Dr. Cesar A. Villariba Research and Knowledge Management Institute Quality Form

Document Code : DCAVRKMI-F-RPAG
MANUEL S. ENVERGA UNIVERSITY FOUNDATION Document Title : Research Proposal Application

Lucena City
Guide
An Autonomous University Page No. : Page 1 of 39
Revision No. : 1
DR. CESAR A. VILLARIBA RESEARCH AND Effectivity Date : December 2013
KNOWLEDGE MANAGEMENT INSTITUTE Prepared by : DCAVRKMI
Reviewed by : QMR
QUALITY FORM Approved by : President
THESIS PROPOSAL APPLICATION FORM
I.Thesis Title : INVENTORY MANAGEMENT FOR JAPAN SURPLUS

RETAILER
II.Name of Researcher : Royce Daniel Anareta

Paul John Arena
Irish Anne V. Braga
Kathlene A. Jao
Kyle Lopez
Program : Bachelor of Science in Business Administration major in Management

Accounting
College/Department : College of Business and Accountancy
Thesis Adviser : Carmen A. Aldovino
III. Thesis Proposal
a) Abstract
In Every retailing business an inventory management system is an essential tool for
determining inventory on hand and forecasting future sales. Having homogeneous
inventory is easier to maintain over heterogeneous ones. This entails our study, an
Inventory Management system that is fit for a heterogeneous inventory. King Louise
Japan Surplus is a Japan surplus dealer, caught the researchers’ attention. The said
business entity has a poor inventory management system. They cannot take track of their
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
remaining Inventory. The business is having their operations at Allarey st. Brgy 3,
Lucena City. The business started its operations last October 2013, a sole proprietorship
owned by John Moreno. Ever since their establishment they have no Inventory
management system. They cannot identify their inventory through time and some items
are left off. The main objective of the study is to provide King Louise Japan Surplus an
inventory management system that is efficient and accurate for the business. Through
the use of the research methods such as direct interviews and observation. The
researchers evaluated their existing practices. The evaluation shows the lack of
knowledge over the inventory and its inefficiencies resulting into losses. From the
analysis of the researchers the results serve as the basis of their conclusion and
recommendation
Keywords: Japan Surplus, Inventory Management System, efficient, accurate,
homogeneous, heterogenous
b) Background
The study aims to develop an Inventory Management system for King Louise
Japan Surplus, a retailing company located in Allarey st. Brgy 3, Lucena City.
Moreover, it also aims to answer the following questions:
1. What is the company background and operations of King Louise
Japan Surplus?
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
2. What is the current Inventory management system of King Louise
Japan Surplus?
3. What are the current irregularities and inefficiencies of the current
system?
4. What is the most suitable and convenient improvements for the
inventory management system of King Louise Japan Surplus
The case details one of the few Japan surplus retailers in Lucena – a sole
proprietorship retailing business that are selling imported surplus products from Japan,
Italy and Belgium. Mr John A. Moreno founded the business way back October 2013 in
Allarey st. Brgy 3 Lucena City. The company currently has 12 employees for deliveries,
front line and for repairs of some of the inventory.
Upon the study, the researchers had observed that the entity has an inefficient and
inaccurate inventory system. Delivered goods are mixed with the old ones and some sold
inventory are forgotten, resulting into scrap. With this the researchers came up with the
idea of proposing an Inventory management system suited for their inventory.
The study aims to provide an inventory management system that is highly suited
for the heterogeneous nature of the entity; a system that will comply with the current
International Financial Reporting Standards, International Accounting Standards and the

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
Philippine Accounting Standards. The Researchers are optimistic that this study will be a
useful tool not only for the entity but as well as those who are in the surplus industry
Thus, this study aims to attain reliable and realistic inventory information with the usage
of an efficient and accurate Inventory management system is one of the essential
objectives of the study.
Purpose of the research
The main objective of the research is to propose an inventory management system
of King Louise Japan Surplus that can deliver efficient and accurate reports for the
inventory.
Specifically, this study seeks to
1. The business related profile of King Louise Japan Surplus along with
A. Quantity of stocks
B. Variety of products
C. Average number of customer in a monthly basis
2. To describe inventory management methods and practices currently used by the
entity in terms of
A. Reorder Point
B. Average Age of the Inventory
C. Inventory Turnover
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
D. Inventory Costing Method
3. To determine the inefficiencies and inaccuracies of the practice
4. To propose an inventory management system
Literature Survey
To eventually make the system, the researchers studied the fundamental part of any
Inventory Management system, and how they will help about the proposed inventory
management system.
INVENTORY
Understanding inventory, Banaag and Ducut (2017) relied on the Generally Accepted
Accounting Principles that stated that an Inventory represents tangible personal property which
is held for sale in the ordinary course of business; are in process of production for such sale; or,
are to be currently consumed in the production.
INVENTORY MANAGEMENT
inventory management supervises the flow of goods from manufacturers to warehouses and from
these facilities to point of sale. A key function of inventory management is to keep a detailed
record of each new or returned product as it enters or leaves a warehouse or point of sale.
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
INVENTORY COSTS
As it per the definition by the Generally Accepted Accounting Princples an inventory is a
tangible asset therefore, there will be costs that will be incurred during the ownership over the
asset. Inventory brings with it a number of costs that can include:
1. Dollars
2. Space
3. Labor to receive, check quality, put away, retrieve, select, pack, ship and account
for
4. Deterioration, damage, and obsolescence
5. Theft
Inventory costs generally fall into ordering costs and holding costs. Ordering, or
acquisition, costs come about regardless of the actual value of the goods. These costs
include the salaries of those purchasing the products, costs of expediting the inventory,
etc.
In the most specific matter, these costs should be taken in with consideration and
shall effect the inventory size.

