Chapter II inventory management system

CHAPTER II

Review of Related Literature and Studies

This chapter presents a brief discussion of the literature reviewed by the researchers which further enriched the conceptualization of the study and helped in describing the cognitive design that guided the conduct of the researcher.

Foreign Literature

 Inventory Systems Summary According to the U.S. Small Business Administration, “nventory refers to stoc!s of  anything necessary to do business" #U.S. Small Business Administration, $%&%' The U.S. Small Busi Busine ness ss Admin dminis istr trat atio ion n

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managem management ent balanci balancing ng cost cost versus versus benefi benefits ts of invent inventory ory,, includ including ing (ainta (aintaini ining ng a wide wide assortment without spreading the rapidly moving items too thin, ncreasing inventory turnover  without without sacrificin sacrificing g service, service, )eeping )eeping stoc! low without without sacrificin sacrificing g performance performance,, *btaining *btaining lower prices by ma!ing volume purchases, (aintaining an ade+uate inventory without an ecess of obsolute items.

Wal-Mart Wal-Mart Inventory System -al(a -a l(art rt runs its its stores stores on a perpetual perpetual inventory inventory system. system. +uantity +uantity of items sold sold as items are are purchased. purchased.

This system system records records the the

The computer computer system at -al -al(art (art constant constantly ly

!eeps up with additions or deductions from inventory and tells management what items are on hand. hand.

The organ organizat ization ion also also conduct conductss counts counts of employee employee manual manual count countss of inventor inventory y

 periodically. -hen an item arrives at the -a -al(art l(art distribution center it is scanned into the inventory system. -hen the items are purchased by the consumer, the pointofsale system reduces the the inventory inventory from that purchase. purchase.

According According to -al -al(art (art/s /s 0ail 0ail 1avielle, 1avielle, a leaner 

inventory will help clear out store clutter and help -al(art focus on specific brands and  products that consumers want #The Associated Associated 2ress, $%%3'.

(Hinsdale: Holt, Richard and Winston Sounders College Publishing, !!!" According to (r.4ugene 5. Brigman, 5undamentals of 5inancial (anagement, 6th ed., 7ompanies 7ompanies are increasingl increasingly y employing employing nventory nventory System. System. A computer computer start start with an inventory inventory counts in memory. -ithdrawals are recorded by the computer as they are made, and the inventory balance is constantly revised. -hen the recorded point is reached, the computer  automa automatic ticall ally y places places an order order,, when when this this new order order is receiv received, ed, the record recorded ed balance balance is increased. 8etail stores have carried this system +uite far, each item has a magnetic codes, and as on item is chec!ed out, it passes over an electronic reader, which then ad9usts the computers inventory balance, at the same time the price is fed to cash register tape. -hen the balance drops to the recorder point, an order is place. The researcher aim to develop a automated inventory system which is technically, operationally, and economically. The method used by the

researcher to develop a automated inventory system is :escriptive (ethod. The researcher  conduct several interviews in order to gather information about the present eisting conditions of the inventory system, !nowing its problems and enhancing it by developing an automated inventory system. ;uestionnaires were also distributed to all interviewees for additional information. Using the descriptive method, the researchers also observe the functionality of the  present inventory system, which help them discover that 4lectronic :ata 2rocessing is Advantageous than other.  Malcolm #$ White Published at !!%< (erchandising means selling products to retail customers. (erchandisers, also called retailers, buy products from wholesalers and manufacturers, add a mar!up or gross profit amount, and sell the products to consumers at a higher price than what they paid. -hen you go to the mall, all the stores there are retailers, and you are a retail customer. 8etailers deal with an inventory, all the goods #products' they have for  sale. They account for inventory purchases and sales in one of two ways. 2eriodic and 2erpetual. As the names suggest these methods refer to how often the inventory account balances are updated.

Source: *nline Article ( htt&:''$middlecity$com'ch!)$shtml   "

Com&anies need Inventory System

According to 4ugene 5. Brigman, in the boo! of 5undamentals of 5inancial (anagement  published at year $%%% in the publishing company of =olt, 8ichard and -inston Sounders 7ollege 2ublishing< 7ompanies are increasingly employing nventory System. A computer start

with an inventory counts in memory. -ithdrawals are recorded by the computer as they are made, and the inventory balance is constantly revised. -hen the recorded point is reached, the computer automatically places an order, when this new order is received, the recorded balance is increased. 8etail stores have carried this system +uite far, each item has a magnetic codes, and as on item is chec!ed out, and it passes over an electronic reader, which then ad9usts the computers inventory balance, at the same time the price is fed to cash register tape.

