Determinants of Foreign Direct Investment in

Angeles City, Pampanga

By
Galang, Sweetsell
Gutierrez, Zyrr
Morales, Marjorie
Tongio, Abegail
Department of Accountancy
HolyAngel University

Authors Note

Correspondence concerning this article should be addressed to Sweetsell Galang, Zyrr

Gutierrez, Marjorie Morales, Abegail Tongio, Department of Accountancy, College of Business
and Accountancy, HolyAngelUniversity, Sto. Rosario St. Angeles City. Contact:
jjst2010@yahoo.com, rinah_sakura@yahoo.com, iyanice240@gmail.com,
relem0514@gmail.com

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Greenwich Pizza is a small Filipino entrepreneurship which is pioneered by Mrs.

CresidaTueres for the development of its business. It started as a small over-the-counter
pizza store in Greenhills Commercial Center in 1971 and by 1994, it grew to 50 branches. It
was then Jollibee Foods Corporation saw its huge potential in venturing into the growing
market of pizza and decisively obtained a deal acquiring 80% of Greenwich- the biggest
pizza chain in the Philippines.Greenwich (2010)
In a technology based competitive marketplace, achieving service excellence has
become critical for success. This proposal addresses a key element of service strategy, the
ability to compete on cycle time, and it addresses a fundamental measure of progress
against that strategy, inventory levels. Inventory levels reflect how every aspects of the
business are performing with question to ask: Is the setup time is short; Is the process
reliable; Are the response to change fast and finally the customer satisfied? The goal of this
study is to provide specific example of how to reduce cycle time and its inventory
component.
This proposal aim to found out if the sales forecast has an impact in accurate supply
forecasting due to customer demand and by comparing the system that the Greenwich
Pizza Chain used the manual approach and the proposed automated based forecasting
where the point at which an item should be ordered than an order occurs when the
predetermined minimum level of inventory is reached and after reaching the minimum reorder point, an Economic Order Quantity (EOQ) can be used as a basis which can be
minimize the use of manual computation to compute ordering quantity, re-order point,
stockroom requirement, and inventory costs.
The general objective of this research is to assess the factors in choosing between
the manual and automated approach in forecasting and ordering management. One of the
specific objectives of the study is to determine the accurate forecasting and ordering of
supplies.
The study is significant for Greenwich Pizza Chain in providing information regarding
its current status in using manual forecasting supplies.

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The company can use the study to identify the problems they are currently
encountering to be able to adapt the possible solutions and plan the actions, which can
improve its business operations.
This study may also useas a guide and additional reference by the future researchers
who aims to conduct a similar study.
Forecasting and replenishing models of inventories have the aim of determining order
quantities to minimize the sum of total overage costs and underage costs.
According to Leger (2014), proper forecasting ensures to satisfy the demand of the
customers by having enough supply. An overestimation of demand leads to an outsize
inventory and high costs while underestimating demandmakes many valued customers
wont get the products they want that leads to unsatisfied consumers.

INPUT
Demand from
Customers
Target Sales
Product
Characteristics

PROCESS
Time Series for
Forecasting
Technique
Economic Order
Quantity [EOQ]

OUTPUT
Level
of
Stocks

Automated or
Manual Approach

Fig. 1 Conceptual Framework

Figure 1 Conceptual Framework

To stay well ahead in the competition, must adapt dynamically a new standard and
change inventory forecasting and ordering from existing push models (manual) to a fully
automated and integrated pull system capable of accurately analyzing existing inventory,
systematically and reliably optimizing replenishment.

