Republic of the Philippines

Department of Education
PUBLIC TECHNICAL -VOCATIONAL
HIGH SCHOOLS

Unit of Competency : Perform Purchasing and Inventory of

Production Materials
Module Title : Performing Purchasing and Inventory of
Module No. 3 Production Materials

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COURSE : ENTREPRENEURSHIP IV

UNIT OF COMPETENCY : Perform Purchasing and Inventory

of Production Materials

MODULE TITLE : Performing Purchasing and Inventory of

Production Materials

MODULE DESCRIPTION : This module covers the knowledge, skills

and attitude required to perform the
purchase of production materials.

SUGGESTED DURATION : 10 Hours

SUMMARY OF LEARNING OUTCOMES:

At the end of this module, you are expected to:

L.O.1. identify criteria in purchasing production materials; and

L.O.2. utilize standard inventory control of the production materials.

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 WHAT WILL YOU LEARN?

At the end of this module, you are expected to:

 learn the criteria in purchasing production materials; and
 utilizing standard inventory control of the production
material.

WHAT DO YOU ALREADY KNOW?

Directions: Let us find out how much you already know in

identifying criteria in purchasing production materials and
utilizing standard inventory control of the production
materials. Answer the questions below honestly and write
the letter of the corresponding answer in your activity
notebook.

1. Apple, cucumber, carrots, tomatoes and corn are examples of what

products?
a. grown products
b. manufactured products
c. processed products

2. The dresses we have, bags we use and shoes we wear, are examples of
what products?
a. grown products
b. manufactured products
c. processed products

3. The maximized use of the natural resources, nurturing

entrepreneurial skills of the Filipino people and additional income of
the government through tax collection are examples of what
purchasing activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process

4. Assessing the profile of the producers and customers and checking

the track record of the suppliers are examples of what purchasing
activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process

5. These are stock files of materials for the inputs of production.

a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

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6. These are partially completed products requiring further processing
including sets of unfinished goods for production process.
a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

7. These are the final outputs of production ready for delivery to the
customers.
a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

8. Stock card #1 has information and data that are categorized in what
cluster of items?
a. collective
b. group
c. individual

9. Stock card #2 has information and data that are categorized in what
cluster of items?
a. collective
b. group
c. individual

10. When you need to purchase or avail of goods and services

without the
need to leave the country, how do you classify these resources?
a. export resources
b. imported resources
c. local resources

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 LESSON 1

IDENTIFY CRITERIA IN PURCHASING

PRODUCTION MATERIALS

WHAT IS THE LESSON ABOUT?

This lesson will teach you how to identify criteria in the

purchase of production materials. It will guide you on how to
utilize a stock card for inventory control of production materials necessary
in the continuous operation of the business.

WHAT WILL YOU LEARN?

At the end of the lesson, you are expected to:

1. learn the benefits and factors in purchasing goods
and services by using the set of criteria cited in this
lesson;
2. use a stock card for the inventory control of the
production materials; and
3. identify local sources necessary in the purchase of
production of materials.

LET US STUDY

WORDS TO STUDY
Sourcing is a complete process of obtaining goods and services from
preparation and processing of a requisition to receipt and
approval of the invoice for payment.
Services are intangible products that are not goods (tangible products),
such as accounting, banking, cleaning, consultancy, education,
insurance, know how, medical treatment, transportation.
Stockpile is a comparatively large stock of essential goods or materials,
built up to withstand long holdups or scarcity due to natural
calamities, strikes, or war.
Inventory is an itemized catalog or list of tangible goods or property, or
the intangible attributes or qualities.

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 PURCHASING OF GOODS AND SERVICES FROM
THE LOCAL SOURCES

We are very lucky nowadays enjoying and benefiting from the

advantages that technology brings to our life. When we go to the
supermarkets and department stores, lots of goods and services are there
available for your needs. With various shopping malls we have in the entire
Philippines, you will not think of going abroad to purchase the things that
you want.

