Chapter I PROJECT AND ITS BACKGROUND

Introduction

Technology has been very essential to every company from purchasing to production and to marketing and selling. Application of technology in every business makes operation more efficient and easier to manage. Most businesses especially those on manufacturing and merchandising relies mainly on inventory. Inventory must be managed properly in order to maximize profit and prevent possible loss. Inventory are raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a businesss assets ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the companys shareholders/owners. Possessing a high amount of inventory for long periods of time is not usually good for a business because of inventory storage, obsolescence and spoilage costs. However, possessing too little inventory isnt good either, because the business runs the risk of losing out on potential sales and potential market share as well.

Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials. The scope of inventory management concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, physical inventory, quality management, replenishment and returns and defective goods. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs kept in check. It also involves systems and processes that identify inventory requirements, set targets, provide replenishment, techniques, report actual and projected inventory status and handle all functions related to the tracking and management of material. This would include the monitoring of material moved into and out of stockroom locations and the reconciling of the inventory balances. Also may include ABC analysis, lot tracking, cycle counting support, etc. Management of the inventories, with the primary objective of determining/controlling stock levels within the physical distribution function to balance the need for product availability against the need for minimizing stock holding and handling costs.

A set of detailed methods, procedures, and routines established or formulated to carry out a specific activity, perform a duty, or solve a problem. It is an organized purposeful structure regarded as a whole. These elements continually influence one another (directly or indirectly) to maintain their activity and the existence of the system, in order to achieve its goal.

Background of the Study Panaderia Pantoja is now one of the provinces largest bakeries with franchisees and branches in different towns in Batangas and Manila from a simple bakery in Barangay IV, Tanauan City. With a capital of Php 50, 000, Aurelio rehabilitated the oven and hired few bakers from neighboring towns in Batangas. During that time, there were no mechanical equipment such as mixers, rounders, dough rollers and slicers. All were handmade. Tasty breads were cut manually using bread knives. Aurelio performed multiple jobs from purchaser, delivery man and production manager while Celinda handled the day-to-day operations of the bakery. In 1970, when their son Arturo took over the business, he started mechanizing the operations and hired more people. By the time new bakeries emerged in town, Panaderia Pantoja was no longer affected since it has already established its name and had earned credits from its loyal customer.

The corporate vision is to be the largest bakery chain in Batangas and to increase the number of stores in Laguna and Greater Manila Area. In line with this vision, the business ought to earn profit with dignity. Specifically, to provide the highest quality bread products and excellent service to their customers, to give employees a just and equitable compensation parallel to the work done, to make their business profitable with dignity and honor, to use their resources wisely by implementing the concepts of reuse, reduce and recycle and to participate in the development of the community where they belong through Corporate Social Responsibility programs.

The researchers decided to conduct study of Panaderia Pantojas branch at Main Branch at Brgy IV, Tanauan City, Batangas. The store uses Peachtree Accounting System, integrated software wherein data gathered from other branches are being recorded. However, only the main branch is capable of handling such system, therefore other branches needed to submit written reports which are to be picked up during daily delivery of supplies. Cut off of data recording data is two oclock in the afternoon. Inflows and outflows of inventories afterwards will be recorded the following day. Because of this, the researchers concluded that the store needs and improved system that will automatically update inventory records. Through this system, variances between the records and actual inventories will be avoided. Also, the system will be a great help for major business decisions like at

what level the stock must be maintained, what is the reorder point and what is the economic order quantity. Statement of the Problem This study focuses on providing a more efficient inventory management system in Panaderia Pantoja- Main Branch at Brgy.IV,Tanauan City, Batangas. In line with this, the researchers want to propose a system which would have automatic update on the inventory in the warehouse. The researchers came up with the idea due to the problems encountered in the warehouse of the said branch as follows: 1. Level of stocks 2. Reorder point 3. Economic Order Quantity (EOQ) 4. Lead time 5. Actual inventory

Significance of the Study This study will be beneficial to the following:

Purchasing Department. The system will serve as a basis for decision-making of the companys purchasing department in terms of level of stock, reorder point, EOQ, and lead time. By this, the problem of unexpected shortage will be avoided. Warehouse Personnel. It will help the personnel in monitoring inventories without so much effort, thus providing great convenience. The system will also reduce inefficiencies due to late update regarding the inflows and outflows of inventories in the warehouse, thus, providing a complete and accurate inventory overview. Accounting Department. It will help the department monitor the inventories and update the inventory records, thus providing a reconciled data of the actual and recorded information. Future Researchers. The proposed system will be very much beneficial to future researchers, giving them the ideas and introducing them to a system that can create organized data entry. The transactions made the equipment requested and materials monitored.

Objectives of the Study General Objective

The general objective of this study is to create a computer-based inventory system that will help Panaderia Pantojas Main branch to better manage its business. Specific Objectives The study specifically aims to: 1. To develop a system that has automatic update of inventories 2. To determine at what level must the stock be maintained 3. To avoid unexpected shortage 4. To calculate the most effective lead time and reorder point Scope and Delimitation The study focuses mainly on the process of inventory. Specifically, this inventory system will only provide information about the quantity of raw materials in the warehouse, replenishment lead time, carrying costs of inventory, asset management, physical inventory, quality management, and replenishment and return. Moreover, the inventory system to be developed will not provide information regarding specific product lines and products being offered, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, demand forecasting as well as the production process.