Saint Louis University 

College of Engineering and Architecture

 Industrial Engineering Department 

Barcode System For Inventory Management of Fama House

In partial fulfillment of the requirements 

in the subject 
Systems Engineering (IE4211) 

Submitted to:
Engr. Anthony James G. Domingo

By: 
Cablao, Jenica Lizette A.
David, Adrian Joseph H.
Gumnad, Priscillyn Rose R.
Mejia, Jeny Stephanie W.

January 2023

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 ACKNOWLEDGEMENT

First and foremost, Our heartfelt gratitude to God Almighty for his blessings and
guidance throughout this study. We can devote our utmost commitment to this study through his
heavenly gift. Immense admiration and heartfelt gratitude are offered to the following
individuals who have been a source of inspiration and encouragement throughout this project.
We are more than grateful for all the contributions you’ve made.

Engr. Anthony James Domingo, our IE 4211 instructor, for his patience, advice, and
encouragement, as well as for sharing his expertise in writing this paper, for educating us and
responding cordially to all of our questions, and for sharing his knowledge and expertise;

We are immensely grateful to our dear parents and guardians who continue to provide us
with moral and practical support, and

To our friends and classmates who supported us during our lowest times.

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ABSTRACT
The researchers developed a barcode system for a
large-scale retail trade in the Philippines. Fama
House is a food manufacturing company in Baguio
City. The researchers say the bar code system helps
them track their inventories in real-time.The
proposed system benefited Fama House in terms of
its sales, warehouse staff, and its owner in terms of
efficacy, efficiency, and productivity. The project
aims to improve the inventory system's efficiency
through barcoding..In the future, the system may
incorporate a few more components..It incorporates
using a smartphone as a barcode scanner,
significantly improving the system's efficiency..In the
long run, in-house inventory software development
is recommended to prevent the long-term costs of
paying the premium application subscription..The
researchers also recommend that the working area
be rebuilt before implementing the barcoding system
so that the ordering operations flow smoothly for
both customers and employees.

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TABLE OF CONTENTS
ACKNOWLEDGEMENT 2
ABSTRACT 3
TABLE OF CONTENTS 4
INTRODUCTION 5
CHAPTER I 6
SYSTEM ANALYSIS 6
A. Stakeholder Requirements 6
B. Needs Analysis 6
C. What the system should do 7
CHAPTER II 9
A. Planning Phase 9
Problems in the current system 9
B. Analysis phase 9
Functional Requirement 12
Non-Functional Requirements 12
Cost of the Proposed Barcode System 12

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 C. Design phase 14
D. Implementation 16
E. Disposal 17
CHAPTER III 18
A. SYSTEMS 18
a. System 18
b. Constraints of the System 18
c. Properties of the System 19
B. Processes 20
CHAPTER IV 23
Conclusion 23
Recommendations 23
REFERENCES 24

INTRODUCTION

Nowadays, the market condition forces the Large Scale Retail Trade (LSRT) to keep up
with the demand. The traditional way retailers keep their sales and inventory details is by using
pen and paper, which are no longer effective when the need for the shop increases. It is because
more items will be made available in larger quantities. Thus tracking the sales made with
inventory level in the shop would be complicated and time-consuming for the retailer. The
situation worsens when the retailer needs a proper method to determine items purchased by their
customers.

Fama House is one of the LSRT’s in Baguio City; they manufacture and distribute
different kinds of pasalubong products. It started in 2008 with only three products. They now
offer eight other products they distribute to different Baguio pasalubong centers.

With the increased demand and the products they offer, they are having difficulty
tracking their inventories. A pen-and-paper inventory system for their business is no longer
efficient for them. It can cause unfulfilled orders when one of their retailers orders a specific
product. The products that are not readily available to deliver can lead to inconvenience and
misunderstanding.

This study aims to make a system for Fama House food products inventory to enhance
their inventory system to avoid unfulfilled orders and misunderstandings among customers.

