CHAPTER I

THE PROBLEM AND ITS SETTING

This chapter contains a brief introduction about the inventory system, background

of the study, objectives of the study, problem definition, the scope and delimitation of our

study and the users and beneficiaries.

1.1. Background of the Study

Research findings over the years have revealed the importance of the Inventory

System in the lives of business entities. The inventory system is indeed a vital part of any

retail business for it keeps track and monitors the materials that are transferred in and out

of a company’s warehouse or establishment usually for accounting purposes. It is

important for a business entity to maintain the correct level of stock and properly record

its movement to keep on account all of their stocks. However in some entities, the

inventory of materials is done manually in such a way that an employee writes down the

information of different stocks or products every time it is transferred in and out of the

room. The same case applies in Peratibs Supplies and General Merchandise; and as a

result, the inventory system becomes prone to human error and would be more time

consuming which will most likely be a loss for the company.

Peratibs Supplies and General Merchandise is a trade-type of business located at

Governor Panotes Avenue, Purok 3, Barangay 8, Daet, Camarines Norte owned and

managed by Mr. Reynaldo A. Noriega. This started as a small business in Lipa City,

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Batangas and later extended in different localities such as Batangas, Quezon and

Camarines Norte. Within 15 years, the said business continuously grew.

The manager together with its employees administer the business. The

employees include one driver, one porter, one sales/inventory clerk and one associate

manager. The driver and the porter receive the stocks from the supplier and transport

them to the (2) storerooms. The storerooms are located at Concepcion, Batangas City

and Daet, Camarines Norte. They deliver some items to other entities. On the other hand,

the sales/inventory clerk facilitates the sales transactions as well as monitoring the

incoming and outgoing stocks in the warehouse. When the manager is not around, the

associate manager takes over to monitor the daily business transactions. Furthermore,

the estimated number of items is 13, 757 which are being supplied by six major suppliers;

Lamco Paper Products Company Inc., Consolidated Paper Products Inc., Advance

Paper Corporation, SSC Perry Inc., Veco Paper Products and Uni-west Paper. These

stocks are directly delivered by the suppliers to the main warehouse located at Batangas

City. Peratibs Supplies and General Merchandise including the three branches pick up

the stocks to the main warehouse and transport them to their respective warehouses.

Some of these stocks are being traded by Peratibs Supplies and General merchandise

to other entities like Mr. Junjun Alvarez, South Centro Copy Center, Winly Copy Center,

T.M. Printers, Ms. Glenda Peciller, Ms. Jenny Gonzales and to other 40 small entities

while the rest are being sold in a retail basis.

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1.2. Problem Statements

This study aims to answer the following poblems:

1. How can this study aid to a faster, more effective and reliable inventory listing?

2. How can this study help the company to monitor the latest inventory balance?

3. How can this study develop a more secured business records for the users?

4. Is the proposed inventory system capable of solving matters regarding the right

time of issuing purchase order to suppliers?

5. How can this study aid in developing an effective and efficient report generation?

1.3. Objectives of the Study

The study aimed to design and develop an inventory system for Peratibs Supplies

and General Merchandise.

Specifically, the study aimed to attain the following:

1. To aid the company to come up with a faster, more effective and reliable inventory

listing.

2. To help the company monitor the latest inventory balance.

3. To develop a more secured business records for the users.

4. To know whether the proposed inventory system is capable of solving matters

regarding the right time of issuing purchase order to suppliers.

5. To aid in developing an effective and efficient report generation.

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1.4. Scope and Delimitations

The researchers focused mainly on utilizing an Inventory System for Peratibs

Supplies and General Merchandise (SME).

The major transactions include the issuance of purchase order by the owner, the

receipt of stocks, the physical count, direct selling or delivery and the manual updating of

the overall balance.

The major functionalities include the determination of an updated inventory count.

Through this, the users can be able to determine the actual inventory count, including the

stocks going in, items sold and those that are still on hand. Automated inventory count

can effortlessly update the process of selling and delivery. Whenever the stocks get

exhausted, the software will inform and offer options whether to refill or end the product.

The system will automatically keep the records related to the purchase and sale of the

inventories. Price level to each item will be assigned so that there will be no error in

computing for the items sold.

The added features include the log-in form for all the users. A certain password will

be designated for each one of the users for a more secured system. However, each user

will be prompted only to the information they are allowed to access. The inventory clerk

will be the system admin wherein he can update the inventory count since his job

description is mainly about this. The manager has the authority to view all necessary files

for the business. In the same manner, the associate manager can also view the all the

kept records of the system.

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 There will only be one personal computer to be used, which can stand alone. One is

for the system admin or the inventory clerk and one for the manager and the associated

manager since the owner and the associate manager are within the same location. In

case of the absence of the owner, the inventory clerk immediately calls him to inform the

out-of-stocks items.

This research will not cover the information on whether the inventory on hand are

usable or defective because the system is only concerned with the number of supplies

and not its form. Likewise, the system is not able to determine whether the inventories

are at the warehouse or ready-for-sale and it has no capacity to distinguish which items

are already paid or still payable. Lastly, the system cannot differentiate the newly

delivered stocks from old inventories because as the stocks are delivered, the inventory

system does not take note of the date.

The researchers intended to use the Visual Basic software in creating the programs

since it is user-friendly and interactive, especially for the average programmers. Users

can code, test and debug with ease, given that Visual Basic offers ready-made controls

and MSDN (Microsoft Developer Network) assistance for technical issues. In addition,

Visual Basic can able to achieve simple and complex business requisites effectively and

efficiently. With Visual Basic, both stand-alone and network environment system

applications can be created.

1.5. Users and Beneficiaries

This study will aid the business owner, Mr. Reynaldo A. Noriega to systematically

organize and monitor the flow of inventory of the entity. He has the right to access all the

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records regarding the business transactions particularly the updated balances of stocks

but he cannot edit or update the inventory balances. In addition to this, he can request

the printing of the inventory report (every end of the year) to the inventory clerk. Like the

owner, the associate manager also has the same access to all the records of the entity

since they have the same duties in supervising the business. The associate manager also

is not able to edit or update the inventory balances. This study will also help the

sales/inventory clerk to monitor the inventories in a faster and more effective means. Also,

to minimize the errors committed in using a manual inventory system. In relation to this,

the sales/inventory clerk is only permissible to edit, update and print the inventory balance

every year-end. As to the proponents, this study will provide them the knowledge on how

to operate a trade-type of business if they would want to manage the same kind of

business in the future. This study is also applicable to their chosen profession since it

primarily deals with different accounting transactions.

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