Documente Academic
Documente Profesional
Documente Cultură
An Accountancy Research
Josephine Lansangan
Michael Morales
Jasmin Ocampo
SEPTEMBER 2017
ROLOI’S INVENTORY MANAGEMENT 2
Cover Page 1
Table of Contents 2
Chapter I: Introduction
Research Frameworks
Conceptual Framework 13
Theoretical Framework 14
Research Design 14
Unit of Analysis/Respondents 15
Point of Focus 15
Research Instrument 15
Ethical Considerations 16
Results 18
Conclusion 19
Recommendation 19
Appendices
Inventory Management supervises the stock items from warehouses to the point of sale. It
accurately, leads to a more organized warehouse, save time and money, increases efficiency and
productivity as well as the customer’s satisfaction. In this case, the responsibility of the inventory
product, while on a merchandising business the inventory is a purchase of finished goods and
resell it to the consumers. The basic activities of inventory management involves are sales
forecasting or demand management, sales and operations planning, production planning, material
requirements planning, inventory reduction. There are departments coordinating with each other
such as sales, purchasing, production, logistics, and accounting in order to achieve effective
This study will examine problems associated with management and control of inventory
forecast, set targets and objectives, the management sets instructions and yet the inventory can be
overlooked or given less that its level of inventory consideration. The management depends on
its inventory level to determine the effect of its instructions, if it is reliable or not. This research
attempts to provide recommendations to improve the services, faster transaction and fewer
errors. The need for faster and accurate management is needed to stay competitive in their
business environment.
This study aims to gather information and analyze data from an actual inventory
technique currently in use. Specifically, the purposes of this research are to make an assessment
ROLOI’S INVENTORY MANAGEMENT 5
of ROLOI STORE, a soft drink distribution business, in Magalang, Pampanga on how it carries
out its inventory and know the factors affecting its current inventory management. The study
also aims to come up with an ideal inventory management technique for the business to operate
more efficiently and less costly as possible. The study will be considered done when the
significant factors of inventory management of the business are all been attend to.
Soft drinks are nonalcoholic beverages that contain carbonated water, and flavorings. A
small soft drink industry business can use inventory turnover ratio to measure how well the
business manage it inventory. Generally, poor inventory management practices are overstocking,
under stocking bad issuing system and absence of stock taking are the main causes. Over
stocking is storing goods over the needed quantity. And it may result in damage of goods
because of limited place to keep it. Under stocking on the contrary is maintaining small number
of material below the demand of the business it has negative impact on the over work of the
commerce to achieve its objectives goal. Bad issuing sometimes also sending the materials from
store without keeping the requisition of user department. If the materials at certain area cannot be
This study will assess the overall inventory activity of ROLOI's Store and also the research will
answer:
2.) Is the supply of inventory from the supplier sufficient to satisfy customers demand?
3.) How does the company decide on how sufficient is the inventory on their warehouses?
5.) How does the business entity maintain their inventories to meet daily sales quota?
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2.) To know how the business maintain its inventory management policy
3.) To know how the business determine the sufficiency of their stocks
4.) To know how the practical application of inventory management theory works
5.) To know if the theories of inventory management are applied on the business
This section will provide brief description on the various significances of the study.
To students - The proposed study serves the students as their reference or guide in creating their
own research. It will also help students to observe the practical application of various inventory
To researchers – The study will help the researchers to further understand the essence of
inventory management.
To teachers - The proposed study will help teachers to have a deeper understanding in inventory
management. By this study they will come up with easier and powerful program.
To future researcher - The proposed study will benefit and help the future researcher as their
guide. It will also serve as a tool to sharpen their knowledge and ability in developing an
inventory management system. The study can also open in development of this study.
Business owners - This proposed study will suggest solutions for the problem related to
inventory management. It will help to improve its techniques on how to manage business, and
will lessen the time, enhance the level of work, help its processes more reliably and efficient, and
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provide accuracy of data. It will contribute to the development of the business and add to its
competence.