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An effective forecasting management solution need to be able to exactly predict

inventory needs and vigorously adapt to changing demand patterns with statistical stock
demand forecasting (Ohler, 2012).
Simplifying order at the store level with automated system suggested ordering based
on sales forecast, configurable par levels, historical expenditure patterns, and on-hand
inventory levels.
In the past few years, improvements in technology have allowed businesses to take
advantage of high volumes of detailed data in the development of accurate forecasted
consumer demand patterns. Kim & et.al, (2007)
Stevenson (1991) identified some approaches to Forecasting:
1.) Qualitative Method which consists mainly of subjective inputs, which often defy
precise numerical description.
2.) Quantitative Method that involves either the extension of chronological
information or development of associative that attempts to utilize the causal variables to
make a forecast.
3.) Judgmental Forecast rely on analysis of subjective inputs obtained from various
sources such as consumer surveys, the sales staffs, managers and executives.
4.) Forecast based on Historical Data deepens on uncovering relationships between
parameters that can be used to outlook values of one of them. Others simply attempt to
project past experience into the future. Often use historical, or time series, data and others
attempt to identify specific patterns in the data.
The importance of demand forecasting forecast can lead to timely introduction of
products, opening of facilities and adjustments in inventory levels.
Qualitative methods rely upon subjective opinions or persons intuition about in
forecasting and placing an order of supply in the market. These methods are most
appropriate when there is little historical data to work with that based on sales target. When
a new line of products is introduced in the market, people can make forecasts based on
comparisons with other products that they consider similar.

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The causal methods of forecasting assume that demand is strongly related to

particular market or environmental that a customer has an option to choose. For instance, a
causal relationship exists between price and demand. If prices are lowered, demand can be
expected to increase and vice versa.
Another method is the time series,which the most common form in forecasting.They
are based on the assumption that historical patterns of demand are good indicator of future
demand forecasting. These methods are best when there is a reliable source of historical
being forecast are stable and have demand patterns that do not vary much from one year to
the next.
According to Dilworth (2000), forecast is an inference of what likely to happen in the
future and business must develop forecasts of the level of demand that the company should
be prepare to meet.
Mavich (1997) Economic Order Quantity (EOQ) can be used in planning the
purchases of supplies. Forecasting Qualitative techniques should be considered when
relevant information is likely to be unstable during the forecast horizon.
Lynch (2003) added, the key point in cost or benefit is that all such broader benefits
in this area is concerned with the quantification of such benefits of the cost that may be
associated with them.
Given the cost structure of a store, there is an order quantity that is can be used and
the most cost effective amount to purchase at a time. This is called the economic order
quantity (EOQ) and it is calculated as follows:

EOQ = 2UO
hC
where:
U = annual usage rate
O = ordering cost
C = cost per unit
h = holding cost per year as a percentage of unit cost

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The Economic Order Quantity or EOQ formula works to calculate an order quantity
that results in the most efficient investment in inventories. Efficiency means the lowest total
unit cost for each inventory items.
Hugo (2006) explained, if a certain inventory item has a high usage rate it means
expensive, the Economic Order Quantity or EOQ formula recommends a low order quantity
which results in more orders per year but less money invested in each order. If another
inventory item has a low usage rate and it is inexpensive, the EOQ formula recommends a
high order quantity. This means fewer orders per year but since the unit cost is low, it still
results in the most efficient amount of money to invest.
According to Stair, et. al, (1997) Economic Order Quantity objective of this inventory
control technique is to minimize ordering and carrying costs.
Assumptions of Economic Oder Quantity (EOQ):
1. Demand is identified and never changes.
2. The lead time (point in time between the order date and the receipt of the order)
is known and constant.
3. The receipt of inventory is instantaneous (inventory from an order receives in one
batch, at moment in time)
4. If orders are places the right time, stock outs of shortages can be avoided.
However, Hopp (2008) addedthat a function of the load on the stockroom is the cost
of replenishment, other lot-sizing procedures, based on dynamics scheduling approaches,
are more suitable than Economic Order Quantity. Nevertheless, the EOQ formula provides a
basic tool for controlling the cycle and carrying costs.
Indeed, increased sales target, a better customer service, reduced idle time, better
response to market demands, give advance notice so managers can see the planned
schedule before actual release of orders and aids capacity planning to have an accurate
forecast.