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
1. Holding (or carrying) costs. This broad category includes the costs for storage
facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation,
taxes, and the opportunity cost of capital. Obviously, high holding costs tend
to favour low inventory levels and frequent replenishment.
2. Setup (or production change) costs. To make each different product involves
obtaining the necessary materials, arranging required papers, appropriately
charging time and materials, and moving out the previous stock of material. If
there were no costs or loss of time in changing room from one product to
another, many small lots would be produced. This would reduce inventory
levels, with a resulting savings in cost. One challenge today is to try to reduce
these setup costs to permit smaller lot sizes. (This is the goal of a JIT system.)
3. Ordering costs. These costs refer to the managerial and clerical costs to
prepare the purchase or production order. Ordering costs include all the
details, such as counting items and calculating order quantities. The costs
associated with the maintaining the system needed to track orders are also
included in ordering costs.
4. Shortage costs. When the stock of an item is depleted, an order for what item
must either wait until the stock is replenished or be cancelled. When the
demand is not met and the order is cancelled, this is referred to as a stock out.
A backorder is when the order is held and filled at a later date when the
inventory for the item is replenished. There is a trade-off between carrying

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
stock to satisfy demand and the costs resulting from stock outs and
backorders. This balance is sometimes difficult to obtain because it may not
be possible to estimate lost profits, the effects of lost customers, or lateness
penalties. Frequently, the assumed shortage cost is little more than a guess,
although it is usually possible to specify a range of such costs.
Establishing the correct quantity to order from vendors or the size of lots
submitted to the firm’s productive facilities involves a search for the minimum total cost
resulting from the combined effects of four individual costs: holding costs, setup costs,
ordering costs, and shortage costs. Of course, the timing of these orders is a critical factor
that may impact inventory cost.
PURPOSE OF INVENTORY
1. Predictability – in order to engage in capacity, planning and production,
scheduling. You need to control how much raw material, parts, and sub
assembles you process at a given time. Inventory buffers what you need from
what you process.
2. Fluctuations in demand – a supply of inventory on hand is protection: you
don’t always know how much you are likely to need at any given time but you
still need to satisfy customer or production demand on time. If you can see
how customers are acting in the supply chain, surprises in fluctuations in
demand are held to a minimum

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
3. Unreliability of supply – Inventory protects you from unreliable suppliers or
when an item is scarce and it is difficult to ensure a steady supply
4. Whenever possible – unreliable suppliers should be rehabilitated through
discussions or they should be replaced. Rehabilitation can be accomplished
through master purchase orders with time products releases price or term
penalties for non-performance better verbal and electronic communications
between the parties.
5. Price Protestation – Buying quantities of inventory at appropriate times helps
avoid the impact of cost inflation.
6. Lower Ordering Costs – if you buy a larger quantity of an item less frequently
the ordering costs are less than buying smaller quantities over and over again
TYPES OF STOCK
Inventory basically falls into the overall categories of raw materials, finished
goods and work in process.
1. Raw materials – used to produce partial products or completed goods.
2. Finished Product – this is the product ready for current customer sales it can
also be used to buffer manufacturing from predictable or unpredictable market
demand.
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
3. Work-in-process – items are considered to be WIP during the time raw
material is being converted into partial product, subassemblies, and finished
product
Other Categories of inventory should be considered from a functional
standpoint
1. Consumables
2. Service, repair, replacement, and spare items
3. Buffer/Safety Inventory
4. Anticipation Stock
5. Transit Inventory
INVENTORY VALUATION METHODS
1. First-in, First Out (FIFO) – inventory valuation assumes that the first goods
purchased are the first to be used or sold regardless of the actual timing of their use or
sale. This method is most closely tied to actual physical flow of goods in inventory
2. Last-in, Last-out (LIFO) – Inventory valuation assumes that the most recently
purchased goods are the first to be used or sold regardless of the actual timing of their
use or sale.
3. Average Cost Method – Inventory valuation identifies the value of inventory and cost
of goods sold by calculating an average unit cost for all goods available for sale
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
during a given period of time. This valuation method assumes that ending inventory
consists of all goods available for sale
4. Specific Cost Method - Inventory valuation assumes that the organization can tract
the actual cost of an item into through and out of the facility. That ability allows you
to charge the actual cost of a given item to production or sales.
5. Standard Cost Method – Inventory valuation is often used by manufacturing
companies to give all of their departments a uniform value for an item throughout a
given year. This method is a best guess approach based on the known costs and
expenses.
INVENTORY SYSTEMS
An inventory system provides the organizational structure and the operating policies for
maintaining and controlling goods to be stocked. The system is responsible for ordering and
receipt of goods: timing the order placement and keeping track of what has been ordered, how
much, and from whom. The system also must follow up to answer such questions as:
1. Has the supplier received the order?
2. Has it been shipped?
3. Are the dates correct?
4. Are the procedures established for reordering or returning undesirable merchandise?
This section divides into single-period systems and multiple-period systems.