 Inventory System Consist 

An inventory control system is used in many warehouses to trac! the location, +uantity, and status of goods that are to be sold. Shipping and receiving of products is scheduled by an inventory control system. nventory control uses barcodes and 85: tags to trac! specific items. An audit, or a physical count of inventory, is used to find out how many items are in an inventory. nventory ta!ing is often re+uired in order to get an accurate count for accounting valuation purposes. Some inventory items have barcodes attached to them or imprinted on them. These barcodes can be read during an audit by barcode reading devices.

Source: *nline Article (htt&:''$nationalbarcode$com'articles'inventory-control-system$htm"

Ste&s *or Inventory Management  This section of the paper loo!s at fundamental definitions and eplanations relating to nventory 7ontrol, (anagement and 2lanning. Typical conflicts within the organization that may affect inventory and what can be done to resolve and avoid these. According to article of :r 0eoff 8elph, -ite! Brzes!i and 0ail Bradbear, published at year $%%>< A simple stoc! classification method is discussed that gives details about the AB7 techni+ue, 2areto distribution and ta!es a loo! into further class level and part level analysis. There is a wor!ed eample of an AB7 classification with valuable information about creating alternative scenarios and varying parameters for class boundaries and order fre+uency per class. The results are shown in a series of statistical tables. Source: *nline Article (htt&:''$inventorymatters$co$u+'&ort*olio'the-*irst-ste&s-to-inventory

managementty&e&ublication"

 .dvantages o* Inventory System According to )9 =enderson, they have a three ma9or advantages by using of inventory system these are #Time savings, Accuracy, and 7onsistency' which helps a lot for a bussiness man to increase the sales of their business. Time Savings

As the old saying goes, “time is money". The amount of time that can be saved by a business is, perhaps, the biggest benefit of using a computerized inventory system. A great eample of this benefit is the retail industry. n cases where a shop maintains all data manually, its manager must reconcile each sales receipt with every piece of physical

inventory. :epending on the size of the establishment and how many different products are sold, this can be a daunting and time consuming tas!. f that same store, however, used a computerized point of sale, 2*S, system, the master inventory list would be updated electronically each time a sale is made. The only thing a manager would have to do each day is print out the report highlighting the inventory to be restoc!ed. Accuracy An additional benefit of using a computerized inventory system is the accuracy it

ensures. 4ighteenth century 4nglish poet Aleander 2ope is often +uoted as having said, “To error is human." -hen an inventory list is maintained by hand, the margin of error  widens with each update. f one mathematical calculation is wrong or one typo is made, disaster may occur. 5or instance, if a cler! accidentally adds a zero to the end of a  purchase order, a business could potentially end up paying for &%,%%% units of  merchandise as opposed to the &,%%% that is actually needed. Consistency A small business operates most efficiently when its processes are eecuted in a consistent manner. By using a computerized inventory system, a business owner can ensures that all orders, reports and other documents relating to inventory are uniform in their presentation, regardless of who has created them. This will allow ease of reading. n addition, uniformity creates a professional appearance, which can go a long way to impress associates, such as potential investors. Source: *nline Article (htt&:''smallbusiness$chron$com'bene*its-using-com&uteri/ed-inventory-

 system-!00$html"

 1isadvantages o* Inventory System

According to ?eil )o!emuller, by using of nventory system they have some disadvantages by using of this. These are #7ustomer ?eeds, nventory 7osts, 7oordination, and 8is!s'.

•

Customer Needs

Balancing the goals of avoiding stoc! outs while minimizing inventory costs is at the heart of 9ustintime inventory. *ne of the main benefits of automated and efficient inventory replenishment systems is that you can +uic!ly respond to reduced inventory levels. 7ompanies are now e+uipped to pull bac! on stoc! in a given product category and ramp up inventory in another as customer needs and interests change.

•

Inventory Costs

(inimization of inventory management costs is a primary driver and benefit of   9ustintime practices. nventory management has costs, and when you reduce the amount of holding space and staff re+uired with @T, the company can invest the savings in  business growth and other opportunities, points out the Accounting for (anagement website. ou also have less li!elihood of throwing out product that gets old or epires, meaning reduced waste.