The scope of this study will cover techniques used for inventory management of a merchandising
store. This research will focus on how do Roloi’s, a retailing store, control its inventory in terms
The researchers will be conducting an interview with Mrs. Luisa N. Lansangan, the owner of
Roloi’s Store on how do they manage their inventory and what techniques do they usually do to
meet their sales quota. In addition, questions about spoiled goods treatment will also be asked in
the interview.
the management is to minimize it. Service businesses still keep some amount of inventory, and
retailers also find inventory management as an important process for effective retail operations
management. In spite of the fact that sales and marketing personnel often wants to maintain a
high amount of inventory to service customers quickly. “Anzalone, A., Ph.D. (2010)”
Inventory is all the good and materials the organization owns in which an entity aims to
Inventory held ties up working capital (costs money and less costs is better) but it is
management relates to a retailer's overall business strategy. The emphasis on inventory control
has led to an over-reliance on technology at the expense of traditional decision making, making
many retailers fail to reap the full benefits of electronic data interchange and quick response
ROLOI’S INVENTORY MANAGEMENT 8
systems resulting to not having an improvement in their inventory situation. Systems can help
improve inventory management, other factors called levers (includes distribution, management
of assortments, and promotional strategy) helps in improving inventory turnover. Retailers must
have someone in charge of inventory who can deal with the whole problem and have several
systems designed to deal with different products and situations instead of having single
and is primarily about specifying the size and placement of stocked goods. Inventory
management is needed at any locations of facilities so that the regular and planned course of
production won't be disrupted against unexpected problem of running out of materials or goods.
An inventory system controls and monitors the amount of inventory in order to determine what
level should be maintained, how orders should be made, and when shall stocks be replenished.
The scope of inventory management are replenishment lead time, carrying costs of inventory,
asset management, inventory forecasting, and etc. “Ghosh and Kumar, 2009”
Inventory management is keeping adequate supplies available and low costs of over or under
stocks by developing and managing inventory levels from raw materials, semi-finished materials
First-in, First-out method assumes that the first good purchased should be the first one to
be used or sold, a method most closely tied to actual physical flow of goods in inventory. Last-in,
First-out method assumes that the most recent good purchased should be the first one to be used
or sold, a method that greatly matches current costs with current revenues. “Max Mullert, 2002”
ROLOI’S INVENTORY MANAGEMENT 9
Specific Cost Method states that the business keeps track of actual cost which allows the
organization to charge the cost of a given unit to production or sales. It is commonly used by
companies with complex computer systems. Standard Cost Method is often used by
manufacturing companies wherein they give a uniform value for an item. The bases are the costs
and expenses like historical costs and any expected changes in the future. The cost method is not
used in calculating actual net profit or for income tax purposes. Average Cost Method identifies
value of inventory and cost of goods sold by calculating average unit cost for all goods available
for sale in a given duration and assumes that ending inventory consists of all goods available for
In distribution, the organization should be precise and relevant by having the right item,
in the right quantity. Increasing safety stock-on-hand is a way to solve problem but not a good
solution since it only leads to wasted money and space. In manufacturing, the organization
should be precise, relevant, and timely by having the right item, in the right quantity, at the right
time, in the right place. Independent demand is influenced by market environment out of the
control of the organization's operations. The organization's products are independent of one
another. While dependent demand is connected to another item. The materials needed depends
on the demand for the final product. You would not need one item if it's not required for another,
Inventory recording is under taken to reduce the error relating to inventory accountability
and accuracy in a firm’s investment in inventories. Wood Frank (1996) indicates the stock
ROLOI’S INVENTORY MANAGEMENT 10
accounting is important in any firm as it registers the changes in the level of stock held to realize
maximum value and avoid typing up funds. Inventory recording may take forms stock taking and
sport checks which are process of physically counting, weighing or otherwise measuring
the quality of each item in stock and recording system should reduce the discrepancies between
Stock is vital tool to achieve an efficient inventory management system. Since there is
storage and issue of inventory, the cost of obsolescence and fraud, management should ensure
Ronald, H (1999), Purchasing or production solutions may also permit order quantities to
be reduced, the other factor that has an immediate and direct effort on average stock level.