.
The study aims to identify the following factors:

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1. Why are accurate forecasting and ordering important?

2. How to compute for actual orders by using the Daily Supplies Requisition Form
(Manual Approach) and Weekly Supplies Requisition Form Templates (Automated
Approach)
3. Do the daily sales have relevance in forecasting supplies?
4. What are the tools and procedure used in supplies ordering?
Forecasting and ordering is very important it helps to determined when to order and
ensure that supplies to be used are fresh and of high quality and have the right quantity at
the right time so that it will not experience the effects of over stacking or zero stocks.
An automated ordering system can determine the minimum and maximum orders of
certain stocks based on projected inventory cost and storage area.

Actua
l
Order
(AO)

Forecast
ed Stocks

(FS)

Ending
Inventor
y

(EI)

Stocks
in
Transit

Adjustmen
ts

Dry Forecasted Stocks (FS) = # of Days x Average Daily Usage (ADU)

Where:
# of Days - # of days based on an items ordering cycle.
Ave. Daily Usage average consumption of a specific item per day.

Bakery and Wet Forecasted Stocks (FS) = Adjusted Sales x Stock Factor

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Where:
Adjusted Sales forecasted sales based on an items ordering cycle.
Stock Factor average consumption of a specific item per peso volume of sales. (In
Greenwich, stock factor is based on a per 10 peso volume of sales, which predetermined by
Kitchen Manager).
Stock Factor = Total Standard Usage/Total Sales Less Vat

The proper relationship between sales and inventory can better be well maintained.
Without inventory control procedures in place, the store can be overstocked or under
stocked.
A template that can determine the minimum and maximum orders of the store for
certain stocks based on projected inventory cost and storage area. With the use of this tool,
stores will not be allowed to re-order items if the minimum re-order level has not yet been
reached. After reaching the minimum re-order point, new orders are encoded using the
Economic Order Quantity or EOQ as basis.
Advantages:
1. Reduces dry operating supplies inventory level stored inside the stockroom by as
much as 40% at any given time (percentage may vary depending on the stores
average daily sales and ordering frequency)
2. Reduces the possibility of overstocking and stock outs.
3. Allows the stores to update average daily sales take out %, average check and lead
time (ordering frequency) as needed. The template will automatically compute the
corresponding effect on stockroom area, inventory costs, economic order quantity,
maximum and minimum inventory level (re-order point).
4. Minimal manual computation is needed to compute ordering quantity, re-order point,
stockroom requirement and inventory costs.

Method
Research Design

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The researcher would like to find out the connection and measurement of cause and
effect relationships among variables of Greenwich Pizza Chain in Angeles City operations
which ispart of the study included a personal interview and direct observation on operations
of the store and inventory to find out the patterns as well as the characteristics of the
strategies that are implemented. By this reason this research is classified both comparative
and time series research.
The purpose of using the comparative research was to compare the manual and
automated based forecasting to record, analyze, and interpret the relevant issues of the
companys operations process to identify influential factors in the present conditions of
Greenwich Pizza chain.
The time series method was use in determining the point when the inventory was in
need to re-order another supply of goods that is its minimum that makes the product
available in the market.

Participants
Sampling is not applicable in this research since the focus of the research is the
analysis in using forecasting methods- manual and automated. The researchers will be
interviewing five (5) Greenwich Pizza Corporation Store Manager in 5 Greenwich branches
around Angeles City as the basis in identifying the significant differences between the said
forecasting methods.

Sources of Data
Primary and secondary data were both used. The primary data were gathered by
interviewing the store manager of Greenwich Pizza Chain. Interviews were conducted at all
branches of Greenwich in Angeles City.
The secondary data were obtained from Greenwich Pizza Chain Handbook. Books and
journals found in University Library of Holy Angel University.

