CHAPTER 2 Review of Related Literature and Studies Foreign Literature

According to Jeff Wourio, online sales and inventory system are designed to immediately record any and all sales and inventory transactions. Not only does that mean timely and accurate sales tracking, but this system also lets one readily identify inventory levels, particularly when what you have on the books doesnt jibe with actual stock. Little is more maddening to a business owner than watching his or her staff bogged down with inefficient, unproductive responsibilities, from double-checking his inventory disparities to seemingly endless cashregister reconciliation. Perhaps the greatest advantage to a comprehensive point-of-sale network is the freedom it can afford on personnel to devote their energy to what genuinely matters the most helping customers.

According to Donald Reimer and Ravi Nayar they disclosed that maintaining the right inventory levels is tough challenge. If not properly managed, the inventory can result in a significant expense. Looking over the shoulder is the lender who is concerned about the cost of carrying too much inventory which can affect profitability.

Fortunately, there are management information systems that exists which use microcomputers and variety of industry specific software. The cost of carrying inventory today has become a major expenditure and requires immediate attention. The benefits of inventory control far outweigh the costs. Any reduction in inventories, whether it is raw material, work-inprocess, finished goods or supplies, can have a dramatic impact on your bottom line.

Industry averages suggest that a 20 percent reduction in inventory is achievable with an online inventory control system. For a company with a yearly sales volume of $1 million, such a reduction would result in savings of $14,400 per year and would free up $48,000 of new dollars for reinvestment. For a company with a yearly sales volume of $10 million, the figures are proportionately higher:$144,000 per year in savings and $480,000 in a new dollar for reinvestment.

According to www.udatasolutions..com/lumbergear.asp that was founded in 2002,Unique Data Solutions began consulting with hardwood lumber companies to grasp the unique requirements of the hardwood lumber industry, and after years of research and development, Lumbergear software was rolled out. Despite the fact that we come from modest beginnings and have come a long way, they continue to provide their customers with quality service and innovative technology solutions.

Lumbergear sales and inventory software is a powerful, affordable and easy to use lumber business management system that increases efficiency in the workplace. They give control of hardwood lumber inventory and costs. The system also features a core set of modules that make it possible to run lumber operations effectively, and get products to customers on time.

The aforementioned lumbergear system specifically helps manage and maintain inventory and costs for hardwood lumber and distribution, and wholesale operations. Lumbergear is flexible system that can be used by wholesalers, kiln facilities, hardwood and softwood lumberyards, brokers, lumber sales, and sawmills.

LumberCell is a new software add-on that works hand in hand with Lumbergear in realtime. A mobile transaction processing system, and is compatible with the most hand held devices such as Blackberry, Pocket PC, and others. LumberCell allows mobile workers to be productive on the road. A Non-Parametric Asymptotic Analysis of Inventory Planning with Censor and Demand of Columbia, School of Operations Research and Information Engineering, Cornell University, Ithaca, NY 14853. They conduct a stochastic inventory planning with lost sales and instantaneous replenishment, where contrary to the classical inventory theory; the knowledge of the demand distribution is not available. Furthermore, they observe that only the sales quantity in each period and lost sales are unobservable, that is, demand data are censored.

The manager must make an ordering decision in each period based only on historical sales data. Excess inventory is either perishable or carried over to the next period. In this setting, they propose non-parametric adaptive policies that generate ordering decisions over time. It

shows that the T-period average expected cost of our policy differs from the benchmark newsvendor cost-the minimum expected cost that would have incurred if the manager had known the underlying demand distribution.

Local Literature

Salavador P. Catelo denoted the importance of the Philippine Retail Food over the past decade. The Philippines witnessed a substantial growth in the retail industry. Although there is dearth of recent literature and statistics to support this observation, a reconnaissance of places especially in the urban areas can attest to this. Growth is seen not only in terms of numbers but more visible in terms of size, investment on structure and modernization in operation. Digal (2001) pointed out that the Philippine retail industrys performance comprises about 11 percent of the Gross Domestic Product (GDP) in 1997. There are clear indications that this magnitude has been more or less maintained in the past 3 years. Total retail sales in 2002 increased by 11.1 percent and its GVA contributed 10.6 percent to GDP in the same year. About seventy-three percent (72.84 %) of this share was in the trade sub-sector while 25.43 percent was in the service sector. From 1981 to 1997, the industry grew by 5.83 percent annually, outpacing the average annual GDP growth rate of 2.27 percent over the same period. Combined with the wholesale sector, the industry absorbed 15 percent of the countrys employed labor in 1998 (Digal, 2001). The food, beverage and tobacco industry contributed 37 percent of the total employment in the wholesale and retail industry in the Philippines in 1995. Within the food sector, 87 percent of the total employment comes from small food retailers with less than 10 employees (Digal, 2001).