Both purchasing and production can concentrate efforts on acquiring or making batches of assma
ller size, without increasing the unit price or cost (Note that this is reversal of the Western belief
in the efficacy of large batch sizes in order to reap the apparent advantages of economies of
Uganda. A Case Study of Coca- Cola Mbarara Plant in Mbarara Municipality by Mugarura
Kelebu”
Zeng and Hayya (1999) described the major functions of inventory as: (1) to support and
provide necessary inputs for manufacturing; and (2) to protect companies against uncertainties
that arise from such cases as discrepancy between demand and production, machine
deterioration, and human errors, among others. They further argue that regardless of the type of a
ROLOI’S INVENTORY MANAGEMENT 11
firm, the management effectiveness of inventory decisions centers on three areas: cost, service
level, and turnover ratio. This implies that inventory cost (Bhagwath & Sharma, 2007)
Maria and Jones (2003) argue that implementation of proper IM practice involves providing high
quality products at relatively less cost. They further pointed out that it is essential to establish a
On the other hand Ballou (2000) argues that inventory cost should be considered while
taking inventory decisions. He found that inventory carrying costs typically range from 20% to
40% of inventory value. Palmer and Dean (2000) are of the opinion that selection of right IM
The review of the inventory management literature published in top logistics journals, indicates
that logistics researchers have made a significant contribution to the expansive body of inventory
management literature. The literature has primarily followed two major themes:
(1) Integrating traditional logistics activities into models of inventory control; and
The first theme focuses on evaluating the trade-offs between transportation, warehousing
and inventory management, primarily through analytical and simulation models. To model these
trade-offs, researchers must first make an assumption regarding the inventory control policy in
place. A large number of inventory management models assume the use of an (Q, r) approach,
and relatively little attention has been given to periodic review (S, T) inventory control models in
the logistics literature. Table II shows that only seven consider periodic review as an inventory
control policy. The second theme focuses on how collaborative inventory programs can make
inventory commitment more efficient and improve customer service. In a recent examination of
the future of the discipline of logistics and logistics research, Davis-Sramek and Fugate (2007)
ROLOI’S INVENTORY MANAGEMENT 12
uncovered that leading discipline visionaries feel that one area in which logistics researchers
must focus is coordination and collaboration, and subsequently, the inventory management
literature published in logistics journals has evolved in recent years in that direction.
Collaborative programs, such as CRP, ECR, QR and VMI, have become popular research topics
Journals”
simultaneously track sales activity and inventory. Manufacturers and trade resellers can both
benefit from a thorough solution, where single transaction entry records necessary details on the
customer, products purchased, price and date while also updating inventory levels.
Using computerized sales and inventory systems allows for much greater accuracy in stocking
and product management. They encourage ease of interaction between employees and shoppers
as transactions are processed and items move from the business to the consumer. Computerized
sales help provide better insight into which products are most popular. It also allows for
enhanced marketing, stocking and oversight of critical sales objectives. “Sales and Inventory
Theoretical Framework
ROLOI’S INVENTORY MANAGEMENT 13
Conceptual Framework
Methods
ROLOI’S INVENTORY MANAGEMENT 14
The researchers of this study will be using descriptive research design. This research
design aims at generating information after the incident has occurred. The research design
looked at the reasons why the situation behaves the way it was. In this study, the manager will
be involved in collecting useful information. In this study, both primary and secondary data
The researchers will also use qualitative approach by conducting an interview with the
manager of ROLOI Store concerning inventory management, such as the use of First-in First-out
Units of Analysis/Respondents
The main participant of this research is the ROLOI Store’s store manager, Mrs. Luisa N.
Lansangan. Information from another manager directly in charge in handling inventories in the
Point of Focus
The point of focus of this study is the inventory management technique used by ROLOI Store in
Sta. Cruz, Magalang Pampanga. The researchers will observe on how the management
implement the First-In, First-Out method. In addition, the researchers need to gather records
from the store with regards of its beginning and ending inventory. The researchers need to
identify the technique used in order to assess the difference of the inventory terms in practical
application.