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
The classification is based on whether the decision is just a one-time purchasing decision
where the purchasing decision where the purchase is designed to cover a fixed period of
time and the item will not be reordered, or the decision involves an item that will be
purchased periodically where inventory should be kept in stock to be used on demand.
We begin with a look at the one-time purchasing decision and the single-period inventory
model.
A SINGLE-PERIOD INVENTORY MODEL
Certainly, an easy example to think about is the classic single-period
“newsperson” problem. For example, consider the problem that the newsperson has in
deciding how many newspapers to put in the sales stand outside a hotel lobby each
morning. If the person does not put enough papers in the stand, some customers will not
be able to purchase a paper and the newsperson will lose the profit associated with these
sales. On the other hand, if too many papers are placed in the stand, the newsperson will
have paid for papers that were not sold during the day, lowering profit for the day.
Actually, this is a very common type of problem. Consider the person selling T-
shirts promoting a championship basketball or football game. This is especially difficult,
since the person must wait to learn what teams will be playing. The shirts can then be
printed with the proper team logos. Of course, the person must estimate how many people
will actually want the shirts. The shirts sold prior to the game can probably be sold at a
premium price, whereas those sold after the game will need to be steeply discounted.
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
A simple way to think about this is to consider how much risk we are willing to
take for running out of inventory. Let’s consider that the newsperson selling papers in the
sales stand had collected data over a few months and had found that on average each
Monday 90 papers were sold with a standard deviation of 10 papers (assume that during
this time the papers were purposefully overstocked in order not to run out, so they would
know what “real” demand was). With these data, our newsperson might want to be 80
percent sure of not running out of papers each Monday.
Recall from your study of statistics, assuming that the probability distribution
associated with the sales of the paper is normal, that if we stocked exactly 90 papers each
Monday morning, the risk of stocking out would be 50 percent, since 50 percent of the
time we expect demand to be less than 90 papers and 50 percent of the time we expect
demand to be greater than 90. To be 80 percent sure of not stocking out, we need to carry
a few more papers. From the “cumulative standard normal distribution” table we see that
we need approximately 0.85 standard deviation of extra papers to be 80 percent sure of
not stocking out. A quick way to fix and the exact number of standard deviations needed
for a given probability of stocking out is with the NORMSINV (probability) function in
Microsoft Excel (NORMSINV (0.8)=0.84162). Given our result from Excel, which is
more accurate than what we can get from the tables, the number of extra papers would be
0.84162 x 10 = 8.416, or 9 papers (there is no way to sell 0.4 papers!).

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
To make this more useful, it would be good to actually consider the potential
profit and loss associated with stocking either too many or too few papers on the stand.
Let’s say that our newspaper person pays $0.20 for each papers and sells the papers for $
0.50. In this case the marginal cost associated with underestimating demand is $0.30, the
lost profit. Similarly, the marginal cost of overestimating demand is $0.20, the cost of
buying too many papers.
The optimal stocking level, using marginal analysis occurs at the point where the
expected benefits derived from carrying the next unit are less than the expected costs for that
unit.
Single-period inventory models are useful for a wide variety of service and
manufacturing applications. Consider the following:
1. Overbooking of airline flights. It is common for customers to cancel flight reservations
for a variety of reasons. Here the cost of underestimating the number of cancellations is
the revenue lost due to an empty seat on a flight. The cost of overestimating cancellations
is the awards, such as free flights or cash payments, that are given to customers to board
the flight.
2. Ordering of fashion items. A problem for a retailer selling fashion items is that often only
a single order can be placed for the entire season. This is often caused by long lead times
and limited life of the merchandise. The cost of underestimating demand is the lost profit
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
due to sales not made. The cost of overestimating demand is the cost that results when it
is discounted.
3. Any type of one-time order. For example, ordering T-shirts for a sporting event or
printing maps that become obsolete after a certain period of time.
MULTI-PERIOD INVENTORY SYSTEMS
There are two general types of multi-period inventory systems: Fixed- order quantity
models (also called the economic order quantity, EOQ, and Q-Model) and fixed-time period
models (also referred to variously as the periodic system, periodic review system, fixed-order
interval system, and P-model). Multi-period inventory systems are designed to ensure that an
item will be available on an ongoing basis throughout the year. Usually the item will be ordered
multiple times throughout the year where the logic in the system dictates the actual quantity
ordered and the timing of the order.
The basic distinction is that fixed-order quantity models are “event triggered” and fixed-
time period models are “time-triggered.”. That is, a fixed-order quantity model (which places an
order when the remaining inventory must be continually monitored. Thus, the fixed-order
quantity model is a perpetual system, which requires that every time a withdrawal from
inventory is made, records must be updated to reflect whether or an addition to inventory is
made, records must be updated to reflect whether the reorder point has been reached. In a fixed-
time period model, counting takes place only at the review period. (We will discuss some
variations of systems that combine features of both.)

