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CHAPTER 2

REVIEW OF RELATED LITERATURE AND STUDIES

Related Literature

Inventory control systems maintain information about activities within firms

that ensure the delivery of products to customers. The subsystems that perform these

functions include sales, manufacturing, warehousing, ordering, and receiving. In

different firms the activities associated with each of these areas may not be strictly

contained within separate subsystems, but these functions must be performed in

sequence in order to have a well-run inventory control system. In today's business

environment, even small and mid-sized businesses have come to rely on

computerized inventory management systems. Certainly, there are plenty of small

retail outlets, manufacturers, and other businesses that continue to rely on manual

means of inventory tracking. Indeed, for some small businesses, like convenience

stores, shoe stores, or nurseries, purchase of an electronic inventory tracking system

might constitute a wasteful use of financial resources. But for other firms operating in

industries that feature high volume turnover of raw materials and/or finished

products, computerized tracking systems have emerged as a key component of

business strategies aimed at increasing productivity and maintaining competitiveness.

Moreover, the recent development of powerful computer programs capable of

addressing a wide variety of record keeping needs—including inventory management

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—in one integrated system have also contributed to the growing popularity of

electronic inventory control options.KJ Henderson(2000)

In exploration, we find new techniques, new knowledge, even develop new

substances, gadgets, equipment, processes or procedures, imagination and skill is

employed by the researcher. The commodities, new devices, services, in technology

are needs of man for a better fuller life which is the concern of the research. These

useful arts are the products of the technological environment and the end-user is

society in general. The fast growing trend and innovation in technologies today

prompts researchers to conduct studies about the efficiency of system program. This

chapter presents a brief review of literature and studies, both local and foreign that is

related to these studies.Inventory control systems maintain information about

activities within firms that ensure the delivery of products to customers. The

subsystems that perform these functions include sales, manufacturing, warehousing,

ordering, and receiving. In different firms the activities associated with each of these

areas may not be strictly contained within separate subsystems, but these functions

must be performed in sequence in order to have a well-run inventory control

system.Ben Spalding (1995)

In today's business environment, even small and mid-sized businesses have

come to rely on computerized inventory systems. Certainly, there are plenty of small

retail outlets, manufacturers, and other businesses that continue to rely on manual

means of inventory tracking. Indeed, for some small businesses, like convenience

stores, shoe stores, or nurseries, purchase of an electronic inventory tracking system

 10

might constitute a wasteful use of financial resources. But for other firms operating in

industries that feature high volume turnover of raw materials and/or finished

products, computerized tracking systems have emerged as a key component of

business strategies aimed at increasing productivity and maintaining competitiveness.

Moreover, the recent development of powerful computer programs capable of

addressing a wide variety of record keeping needs—including inventory management

—in one integrated system have also contributed to the growing popularity of

electronic inventory control options. Timothy O. Pendleton(2001)

Given such developments, it is little wonder that business experts commonly

cite inventory management as a vital element that can spell the difference between

success and failure in today's keenly competitive business world. Writing

inProduction and Inventory Management Journal,Godwin Udo described

telecommunications technology as a critical organizational asset that can help a

company realize important competitive gains in the area of inventory management.

He noted that companies that make good. Eugene F. Brigman, Fundamentals of

Financial Management, 5th ed., (Hinsdale: Holt, Richard and Winston Sounders

College Publishing, 2000), pp. 840-841. Companies are increasingly employing

Inventory System. A computer start with an inventory counts in memory.

Withdrawals are recorded by the computer as they are made, and the inventory

balance is constantly revised. When the recorded point is reached, the computer

automatically places an order, when this new order is received, the recorded balance

is increased. Retail stores have carried this system quite far, each item has a magnetic
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code, and as on item is checked out, and it passes over an electronic reader, which

then adjusts the computers inventory balance, at the same time the price is fed to cash

register tape. When the balance drops to the recorder point, an order is place.

Related Studies

Automated Inventory is more preferable than of Manual inventory because it

definitely make reliable and accurate count of products and it is less time consuming

in terms of monitoring which could be used in their activities to run the business

while manual inventory is labor-intense and prone to human error where people might

forget to record a transaction or miscount of good or items. It Is also difficult to share

the inventory information throughout the business using manual inventory.

Almost all of companies in today’s generation uses Automated Inventory

System, but there still uses a manual inventory and that is PC Clinic Plus. In order for

them to make their job easier, We are improving their system into Automated System

so that they can be lessen their time in counting products and to make it easier.

Local Studies

New and innovative users of computers and information systems are being

implemented every day type of organization. Even so, organization is still in the early

stages automation. Each company has a seemingly endless number of opportunities to

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use information technology to operate more efficiently and, perhaps, achieve a

competitive edge.

According to Friaset. al. (2003):

The use of the automated filing system can improve the performance of the

employees and the processing of reports in a faster, more accurate and more efficient

manner.”

The study of Friaset.al. and the present study are similar because both are

believers that automation improves report process with accuracy, efficiency and

speed.

According to Ramos et.al (2000):

“Computer-based inventory is much more than keeping track of the quantity

of items on hand. It also deals with determining supplies and items.”

The study of Ramos et.al and the present study are the same because they both

believe that with the use of computer-based Inventory System details of items can be

easily accessed on hand.

According to Cayabyab et.al (2003):

“Implementing the Automated System will definitely save time and effort in

making reports.”
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The study of Cayabyab et.al and the present study are related because both

agree that automation can save time and can lessen human effort.