As an entrepreneur, you must realize that there are things that are
grown like the fruits, plants, vegetables and other natural resources. Other
things made and manufactured according to the needs and wants of our
target market or customers. Likewise, the services are also made and
created according to the felt need of the community. Service is more delicate
to manage because it is a work that someone has to provide to others with
satisfaction.

Why do you prefer to purchase from local sources? Purchasing local

goods and services is patronizing our own products resulting to some of the
following benefits:

 it stops the value of colonial mentality not only among young

children;
 it gives additional income to the government through tax
collection;
 it maximizes the use of our natural resources from raw
materials to the finished products;
 it develops the skills of the Filipino people making them more
innovative, creative and productive; and
 it gives affordable price for seasonal and quality products, fruits
and vegetables.

Factors do you consider when purchasing goods and services from the
local sources? Whether you sell PRODUCTS or sell SERVICES as part of
your business, skillful, careful and wise purchasing is an important part of
your business. It can determine whether or not you will make a profit. Here
are some important points to consider when purchasing goods and services:
 study the profile of the local producers
 research on the daily average consumption of the
customers
 know your customers
 find out the right place to buy
 determine how much to procure
 check the track record of each supplier

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  get the behavior of the patrons towards the
products and services

LET US REMEMBER

In the purchasing activity of the business, the supply of goods

and services are vital factors to consider. Supply is the amount of
something the customers can avail from the producers who make or grow
goods and services.

LET US APPLY WHAT YOU HAVE LEARNED

Directions: Find out the available goods and services in your

community and compare them with other communities using the Venn
diagram in any of the following categories:

1. Profile of the Producers 5. Determine How Much to Procure

2. Customer’s Average Consumption 6. Check the Track record
3. Profile of the Customers 7. Behavior of the Patrons
4. Right Place to Buy 8. Sustainability of the items

VENN DIAGRAM

DIFFERENCES DIFFERENCES

SIMILARITIES

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 HOW MUCH HAVE YOU LEARNED FROM THIS LESSON?

Directions: Write capital letter “B” for benefits and “F” for factors in
purchasing activity. Copy and answer this evaluation activity on your quiz
notebook.

CRITERIA IN PURCHASING MATERIALS RESPONSE

1. Knowing the customers you are prospecting

2. Having more tax collections

3. Checking the profile of the suppliers

4. Becoming more productive and creative

5. Maximizing the use of the resources

As a young entrepreneur, how can you show the responsible ways of

purchasing activities on any of the possible situations you may consider?
Write your answer on the blank sheets below.

1. ____________________________________________________________
_____________________________________________________________
2. _____________________________________________________________
_____________________________________________________________
3. _____________________________________________________________
_____________________________________________________________
4. _____________________________________________________________
_____________________________________________________________
5. _____________________________________________________________
_____________________________________________________________

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LESSON 2

UTILIZE STANDARD INVENTORY CONTROL

OF THE PRODUCTION MATERIAL

WHAT IS THIS LESSON ABOUT?

This lesson deals with the inventory control of production

resources. You will learn some ways on how to do the controlling function
of a business to ensure enough resources in the making of goods and
services.

WHAT WILL YOU LEARN?

At the end of the lesson you should be able to:

1. Determine the correct use of the business stock cards;

2. Conduct inventory control of the production materials for
the goods and services businesses using stock card.

LET US STUDY

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 WORDS TO STUDY
Control is an approach or strategy that checks and balance resources
needed in the continuous operation of the business.
Inventories are stocks of goods and materials available for
production or manufacturing.
Process refers to the step – by - step manner of operation making
product from raw materials into finished outputs.
Stocks are the inventory itself in various forms.

CONDUCTING INVENTORY CONTROL

OF GOODS AND SERVICES

One delicate task of an entrepreneur is to maintain an inventory

control of goods and services. There must be an assurance that the owner
will not run out of stock in the production phase of his business. These are
much accounted for from raw materials to the finished expected outputs.
All related activities of purchasing require control management. There must
be no shortages of materials since sources and supplies are locally checked
and available for the business.