Research Instruments
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In this study, interview questionnaire is used. The researchers will ask the store manager some
This section describes in great detail the data-collection procedures. The primary sources of
information are records provided by store manager which include the quantity of sales per day,
number of delivery received, beginning inventory, and the ending inventory. The manager, as the
The secondary sources of information came from other academic researches with same line or
related study. The academic researches included information, discussions, and interpretation that
can be used as a basis for this research; in line with it, the researchers used the citation as a
The analysis of the primary and secondary sources and the result of the interview determined
whether the technique used by the management on its inventory is appropriate and effective. The
technique to be used by the management after the analysis and evaluation of results.
Ethical considerations
Before the researchers started their study, consent was given to the participant to be fully
informed about the research that was conducted. The researchers conducted an interview with
relevant people, such as the manager and the manager that handles the business’s inventory. The
questions did not ask for any personal or private information from the respondent, but rather the
ROLOI’S INVENTORY MANAGEMENT 16
questions were directly related to the study. The participants were debriefed about the purpose,
objective, the scope and limitations, and as well as how it will be used by the researchers during
the time frames. The researchers did not force the participants in gathering the information
because the researchers want it free from coercion. Given on any time the participant is free to
withdraw their participation in the study to avoid negative impact in their company. The research
will do no harm to the company by any means. Gathered information will also be confidential for
the sake of the company. Confidential information will be ensured that it will not be known by
The conclusions made by the researchers are derived from the information that was
gathered during the interview. Steps were followed carefully while collecting data to ensure the
Authors, professors and participants that are part of the research were given acknowledgement as
The data that were gathered from the respondents either qualitative or quantitative was presented,
analyzed, and interpreted. The researchers used techniques and questionnaires to begin the
research study. The researchers will analyze the qualitative information that was gathered from
the respondents and this will be used to know if the company uses techniques that are the same
with the techniques written in books, or if the company implemented different inventory
management technique. Whether if the company uses First-In-First-Out technique, which means
that your oldest stock (first-in) gets sold first (first-out), not your newest stock, in order to
manage a FIFO system, you’ll need an organized warehouse. This typically means adding new
products from the back, or otherwise making sure old product stays at the front (Campbell,
ROLOI’S INVENTORY MANAGEMENT 17
2017). The quantitative information that was gathered will then be used to know how the
company handles its inventory, whether if it can supply the sufficient number of units needed by
its customer daily. With this, the researchers can now interpret the data by making conclusions
RESULTS
practices its own inventory management techniques for its products. They conduct an inventory
count twice a day, before they start the operation of the business and after closing the store.
Roloi's policy is “order now, deliver today”. The volume of inventory may vary depending on
customers demand. Roloi store orders at Pepsi-Cola Products Inc. as their main supplier by
booking, and they usually deliver it 3 times in a week at 5:00pm. Inventories are kept in their
own warehouse. The basis of the store’s orders is the quantity of inventory that they counted at
the end of the day. The management uses reorder point to determine the store’s order quantity.
The spoiled goods are considered as back order which are to be returned and replaced
with new goods by the supplier on their next delivery. The store uses First-In, First-Out method
technique of inventory management. The old stocks are separated from new delivered goods
which are considered as the store’s new stocks, the old stocks are sold first and must be
exhausted before they put the new delivered stocks on their for sale inventories stocks for it to be
sold. The business main problem is that their inventory is sometimes insufficient to meet the
ROLOI’S INVENTORY MANAGEMENT 18
customers demand, the reason for such problem is that the store cannot predict how many goods
will be sold for the day. Another reason is that the production and delivery of the Pepsi-Cola
products to the store is always late due to the delay of production at their main plant.
CONCLUSION
In evaluating the data gathered, the researchers concluded that Roloi Merchandising
Store’s inventory management technique is not effective. The replenishment of stocks are
delayed due to the suppliers fault to deliver inventories, due to that it affects the delivery of
products of Roloi’s to its customers. The business First-In, First-Out Method is effective in
eliminating the chance of having expired product. Their 2-time checking of inventory is effective
for eliminating the chance of miscalculation of inventory. The technique of Roloi Store is not
effective in the industry due to the lack of order in the management of their inventories.