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 A. Service Description
FAMA HOUSE is a food manufacturing company that serves high-quality
products like Broas, Turones de Mani, and Araro cookies as their most profitable
products.

B. Mission
To promote the pasalubong industry of Baguio City by providing quality food and
enjoyable taste to our customers.
C. Vision
To be one of the leading manufacturers of “pasalubong” items in the Philippines
and to be recognized globally.

D. Objectives
The study aimed to create a system that would cater to Fama House’s problem in
its inventory system. To help Fama House in its inventory system, the researchers sought
to use a barcode system to automate their data paperlessly, thus eliminating paper waste
and saving the environment simultaneously. The barcode system helped businesses track
inventory faster and easier. Furthermore, products that have barcodes are scanned and
synchronized with real-time inventory management software via a barcode scanner.
CHAPTER I
SYSTEM ANALYSIS

A. Stakeholder Requirements

Systems Request

Project Sponsor: Owner, Officer-In-Charge, Employee

Staff

Business Need: To improve efficiency and provide a better

way of inventory control.

Business Requirements: Improve the monitoring of inventory

levels for each item.

Business Value: Improve inventory tracking and

transaction processing with little to no
error

Special issues or Constraints: Time

Table 1. Systems Request of Fama House

The researchers interviewed the owner, and we determined the establishment's

critical requirements. Researchers consulted the owner about the company's needs to
identify the correct problems and provide the right solutions. The owner filled in the
Systems Request Form to specify the Systems Requirements. Table 1 illustrates the

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 project sponsors, identified as the owner, officer-in-charge, & employee staff. According
to the owner, Fama house's business requirement was to improve Inventory tracking
control. The researchers provided a solution to the business for their inventory tracking,
which is the barcode system to improve the accuracy of the inventory data and track their
inventory in real-time.

B. Needs Analysis

Needs Requirement Rationale

Applied to products for quick

Barcode
identification

Order Management Read the barcode and know the

Barcode Scanner
product's information.

Barcode Printer Prints the barcode labels

Online database The owner can update the inventory

● Part Number Matrix data used for sales processing in the
● Name database.
Inventory Management ● Description
System ● Location
● Shelf life
● Selling Price

Not all staff can access the system

apart from the responsible staff.
Security Password Protection The sales information is
confidential and only accessible by
the admin.
Table 2. Needs Analysis

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 Figure 1. Fama House System

Figure 1 shows the needs and requirements of Fama House. Using the current
inventory system (paper-based system), the researchers identified its process flow and
requirements.

Analyzing the system development life cycle and process flow diagram is crucial
for developing the proposed system to create a new operating system for Fama House.

C. What the system should do

According to the owner of Fama House; they want to improve their inventory
system by tracking and controlling stocks. A system is proposed to improve the inventory
system of Fama to standardize and improve the daily inventory so that they may track
their products more precisely and accurately. This system is introduced once the business
has appointed staff, and the owners are responsible for explaining the system to them.

Under order management, the barcode is applied to products for quick

identification. The barcode scanner would read the barcode and know the product's
information. Lastly, the barcode printer would print the barcode labels.

The inventory management system’s requirements are part number matrix,

location, shelf life, and selling price; the owner can update the inventory data used for
sales processing in the database.

Lastly, under security is password protection; assigned personnel will be the only
ones who will access the systems. The sales information is confidential and only
accessible by the admin.

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CHAPTER II
SYSTEM DEVELOPMENT LIFE CYCLE

A. Planning Phase

During the planning phase, the researchers focused on why the system would be built and
determined the project structure. The researchers created the project's technical design, task list,
resource plan, communications plan, and initial schedule and defined the project team's and
stakeholders' roles and responsibilities.

Problems in the current system

The main problem with Fama House is that they cannot detect which products are leaving
the store. Thus, they must check the inventory manually, or employees may notice that certain
products are out of stock. This may result in a loss because customers may not receive their
desired products and sell them at the store.