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
Some additional differences tend to influence the choice of systems:
1. The fixed-time period has a larger average inventory because it must also protect against
stock out during the review period, T; the fixed-order quantity model has no review
period.
2. The fixed-order quantity model favors more expensive items because average inventory
is lower.
3. The fixed-order quantity model is more appropriate for important items such as critical
repair parts because there is closer monitoring and therefore quicker response to potential
stock out.
4. The fixed-order quantity model requires more time to maintain because every addition or
withdrawal is logged.
FIXED-ORDER QUANTITY MODELS
Fixed-order quantity models attempt to determine the specific point, R at which an order
will be placed and the size of that order, Q. The order point, R, is always a specified number of
units. An order of size Q is placed when the inventory available (currently in stock and on order)
reaches the point R. Inventory position is defined as the on-hand plus on-order minus
backordered quantities. The solution to a fixed-order quantity model may stipulate something
like this:
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
When the inventory position drops to 36, place an order for 57 more units. The simplest
models in this category occur when all aspects of the situation are known with certainty. The
simplest models in this category occur when all aspects of the situation are known with certainty.
If the annual demand for a product is 1,000 units, it is precisely 1,000-not 1,000 plus or minus 10
percent. The same is true for setup costs and holding costs. Although the assumption of complete
certainty is rarely valid, it provides a good basis for our coverage of inventory models.
Safety Stock can be defined as the amount of inventory carried in addition to the expected
demand. In a normal distribution, this would be the mean. For example, if our average monthly
demand is 100 units and we expect next month to be the same, if we carry 120 units, then we
have 20 units of safety stock.
Safety stock can be determined on many different criteria. A common approach is for a company
to simply state that a certain number of weeks of supply needs to be kept in safety stock. It is
better, though, to use an approach that captures the variability in demand.
ABC INVENTORY PLANNING
Maintaining inventory through counting, placing orders, receiving stock, and so on takes
personnel time and costs money. When there are limits on these resources, the logical move is to
try to use the available resources to control inventory in the best way. In other words, focus on
the most important items in inventory.

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
Any inventory system must specify when an order is to be placed for an item and how
many units to order. Most inventory control situations involve so many items that is not practical
to model and give thorough treatment to each item. To get around this problem, the ABC
inventory classification scheme divides inventory items into three groupings:
1. High dollar/Peso Volume
2. Moderate Dollar Volume and
3. Low Dollar/ Peso Volume
Dollar volume is a measure of importance; an item low in cost but high in volume can be
more important than a high-cost item with low volume.
INVENTORY ACCURACY AND CYCLE COUNTING
Inventory records usually differ from the actual physical count; inventory accuracy refers
to how well the two agree. Companies such as Walmart understand the importance of inventory
accuracy and expend considerable effort ensuring it. The question is:
1. How much error is acceptable?
2. If the record shows a balance of 683 of part X and an actual count shows 652, is this
within reason?
3. Suppose the actual count shows 750, an excess of 67 over the record; is this any better?
Every production system must have agreement, within some specified range, between
what the record says is inventory and what actually is in inventory. There are many
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
reasons why records and inventory may not agree. For example, an open stockroom area
allows items to be removed for both legitimate and unauthorized purposes. The legitimate
removal may have been done in a hurry and simply not recorded. Sometimes parts are
misplaced, turning up months later. Parts are often stored in several locations, but records
may be lost or the location recorded incorrectly. Sometimes stock replenishment orders
are recorded as received, when in fact they never were. Occasionally, a group of parts is
recorded as removed from inventory, but the customer order is cancelled and the parts are
replaced in inventory without cancelling the record. To keep the production system
flowing smoothly without parts shortages and efficiently without excess balances, records
must be accurate.
How can a firm keep accurate, up-to-date records? Using bar codes and RFID tags is
important to minimizing errors caused by inputting wrong numbers in the system. It is
also important to keep the storeroom personnel have access, and one of their measures of
performance for personal evaluation and merit increases is record accuracy, there is a
strong motivation to comply. Every location of inventory storage, whether in a locked
storeroom or on the production floor, should have a recordkeeping mechanism. A second
way is to convey the importance of accurate records to all personnel and depend on them
to assist in this effort.
Another way to ensure accuracy is to count inventory frequently and match this
against records. A widely used method used is called cycle counting.