In the Philippines, food retailing industry involves a wide array of sellers from the sidewalk vendors, wet and dry markets, sari-sari stores, groceries, supermarkets, hyper marts, warehouse and discount clubs and convenience stores. Food means brisk business. Food is intricately linked with its culture and traditions. In the family, food accounts for 43 percent of total expenditures. Outside the home, eating has become lucrative for the retail business.

Expenditures for dining out, excluding corporate representation registered an average growth rate of 15 percent to 20 percent per annum in the last 10 years. In the quick service or fast food segment, the total market in 2000 was over PhP 30 B. (Palma, 2005). According to the Family Income and Expenditure Survey (FIES) of the National Statistics Office (NSO), household spending on food increased by 26 percent from 1997 to 2000. Personal consumption expenditure (PCE) on food and beverages in 2002 reached about PhP 448 B from PhP 401.7 B in 1998, or an average annual growth rate of about 3 percent (Omana, 2005).

Motor Image Pilipinas (MIP), exclusive distributor of Subaru in the Philippines reported a year-end sales performance of 602 units, marking an increase of 100 percent from 2007. It also registered the biggest growth in performance in the Philippine automotive industry based on the figures released by the Chamber of Automotive Manufacturers of the Philippines (CAMPI). Subaru has been the fastest growing automotive brand since its arrival in 2006 and Motor Image has announced plans to expand its business in 2009.

Since its arrival in 2006, Motor Image Pilipinas has continued to sustain its growth in the market with Subaru establishing itself as the premier sport-luxury in the country. In 2008, Motor Image launched three new models that further strengthened its position in the market; the luxury SUV Tribeca, the 300-hp WRX STI and the third generation compact SUV, the Forester. Aside from these three models, Motor Image has also made available other well- known Subaru models such as the Outback, the Legacy and Impreza 2.0R variants.

According to www.helium.com Henry Sy started to work at an early age of 12, usually manning the small family sari-sari store and preparing the traditional way of recording the sales and inventory control. Shortly, Sy thought of selling small portions of their grocery items to accommodate customers buying small volumes of products. Thus, the concept of retail marketing came to his mind. He entered the buy-and-sell industry to obtained funds to start his own retail business. Sy imported retail products from the US and sold it in the Philippines and the rest as they say was history. Mr. Sy is now the CEO and the founder of the SM Prime Holdings- one the largest publicly-listed companies in the Philippine Stock Exchange.

Related Study Foreign

An Online Inventory Control System can also help company with new inventory management techniques such as Just-in-time (JIT). Such techniques cut the use of company resources such as warehousing, equipment and personnel. However these techniques require error-free environments and better control over inventory since the buffer zone to compensate for the errors is less.

Computer technology has provided opportunities for improving instruments management. Online inventory management system has the capability to manage and process large volumes of data quickly and provide reports that help the healthcare facility do a better job of managing its surgical instrument inventory. It is important to be aware of which systems are currently available in the marketplace and what they offer. Most computer management systems track the instrument set through all processes and service. Others have additional options, such as instructional features online, instruments preventive maintenance reminders, and employee tracking for productivity.

Although an automated system may require a substantial initial investment, it has proven to be a cost effective instrument management program. According to Valerie DeVries, RN, sterile processing manager at Lenox Hill\hospital in New York City. It may cost thousands of dollars, but its worth it. Now we can find the trays. At Lenox Hill, we have an outrageous volume of instruments inventory. However, the system requires maintenance, backup, and someone to sit and input consistently.

When it comes to inputting data, bar coding, is a valuable tool. Inputting data using a bar code system is a definite time saver over annual input as long as the information is recorded at time of use. Bar coded trays and a bar code scanner provide improved tacking of instrument sets. Using a tray system that provided a location for labeling as well as the ability to bar code is a clear advantage.

Improving information management has become the critical issue for most small retailers, says Judy Newdom, a principal of Computer Sciences Corporation national retail practice, based in Cleveland, As a result, cash registers at many small businesses have been transformed into Online POS Systems. Silverman say he selected the upgraded CounterPoint software after evaluating other packages because it would run on the assortment of POS hardware his firm already had. Switching to competing POS software would have required Blades to purchase new hardware, he says.

The new version of CounterPoint gives the company a quicker, a more accurate, and more detailed picture of its sales and inventory than the previous version. Moreover, the program can be tied into the firms accounting software. Dynamics, from Great Plains Software Inc. of Fargo, N.D. This enables each sale to be entered instantly into the accounting ledger.

The aforementioned related studies seem to reveal the strengths and weaknesses of the Sales and Inventory System both local and abroad. Thus, the writes cited the aforementioned studies since it served as a guide to the present study. The Quasem Dry Cells Ltd is an old and premier manufacturing company of Bangladesh. The factory of the company is situated in Tangail district. The company mainly produced various types of batteries. The demand of the product of the company is high. So, the company has to follow a proper inventory management system. The company follows Safety Stock inventory management system.