Recommendation
The researchers recommend the management of ROLOI's Store to order stock that is
more than the normal quantity. Being timely is one thing and this will lead to a smoother
operation, having sufficient stock that meets the demand of customers will make the business
transactions go smoothly. The researchers would also like to suggest that the store should
establish a daily quantity of orders quota to know if they are selling more or less of what they
ROLOI’S INVENTORY MANAGEMENT 19
have, it would also help them know if they should order more or order less to their suppliers. We
recommend that the management should try increasing their reorder point to avoid having
Appendices
Kotler P. (2002) Marketing Management. Edn 2. The Millennium Edition. New Delhi:
Morris C. (2004) Quantitative Approach in Business Studies: London: Pitman Publisher. Nigeria
Dwivedi, S., kumar, A., & Kothiyal, P. (2012). Inventory management: A tool of identifying
items that need greater attention for control. The Pharma Innovation, 1(7), 125-129.
ebooks/reader.action?docID=3001813
ROLOI’S INVENTORY MANAGEMENT 20
https://etshare.pbworks.com/f/Inventory%20Management.pdf
Relph, G., Milner, C. (2015) Advanced Methods for Managing Inventory within Business
https://www.koganpage.com/media/project_kp/document/inventory-management-
sample-chapter.pdf
Study of 7up Bottling Company Nile Mile Enugu, Nigeria (PDF Download
https://www.researchgate.net/publication/263138566_The_Impact_of_Effective_Inve
ntory_Control_Management_on_Organisational_Performance_A_Study_of_7up_Bott
ling_Company_Nile_Mile_Enugu_Nigeria
http://www.iimm.org/ed/index.php?option=com_content&view=article&id=138&Itemid=107
management supervises the flow of goods from manufacturers to warehouses and from these
Inventory Control – is the area of inventory management that is concerned in minimizing the
total cost of inventory while maximizing the ability to provide customer with product in a timely
manner.
ROLOI’S INVENTORY MANAGEMENT 21
Inventory Recording – is the manual or computer-based record of quantity and kind of inventory
at hand. It often also includes history of the recent transactions in each inventory items. Is also
Stock/Inventory – are the goods and materials that a business holds for the ultimate goals to have
a purpose of resale.
Safety Stock – term used by logisticians to describe a level of extra stock that is maintained to
First-in, First-out Method – is a cost flow assumption that the first good purchased are also the
Average Cost Method – it is assumed that the cost of inventory is based on the average cost of
the goods available for sale during the period. It is computed by dividing the total cost of goods
sold available for sale by the total units available for sale.
Specific Identification – is a method of finding out inventory cost. It requires a detailed physical
count, so that the company knows exactly how many of each goods brought on specific dates
remained at year-end inventory. When this information is found, the amount of goods are
multiplied by their purchase cost at their purchase date, to get a number for the ending inventory
cost. In theory, this method is the best method, since it relates the ending inventory goods
Standard Cost Method – is the practice of substituting an expected cost for an actual cost in the
accounting records, and then periodically recording variances showing the difference between
Perpetual Inventory System – updates inventory accounts after each purchase or sale.
ROLOI’S INVENTORY MANAGEMENT 22
Periodic Inventory System – is a system of inventory in which updates are made on a periodic
basis.
The interview that will be conducted by the researchers is related about the researchers study
about the assessment of Roloi’s Merchandising Store, Located at #143 Sta. Cruz, Magalang
Pampanga in terms of Soft Drink Products. The researchers will assure the respondents that all
the information that will be gathered will remain confidential and will be used for the sole
purpose of the researchers study. Foremost, the researchers would like to express their greatest
gratitude of appreciation for your cooperation to entrust your business records to us for the
completion of this study. The researchers will rely on your positive response to be able to answer
1.) On what quantity of inventories for the month ended July 31, 2017 are the business’:
2.) What is the process followed by the business in performing inventory counts?
3.) How does the business determine the frequency for ordering of new stocks?
4.) At what level of inventory would trigger the ordering of new stocks?