Property and Supply

Management System

MIRIAM M. VILLANUEVA
State Auditor V
Supervising Auditor
Cluster 1, NGS
FORECASTING, ORDERING,
LEARNING OBJECTIVES

 Enhance learning/s on forecasting,

ordering, delivery, inspection and
payment;
 Know the techniques in forecasting;
 Understand the general guidelines in
ordering, delivery, inspection and
payment of supplies, materials and
PPE;
FORECASTING

• Forecasting is an essential
element in any inventory/
supply management system.
• It involves the key inventory
decisions as to when and how
much to order.
• Done on the basis of estimated
future demands.
Popular Techniques in Forecasting

1. Last Period Technique

2. Averaging Technique
3. Moving Average Technique
4. Experimental Smoothing
Method
 Techniques
Techniques in
in
Forecasting
Forecasting

Last Period Technique

→uses the demand for the last

period as a forecast for the next
period.
 Techniques
Techniques in
in
Forecasting
Forecasting

Averaging Technique

→ the average of the sum

of all past demand data are
used as the forecast of the
next forecast demand.
 Techniques
Techniques in
in
Forecasting
Forecasting

Moving Average Technique

→as we advance each period,
the latest demand figure is added
to the running sums and the oldest
demand is subtracted to derive
the totals which shall be the basis
for the averaged data.
 Techniques
Techniques in
in
Forecasting
Forecasting

Experimental Smoothing
Method
→ Estimate of demand for each
future period is equal to the
estimate of a permanent component
of demand based on past data.
 Techniques in Forecasting
Exercise: Compute the forecast demand for the 4th quarter:

3rd 4th Item Specifications Unit 1st 2nd 3rd 4th 

Fluorescent,
14 14 1 40WATTS, Philips set 8 10 12  
Flash Drive, 4GB,
8 5 2 USB 2.0 piece 3 6 5
Calculator, 14 Digits
4 2 3 Model D5 piece 2 4 2
Clip, Paper Small
15 10 4 Vinyl Coated box 15 7 8
Glue, all purpose,
10 12 5 300 grams jar 11 9 7
Paper, thermal,
9 8 6 210mmx30M roll 4 6 7
Record Book, 500
8 2 7 pages book 8 10 20
Toilet Tissue, 12
25 35 8 rolls/pack pack 15 25 35
Furniture Cleaner,
10 18 9 300ml/can can 11 5 8
Pen-Sign Pen-Pilot .
25 18 10 7, Black piece 14 15 18
 ORDERING

A procurement activity which aims

to maintain continuous supply of
supplies, materials and equipment/
PPE needed in an agency’s normal
operations and to support its
various activities towards the
achievement of its goals/mandate.
 Techniques
Techniques in
in
Forecasting
Forecasting

REMINDER:

The supply officer must know

how well he is meeting the agency’s
needs and must be able to appraise
the costs he incur
ORDERING
General Guidelines –
 Except as otherwise provided in the
GAA, the stocks on hand shall at no
time exceed the normal three (3)
months requirements, subject to
pertinent rules and regulations issued
by competent authority.
ORDERING
General Guidelines –

 Requisitions for supplies and materials

drawn during the last days of
December intended to be paid out of
the unexpended balance of the
appropriations for supplies and
materials shall not be allowed.
ORDERING
General Guidelines –

 The three (3) months supply is

determined by computing the average
monthly consumption for the last six
months plus 10% allowance for
contingencies x 3.
ORDERING
• Sample computation on how to compute the
three months supply:

Month Consumption (unit) Solution:

January 500
February 500 6,600
= 1,100
March 1,400 6
April 1,500 10% x 11,000 = 110
May 1,200 1,210
June 1,500 x 3
TOTAL 6,600 3,630
ORDERING
General Guidelines –
The 10% allowance may be exceeded when
circumstances call for additional
procurement:
 Conduct of seminar or conference

 Or in case where the activities cannot

be delayed without causing detriment to

public service.
ORDERING
REORDER POINT

The establishment of the standard stock

level of commodities to be kept in stock. This
system is predicated on the ff factors:
a. material requirement is known;
b. assumes a degree of certainty in
terms of future demands; and
c. based on forecasts with anticipated
deviations between the forecasted and
actual usage.
ORDERING
Determine Specific Needs
 Appraise current requirements for inventory
 Collect and process data required - status of
items in the inventory and their location to
determine
- What is on hand
- Where it is
 Process and analyze usage and cost to know
- What to order
- How much to order
ORDERING

Why Hold Inventory

1. Economy of scale
2. Fluctuating demand
3. Uncertainty of demand
4. Speculation
ORDERING

1. Economy of Scale – Large orders spread or

set-up cost over a large number of units
makes per unit cost lower and enables
the agency to avail itself of quantity
discounts.
2. Fluctuating Demand- Demands may
not be predictable. In such cases, it
may not be possible to meet peak
demands unless stocks are built-up.
ORDERING

3. Uncertainty of Demand- If the lead-

time between ordering and availability
is zero, there is no buffer stock or no
inventory to take care of the needs of
the agency specially during
emergencies.
4. Speculation
– Sometimes orders are made
to take advantage of good prices. This,
however, is usually avoided as basis for
stocking.
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