•

Coordination

A disadvantage of managing a 9ustintime inventory system is that it re+uires significant coordination between retailers and suppliers in the distribution channel. 8etailers often put ma9or trust in suppliers by syncing their computer systems with

suppliers so they can more directly monitor inventory levels at stores or in distribution centres to initiate rapid response to low stoc! levels. This usually means buildup of  technology infrastructure, which is costly. This coordinated effort is more involving on the whole than less time intensive inventory manage ment systems.

•

Risks

@ustintime inventory is not without ris!s. By nature of what it is, companies using @T intend to wal! a fine line between having too much and too little inventory. f  company buyers fail to ad9ust +uic!ly to increased demand or if suppliers have distribution problems, the business ris!s upsetting customers with stoc! outs. f buyers over compensate and buy etra inventory to avoid stoc! outs, the company could eperience higher inventory costs and the potential for waste.

Source: *nline Article ( htt&:''smallbusiness$chron$com'advantages-disadvantages-2ustintime-

inventory-30!4$html   "

 Pro*essional Inventory Management  According to :r 0eoff 8elph, -ite! Brzes!i and 0ail Bradbear< nventory can be call as 2rofessional nventory (anagement if they meet the terms< #0ood nventory, 4tending Stoc!  7lassification for 0reater 7ontrol, A wor!ed eample showing the impact of moving from > to 3 classes, Buffer Stoc! (ethodology, Simple buffer stoc!, Stochastic buffer stoc!, A wor!ed eample showing the impact of simple safety stoc! and stochastic safety stoc!.'

Source: *nline Article ( htt&:''$inventorymatters$co$u+'&ort*olio'&ro*essional-inventory-

managementty&e&ublication "

 High-level Inventory Management 

According to @ohnson and )aplan author of the boo! of 8elevance 1ost, #Boo! published year &C< 2ublishing 7ompany, =arvard Business School 2ress' t seems that around &DD% there was a change in manufacturing practice from companies with relatively homogeneous lines of   products to horizontally integrated companies with unprecedented diversity in processes and  products. Those companies #especially in metalwor!ing' attempted to achieve success through economies of scope  the gains of 9ointly producing two or more products in one facility. The managers now needed information on the effect of productmi decisions on overall profits and therefore needed accurate productcost information. A variety of attempts to achieve this were unsuccessful due to the huge overhead of the information processing of the time. =owever, the  burgeoning need for financial reporting after &%% created unavoidable pressure for financial accounting of stoc! and the management need to cost manage products became overshadowed. n particular, it was the need for audited accounts that sealed the fate of managerial cost accounting.

The

dominance

of

financial

reporting

accounting

over management

accounting remains to this day with few eceptions, and the financial reporting definitions of  EcostE have distorted effective management EcostE accounting since that time. This is particularly

true of inventory. =ence, highlevel financial inventory has these two basic formulas, which relate to the accounting period. #5irst the 7ost of Beginning nventory at the start of the period F inventory purchases within the period F cost of production within the period G cost of goods available. Second the 7ost of goods available H cost of ending inventory at the end of the period G cost of goods sold'. The benefit of these formulas is that the first absorbs all overheads of   production and raw material costs into a value of inventory for reporting. The second formula then creates the new start point for the net period and gives a figure to be subtracted from the sales price to determine some form of salesmargin figure.

(anufacturing management is more interested in inventory turnover ratio or average days to sell inventory since it tells them something about relative inventory levels. #nventory turnover ratio #also !nown as inventory turns' G cost of goods sold I Average and nventory G 7ost of 0oods Sold I ##Beginning nventory F 4nding nventory' I $'' and its inverse Average :ays to Sell nventory G ?umber of :ays a ear I nventory Turnover 8atio G >36 days a year I nventory Turnover 8atio.This ratio estimates how many times the inventory turns over a year. This number tells how much cashIgoods are tied up waiting for the process and is a critical measure of process reliability and effectiveness. So a factory with two inventory turns ha s si months stoc! on hand, which is generally not a good figure #depending upon the industry', whereas a factory that moves from si turns to twelve turns has probably improved effectiveness  by &%%J. This improvement will have some negative results in the financial reporting, since the EvalueE now stored in the factory as inventory is reduced.