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
Cycle counting is a physical inventory-taking technique in which inventory is
counted frequently rather than once or twice a year. The key to effective cycle counting,
and, therefore, to accurate records lies in deciding which items are to be counted, when,
and by whom.
RUN CHARTS
Run charts allow you to measure a variable that changes over time. A run chart is
an x-y axis chart with the unit of measure appearing on the vertical y-axis, and the
timeframe running along the horizontal x-axis. The unit of measure can be anything you
wish to track such as stockouts, errors, labor hours, pieces, pounds, or gallons. The
timeframe can also be whatever you desire it to be such as seconds, minutes, hours, days,
weeks, months, or years.
FLOW CHARTS
Flow charts allow you analyse the sequence of a set of events. A flow chart does
not necessarily show the interdependence of events or which events are going on at the
same times as others. Flow charts are easier to understand than written procedures.
DROP SHIP INVENTORY
A typical set of inventory transactions involves receiving items, moving them to a quality
review area, checking them, moving them again to main storage, picking them for an order,
assembling and packaging the order, and shipping it. Not only does this process require a large
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
number of transactions, any of which could be made in error, but it also involves a great many
“touches” of the inventory, increasing the odds of product damage.
CROSS-DOCK INVENTORY
As just noted under the “Drop Ship Inventory” (4.1) best practice, there are a great many
inventory transactions and physical moves required if an item is brought into a warehouse, stored,
retrieved, and shipped. All these moves introduce the possibility of creating the incorrect
transaction or damaging Items. Through the top drop shipping approach eliminates this problem,
it is not always possible to do so, because suppliers refuse to ship direct, container sizes must be
reconfigured prior to final delivery, or items from multiple suppliers must be combined into a
single shipment.
If drop-shipping is not possible, a cross-docking may be an alternative.
Under this approach, items arrive at the receiving dock and are immediately shifted across to a
shipping dock for immediate delivery. By doing so, the only inventory transactions are for
receiving and shipping while the only inventory move is form one dock to another. There is no
quality review, putaway, or picking transaction at all. Because of these missing transactions, the
use of warehouse staff is kept to minimum.
To make cross-docking work, inbound deliveries must have a high enough level of product
quality to eliminate the equality assurance review, which would otherwise create a potential delay
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
in the delivery of shipments to customers. Also, there must be excellent control over the timing of
inbound deliveries, so the warehouse knows exactly when items will arrive. This is especially
critical when some parts of a customer order must still be picked, since the picking transaction
should be completed just prior to the arrival of a delivery containing the remaining items in a
customer order. Further, the computerized warehouse management system must be sufficiently
sophisticated to tell the receiving staff that items are to be cross-docked, and the number of the
shipping dock to which items must be shifted for delivery. Finally, this on-site longer than normal
while loads are accumulated from several inbound deliveries.
WAREHOUSE PROCESS
Improvements comes from simplifying processes and procedures. (Tom Peters) These processes
need to be aligned and working optimally if we are to improve efficiency, and as a result, reduce
cost within the warehouse operation.
Detailed process documents need to produced and made available to all employees. These need
to be continually reviewed and updated. According to WERC (2010) companies who exhibit
good to best practices processes define and publish process descriptions and assign ownership of
the processes to responsible individuals. Supplementing written instructions with photographs
and also improves understanding.
Although warehouse differ in terms of size, type, function, ownership, and location the
fundamental process remain. These processes include pre-receipt, receiving, put-away, storage,
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
picking, replenishment, value-adding services and dispatch. We also include a section on cross
docking where products are moved across the warehouse without actually going through the put-
away process. Other warehouse processes such as stock counting and inventory control, although
undertaken as part of the mainstream day-to-day processes, are included in the section on
housekeeping.
By ensuring that the correct processes are in place and operating optimally companies can not
only improve accuracy and efficiency but also take advantage of the new technology available.
Many books on the subject of warehousing will concentrate on the picking process as this is the
most labour and cost-intensive process and has direct impact on customer service.
This section is no exception; however we also recognize the importance of pre-receipt and the
receiving process. Receiving the wrong products or putting products in incorrect locations can
result in errors just as easily as picking the wrong item.
RECEIVING
Receiving, goods-in or in-handling is a crucial process within the warehouse. Ensuring that the
correct product has been received in the right quantity and in the right condition at the right time
is one of the mainstays of the warehouse operation. These elements are often termed supplier
compliance.
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
However, it is our contention that once goods have arrived at the warehouse it is usually too late
to rectify most receiving issues. We believe there are many steps that need to be taken before the
actual act of receiving takes place.
PRE-RECEIPT
First we need to ensure that the supplier presents the products to the warehouse the most
appropriate way. It is normally the buyer who specifies the product and therefore may not have
the knowledge of the goods-receiving operation. All these problems take time to resolve and are
