CHAPTER 2

REVIEW OF RELATED LITERATURE & STUDIES

Inventory System
Inventory system is a dynamic part of any retail business, whether it is a
traditional brick-and-mortar shop or an online Web site. Inventory system offers you with
critical information about the condition of your products, such as whether you are low on
stock and your inventory needs to be restocked. Inventory system also provides your
customers with accurate information, letting them know when items are out of stock,
back-ordered, or pre-orderable. Failure to provide your customers with this information
puts you at risk of losing future business. Inventory system also gives you vision into
which products are selling well and which products are not. This information allows you
to make better business choices on how to market your products, and whether or not to
carry them.
Inventory system let you distinguish when it is time to stock up on items that are
running low and can also prevent you from overselling products and then having to
inform customers that their items are either unavailable or must be backordered.
Inventory system can provide insight into which products are selling well and which
products are selling poorly. With this information, you can make intelligent decisions on
how to exploit your sales and make your Web site more effective. (http://www.softwaresmith.com).
Importance of Inventory
Inventory system is essential in a business, besides it can maintain the business
profitable. Moreover, the primary role of the system is to help a business to easily locate
the inventory usage and make any necessary changes, and keeps the records and
reports of the inventory and value it for an accurate inventory. However, the system can
avoid item duplication and prevent out-of-stock condition which it is not only to take care
all of the product/supplies of the business but also it gives a better services to the
customer of the business. (http://smallbusiness.chron.com)
Likewise, maintaining inventory is valuable for various reasons. First, in order to
plan, schedule and be prepared for the dynamic world of the supply chain. Second,
inventory can act as a bridge between what you need and what you produce. Lastly,
Inventory enables you to establish a level of predictability within your business.
(https://www.zenventory.com)

Inventory System Features

One of the features of an inventory is to display a notification when inventory
levels are getting low or soon to be critical level. (www.software-smith.com)
Types of Inventory
Your business inventory consists of your stock, the goods that you offer for sale
and any other materials you need to run your businesses. Maintaining an appropriate
inventory is crucial to the profitability of any small business, where inventory amounts
may be smaller than in a large company. Running out of goods means you may not be
able to meet demand, while having too many goods means your money is tied up in
inventory that you cannot sell.
1. Raw Materials - This type of inventory includes any goods used in the
manufacturing process, such as components used to assemble a finished
product. Raw materials may also include partially finished goods or materials. For
example, for an orange juice company, oranges, sugar and preservatives are raw
materials; while for a computer manufacturer, chips, circuit boards and diodes
are raw materials. Inventory items may be classified as raw materials if the
organization has purchased them from an outside company, or if they are used to
make components.
2. Work-in-Process - Work-in-process inventory items are those materials
and parts that are waiting to
be made into something else. These may
include partially assembled items that are waiting to be completed. Work-inprocess inventory items may include finished goods that have not yet been
packaged and inspected, as well as raw materials that have moved from storage
to a preassembly area. For example, in an orange juice company, the oranges
may come in to a storage area, where they are raw goods, but once they have
been moved out of the storage area and onto the assembly line for juicing, they
become work-in-process inventory. In a small company, work-in-process goods
may be stored in the same area as raw materials and finished goods.
3. Finished Goods - Finished goods are any products that are ready to be
shipped out or sold directly to customers, including to wholesalers and retailers.
Finished goods may be waiting in a storage area or on a shop floor. If the amount
of inventory of finished goods increases faster that the amount of raw goods and
work-in-process goods, then production may need to slow down until more
finished goods are sold. In some businesses, goods are not included in the
finished goods inventory until they are sold. For example, in companies where
goods are made to order. (Smallbusinesses.chron.com)

Inventory System Methods

The Inventory System consists of implementations of an Inventory Manager
interface. The interface consists of the following methods:
purchase - Decreases the inventory (stocklevel) of the item. Returns
unsuccessfully if inventory is not available. This method is required by any
implementation of the inventory system.
purchaseOffBackorder - Does the same thing as purchase and increases the
backorderLevel.
purchaseOffPreorder - Does the same thing as purchase and increases the
preorderLevel.
preorder - Decreases the preorderLevel of the item. Returns unsuccessfully if the
preorderLevel is lower than the quantity being preordered.
backorder - Decreases the backorderLevel of the item. Returns unsuccessfully if
the backorderLevel is lower than the quantity being backordered.
setStocklevel - Sets the stocklevel to a fixed number.
setBackorderLevel - Sets the backorderLevel to a fixed number.
setPreorderLevel - Sets the preorderLevel to a fixed number.
increaseStocklevel - Increases the stocklevel of an item by some quantity. This is
used if an order is cancelled after the item has already been purchased or the
administrator can call it.
increaseBackorderLevel - Increases the backorderLevel of an item by some
quantity. This is used if an order is cancelled after the item has already been
backorded or the administrator can call it.
increasePreorderLevel - Increases the preorderLevel of an item. This is used if
an order is cancelled after the item has already been preordered or the
administrator can call it.
decreaseStocklevel - Decreases the stocklevel of an item. This should not be
used in place of purchase. An administrator usually calls it.
decreaseBackorderLevel - Decreases the backorderLevel of an item. This should
not be used in place of backorder. An administrator usually calls it.

