Dio’s Star One Food Inventory Management

Dio’s Star One

Food Inventory Management

Añonuevo, Chiqui

Dacome, Lyly Beth M.

Escudero, Santos Kavin

Rosales, Cristian Bryan B.

Saito, Jennifer Marie T.

 Dio’s Star One Food Inventory Management

CHAPTER 1

Introduction

The food industry is somewhat different than other industries with large inventories. The

inventory stock in the food industry is often perishable, which changes the way food companies

manage inventory. To operate a successful food company, you need the right inventory

management tools in place to manage the supply chain, delivery of the product, and the safety

of the goods for consumers.

Moreover, inventory management system can communicate with members of your supply

chain and can yield access to information about the products in real-time. This provides

heightened visibility and allows you to track certain shipments should a problem arise. There is

a significant amount of data being shared that can provide insight for safety, shipping, and

overstock issues.

Company Profile

DIO’S Star One is a 24-hour fast food business owned by Mr. Dioselito Palisoc located at #1

Brgy. Sto. Nino, San Pedro Laguna. The business started its operations last September 2017. The

costumers may reach them by calling 097559353481 or thru their facebook page named Dio’s

Star One.
 Dio’s Star One Food Inventory Management

Dio’s offers rice meals and drinks served with a free cup of soup and the business operations

has 3 shifts from 6:00 am to 2pm, 2pm to 10pm and 10pm to 6am. They also offer delivery

meals. They buy rice, meat, fish, eggs and condiments from different suppliers every 1-2 days.

Mr. Palisoc came up with this type of business because he loves cooking. His sister was engaged

in food business but unfortunately it was mismanaged. That time, Mr. Palisoc took over the

business. He thought of something different on the menu that they offer until he came up with

Dio’s Star One. As of today, the business has already 2 branches in San Pedro. The other branch

is located in San Vicente and Sto. Nino branch is currently under expansion.

The store operates 50% to 60% markup and this covers their fixed cost such as rental, employee

salaries, and payment to suppliers. Their average daily sales ranges from P10,000 to P15,000

within the day for walk-in clients alone. They accept payment thru cash basis only.

Mission and Vision Statement

“The primary goal of the business is to serve good quality food at an affordable price. To be able

to consistently provide our customers with impeccable service and to have every customer who

comes through our door greeted or acknowledged within 20 seconds, and thanked at least

once for allowing us to serve, and to leave impressed. Our vision is to establish a name in the

industry and open more branches in the country.”

 Dio’s Star One Food Inventory Management

Research Issue

Dio’s Star One faces many challenges that needs to be addressed for their business to survive

and continue. Some of problems observed by the researchers are the following:

1. Staff

Dio’s Star One currently have 12 regular employees. Due to heavy foot traffic in the

afternoon shift, the manpower does not accommodate all the customers properly.

Since the store operates for 24 hrs., the owner cannot supervise all the employees from

time to time. There’s a time where the business encounters cash shortage or overage.

2. Delivery

The business also offers delivery. Although it is on time, it only reaches San Pedro,

Laguna. The challenge for them is to expand their delivery by adding vehicles and

manpower to accommodate deliveries in other places.

3. Traditional Inventory System

Fragmented information and lack of communication can have a major impact on the

food supply chain. This is because there are various parties involved in the chain which

have little to no knowledge of one another’s actions. Poor communication causes

inefficiency, waste and can lead to mistrust among the employer and employee. This

problem gets much worse when they did not control the inventory every shift and if the

employee assigned for inventory did not do the proper way to record it.
 Dio’s Star One Food Inventory Management

4. Technological Issues

Technologies are reshaping the way fast food restaurants serve their customers. We are

already seeing how these businesses are responding to the way that their customers are

conducting their lives and combining technologies to create new experiences for them.

Essentially, technology is enabling the business to gather more customers.

Unfortunately, Dio’s Star One has only 700 likes on their facebook page and do not have

any other social media account for their advertisement.

Focal Issue

Food Inventory Management

Food inventory management is the system for tracking what stock comes into the restaurant,

what inventory leaves the restaurant, and what’s left over. A good food inventory management

system is also the most useful tool for gaining insight into the ways you may be losing money.

The researchers choose to focus on in this issue to help the store owner to get the right

inventory, reduce spoilage and can optimize their working capital for long-term growth of the

store.