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Greenwich Pizza Chain Branch in Angeles City:

Greenwich Pizza Corp.
Marquee Mall Branch
Francisco G. Nepomuceno Ave., PulungMaragul, Angeles City
Pampanga, Philippines
Greenwich Pizza Corp.
Nepo Mall Branch
Ground Floor Nepo Mall Doa Teresa Avenue corner Saint Joseph Street Angeles City
Pampanga, Philippines
Contact Number: (045) 625-9906
Website: http://www.greenwich.com.ph
Greenwich Pizza Corp.
Mabalacat Branch
Jenra Bldg., McArthur Highway, Mabalacat
Pampanga, Philippines
Contact Number: (045) 331-2446
Greenwich Pizza Corp.
Sto.Rosario Branch
Jenra Mall, Sto. Rosario St., Angeles City
Pampanga, Philippines
Telephone No: (6345) 322-1683
Greenwich Pizza Corp.
SM Clark Branch
ClarkfieldAvenue,Angeles City
Pampanga, Philippines

Data Analysis/Processimg
The researchers have determined to use linear regression data analysis technique to
verify that the demand and target sales are used to predict the level output of stocks.
Because of time series method and comparative research design that researchers are
convinced that the use of linear regression data analysis will be the most effective data
processing technique because the said data processing technique is used for predicting the
unknown value of another variable.

The researchers will be using a model to test the order to predict a certain outcome of
business operations in maintaining their inventory. The model consists of a dependent and
an independent variable. The researchers have determined that customers demand, product

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characteristics and target sales are the independent variable used to predict the level of
inventory stocks whether it may be properly managed which may lead to efficient inventory
forecast or over/undervaluation of inventory. The predictions on the level of inventory stocks
will be assigned as the dependent variable. Thus the equation would be expressed as:

Y = a + bX
Where:

Y independent variable (Customers Demand; Target Sales)

a & b Unknown constants
X Dependent Variable (Level of Stocks)

Using the model presented above, the researchers can assess whether demand from
customers, target sales and product characteristics can be used to predict the efficiency or
over/undervaluation of inventory. The equation itself can be tested to verify the outcomes
that it will produce. This can be done by examining the variables in analyzing the outcome,
the researchers will be using the latest data processing software to verify that the linear
regression equation as stated and presented above is reliable and correct.

References

BOOKS:
Hugos, Michael, Essentials of Supply Chain Management 2nd Edition, John Wiley & Sons, Inc.,
USA, 2006
Hopp, Wallace, Supply Chain Science, International Edition, .McGraw Hill, 2008
Lynch, Purchasing and Supply Management, 12th Edition, McGraw Hill, 2003

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Hopp, R., Supply Chain Excellence: A handbook for dramatic improvement using the
modelMcGraw Hill, 2003
Stair, et.al, Managing Purchases 6thEdition McGraw Hill, 1997
ONLINE JOURNALS;
Murty.(2006).Forecasting for Supply Chain and Portfolio Management.Retrieved from articles
http://www.personal.engin.umich.edu/murty/.pdfwww.retalix.com

Kim, et. Al (2007).Method and System for Forecasting Future Order Requirements.Retrieved
from articles http://www.freshpatents.com/Method-and-system-for-forecasting-future-orderrequirements-dt20080703ptan20080162270.php

Ohler, (2012), Supply Chain Management.Retrieved from articles

http://www.buyersmeetingpoint.com/about-us/latest-news3/570-10-25-2012-supply-chainmanagement-lessons-from-pizza-hut

Leger, (2014), Demand and Supply Management, Retrieved from articles

http://scm.ncsu.edu/scm-articles/article/cpfr-model-2.-demand-and-suply-managementcollaborative-planning-forecastin#5www.retalix.com

Stevenson, (1991), Demand Forecasting in a Supply Chain, Retrieved from articles

http://www.learningace.com/doc/7688366/868f412a758d537b3c2b551a58e3b693/chapter-7demand-forecasting-in-a-supply-chain

MANUALS / HANDBOOKS
Foundation of Store Management Revised Edition 2010,byGreenwich Pizza Corporation

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