After thoroughly analyzing all problems encountered by the business, the researchers

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solved and resolved all issues and designed, developed, and implemented a system that met all of
the business's requirements. This system would improve business performance and dependability
through software that assists managers in performing business tasks more effectively.

The Gantt chart would generate the project plan for Fama House.

Table 3. Project Gantt Chart

B. Analysis phase

The analysis phase entails gathering system requirements. At this stage, business needs
are analyzed to improve operations' efficiency. The requirements are identified by observing and
interviewing Fama House's current systems.

A Flow Process Chart is used to formally represent and model the current customer
service process at Fama House and show how the data are related. It is then necessary to develop
a system walkthrough to describe how well the system works and business would operate if the
new system is designed.

The flow process chart in the figure below depicts Fama House's current inventory process.

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Figure 3. Current System of Fama House

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 Figure 4. Current Inventory Process of Fama House

The requirements gathered included functional and non-functional requirements.

Analyzing business requirements is vital because it aids in understanding the needs of the
business and achieving the end goal.

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Functional Requirement
Order management
● Allow the user to scan each customer's purchases. The system would display the item
descriptions, total process sales, and generate receipts for customers.

Inventory management
● Users can match the inventory level of each item with the sales made.
● The system allows them to change the inventory data if they have a mistake in inputting
data and display the item's information(part number, location, shelf life, and selling
price).
● Check inventory status and stock availability: The system would include a feature that
alerts the user when the product count falls below a certain threshold.

Non-Functional Requirements
a. Security
● The system would have protection from unauthorized users. Apart from those
responsible for processing customers' sales, not all employees have access to the
system. The sales data is private, and only the administrator can access it.

b. Usability
● The system would be simple for administrators and users. It should clearly state
what function they will perform.

c. Reliability
● The system would produce accurate results to ensure system reliability.
● The system must notify the user of completing the requested processes after doing
a data operation.

Cost of the Proposed Barcode System

The planning phase of the systems development life cycle consists of the needed
resources and costs to be considered. The primary objective is to render a service that provides a
more accurate and faster inventory system to the owner.
Table 4. Cost of The Proposed Barcode System

Barcode System

Barcode Printer 7, 039.50 Php

Barcode Label 1, 201.32 Php

Scanning Equipment 5, 213.30 Php

Barcode Scanner and Reader 1, 668.30 Php

TOTAL COST 15, 122.42 Php

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Acquiring a barcode system may incur certain costs:
1. Dymo Labelwriter 450 Thermal Label Printer
The Dymo Labelwriter 450 Thermal Label Printer (1752264) is the most efficient
barcode printer for printing the business’s barcode labels. It removes the waste and effort
of sheet labels and easily prints correct quantities, saving up to 7,039.50 Php. This
thermal printing method eliminates the need for costly ink or toner. It generates labels
directly from text in Microsoft Word- Excel- Outlook- QuickBooks- and other programs,
or it can easily print addresses from Outlook Contacts or Mac Address Book. It can
customize and print addresses, file folders, barcode labels, name badges, and more with
DYMO Label software - all from your PC or Mac.
2. Direct Thermal: General Purpose Roll Label
This product is ideal for a wide range of direct thermal label printers, particularly those
commonly used in industrial applications. These direct thermal rolls, which cost up to
1,201.32 Php per jar, are perfect for printing changeable data such as barcodes, shipping,
carton content, and product identification labels.
3. Wasp Barcode Software
The Wasp WaspLabeler +2D is a simple solution for developing, designing, and printing
barcode labels. To collect your label data, it manually enters it or quick links to an
external data source, such as Microsoft Excel, Microsoft Access, or QuickBooks. Print
your labels to any networked Windows printer to improve tracking efficiency and
accuracy. This barcode program might set you back up to 5, 213.30 Php.
4. Handheld Wired Barcode Scanner Bluetooth 1D/2D QR Bar Code Reader
This product is simple to install and works with any USB port; it has an ergonomic
design made of ABS plastic. A laser barcode scanner for businesses, shops, and
warehouse operations compatible with Windows and iOS is simple to use; it works with
Quickbooks, Word, Excel, Novell, and all standard software. The scanning equipment
scans 300±50 times per second and costs up to 1, 668.30 Php.