Foreign Studies

According to Thomas Porte (2000):

“The computers have been labeled as the dominant advance of the 20 th century

fully utilized. Computerization can dramatically change the organization‘s conducts,

business operations into more accurate and efficient one”.

The study of Thomas Porter and the present study are synonymous, because

both are asserting the effectiveness of using technology to improve quality customer

service.

According to Agents for Business Automation (2000):

“Regardless of economical situation efficiency is always a principle goal in

conducting business. Automation can help us to carry out business in a fast, low and

effective way with minimal human involvement.”

The study of ABA and the present study are the same because both are

emphasizing that by the use of automation, it can be speed up business process with

less effort.

The study of Thomas Porter and the present study are synonymous, because

both are asserting the effectiveness of using technology to improve quality service.
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According to Agents for Business Authorization (2000):

“Regardless of economic situation efficiency to always a principle goal in

conducting business.” Automation can help us to carry out business in a fast, low and

effective way with minimal human involvement.

The study of ABA and the present study are the same because both are

emphasizing that by the use of automation, it can speed up business processes with

less effort.

According to Favor Ware Corporation(2000-2003):

“There are benefits of automation like increase in employee productivity, decrease in

redundant task and accurate reports.”

The study of FWC and the present study are related because both are tackling

about reduction of errors in operations and lessen of tasks.

Foreign Literature

A computerized inventory satisfies a business needs and eliminates the

process that was identified. Other follows the old trend, having a manual regarding

their inventory processing and this is done with great effort. For instance, updating

stocks writing records and preparing inventory reports is a mess. This time-

consuming effort could be resolved by computerized system.

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The statement above is related in the present study because both emphasized

that by the use of computerization, it can speed up business processes with less effort.

Accomplishing computerized inventory will result in minimizing entry errors

and lessen or even eliminate redundancy. With these results, an increase on sales is

anticipated.

The statement above is similar in the present study because both agree that by

the use of computerization problem such as data entry errors and redundancy can be

lessened or even eliminated.

According to Lowe‘s Corporation (2002):

“…..we discovered how computerized inventory system plays an integral part of

Lowe‘s business activities for it provides a better understanding of the whole business

structure”

The statement above is synonymous to the present study because they both

show the importance of computerized inventory system as cited by H.M. Deitel and

team (2001):

“A computerized is a device capable of performing computations and making

logical decisions at speeds a millions and even billions of time faster than human

beings can. For example, many of today’s personal computers can perform hundreds

of millions of additions per second. A person operation a desk calculations that

powerful personal computer can perform in one second.”

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The researchers adapted this literature in capable of computer it relates to the

present study because both believe that by the use of computer, it can speed up the

human activities.

Inventory [Donald Reimer (1989)]

According to Donald Reimer (1989), “Today, maintaining the right inventory levels

is a tough challenge. If not properly managed, your inventory can result in a

significant expense. Looking over your shoulder is the lender who is concerned about

the cost of carrying too much inventory- which can affect profitability.”

Theoretical Framework

The framework for this study be is based on the management theories

primarily because of the problem in itself. Inventory management is an integral part

of any business acumen, wherein outdated manual inventory system could eliminate

the inconveniences encountered in manual inventory system.

HenriFayol (1998), author of the textbook Classical Administrative Theory of

Management that is often used today, identified the five basic management functions

(planning, organizing, staffing, directing and controlling). He developed the fourteen

basic principles of management that underline all managerial tasks with include,

division of work, authority, discipline, unity, of command, one head, one plan,

subordination of individuals, interest to general interest remuneration of personnel

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centralization, scalar chain order, equality, stability of tenure of personnel, initiative,

and esprit de corps.

Understanding the basic principles of management will lead to a better

understanding and a recitation of the need for a fail-safe system to monitor and/or

establish control for products and service allocation. Suchprerogatives will result to

higher level of product, turnaround, faster movement of products and service and

more organized, logical and systematic way of keeping customers loyalty, planning,

organizing, staffing, and directing must be monitored to maintain these effectiveness

and efficiency. Thus controlling, the loss of the five functions ofmanagement is

concern with the act of monitoring of each these functions to evaluate the store’s

performance towards meeting goals and objectives.

In the controlling functions of management store owners or managers

establish several or certain towards that willbe used to measure progress toward

goals. There were designed to determine whether the product s and/or services being

espoused by the business enterprise are on target. Aiming the progress toward the

objectives they planned to achieve.

According to Fayol, control has six characteristics: Acceptance by members

of the organization, focus on the critical accuracy, timeliness, and ease of

understanding. Control or monitoring activities should be well accepted by the

grocery store, though how shall it may be in comparison with other big line business,

though massive information dissemination campaign or aggressive seminar training

or in hence workshop on the said “innovations”.

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The framework for this study be, benefit summed up by clear elaborating on

the existing , inventory management principles being practiced by majority of the

Inventory System of PC Clinic Plus Computer Repair & Services, located at Dagupan

City. It deals on the inherent characteristics of basic inventory management principles

which, when taken altogether, constitutes the essential elements needed for the design

of an appropriate inventory management system.

Conceptual Framework

Handling stocks in every organization is an important issue in every business.

A well-structured inventory system would give the organization proper control of

their stocks. This study will be using the input-process-output diagram to come up

with an enhanced Inventory System for Pc Clinic Plus of Dagupan City, Pangasinan.

Input Process Output

Organizational
Requirements,
Purchasing
Management and INVENTORY
Returning
Accounting Theories SYSTEM OF PC
Receiving
Concepts Techniques CLINIC PLUS
Storage
Issuing
Reporting

Figure1:Inventory System Conceptual Framework