-hile these accounting measures of inventory are v ery useful because of their simplicity, they are also fraught with the danger of their own assumptions. There are, in fact, so many things that can vary hidden under this appearance of simplicity that a variety of Ead9ustingE assumptions may be used. These includeK #Specific dentification, -eighted Average 7ost, (ovingAverage 7ost, 55* and 15*'.

nventory Turn is a financial accounting tool for evaluating inventory and it is not necessarily a management tool. nventory management should be forward loo!ing. The methodology applied is based on historical cost of goods sold. The ratio may not be able to reflect the usability of future production demand, as well as customer demand.

Source: Boo! (Relevance 5ost, &$ 3)"

 Introduction to model o* the Perishable Inventory According to the boo! of Timothy S. Laughan, that published in year &M #Boo! of  Boo! #A model of the 2erishable nventory System with referenct to consumerrealized product epiration< 2ublishing 7ompany, *perational 8esearch Society 1td'. The introduction of unit  perishability has significant effect on inventory policy for a large number of commodities. A significant amount of research has been presented which addresses the tradeoffs between ordering, carrying, shortage, and outdate costs for perishable inventory. A model of the  perishable inventory system which incorporates the effects of consumerrealized product epiration. This model represents a synthesis of two distinct directions in the perishable

inventory literature, and addresses the simultaneous determination of inventory ordering and outdate policy for a perishable item with random demand and random lifetime. Source: Boo! (. model o* the Perishable Inventory System ith re*erenct to consumer-reali/ed

 &roduct e6&iration, 7ol$ 08, 9o$ 8, &$ 83"

;he .dvantages o* a Com&uteri/ed Inventory Management System According to Bonnie 7onrad, 7omputerized nventory (anagement System give advantage to the business li!e first, the Speed and 4fficiency. A computerized inventory management system ma!es everything from inputting information to ta!ing inventory easier. :oing a hand count of inventory can ta!e days, but with a computerized inventory management system, the same process can be done in a matter of hours. Second the :ocument 0eneration, once the computerized inventory management system is in place, managers and wor!ers can use it to automatically generate all !inds of documents, from purchase orders and chec!s to invoices and account statements. (anagers can also use the system to automatically order products when they run low. Third, the Timely :ata with a manual system, the data is only as accurate and up to date as the last hand count. -ith a computerized inventory management system, the management team can pull a report and instantly see how many units are on the floor, how many have sold and which products are selling the fastest.

Source: *nline Article ( htt&:''smallbusiness$chron$com'advantages-disadvantages-

com&uteri/ed-inventory-management-system-83%$htmll   "

 1isadvantages o* a Com&uteri/ed Inventory Management System According to the article of @ohnson Braham if they have advanatages by using of  nventory System, they have also :isadvantages in using a computerized nventory. 5irst the 8eliance on Technology, with a computerized inventory management system, the company is at the mercy of its technology. *utside factors li!e a power failure or the loss of nternet or networ!  connectivity can render the system temporarily useless. Second the Accuracy ssues, a computerized system alone does not ensure accuracy, and the inventory data is only as good as the data entry that created it. 7ompanies that plan to use a computerized inventory management system need to have a system in place to validate their data and chec! the numbers reported by the system. A select hand count or targeted audit may be necessary to ensure the integrity of the system. Third the 8is! of 5raud, any computerized system carries the ris! of intrusion, and with a computerized inventory management system comes the ris! of fraud as well. A dishonest vendor could hac! the system to receive payment for products never delivered, or a dishonest employee could redirect chec!s to themselves. Source: *nline Article ( htt&:''smallbusiness$chron$com'advantages-disadvantages-

com&uteri/ed-inventory-management-system-83%$html   "