Return of Investment

Net Profit 10,000 Php

Cost of Investment

Barcode Printer 7, 039.50 Php

Barcode Label (per jar) 1, 201.32 Php

Scanning Equipment 5, 213.30 Php

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 Barcode Scanner and Reader 1, 668.30 Php

Total Cost of Investment 15, 122.42 Php

Return of Investment (Net 0.66

Profit/Total Investment)

Return of Investment 66.13%

Table 5. Return of Investment for the Proposed System

Payback Period of the Proposes System

Payback Period

Initial Expenditure 15, 122.42 Php

Cash Inflow 10, 000.00 Php

Payback Period 1.5 years

Table 6. Estimated Payback Period of the Proposed System

C. Design phase
Considering the stakeholders' needs, the researchers devised a feasible solution: a barcode
system for Fama House's inventory management. The Barcode Inventory Management System
improved inventory control and tracking, allowing Fama House to manage its inventory goods
movement more efficiently.

Each product's barcode, which includes all the relevant information about each product,
would be copied to the inventory management system. Before being affixed to the product, the
staff would check the barcode tag to see if it works and carries all the necessary information
about the designated product. Shown in figure 5 is the proposed barcode label that Fama House
would use.

The inventory list of the products in the system would be accessible to the personnel. The
data on the barcode label would be promptly and precisely read, captured, and decoded by the
barcode scanners. It would interpret information much more quickly and accurately than the
staff, doing it hand by hand, thereby lowering the possibility of error.

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 Figure 4. Barcode System Process Flow

Figure 5. Proposed Barcode Label

When a customer submits an order, the staff checks the inventory system to see if the
products are available. The staff will process the order if they are and can fulfill the customer's
purchase. The staff will cancel the order if the products are unavailable, make a reorder, and
notify the supplier. The system will scan the products and update the inventory list; if the
inventory goes below 100, a new order for the specified products is required.

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 Figure 6. Proposed Inventory Management System

There is no safety stock and reorder point for the business's eight products. Below is the
proposed safety stock and reorder point of Fama House, which will secure them against
unexpected demand spikes that can occur during a busy or festive season. The formulas used are
as follows,

Safety Stock = (maximum daily use * maximum lead time) - (average daily use * average lead
time)
Reorder Point = (daily average use * lead time) + safety stock

Table 7. Safety Stock and Reorder Point of Fama House

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D. Implementation
Before implementing barcoding, the business should reorganize its internal working
areas. Five primary components are required to set up a barcode system. They should have a
laptop, a barcode printer, a label for item tracking, data collection scanning equipment, and an
external database for barcode data capture and relay.

The barcoding system would enhance the company's performance regarding the
efficiency of inventory procedures, especially daily. The Fama House would use a barcoding
system because it will only need the production of the barcode itself and the system scanner.
Inventory software is also necessary for barcoding and Inventory Management Software. The
barcode scanner would adapt directly to the server to be functional. The business would also
generate and produce its product label. In this case, a printer and a unique code generator are
required. A laptop would also be an option for Fama House; consulting a professional and
building a productivity computer that can handle all the processes running together for 8 – 10
hours daily is better.

If the store wanted to utilize barcoding and the business' physical space, it would be
better if the business reorganized the working areas inside the business. There would be two
barcode scanners, one for inventory and one to scan the bought product and go into the business
storage. Two scanners would separate the input and output of stocks in the inventory
management software, decreasing the traffic in scanning products. However, having two bar
scanners would mean that only one server would handle all the data. The barcode scanner
intended for inventory would be placed in the back area of the storage room, and the scanner
intended for sales would be placed near store exits. In this manner, the sections and workflow
that include inventory management would be utilized with barcode scanners. To train employees
to use the new system, the owner would train the employees to understand and learn the new
system and run a simulation on how the system works in real-time. There would be monthly
maintenance updates, such as security patches, to ensure that there would be no data leaks on the
servers. If ever scanners the breakdown, the owner would offer preventive maintenance to ensure
that every piece of hardware is in good working condition.