better handled at the supplier prior to delivery.
Delivery in the standard of selling quantity is also crucial in assisting the manager to increase the
speed of throughout and simplify picking. The methods of delivery needs to be compatible with
the unloading equipment available at the warehouse.
CHECKING
Once the goods are off-loaded, you need to decide whether they need to be checked before put-
away. The ideal scenario is to move inbound goods directly from the loading bay to the storage
area or dispatch area if goods are cross docked.
However, trust is an issue here and unless you are 100 percent certain that your suppliers are
totally accurate with their deliveries on every occasion, some form of checking will need to take
place.
RECORDING
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
Depending on the product, there could be a requirement to record more than just the standard
data such as product code, description and quantity on arrival. Other information could include
batch or lot numbers and serial numbers. Barcode scanning is ideal for this type of data capture.
QUALITY CONTROL
It is accepted that certain products will require more stringent checking on receipt. These include
high-value items, food, hazardous goods, temperature-sensitive product and pharmaceuticals.
These items should be set aside to spot check items on arrival. This needs to be done as promptly
and as efficiently as possible so as to avoid congestion and to get the products onto the system
quickly.
PICKER TO GOODS
The majority of warehouses continue to operate with minimal automation and picker-to-goods
operation prevail.
PICK TO ORDER
The picker takes one order or part of an order (assignment) and travels through the warehouse
either on foot with a cage or trolley or with a pallet using a pallet jack or fork lift truck,
collecting items until the whole order or assignment is completed.
The advantage of picking individual orders is the minimum amount of handling moves from the
store to dispatch in one handling movement. This remains the most common method of picking.
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
CLUSTER PICKING
In order to reduce overall travel time, operators can take a number of orders out into the
warehouse at the same time and pick unto individual compartments on their trolley or cages.
Although having the advantage of being able to pick several orders at the same time and
reducing overall travel, it does need experienced pickers if a put-to-light system is not utilized.
There is a possibility of putting the wrong product or wrong quantity of product into a container
and therefore a check system needs to be in place to ensure picker accuracy.
BATCH PICKING
Batch picking is where operators pick product for a number of orders at the same time. This is
similar to cluster picking however rather than have a cluster of separate orders, these orders are
consolidated into one pick list once picked are later broken down into their constituent orders.
This is also termed bulk picking. Advantages include less travel and potentially increased
accuracy as two people are involved in the pick and allocation process. The disadvantage is that
it is a two-stage process and cannot easily manage time-sensitive orders.
ZONE PICKING
Products are picked from defined areas in the warehouse and each picker is assigned to a specific
zone or zones and only picks items from within those zones. The level of activity will determine
the number of zones/pick allocations allocated to each picker.
WAVE PICKING
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
In wave picking, orders are combined and released at specific times during the day or to
associate them with vehicle departures, replenishment cycles, shift changes, product locations,
product commonality, value-adding services requirements and priorities.
STOCK OR INVENTORY COUNTING
All warehouses are obligated to undertake some form of stock count. It depends on the law of
country and accounting requirements as to how frequent and comprehensive the count is.
WAREHOUSE MANAGEMENT SYSTEM
Warehouse Management System can be stand alone or can be part of enterprise resource
planning system supporting the latest technological advances within the warehouse including
automation, RFID, and voice recognition. A WMS can process data quickly and coordinate
movements within the warehouse. It can produce reports and handle large volumes of
transactions. The potential benefits of having a WMS in place include the following:
 Real-time stock visibility and traceability;
 Improved productivity;
 Accurate stock;
 Reduction in mis-picks;
 Automatic replenishment;
 Reduction in returns;
 Accurate reporting;
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
 Improved responsiveness;\
 Improve customer service; and
 Minimized paperwork.
SELECTING A WAREHOUSE MANAGEMENT SYSTEM
To ensure that the system you choose is he right one for your operation, here are some best-
practice guidelines courtesy of Business Application Software Developers Association (BASDA)
(2009) and Sage Accpac (2005):
 Form a project team.
 Define, record review and improve current processes. Don’t automate redundant or poor
processes.
 Create a list of key functions required of the new system.
 Incorporate any future growth plans in your specification.
 List the benefits to your company of a WMS.
 Research and approach a select number of vendors and select a small number with
experience of providing solutions of your market sector.
 Produce a return on investment (ROI) report.
ATTRIBUTES OF A WAREHOUSE MANAGEMENT SYSTEM
In order to be effective, a WMS needs to have the following attributes (adapted from RURIANI
2003):
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
o Ability to interface with other systems;
o Modular and scalable;
o Accessible;
o Ease of operation;
o Standard system;
o Meet specific needs;
o Capable of supporting warehouse best practice, lastly
o Reporting capabilities.
Activity-based costing
According to Griful- Miquela (2001):
Activity based costing systems are designed so that any costs that cannot be attributed directly to
a product or service flow into the activities that make them necessary. The cost of each activity
then flows to product/s or services that makes the activity necessary based on their respective
consumption of that activity.