How do you control inventory of goods and services? It is imperative to

determine your production ability, capacity and responsibility. An
enterprise must have reliable data about purchasing and manufacturing. A
production chart on daily, weekly, monthly, quarterly and yearly basis
would help to feed information as basis of parallel consumption of the
materials.

The use of stock card is a good strategy to control records of stocks of

goods and materials. There are three types of inventories described below:

1. Raw-Materials Inventory (RMI). These are stockpile of materials for

inputs of production. (Examples are textile in roll and threads in
boxes stocked in a warehouse for the garment industry.)

2. Work-In-Process Inventory (WIPI). These are partially completed

products requiring further processing including sets of unfinished
goods for production process. These unfinished items are for
fabrication or for further processing stocked in buffer storage.
(Examples are the baby dress garments with body parts only waiting
for the sleeve and collar sewing operations)

3. Finished-Goods Inventory. These are the final outputs of production

ready for delivery to the market or customers. (Examples are bags,
shoes, t-shirts, computers, calculators, books and others.)

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 To control is not only to check physically but to list down stocks and
balances on a stock card before deciding to do the purchasing activity. It is
important to declare the minimum and maximum stock of every item needed
in the business operation. The important sources like the suppliers and
stores (including business places) are reflected in the stock card including
the date of purchase and the price as reference.

In this stock card, it is important to update the daily record to tally

the actual stocks against what is reflected on the stock card. This would
help an entrepreneur to know what, when, where and how many items are
to be purchased at a time to sustain the inventory of goods and services.
Every stock card must be a reliable piece of reference. All items received
and used should be updated at all times.

Below are examples of stock cards that you may use. Of course, you
may also design your own stock card. The stock card-1 is for itemized
inventory record per item or individual; while stock card – 2 is for the
collective inventory record of all the files of stock card - 1.

TENEZA’S MEAT & FISH PRODUCT COMPANY

S TOCK C ARD- 1
(Individual/Per Item)
Stock Card No. Min. Stock Supplier:
Item: Max. Stock Re-Order Stock
+ Deliveries - Withdrawals BALANCE Withdrawn by:
Date (qty./units) (qty./units) (qty./units) (Person/Department)

TENEZA’S MEAT & FISH PRODUCT COMPANY

S TOCK C ARD- 2
(Collective Items from Stock card – 1)

Operation Year: ________

Beginning +Total Deliveries Cumulative

10
Month Item Balance -Total Withdrawals Balance

Below is an example of a filled-up stock card,

TENEZA’S MEAT & FISH PRODUCT COMPANY

S TOCK C ARD- 1
(Individual/Per Item)

Stock Card No. 1 Min. Stock: 3 bags Supplier: MVC Company

Item: TVP/Textured Max. Stock: 25 bags Re-Order Stock: 20 bags
Vegetable Protein
+ Deliveries - BALANCE Withdrawn by:
Date (qty./units) Withdrawals (qty./units) (Person/Department)
(qty./units)
Balance Forwarded 20 bags Ms. Sol Saldivar
2009
May 25 5 bags 15 Mr. Rene Delfino
26 8 7 Jun (Mixing Section)
27 4 3 Reynaldo (Receiving Sec)
28 20 bags (OR#1221, P750/bag) 23 Leony (MVC Co.)
29 5 18 Perchy (DepEd)
June 2 16 2 Marian (Packaging Dept)
3 20 bags (OR#1221, P750/bag) 22 Leony (MVC CO.)
4 1 21 Jenny (Shipping Dept.)
10 2 19 Via (Manufacturing Dept)
11 2 17 Jun (Mixing Section)
12 2 15 Reynaldo (Receiving Sec)
13 1 14 Via (Manufacturing Dept)
14 1 13 Reynaldo (Receiving Sec)
15 1 12 Jun (Mixing Section)
16
17
18
19
20

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 LET US REMEMBER

In the successful inventory control management, always remember

to take note of the date, items received and withdrawn, supplier sources,
minimum and maximum stocks, re-order stock, the price and other data
important in the inventory control. The stock card should always be
maintained as a tool or basis to control inventory.

