Research Preliminaries Format

DESIGN AND DEVELOPMENT OF AUTOMATED INVENTORY

SYSTEM WITH POINT OF SALE FOR MAKIMURA
RAMEN CORPORATION

Group Members:

Introduction:
To quote a British newspaper in a June 1949 news article about the Electronic Delay

Storage Automatic Calculator computer ―also known as EDSAC, the first full-size stored-

program computer built at the University of Cambridge to provide a formal computing service for

users (EDSAC, 1949). ― ’The “brain” [computer] may one day come down to our level [of the

common people] and help with our income-tax and book-keeping calculations. But this is

speculation and there is no sign of it so far.’ Seventy years later, the speculation came into reality

and in so much more.

Technology, most especially in this age of information, is developing in an astonishing

rate―so astonishing, that in fact, citing statistics about its growth would be futile. So astonishing,

that today’s innovation could become obsolete tomorrow. After the ESDAC came the personal

computer, from bulky desktops to handy laptops. Seventy years later, computers aid us in almost

everything including income tax and bookkeeping calculations. Seventy years later, the absence

of computers is almost detrimental, most especially to business establishments.

Before the emergence of Computerized Accounting Systems (CAS), everything was done

manually. Starting from the acquisition of goods (for merchandising) or raw materials (for

manufacturing), into receiving cash from customers and paying for the goods or materials
acquired. With the ever-increasing competition in the market in every business line there is,

computers and computer systems play a vital role in the success of a business. CAS are information

technology developments that aid complex accounting transaction processes by automatically

executing accounting procedures in a computer. Derived from the manual management of

accounting transactions, CAS has modernized and simplified people’s work to data encoding

(Ongoco, 2018).

A major decision-making component in any organization is stock keeping and checking. It

can be a real challenge for most businesses and may become a major problem especially if the

inventories are long and in- and outflow is huge. Manual reports are time consuming and difficult

to construct. Inadequacy, duplication, irrelevance and inefficiency are just few of the many

problems with the current manually operated systems. List of files, and papers in these files are

difficult to document and maintain, thus prone to risk of loss or damage, making the system

inefficient (Arshad, Shoaib, & Sajjad Khan, 2000). In this age of information, manual accounting

system is still being used by some establishments, even companies with large number of

inventories.

According to Stevenson (2010), Inventory Management is defined as a framework

employed in firms in controlling its interest in inventory. It includes the recording and observing

of stock level, estimating future request, and settling on when and how to arrange. On the other

hand, Deveshwar and Dhawal (2013) proposed that inventory management is a method that

companies use to organize, store, and replace inventory, to keep an adequate supply of goods at

the same time minimizing cost. It is justified that the inventory management practices have a direct

positive impact on the competitive advantage and organizational performance of MSE firms.

Therefore, owners or manager of MSE manufacturing firms are expected to consider inventory
management practice as a one core enterprise objective in order to excel their competitiveness

through providing quality customer service, quality product, reduction of cost, meet market

demand in a flexible manner, and also enhance their overall organizational performance (Daniel

Atnafu, Assefa Balda, & Shaofeng Liu, 2018).

A study conducted in Kenya by Naliaka and Namusonge (2015) identified that inventory

management affects competitive advantage of manufacturing firms. The same study further

concludes that the firm is able to compete based on quality and delivery of customer orders on

time. Competitive advantage comprises capabilities that allow an organization to differentiate

itself from its competitors and is an outcome of critical management decisions (Li, Ragu-Nathan,

Ragu-Nathan, & Subba Rao, 2006).

In the business line of selling foods and giving services, it is crucial to maintain the right

amount of inventory to eliminate any form of waste and additional holding costs from the

accumulation of inventory, which may also result in longer lead time – meaning customers will

wait longer if an item is out of stock, which now becomes an additional concern because the

business might lose its customers.

In reality, inventory management is not fascinating but it can define success from failure.

It is said that the bigger the inventory, the more that management inventory is vital. Inventory

management and purchasing have the same objective: to have the right goods at the right time at

the right quantity. The goal of proper inventory management and control is to ensure continuous

operations which is important because delays due to lack of materials is costly. Furthermore,

sales can be maximized by stocking appropriate inventories in retail and wholesale establishments.

Protecting inventories which is part of the assets of the company from theft or shrinkage contribute

to operational efficiency. If inventories are maintained at an optimum level, meaning, the point
at which inventory stock outs are at the minimum level and do away with excess inventory, money

can be saved and profit can be maximized (Moore, Petty, Palich and Longenecker, 2008). A

reliable inventory system means a high level of customer trust and their attendant continuous

patronage. Inventory management system are primary used in manufacturing companies, where

its viability and potential economic value are reasonably attained. Inventory is kept to meet

reliability of operations, flexibility in production scheduling, change in raw material, delivery time

an change in economic purchase order size (Inyama, 2006).

It came to the researcher’s attention that Makimura Ramen Corp. is still using the manual

accounting system, which includes their inventory system. As a result, the researcher conducted

this study for the main reason of introducing a computerized inventory system with POS to the

company. All because inventory decisions are risky and they make a large impact throughout the

supply chain (Bowersox, Closs, & Cooper, 2005). Hence, beginning from inventory acquisition

until the generation of sales, inventory decisions must be carefully made and executed by every

establishment.

Computerized inventory system will be of great help most especially in controlling

inventory, tracking inventory movement, optimizing stock levels and improving cost control

measures through generated reports from the system. The billing and collection process could be

computerized as well using POS.

Statement of the Problem/s:

The study aims to design a computerized accounting system with point of sale for Makimura

Ramen Corp. that will reduce the ineffectiveness and inefficiency of their existing inventory

system.

Specifically, the study seeks to answer the following questions:

1. What are the processes involved in the existing inventory system of Makimura Ramen

Corp.?

2. What are the problems encountered in the existing inventory system of Makimura

Ramen Corp.?

3. What is the best possible design of a computerized inventory system with point of sale

to address the problems encountered in the existing inventory system of Makimura

Ramen Corp.?

4. What are the benefits of adopting the proposed computerized inventory system with

point of sale?

Summary of the Methodology:

Research Design:
___Quantitative ____Qualitative __X_Mixed Methodology

Research Locale: Makimura Ramen Corp.- Angeles City, Pampanga

Target Respondents: Accounting Manager, Accounting Assistant, Branch Manager
Sampling Procedure: Non-probability Sampling- Purposive
Data Gathering Procedure: To gather the data and information from the respondents, the
researchers construct an interview-questionnaire. After constructing the interview-questionnaire,
the researchers sought and asked their adviser to be able to know if the constructed questions are
valid and reliable. Then after having the approval, the researchers administered the questionnaire
immediately with a formal and valid letter to the management of Makimura Ramen Corporation.
After the retrieval of the interview-questionnaire, the researchers tabulated and analysed
the data immediately.

Note: Attach Data Gathering Instrument (e.g. Questionnaire, Guide Questions, etc.)