;y&es o* Inventory Management Systems

According to )enneth =amlett they have different types of nventory (anagment systems, first the (anual which is many small business owners, especially if the business has very few products, !eep trac! of inventory manually. The easiest way to perform manual inventory management is to use a spreadsheet. 5or eample, a small ba!ery might use a spreadsheet to !eep trac! of inventory purchases and usage. The owner can also set up the spreadsheet to calculate when ingredients need to be reordered. At the start of each wee!, the owner manually counts the raw ingredients and components she has on hand. She enters these values in the spreadsheet. She also enters her epected usage based on eisting orders. Using the appropriate spreadsheet formulas, she determines if she has enough materials for the wee! or if  she/ll need to purchase more. (anual systems allow the small business owner to manage inventory with very little investment in systems or training. (aintaining data integrity is a ma9or  downside to managing inventory using a spreadsheet. A single data entry or formula error can cause ma9or inaccuracies in the data output. Second the Barcode, nventory management systems that use barcode technology increase the accuracy and efficiency of managing inventories. All ma9or retailers use barcode technology as part of an overall inventory management program. Barcode technology facilitates the movement of inventory within the confines of the warehouse #from one location to another' or from the supplier to the warehouse #receiving' and from the warehouse to the customer #pic!ing, pac!ing and shipping'. Third the 8adio 5re+uency dentification, 7ompanies that use 85: typically move thousands of pieces of inventory through their doors. 85: uses two types of technology to manage inventory movementsactive and passive technology. Active 85: technology uses fied tag readers assigned throughout a warehouse. Anytime an item with an 85: tag passes the reader, the movement of the item is recorded in the inventory management software. Active systems wor! best in environments that

re+uire realtime inventory trac!ing or where inventory security problems eist. 2assive 85: technology re+uires the use of handheld readers to monitor inventory movement. @ust as in an active system, once an inventory item/s tag is read, the movement data are transmitted to the company/s inventory management software. Because 85: technology has a reading range of up to M% feet using passive technology and >%% feet using active technology, it greatly increases the accuracy of moving inventory around a warehouse. Source: *nline Article (htt&:''smallbusiness$chron$com'ty&es-inventory-management-systems-

38$html"

Use of Inventory System

According to the article of Pete Abilla that published in Novemver 16, !11" they tackle the di#erent cause of using inventory system$ %irst to &top products from spoiling, if you have too many products in your 'arehouse, you increase the risk that they 'ill become obsolete, damaged, spoiled or stolen before you can sell them all$ (epending on 'hich industry you)re in, you)re probably more 'orried about some of these risks than others$ %or e*ample, if you)re in the technology industry, you don)t 'ant your e*pensive products to become outdated, damaged or stolen, but you probably don)t care about their freshness date$ %ood producers, on the other hand, put product spoilage high on the list of inventory management concerns$ &econd

to &top paying hidden costs, having too much inventory doesn)t +ust increase your risk of paying more in the future" it costs you more money all the time$ here 'ill you store the e*tra inventory- .ou may need to buy a larger 'arehouse than you really need or rent trailers if your 'arehouse isn)t big enough$ Plus, you have to provide security to prevent theft$ And don)t forget about the money that)s tied up in inventory that you could have used to hire personnel or gro' your business in other 'ays$ /hird to &top disappointing customers, on the other end of the inventory spectrum, if you have too fe' products in your 'arehouse, you face a 'hole other set of risks$ .our customers don)t 'ant to 'ait too long to get their orders shipped to them$ &o if you run out of the products they)re looking for or if your picking, packing and shipping processes are too slo', you could drive customers a'ay$ %ourth to &top 'asting time, inventory management can be time0consuming, especially if you)re trying to do it by hand or in *cel spreadsheets$ &peed is everything in business$ 2o' fast you reorder products, ship customer orders and update your inventory records could make or break your company$  /hat)s 'hy an automated inventory management system is so important$ &canning product barcodes and setting up automatic reorder points can save valuable time by streamlining comple* processes$ %ifth the &tart planning ahead, you can)t a#ord to be purely reactionary in your inventory management$ .ou need to start planning ahead and being proactive$ Instead of being unprepared for sudden spikes in sales, try to notice these trends ahead of time by monitoring social media channels for mentions of certain

products and looking at historical records to spot seasonal upticks in sales$ All of this is easier said than done$ It goes back to having a po'erful inventory management system to free up your time and do most of the data analysis for you$

Source: *nline Article ( htt&:''$shmula$com'hy-use-an-inventory-management-

 system'8!3'   "

 Per&etual Inventory System

According to article of 8osemary 2eavler, a perpetual inventory trac!ing system is a method of immediately accounting for inventory sales in the inventory account, if there is no theft or spoilage. t is an inventory management system where store balances of inventory are recorded after every transaction. t eliminates the need for the store to close down constantly for  inventory stoc!ta!ing as perpetual inventory systems allow for continuous stoc!ta!ing. 2erpetual inventory systems !eep a running ac count of the companyEs inventory.