LET US APPLY WHAT YOU HAVE LEARNED

Directions: Following the Stock Card No. 1 (above) for

Textured Vegetable Protein of Teneza’s Meat & Fish Product Company,
assume business operation and consider your own business reflecting data
on the appropriate columns available. Copy the stock card on your activity
notebook and use it on your business now.

Name of your business: ________________________________________

S TOCK C ARD- 1
(Individual/Per Item)
Stock Card No. Min. Stock: Supplier:
Item: Max. Stock: Re-Order Stock:
+ Deliveries - Withdrawals BALANCE Withdrawn by:
Date (qty./units) (qty./units) (qty./units) (Person/Department)
Balance Forwarded

HOW MUCH HAVE YOU LEARNED FROM THIS LESSON

Directions: Choose the correct answers from the ITEM

BANK below and write your answers on your quiz
notebook.

ITEM BANK
Finished-Goods Inventory Stock Card – 1
Inventory of Goods and Services Stock Card – 2
Inventory of Services Stock Card - 3
Raw-Materials Inventory Stock Card - 3
Work-In-Process Inventory Stock Card – 3

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 1. These are stockpile of materials for inputs of production.
2. These are partially completed products requiring further processing
including sets of unfinished goods for production process.
3. These are the final outputs of production ready for delivery to the
market or customers.
4. This is the stock card for the collective items of stocks.
5. It is an inventory tool designed for individual item of stocks.

POST-TEST

Directions: Let us find out how much you already know about production
cost and pricing of products or services. Answer the questions below
honestly and write the letter of the corresponding answer in your activity
notebook.

1. Things or products like apple, cucumber, carrots, tomatoes and corn

are examples of what products?

a. grown products
b. manufactured products
c. processed products

2. The dresses we have, bags we use and shoes we wear, are examples of
what products?

a. grown products
b. manufactured products
c. processed products

3. Maximized use of the natural resources, nurturing entrepreneurial skills

of the Filipino people and additional income of the government through
tax collection are examples of what in purchasing activity?

a. benefits of purchasing activity

b. factors in purchasing goods and services
c. guidelines in purchasing process

4. Assessing the profile of the producers and customers and checking the
track record of the suppliers are examples of what in purchasing
activity?

13
 a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process

5. These are stock files of materials for the inputs of production.

a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

6. These are partially completed products requiring further processing

including sets of unfinished goods for production process.

a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

7. These are the final outputs of production ready for delivery to the
customers.

a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

8. Stock card #1 has information and data that are categorized in what
cluster of items?

a. collective
b. group
c. individual

9. Stock card #2 has information and data that are categorized in what
cluster of items?

a. collective
b. group
c. individual

10. When you need to purchase or avail of goods and services without
the need to leave the country, how do you classify these resources?

a. export resources
b. imported resources
c. local resources

14
RESOURCES:

Individual Stock Card for Inventory Purpose

Stock Card for the Collective Items

REFERENCES:

Fajardo, Feliciano R., Entrepreneurship

Jorge A. Camposano, Jorge A., MBA, Ph.D., Entrepreneurship

for Modern Business

San Gabriel, Nati C., Business Finance and Business Firms

SEDP, Business Management

Teneza, Celedonia T., Ed.D., Worktext in Technology &

Livelihood Education in Business Management III, published by
Shekinah Publishing and Printing Press Co., Copyright, 2006

Teneza, Celedonia T., Ed.D., & Baes, Ma. Gradiva S., Worktext
in Technology & Livelihood Education in Business Management
IV, published by Shekinah Publishing and Printing Press Co.,
Copyright, 2006

