its inventory level of Southbest Sales Center easier. The system computes
for the amount of the inventory the entity has and allows it to know when
to order because of considering the concept of reorder point and safety
stock for better inventory management.

Conclusions
The conclusions drawn from the findings were the following:
1. The computerized system was more efficient than the manual system.
2. The system could be of great help in locating and managing the inventory
records of Southbest Sales Center.
3. The system could help the hardware store in minimizing the time
consumed in physically counting inventories.
4. The monitoring of inventory record was easier.
5. The system was easy to learn and use though it was new to everyone.
Recommendation
Based on the conclusions, the proponent recommended the following:
1. The owner and staff may utilize the program to improve and enhance the
method of keeping inventory records.
2. This study is recommended for implementation since this inventory system
will be beneficial not only to the owner but also to the staffs.
63

3. The future researchers can enhance the inventory system by adding
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,
Heating & Refrigeration News. 24 October 2005.
65

Safizadeh, M. Hossein, and Larry P. Rizman. "Linking Peformance Drivers in
Production Planning and Inventory Control to Process Choice." Journal of
Operations Management. November 1997.
Udo, Godwin J. "The Impact of Telecommunications on Inventory Management."
Production and Inventory Management Journal. Spring 1993.
Weisfeld, Barry. "Automated Ordering Puts Profits in Sight." Transportation and
Distribution. February 1997.
Christopher Valix and Christian Valix, Financial Accounting Volume 1

Websites
Retrieved from http://smallbusiness.chron.com/benefits-using-computerized-
inventory-system-2044.html Dated August 20, 2013
Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-
computerized-inventory-management-system-22513.html
Retrieved from http://www.technologyevaluation.com/search/for/thesis-for-
inventory-system.html Dated September 1, 2013
Retrieved from http://www.ctp.bilkent.edu.tr/ctp108/ctp108_ln_w1.pdf Dated
September 1, 2013
66

Retrieved from http://www.studymode .com/essays//foreign-and-local-literature-
about-sales4439148.pdf Dated September 1, 2013

Unpublished Studies
Inventory Management as a Determinant for Improvement of Customer Service
by Musenga Francis Mpwanya

















67


B. Interview Outline

Q: What is your name?
A: Edgar Sy
Q: What is the name of your business?
A: Southbest Sales Center
Q: How do you conduct your Sales System?
A: One-on-one basis. One customer, one seller
Q: Do you issue receipts? Do you do it manually or automatically?
A: Yes we issue receipts and we do it manually.
Q: How about your inventory system?
A: Physical count, manually.
Q: So, all your staffs do inventory count?
A: Yes.
Q: Do you close your store when you do inventory count?
A: Usually, no. But if we want an accurate inventory count, we close the
store for the day. If we dont close the store, it takes 3-5 days to do
physical count.
Q: How about your purchase? How do you do it?
A: If a supplier comes, we consult the logbook on what product they
supply that is below the margin of safety stock. We issue purchase order
to the suppliers then they will deliver what we purchased and the receipt.
68

Q: We observed that you have many products, does each product have its
own logbook?
A: No, we only have one logbook for all products.
Q: How many products do you have?
A: More than 1000 because every product has its own classifications.
Q: If a delivered product is defective, do you still return it?
A: Not all.
Q: Are your products consigned?
A: No, all of them are purchased. If ever we werent able to sell it, we
couldnt return it anymore. The products dont deteriorate thus the loss is
shouldered by the other products, which still provide revenue.