2erpetual inventory systems involve more record!eeping than periodic inventory systems. 4very inventory item is !ept on a separate ledger. These inventory ledgers contain information on cost of goods sold, purchases, and inventory on hand. 2erpetual inventory management systems allow for a high degree of control of the companyEs inventory by management. 2erpetual inventory management is generally used by companies who have the ability to scan the inventory items sold and who use pointofsale inventory systems.

Source: *nline Article (htt&:''bi/*inance$about$com'od'Inventory-Management'a'&er&etual-or-

 &eriodic-inventory-hich-should-your-com&any-use$html"

 Periodic Inventory System

According to the article of (ichelle (c!inley, a periodic inventory system does not re+uire daytoday trac!ing of physical inventory. 2urchases, cost of goods sold, and inventory on hand cannot be trac!ed until the end of the accounting time period when a physical inventory is performed and ending inventory is compared against the sum of beginning inventory and  purchases. 7ost of ending inventory can be calculated by using the 15* or 55* inventory accounting methods, or other less common methods. 2eriodic inventory management allows a company to !now beginning inventory and ending inventory but it does not trac! inventory on a daily basis. This means there is lost information. Business owners cannot tell if inventory was sold or if it was stolen, lost, or spoiled.

f you own a startup business without much money, periodic inventory management is definitely better because you can get by with 9ust a cash register and a simple accounting  procedure. f you sell services rather than products, you may not need an inventory management system unless you own a restaurant  or you are in the hospitality business. As your business grows, you will probably want to switch over to a perpetual inventory management system as it allows you to !now the balance in your inventory account at any point in time. 1arge businesses

typically have perpetual inventory systems rather than periodic inventory systems since the rest of their financial and accounting systems are co mputerized.

Source: *nline Article (htt&:''bi/*inance$about$com'od'Inventory-Management'a'&er&etual-or-

 &eriodic-inventory-hich-should-your-com&any-use$html"

Local Literature

7omputerbased system is a comple system wherein information technology plays a ma9or role. t ma!es the wor! easier, faster and more accurate. :ue to that fact, the automated scheme has become essential to small and big companies for they are epected to give the best services possible. ?evertheless, some businesses still prefer stic!ing with the system that is not integrated with technology. 2robable causes are computer illiterate staff and lac! of funds. 7ompanies, especially the big ones are recommended to switch from manual to automated systems because this will improve the efficiency and productivity of the business which will uplift the industry/s reputation. *ne of the most sought after automated systems of different companies is a purchasing and inventory system which comes hand in hand. A purchasing and inventory system is very important in every organization because a good purchase and inventory management can create ecellent productivity. 2rimarily, i3nventory wor! consists of input, output and restoc!. nput is a  process of buying new products into the inventory and replacing the old products with the new ones. (eanwhile, output is a procedure of ta!ing out the products from the inventory for sales or  usage and refill is a process of increasing the number of eisting products in the inventory in order to fulfill the insufficient products or escalating demands. (ost of the retailing mar!et is

using traditional way in the inventory management system where a person is assigned to chec!  and record the stoc! by hand using pen and paper. t is where operations with regards to all the stoc! will be archived. (!3!, !"$ Com&uter-b2ect Mar+ing: Iconicity 34:)4%-433$

According to the articles in S)0 7omputer Solutions it stated that, =andling this study centerIschoolIcollege very well, is very tedious tas! to manage. The data on registers or maintain the database manually. Therefore, the School (anagement System software is provided for you. t is errorless and appropriate version. t is the computerized system to manage the data of  studycenterIschoolIcollege. Psoftware.techrepublic.com.comIabstract.aspQd,$%%DR According to 4leonora Ale!sey!ina , she stated that 8eliable and fast school management software with the great customers support. tEll help you with your daily school management routines and deliver you from your paperwor!. Ahtt&:''donload$cnet$com'School-Management-System'%!!!-!)8B0-3!8%?4)$html,!!