Villanueva, Cristina R. & Rojo, Luz V., Technology & Livelihood

Education

Internet Sources:
www.wikipedia.com
www.econolib.org
www.brittanica.com

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 MODULE 3

Engaging in the Purchase of Goods and Services

PRE-TEST/POST-TEST

KEY TO CORRECTION

1. A

2. B

3. A

4. B

5. B

6. C

7. A

8. C

9. A

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 10. C

ACKNOWLEDGMENT

Copyright Department of Education 2009

This module was based on the Writeshop on the Development of the

Competency-Based Curriculum (CBC) for Entrepreneurship for Technical
Vocational High School conducted at Marikina Hotel Marikina City, May 25
– 30, 2009

This learning instrument was developed by the following personnel:

Dr. Reynaldo M. Valdez

Jones Rural School

Group Leader

Dr. Celedonia T. Teneza

Benigno Aquino High School

Mr. Gilbert Camayang

Cabrroguiz National School of Arts and Trade

Mr. Alfonso P. Rodriguez Jr.

Muntinlupa Business High School

Mr. Fernando C. Agustin

Bukig National Arts and Trade School

Mrs. Leona M. Tomas

San Pedro National High School

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Writer/Facilitator:

Mr. Rene G. Delfino

Muntinlupa Business High School

Editor: Dr. Estrellita Evangelista

Encoder: Mrs. Marisol E. Saldivar

Funding: Department of Education

ACKNOWLEDGMENT

Copyright Department of Education 2009

This module was based on the Writeshop on the Development of the

Competency-Based Curriculum (CBC) for Entrepreneurship for Technical
Vocational High School conducted at Marikina Hotel Marikina City, June 5
-7, 2009

This learning instrument was developed by the following personnel:

Dr. Reynaldo M. Valdez

Jones Rural School

Group Leader

Dr. Celedonia T. Teneza

Benigno Aquino High School

Mr. Alfonso P. Rodriguez Jr.

Muntinlupa Business High School

Writer/Facilitator:

Mr. Rene G. Delfino

Muntinlupa Business High School

Editor: Dr. Estrellita Evangelista

Encoder: Mrs. Marisol E. Saldivar

18
Funding: Department of Education

ACKNOWLEDGMENT

Copyright Department of Education 2009

This module was based on the Writeshop on the Development of the

Competency-Based Curriculum (CBC) for Entrepreneurship for Technical
Vocational High School conducted at Marikina Hotel Marikina City, July 1to
5, 2009

This learning instrument was developed by the following personnel:

Dr. Reynaldo M. Valdez

Jones Rural School

Group Leader

Dr. Celedonia T. Teneza

Benigno Aquino High School

Writer/Facilitator:

Mr. Rene G. Delfino

Muntinlupa Business High School

Editor: Carolina F. Chavez, Aida T. Galuran, Beatriz A. Adriano

& Dr. Corazon C. Echano

Encoder: Mrs. Marisol E. Saldivar

19
Funding: Department of Education

TABLE OF CONTENTS

Module Title: Determining Production Cost Page

and Price of Products and Service
How to Use This Module . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Summary of Learning Outcome . . . . . . . . . . . . . . . . . . . . . . . . . 2

What Will You Learn

What Do You Already Know
Pre – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Lesson 1: Identify Criteria in Purchasing

Production Materials . . . . . . . . . . . . . . . . . . . . . . . . . . .5

What is this Lesson About

What Will You Learn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Let Us Remember
Let Us Apply What You Have Learned . . . . . . . . . . . . . . . . . . . . 7

How Much Have You Learned . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Lesson 2: Utilize Standard Inventory Control

of the Production Materials . . . . . . . . . . . . . . . . . . . . 9

Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Let Us Remember . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Let Us Apply What You Have Learned . . . . . . . . . . . . . . . . . . . . . 13

20
How Much Have You Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Post – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Key to Correction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

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