E. Disposal

Fama house data storage is cloud-based through subscriptions to providers; it is stated in

the contract that they are responsible for the destruction and disposal. When Fama House data is
relocated, all the data of Fama House in the former location will be destroyed. If any data
remains, security risks may arise, allowing unauthorized access to residual data. Fama House
would have access to the underlying technology and more control over how it deleted data in
past places if it migrated its data to a private cloud. Fama House can also utilize encryption
because it is used to protect data saved in the cloud. It doesn't help destroy data. Other data
access risks are addressed by encryption, which prevents unauthorized sources from reading and
utilizing cloud data.

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 The disposal of electronic devices, such as the barcode scanner, printer, and laptops used
by staff, can be sold as scrap and replaced if it depreciates their value. The business can upgrade
its equipment or sell it at a lower value. They will still gain a profit from it to make and use to
buy other equipment.

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CHAPTER III
SYSTEM DESIGN

A. SYSTEMS
a. System
The proposed inventory management system of Fama House has three systems:
operation management, inventory management, and user-friendly design. The standard
operation for the inventory system will collect inventory quantity for each product.

b. Constraints of the System

Tracking Obsolete Material

Some products or materials still need to be sold or used and may become obsolete
or past the expiry date. These materials or products tend to accumulate over time as
inventory managers need to pay more attention to them.

When that product or material is needed sometime in the future, unfortunately, the
unsold stock stays forgotten, and new stock is purchased; the older one may remain in the
warehouse for so long that it gets damaged completely. It would increase expenses and
material wastage.

Fama House could locate the dead stock and adequately use them. Such a
software solution can help the inventory manager significantly in controlling stocks.

Identifying Incorrectly Located Materials

When there is no proper system to track products, materials, or equipment in the

store, it can be cumbersome and time-consuming to find them when you have sales
orders. It can delay sales and make customers unhappy.

All products of Fama House would be tagged with barcodes. It would help
employees identify the products that are needed. Fama House only needs to be equipped
with a scanner. Once the scanner finds the required product, a lamp glows, indicating a
match.

Keeping up with Overstocks

Purchasing new materials with a few unsold products in the stockroom can affect
profitability. This situation mainly arises due to the inefficiencies of manual processes,
which causes poor stock control.

Storing too much stock is as bad as storing too little, as overstocking hampers
cash flow and creates inventory-related problems, like storage or loss.

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 When Fama House implements a stock audit process, inventory managers can
audit stocks regularly to identify unused stocks quickly. It would significantly boost
inventory efficiency, enabling Fama house to cut costs, eliminate delays, and enhance
profitability.

Changing Demand

Consumer demand is in a constant state of flux; this makes storing inventory

complicated. Too much stock and it could end up with dead stock; too little, and it won’t
be able to fulfill customer demands.

Streamlining procedures and processes allow employees to efficiently perform

their jobs, and owners can cut costs and eliminate waste.

Fama House needs robust inventory forecasting technology that considers all
these factors and helps plan its inventory more efficiently.

Managing Warehouse Space and Efficiency

One of the most challenging tasks for any business is the efficient management of
space. Warehouses need to be planned and designed with the help of inventory
management platforms to control when new stock is delivered and help make the best use
of available space.

Warehouse inventory control is labor-intensive and necessitates multiple steps

like receiving the stocks, putting them away, picking inventory, packing, and shipping.
All of these tasks would be executed as efficiently as possible.