nventory is one of the most important in monitoring a stoc! that ta!e place in business activity. The inventory system does the entire tas! in computing the value with inventory #cost and +uality' and handling data or information. nventory System maintains an orderly flow of  supplies, raw materials, or finished goods through an office shopIfactory because of items in any inventory. 8epresents cost, they need to be controlled. The purpose of inventory system for  management are to !eep inventory levels and cost at desire minimums while maintaining to  proper safeguards over materials to places and people who need them. nventory review refers to the time interval between counting inventories. 2eriodic review systems have a set schedule for conducting an inventory count. Transactional review systems update the inventory count after each transaction. 2eriodic review is less resource intensive but more prone to creating shortages and inventory discrepancies while transactional review is more accurate but re+uires more resources. nventory costs can be bro!en into several categoriesK the actual cost of the inventoried  product, the cost of storage and the cost of unmet demand if inventory is not available to fill orders. Additional costs include transportation and ordering costs incurred when replenishing inventory. 4ach of these costs is uni+ue to individual businesses and can vary widely. (Warren R$ Planret, !!" nventory means goods and materials, or those goods and materials themselves, held available in stoc! by a business. This word is also used for a list of the contents of a household and for a list for testamentary purposes of the possessions of someone who has died. n accounting, inventory is considered an asset. htt&:''$studymode$com'course-notes'Inventory-System-33?)?0$html 

 t is little wonder that business eperts commonly cite inventory management as a vital element that can spell the difference between success and failure in todayEs !eenly competitive  business world. -riting in 2roduction and nventory (anagement @ournal, 0odwin 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 ma!e good use of this technology are far better e+uipped to succeed than those who rely on outdated or unwieldy methods of inventory control. Automation can draidatically 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 re+uirements. htt&:''$studymode$com'essays'Revie->*-Related-Studies-Inventory-4%!$html 

Foreign Studies

Automation can draidatically 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 re+uirements. 4ffective nventory Analysis. 0et :ata 8elated to 4ffective nventory Analysis. 5or many distributors, inventory is the largest and perhaps the most important asset. nventory ties up more money than buildings or e+uipment, and is often less “li+uid." t is crucial, then, that distributors develop and use a comprehensive set of tools that allows close monitoring of the

 performance of inventory investments. 8ead more about simple measurements that can help you maimize your investment in inventory. According to the study of 4dwin Bello and his fellow researchers of 7omputerized (onitoring and nventory of Stoc! with -arning 1evel dated (arch $%%6, many firms have thousands of items of inventory which re+uire some form of control. The usage calculations and record !eeping chores would soon become overwhelming were it not for the computer and its uni+ue information storage and retrieval capabilities. htt&:''$studymode$com'sub2ects'related-studies-in-&os-&age$html  (!33, !"$ Cha&ter Ii:  Related 5iterature and Studies o* Inventory System$StudyMode$com$ Retrieved !, !33, *rom htt&:''$studymode$com'essays'Cha&ter-Ii-Related-5iterature-.nd-Studies-4)4?8!$html 

Local Studies

  According to the study of Anna (arie Beltran :istor of 2roposed Sales (onitoring System issued &6, the accelerated wor! structure of the company proper monitoring is essential in order to !eep trac! of the company/s sales activities. =er system aims to come up with an efficient, and accurate mechanized system of preparing invoices that will !eep trSac! of  the daily transaction and generate reports. mportant information will be provided by this study in order to prove that the computerization of the company/s operation and achieve a more reliable and efficient means of monitoring day to day activities. =er system focuses on the analysis and design of the sales monitoring system which will monitor the stac!s inventory of the sales departments. This system of hers is somewhat related to our study but our system focuses more on the inventory monitoring system of a trading company.

2opular author of Accounting, -aldo T. 2assion #&%' in his boo! stated that, to improve their efficiency and reduce their cost of operation. 8eports are more timely and accurate. 7omputers have large capacity to store data and tremendous speed to manipulate and recall data to the format a user wishes to use which the introduction of microcomputer  computation of business is more affordable.

Synt/esis

The proponents believe that every literature and every studies stated in this research is similar on the present study . The proponents relate and differentiate the research based on the flow of their transaction from the proposed study. The transaction and process and also the design specialization will easy help to ac+uire and accommodate and communicate with the user. The proponents get and use other research in this chapter, in which it helps to them, because they get !nowledge during creating the systems. This 8eview of 8elated 1iterature and Studies, illustrate the specific and general tas! of  the nventory (anagement System, also the types of nventory that gives a lot of !nowledge for  everyone before entering into business and using nventory. n this chapter the proponents put a different opinion of others interms of nventory, the 1iteratures and studies should get on the Boo! articles on the internet. nventory (anagement system, tac!led how you manage your inventory whether manual or computerized, both of that having advantages and disadvantages for the business, this chapter  gives an idea also for the reader to review what/s use of nventory to the business.