decreasePreorderLevel - Decreases the preorderLevel of an item. This should

not be used in place of preorder. An administrator usually calls it.
setStockThreshold - Sets the
(stockThreshold) to a fixed number.

threshold

associated

with

stocklevel

setBackorderThreshold - Sets the threshold associated with backorderLevel

(backorderThreshold) to a fixed number.
setPreorderThreshold - Sets the threshold associated with preorderLevel
(preorderThreshold) to a fixed number.
setAvailabilityStatus - Sets the availability status.
setAvailabilityDate - Sets the date at which the item will become available.
queryAvailabilityStatus - Determines whether an item is in stock, out of stock,
backorderable, or preorderable. Used when determining which method to call:
purchase, backorder, or preorder.
queryStocklevel - Returns the number of items available for purchase
(stocklevel).
queryBackorderLevel - Returns the number of items available for backorder
(backorderLevel).
queryPreorderLevel - Returns the number of items available for preorder
(preorderLevel).
queryStockThreshold - Returns the stockThreshold.
queryBackorderThreshold - Returns the backorderThreshold.
queryPreorderThreshold - Returns the preorderThreshold.
queryAvailabilityDate - Returns the date when this item will become available.
inventoryWasUpdated - This method is called when a set of items is added to
inventory. It is a convenient way of notifying interested systems of a large update.
Does not change the state of the inventory.
(https://docs.oracle.com)

JDK Pharmacy Inventory System

The works of G. Ambrosio, M. Narvaez, & A. Sabater (2015) proposed the
mentioned title above which is a capstone project in LPU Cavite. The system is capable
of managing stocks of medicines, as well as providing alerts of expired ones and the
quantity of each. In addition, it includes sales report, log-in page, and message to inform
the user or admin with regards to stocks of medicines. In order to propose the system,
research and analysis was done, including algorithm technique. Other than that, the
study focuses on specific issues encountered by the pharmacy.
IT Services Inventory System for Asia Factory Operation of Maxim Integrated
The system or study was proposed by D. Ambulo, M. Elumbra, V. Sayco, and M.
Sibug (2015) for the client to create a secure and reliable system. In addition, the
system is flexible to provide transaction such as endorsement transaction, computer
units, laptops and peripherals transaction, as well as the reports, user-friendly
environment. and valid data that can be shown.
Another thing is that the system is proposed as a web based inventory system
which intends to have an efficient monitoring of the transactions of the company. At the
end, the user is also allowed to have a report to have a basis for supplies that has been
sold or stocked.

Inventory System of Asia Paper Industrial Corporation

The students of professor Ferollino (2011) proposed the inventory system of Asia
Paper Industrial Corporation wherein it is a group of processes or element that works
together to produce a common output. The proposed system will monitor every
transactions of Asia Paper Industrial Corporation.
The proponents were tasked to create a system that enables to monitor the "in
and out" of the products and to waste product during the process of making the product.
Also, the system is able to monitor the products which includes the supplies' name,
product codes, and the critical level.

Laboratory Inventory System

N.M.Z. Hashim and N.A.M.M. Arifin (2013) proposed the study in University
Teknika Malaysia Melaka wherein the inventory system will be used to the Faculty of

Electronics and Computer Engineering (FKEKK). The system enables to monitor current
status of each equipment and component used in the laboratory. In order to propose the
system, analysis was done so that the requirements were made which is actually a
second phase in the software development life cycle. Using of the database concept
was also done for storing information in which related with land application process. In
addition, the system is based on forms oriented that were used by the previous
technicians and staff.

Inventory System and Functionality Evaluation for Production Logistics

Another study in Malaysia was produced by M.R. Khabbazi, M.K. Hasan, A.
Shapi'i, R. Sulayman, and A. Taei-Zadeh (2013) which focuses on comprehensive
modeling and functionality requirement evaluation of perpetual production logistics. The
mentioned statement is for analyzing system behavior and data transactions invoked by
a module-based inventory system using business process modeling and object-oriented
data modeling techniques. The study explains through the scheme and drip procedure
leading to computerized inventory information system as a module to sum up with other
back office systems in production logistics.
The system is also able to handle all inbound warehousing operations which
comprises deducting, storing and retrieval information, as well as the actual inventory
SKU balance in order to keep inventory data up-to-date and in real-time.
Functionality of the solution is evaluated based on the identified inventory system
requirements responding to all inventory controlling of receiving, allocating, load
balancing, and traceability linking through different types of look-ups and data queries.