Lorraine Technical School: Chapter 1: Problem and Its Background

Lorraine Technical School
3/F No. 240 Rosewood Bldg.2 M. cor. M. H. Del Pilar St., 10th Avenue, Caloocan City
Telefax No. 361-0763
Chapter 1: Problem and its Background

Introduction
An inventory system is basically a process whereby a business keeps track of the goods
and material it has available. In its simplest sense it can be done manually by a count at
the end of each day. In this way it is possible to keep a record of the goods coming in to
the business and goods being sold. However this is only really appropriate for small
businesses that do not have a lot of stock. For larger business it is more likely that a
computerized system will be required. Transaction processing systems are commonly
used to operate businesses. In this era, manual transactions evolved into computerized
ones. Manual inventory systems turned out to be slow and inaccurate resulting to
problems like running out of stocks and slow computations of product prices being
bought by the customers. The degree of success of a business greatly depends upon
controlling the merchandise inventory. The continuously improving and upgrading of
computer usage into more powerful and useful applications has made managing business
transactions a lot more efficient and easier. Today, businesses use the computer to assist
in controlling and monitoring many aspects of the businesses, since manual approach in
data processing could no longer meet the demands of increasing volume of transactions.
1
Background of the Study
2
Statement of the Problem
Some problem of inventory management system include ensuring that a business does
not spend money on unnecessary product orders and tracking which products are selling
and which are not. Some problem are that it can be time consuming and that small
businesses with limited products may not need an inventory system. Statement of the
problem to inventory management system is that it requires constant attention
As products continuously need to be updated, restocked and reordered.
If a business is running a computerized program. It carries the risk of someone

hacking into the software.
A dishonest employee manipulating outgoing payments for personal gain.
One common problem of inventory management system is that it is subject to human

error when employees enter incorrect information by mistake.
3
Objectives of the Study
The Objectives of this research is to investigate inventory management problem at
the Micro Computer Shop. Six objectives for this project are:
To ensure that the supply of raw material & finished goods will remain
continuous so that production process is not halted and demands of customers are
duly met.
To minimize carrying cost of inventory.
To keep investment in inventory at optimum level.
To reduce the losses of theft, obsolescence & wastage etc.
To make arrangement for sale of slow moving items.
To minimize inventory ordering costs..
4
Significants of the study
To the Economy
The inventory management is important to the economy because it helps the company to
manage the products that is delivered,stored, sold, bought in/by the company that use it.If
you have too many products in your warehouse, you increase the risk that they will
become obsolete,damaged, spoiled or stolen before you can sell them all.
To the Technology
It will help to keep updated in such product in technology. Technology product must not
be outdated cause of its specs. There are products that are needed to be updatedYou cant
afford to be purely reactionary in your inventory management. You need to start planning
ahead and being proactive.
To the Society
Inventory management is the practice overseeing and controlling of the ordering, storage
and use of components that a company uses in the production of the items it sells.
Inventory management is also the practice of overseeing and controlling of quantities of
finished products for sale. A business's inventory is one of its major assets and represents
an investment that is tied up until the item sells.this is why it can contribute to our
society
To the Student
The students can use the proposal and reference if that will make another inventory
system . It can show how to preserve products. It will help the students to know what is
important to be listed , like time delivered, expiration date, and time sold of such
products.
5
Scope and Delimitation of the Study
Scope
Regardless of which type of inventory system a company uses, the scope of the
inventory may change based on the strategic targets of the business. Scope may refer to
different aspects of how inventory counts are conducted or to the way inventory
information is used. A manufacturer of durable goods may use inventory information to
control the costs of raw materials and to maximize margins, while a food manufacturer
may prioritize fast turnover of inventory to ensure freshness. The importance of inventory
counts in those examples may require staff dedicated to inventory management, while a
small cleaning business may not need more than an occasional scan of its cleaning
supplies inventory to function efficiently.
Delimitation
Regardless of which type of inventory system a company uses, the scope of the
inventory may change based on the strategic targets of the business. Scope may refer to
different aspects of how inventory counts are conducted or to the way inventory
information is used. A manufacturer of durable goods may use inventory information to
control the costs of raw materials and to maximize margins, while a food manufacturer
may prioritize fast turnover of inventory to ensure freshness. The importance of inventory
counts in those examples may require staff dedicated to inventory management, while a
small cleaning business may not need more than an occasional scan of its cleaning
supplies inventory to function efficiently.
6
7
8
Conceptual Framework of the Study
INPUT PROCESS OUTPUT
Figure1. Conceptual Framework of the Existing System
9
INPUT PROCESS OUTPUT
Figure2. Conceptual Framework of the Proposed System
10
Definition of Terms
11

Lorraine Technical School: Chapter 1: Problem and Its Background

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Lorraine Technical School

Chapter 1: Problem and its Background

computerized system will be required. Transaction processing systems are commonly

controlling the merchandise inventory. The continuously improving and upgrading of

Background of the Study

Statement of the Problem

As products continuously need to be updated, restocked and reordered.

If a business is running a computerized program. It carries the risk of someone

A dishonest employee manipulating outgoing payments for personal gain.

One common problem of inventory management system is that it is subject to human

Objectives of the Study

The Objectives of this research is to investigate inventory management problem at

To minimize carrying cost of inventory.

To keep investment in inventory at optimum level.

To reduce the losses of theft, obsolescence & wastage etc.

To make arrangement for sale of slow moving items.

To minimize inventory ordering costs..

Significants of the study

Scope and Delimitation of the Study

Conceptual Framework of the Study

INPUT PROCESS OUTPUT

Figure1. Conceptual Framework of the Existing System

INPUT PROCESS OUTPUT

Figure2. Conceptual Framework of the Proposed System

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