Safety stock system helps the company to fulfill its market demand. For instance, the demand of inventory is likely to fluctuate from time to time. In particular, at certain points of time the demand may exceed the anticipated level. In other words, a discrepancy between the assumed and actual usage rate of inventory is likely to occur in practice. Similarly, the receipt of inventory from the suppliers may be delayed beyond the expected lead-time. The delay may arise from strikes, floods, transportation and other bottlenecks. Thus, a firm would come across situations in which the actual usage of inventory is higher than anticipated level and or the delivery of the inventory from the suppliers is delayed. The effect of increased and or slower

delivery would be a shortage of inventory. That is, the firm would face a stock-out situation. This, in true, as explained in detail below, would disrupt the production schedule and alienate the customers. The company would, therefore, be well advised to a keep a sufficient safety margin by having additional inventory to guard against stock-out situation. Such stocks are called Safety Stock. This would act as a buffer or cushion against a possible shortage of inventory caused either by increased usage or delayed as the minimum additional inventory to serve as a safety margin or buffer or cushion to meet an unanticipated increase in usage resulting from an unusually high demand and or an uncontrollable late receipt of incoming inventory.

RFID Tracks Jewelry Sales, Inventory of Middle East, they created a study wherein once the tag is applied to a piece of jewelry, a store employee uses a handled interrogator to capture the tags unique identification number, then again on a daily basis for inventory management. Any attempt to cut the cord disables the tag, making it impossible to transfer it from one piece of jewelry to another one that is cheaper in an attempt to disguise a theft. The data related to those daily read is transferred to an inventory database managed by TJSs software service, and TJS forwards a daily report to the bank. The database contains detailed information on each piece of jewelry. The system can be operated as a stand-alone system or integrated with the stores IT system. Handheld interrogators manufactured by Feig Electronics, or by PDA reader module supplier ACG, can be waved a few inches above the jewelry to retrieve information about the item from the database. When the store sells a product, employees scan the label once, and then cut the tag, disabling it. The tags are then returned to Sokymat, which removes the chips from the hard plastic cases and put them into new casings. While the system offers special advantages to the Middle East, where bank ownership is an attractive option, the system has also caught the attention of jewelry retailers worldwide. From a technical point of view, its a solution for the whole world, Nasser says. Not everyone needs a financing solution; instead, its about inventory management. TJS charges the stores a monthly fee for the system, depending on the size of the retailer.

By June, Nasser says, its system will be deployed at 25 locations. The company is not the only one offering an RFID solution for jewelry retailers. French RFID systems manufacturer Tagsys and Swiss auto-ID software solutions provider Solid have co-developed a 13.56 MHz

RFID system aimed at increasing inventory accuracy and reducing theft. Swiss watch and jewelry maker de Grisogono has developed the system at its stores in Geneva and Paris, and also plans to roll it out across all 15 worldwide retail locations by the end of the year.

A prototype warehouse sale order and inventory system via Pocket PC phone using GPRS communication has been created for sales departments in tire factories to manage with sales orders effectively and efficiently. This prototype will work as the order-center for administrators, sale persons and customers. This warehouse sales order system has been created using PHP, which is server side script and MySQL, which is a database program. The application has five sections: Firstly, a product data management system and sale order data management through website.

Secondly, a sale person-order system through website via a computer PC or laptop. Thirdly, a customer-order system through website via a computer PC or laptop. Fourthly, sale person-order system through website via a pocket PC phone. Fifthly, a summary report system for the manufacturing department and director.

The system will require an internet network for a computer PC or laptop, and the GPRS communication network for a pocket PC phone. After the application was implemented by sale persons, customers and administrators, the result of order products through websites was very satisfactory. It decreased the order processes, and at the same brought information technology to apply to the sale process. It reduces the processing time by 77.98 percent and increased satisfaction for all users.

Local Study Michael Cruzs of De La Salle College of Saint Benilde a graduate of Bachelor of Science in Business Administration, Major in Information Services Management by 2004-2007 and Senior Business Systems Analyst of KFC Philippines. He conducted a research study on Enterprise Content Management to any store or company which tackles sales and inventory

control that aims to help concessionaires in their inventory stocking and as well as in preparing their sales report.

A Research Study of Longjas Trading Online Sales and Inventory was conducted by the students of Leyte Normal University Computer Science Department. They develop a system with high levels of reliability and availability required of business-to-consumer Websites that requires not only great technology, but also great operational processes. Building a scalable, highly available application is a necessary process in becoming functional as an e-commerce entity.

They have tried developing the most basic modules required in an online business, using MySQL-server, PHP and Apache Web server. All of the key processes and tools are covered in this store from retail storefront to back end management. Another research study with the title name Sales Inventory for Gaisano Capital Tacloban Branch, that was conducted by the group of researchers of Eastern Visayas State University Bachelor of Science in Information Technology Students. The study also deals with sales inventory wherein the customer will purchase the item, and then the cashier will scan the barcode to the barcode reader machine and automatically compute the sold items, available and generate sales inventory report. The objectives of their research study is to have an accurate sales, stock, availability of an items, lessen the work load of the management employee and have smooth flow of sales inventory.

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