Inventory management modules either have warehouse management as a feature

or are integrated with warehouse management modules. It would help automate many
tedious tasks and increase warehouse management efficiency.

c. Properties of the System

The Barcode Inventory System minimizes errors in inventory records caused by
human error and time-consuming manual coding eliminating human error. A more
efficient and accurate inventory system would achieve through this project. The system
would obtain data quickly without being affected by human error. It takes less time to
scan a barcode than manually enter the data, resulting in more productive workers. Since
it is available rapidly, making more practical decisions based on the information obtained
through barcodes is possible.

The proposed system is expected to benefit Fama House Food Products, its sales,
warehouse associates, and its owner in terms of effectiveness, efficiency, and
productivity by utilizing barcodes. It would provide a fast, accurate, and automated way
of collecting inventory data (picking, packing, shipping, receiving, etc.) using a handheld
scanner, then efficiently transferring that information to the cloud servers. One of the
most important reasons companies adopt barcode technology is to reduce the cost of

21
 human errors.

B. Processes
Figure 6. Current Process Flow Chart of Fama House

Figure 6.5 Total Frequency and Average Time

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Figure 7. Proposed Process Flow Chart of Fama House Technology

Figure 7.5 Total Frequency and Average Time Table

23
 Advancement of technology is one of the most dramatic developments of the twenty-first
century.

Technology has become indispensable in people's daily lives due to its rapid
improvement. People's lifestyles have changed and become more integrated with technology as
technology has advanced. Since the last decade, technology has completely altered people's
lifestyles in three areas: social communication, the workplace, and education.

FAMA House's Barcode System for Inventories Management will leverage the following
technologies to improve inventory processes more efficient and accurate:

Barcode Generator

Product information is encoded into bars and alphanumeric

characters by barcodes, making it much faster and simpler to
ring up an item at a store or track inventory in a warehouse.
Aside from convenience and speed, bar codes provide
significant business benefits such as accuracy, inventory
control, and cost savings.

The width of the black bars generally symbolizes the digits 0

or 1, whereas the sequence of those bars indicates a number between 0 and 9. A computer
attached to the scanner contains all the information on the item associated with that unique
combination of bars and spaces. It can add, multiply, or divide those numbers to identify the
relevant product which appears on the screen.

Barcode Scanner

Barcode scanners are used to read, translate, and transfer information

in barcodes. Its goal is quite apparent. However, barcode scanners
may be pretty valuable to your organization despite their seeming
simplicity. Internal operations have always been challenging with
barcode scanners.

Barcode scanners save time and costs as they can be read by a

scanner, either a portable device or one fitted into a checkout station,
rather than by a person physically entering product information.

Barcode Printer

A barcode printer is a computer peripheral for printing barcode

labels or tags that can be attached to or printed directly on physical

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objects. Barcode printers are commonly used to label cartons before shipment or retail items.
This will help to scan each product to track its location, shelf life, and selling price.

CHAPTER IV
CONCLUSION AND RECOMMENDATION

Conclusion
The Barcode Inventory System is an automated system that will eliminate inaccuracies in
inventory records and time-consuming effort caused by manually encoding data. This project
improved the efficiency and accuracy of the inventory system of Fama House. Using the
technology allowed the business to acquire data fast and without the risk of human error. A
barcode scan is quick and reliable and takes far less time than a pen-and-paper system, resulting
in more productive staff.

Furthermore, data gathered through barcodes are available quickly, allowing for more
practical judgments. The proposed system benefited Fama House in terms of its sales, warehouse
staff, and its owner in terms of efficacy, efficiency, and productivity.

Recommendations
The project aims to improve the inventory system's efficiency through barcoding. In the
future, the system may incorporate a few more components. It incorporates using a smartphone
as a barcode scanner, significantly improving the system's efficiency. In the long run, in-house
inventory software development is recommended to prevent the long-term costs of paying the
premium application subscription. The researchers also recommend that the working area be
rebuilt before implementing the barcoding system so that the ordering operations flow smoothly
for both customers and employees.

25
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