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
SIGNIFICANCE OF THE STUDY
This study would be beneficial for several groups. First of all, the study of
enhanced manual inventory system would be able to benefit the entrepreneurs in terms of
making their work easier in some areas like, locating within a facility and their impact on
space planning and some practical methods of attaching addresses to stock items and how to
tie an item number to its location address. Second, this will benefit the employees in terms
of documenting the purchases, orders, checks, invoices and account statements.
This study would also benefit the other business with manual inventory system to
make sure that their business operation for inventory would have lesser risk for errors. It
will help other businesses to distinguish the benefits of the enhancement of manual
inventory system.
STATEMENT OF DESIRED OUT COMES
The researchers want to propose an efficient and accurate inventory
management system for the company.

Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
c) Description of method or approach
METHODOLOGY OF THE STUDY
This chapter shows the methodology of the study and setting up a system that allows you
to put items where they will do the most good for the company. This chapter contains the
research design, data gathering and research locale to show more information for the study.
RESEARCH DESIGN
This study aims to assess the present inventory system King Louise Japan Surplus. The
researchers decided to use Descriptive method as the research design for the researchers to
describe the relations of King Louise Japan Surplus inventory management on efficiency and
accuracy
RESEARCH LOCALE
The study is conducted at King Louise Japan Surplus, located in Allarey St, Barangay 3,
Lucena City near Mary Hill College
DATA GATHERING PROCEDURE
Essential information for this research work were collected through primary and secondary
sources. The combinations include:
Interview with key personnel in the stores, purchasing and inventory of the company.
Observation of the production process was done to see the flow of goods in the conversion
process. Material handling and storage were also observed and so was the patrol/inspection
procedures.
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
Record analysis of relevant data was obtained from the company’s annual report and journals
Theoretical background information was gathered through review of related literature on
inventory management.
DATA GATHERING INSTRUMENT
Interview was used as a method for data gathering for its useful help to gather
information about the study on the existing operation. The interviewer undertaken by asking the
owner to take some information about their business followed by introducing the researchers and
asked some questions.
Observation was the direct method used by the researchers wherein they considered the
present system operation, however the method gives incomplete data in all aspects of operation
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
CONCEPTUAL FRAMEWORK
Input Process Output
Business related Interview Enhanced Inventory

profile management system
Evaluation and
King Louise Assesment Business Profile
Japan Surplus
present
Inventory
System
In Figure 1, the conceptual framework of the proposed inventory system for delivering
efficient customer service. It shows the process of enhancing the service and inventory
management system.
In this study, it aims for an efficient and accurate inventory management system. So, the
researchers have to know and inputted the problems incurred by King Louise Japan Surplus.
They had to know the business related profile and the present inventory management system
used by the company. It will undergo the SWOT analysis (strength, weakness, opportunities and
threats) to be evaluated, assessed and will be tested. After the process of which, the researchers
know the profile of the business and then will develop a user friendly inventory methods.
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
d) References: The style of the bibliographical item itself depends on the disciplinary field. The
main consideration is consistency; whatever style is chosen should be followed scrupulously
throughout.
Last, F.MI. (year). Title of the book or article. Place of Publication: Publisher.
Last1, F.MI., & Last2, F.MI. (year). Title of the article in the journal or magazine written in sentence case
format. Title of the Journal or Magazine in Title Case format and should be in Italics, volume number
in italics(series number no space after volume number and should not be in italics – write in
parenthesis, only if series number is available), p.__.
Last1, F.MI., Last2, F.MI., & Last3, F.MI. (year). Title of the article in the journal or magazine written in
sentence case format. Title of the Journal or Magazine in Title Case format and should be in Italics,
volume number in italics(series number no space after volume number and should not be in italics –
write in parenthesis, only if series number is available), pp.__ to __. Retrieved from
www.URLaddressHere
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
IV. Sustainability and Capacity Building
Would the proposed RDE be part of No

an existing collaboration between
the partner college/departments? If
so, please give details.
Please give a description of how The researchers will continue the collaboration after the end of
you and your the activity to extend help and educate in terms of the inventory
group/department/institution plan to
continue the collaboration after the management system, in the business entity we’ve chosen
end of the activity. Please provide
information about potential funding
sources that might support this
research collaboration after the end
of this RDE.
How will the collaboration The research collaboration can be used as a reference for
contribute to the capacity building similar studies, thus the research itself can be innovated in the
of the wider research and innovation
landscape in the University and future
Philippines?
V. Relevance to Economic Development, Inclusive Growth and Social Welfare
Does the research/innovation Yes, If King Louise Japan Surplus’ inventory management
addressed by your collaboration system will be accurate and efficient. The decision making
support areas relevant to the
economic development and social capacity of management for development and expansion will be
welfare of low- and middle-income enough to create jobs that will impact the social welfare of low
families, etc., benefitting poor and and middle income families
vulnerable populations in the
country?
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
Please indicate a plausible With an efficient and accurate inventory management system,
pathway of how the research may the management can forecast sales for the succeeding years to
contribute to the economic
development and social welfare of come. Thus this will generate more jobs, contribute more taxes
the community and lead to positive that can help the community as a whole
impact on the lives of people on
low income within a reasonable
time frame (3-15 years).
VI. Research Governance and Ethics
Please describe how you will ensure that the The researches will be honest in conducting, proposing and
activity will be carried out to the highest
standards of ethics and research integrity.
reporting the research. They will ensure the accuracy of the
research data and results. Thus, they will acknowledge the
contribution of the other established research within the
study. The researchers will also comply with the Ethical and
Legal obligations on this research.
Please describe how potential ethical health The researchers concluded that confidentiality will be one
and safety issues arising as part of this of the pressing issues in terms of ethics and safety.
collaboration have been considered and how
they will be addressed. Thus, the researchers will ensure that the data shared
between the entity and the researchers will be kept with
integrity, credibility and confidentiality.
Will the proposed RDE involve research on No. The research will only cover the day-to-day inventory
animals, human participants, human tissue or practices of the business as data for the research
patient/participant data?
Has the proposed RDE been reviewed by the NO

research ethics committee?
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
VII. Expected Outputs and Deliverables (This refers to the products of the investigation which would
contribute and increase the stock of knowledge.)
 Demographic profile of respondents (target beneficiaries)

 Inventory Management System of a Surplus company
VIII. Target Beneficiaries of Research Results: (who and how many are the direct / indirect beneficiaries
of the study, what are the benefits that are likely to accrue in the short or long term)
Target Beneficiaries Total

1.
King Louise Japan Surplus 12
2.
Manuel S. Enverga University 300
Foundation Students of College of
Business and Accountancy as well as
the student researchers
3.
Japan Surplus retailers 42
IX. Dissemination Plan: (what is the plan for sharing / communicating research results to different
stakeholders / possible beneficiaries; please mention specific activities)
Activities Strategy
1. Meeting Meeting with the staff King Louise Japan
Surplus to communicate the results of the
research.
2. Publication Publishing the research for the use of the
students and as well as for the use of the
coconut industry
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR
SUBMITTED BY: NOTED BY:
Royce Daniel Anareta CARMEN A. ALDOVINO

Paul John Arena
Irish Anne V. Braga
Kathlene A. Jao
Kyle Lopez
REVIEWED BY:
Research Ethics Committee
APPROVED BY:
CATHERINE D. LIMJUCO, CPA, MBA

Acting Dean, CBA
Lucena City
Guide
Revision No. : 1
Reviewed by : QMR

Dr. Cesar A. Villariba Research and Knowledge Management Institute Quality Form

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Dr. Cesar A. Villariba Research and Knowledge Management Institute Quality Form

Загружено:

Авторское право:

Доступные форматы

Document Code : DCAVRKMI-F-RPAG

MANUEL S. ENVERGA UNIVERSITY FOUNDATION Document Title : Research Proposal Application

THESIS PROPOSAL APPLICATION FORM

I.Thesis Title : INVENTORY MANAGEMENT FOR JAPAN SURPLUS

II.Name of Researcher : Royce Daniel Anareta

Program : Bachelor of Science in Business Administration major in Management

III. Thesis Proposal

In Every retailing business an inventory management system is an essential tool for

determining inventory on hand and forecasting future sales. Having homogeneous

Keywords: Japan Surplus, Inventory Management System, efficient, accurate,

Moreover, it also aims to answer the following questions:

1. What is the company background and operations of King Louise

2. What is the current Inventory management system of King Louise

3. What are the current irregularities and inefficiencies of the current

4. What is the most suitable and convenient improvements for the

inventory management system of King Louise Japan Surplus

front line and for repairs of some of the inventory.

idea of proposing an Inventory management system suited for their inventory.

International Financial Reporting Standards, International Accounting Standards and the

of an efficient and accurate Inventory management system is one of the essential

objectives of the study.

Purpose of the research

The main objective of the research is to propose an inventory management system

Specifically, this study seeks to

C. Average number of customer in a monthly basis

2. To describe inventory management methods and practices currently used by the

B. Average Age of the Inventory

D. Inventory Costing Method

3. To determine the inefficiencies and inaccuracies of the practice

4. To propose an inventory management system

are to be currently consumed in the production.

As it per the definition by the Generally Accepted Accounting Princples an inventory is a

asset. Inventory brings with it a number of costs that can include:

4. Deterioration, damage, and obsolescence

shall effect the inventory size.

facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation,

to favour low inventory levels and frequent replenishment.

obtaining the necessary materials, arranging required papers, appropriately

included in ordering costs.

inventory for the item is replenished. There is a trade-off between carrying

backorders. This balance is sometimes difficult to obtain because it may not

be possible to estimate lost profits, the effects of lost customers, or lateness

although it is usually possible to specify a range of such costs.

that may impact inventory cost.

1. Predictability – in order to engage in capacity, planning and production,

what you process.

2. Fluctuations in demand – a supply of inventory on hand is protection: you

how customers are acting in the supply chain, surprises in fluctuations in

demand are held to a minimum

3. Unreliability of supply – Inventory protects you from unreliable suppliers or

when an item is scarce and it is difficult to ensure a steady supply

4. Whenever possible – unreliable suppliers should be rehabilitated through

discussions or they should be replaced. Rehabilitation can be accomplished

penalties for non-performance better verbal and electronic communications

between the parties.

5. Price Protestation – Buying quantities of inventory at appropriate times helps

avoid the impact of cost inflation.

goods and work in process.

1. Raw materials – used to produce partial products or completed goods.

also be used to buffer manufacturing from predictable or unpredictable market

3. Work-in-process – items are considered to be WIP during the time raw

material is being converted into partial product, subassemblies, and finished

Other Categories of inventory should be considered from a functional