With a strong inventory management solution, the business can:

 Optimize food safety and can decrease food health-risk problems

 Reduce food waste

 Get food products onto shelves quicker so the product is still fresh for customers
 Dio’s Star One Food Inventory Management

 Prevent under or over-ordering

 Identify theft

 Keep track of the health of the business

Below are the details obtained with Mr. Dio Palisoc related to business transaction:

a. The store has an average sales of 10,000 Pesos on their walk in customers.

b. They purchase every 1-2 days for inventory. They replenish inventory every shift.

They purchase items from different suppliers.

c. They set 50% - 60% mark up that depends on the price of each item.

d. They are open 24 hours with time shiftings from 6am-2pm, 2pm-10pm and

10pm-6am

Findings

If they get the right food inventory management, it will grow their profits but if they continue

to get it wrong, they could lose the business.

Scope and Limitation

This study focuses on dealing with the Food Inventory Management of Dio's Star One fastfood

store. The data and information that is to be used in this study shall be provided by the owner

and employees of the business, gathered from the observation by the students partaking this

study, and internal data that is accessible to the researchers.

 Dio’s Star One Food Inventory Management

The study is also limited to the provisions and information allowed or given by the business to

the students. This study will not cover other problems unrelated to the problems stated. With

the information given, the researchers will be able to know what measures are needed to deal

with the problems stated in this study.

References

https://www.cambridgeconsultants.com/insights/opinion/how-technology-shaping-fast-food-

industry

https://www.unleashedsoftware.com/blog/role-inventory-management-food-industry

https://dearsystems.com/food-inventory-management/

https://www.google.com/search?q=dio%27s%20star%20one&oq=dio%27s%20star

%20one&aqs=chrome..69i57j33.8230j0j9&client=ms-android-vivo&sourceid=chrome-

mobile&ie=UTF-

8&fbclid=IwAR3GgfozF0H37VqKh7EwW78m8s2aiCdx4fjf9VzouPdDaxkNqRkzq4WAreY#trex=m_

t:lcl_akp,rc_f:,rc_ludocids:7638307945895599867,rc_q:Dio's%2520San%2520Pedro

%2520Laguna,ru_q:Dio's%2520San%2520Pedro%2520Laguna

https://m.facebook.com/diostarone/
 Dio’s Star One Food Inventory Management

Definition of terms

Inventory - is an accounting term that refers to goods that are in various stages of being made

ready for sale

Mark-up price - is the method of adding a certain percentage of a markup to the cost of the

product to determine the selling price.

Shortage - a state or situation in which something needed cannot be obtained in sufficient

amounts

Spoilage - the process in which food or other substances stop being good enough to eat or use,

or the waste produced in this process:

Spreadsheet - an electronic document in which data is arranged in the rows and columns of a

grid and can be manipulated and used in calculations.

Overage - an excess or surplus, especially the amount by which a sum of money is greater than

a previous estimate.
 Dio’s Star One Food Inventory Management

CHAPTER 2

Review of Related Literature

This chapter presents a brief discussion of the foreign and local literature reviewed by the

researchers which further enriched the conceptualization of the study and helped in describing

the cognitive design that guided the conduct of the researchers. The information’s indicated

were gathered in internet websites, journals and various books relating to the researcher’s

topic.

Foreign Related Literature

According to Burger King’s Vice President, David Sell, Businesses that provide both goods and

services, such as retail stores and auto-repair shops, have the same inventory-control problems

as manufacturers: keeping levels too high costs money, while running out of inventory costs

sales. Technology, such as the point-of-sale registers used at BK, makes the job easier. BK’s

system tracks everything sold during a given time and lets each store manager know how much

of everything should be kept in inventory. It also makes it possible to count the number of

burgers and buns, bags and racks of fries, and boxes of beverage mixes at the beginning or end

of each shift. Because there are fixed numbers of supplies—say, beef patties or bags of fries—in

each box, employees simply count boxes and multiply. In just a few minutes, the manager
 Dio’s Star One Food Inventory Management

knows whether the inventory is correct (and should be able to see if any theft has occurred on

the shift).

According to the State of Small Business Report, 43% of small business owners still manage

their inventory with pen and paper, a spreadsheet or don’t take the time to manage inventory

at all. This can lead to a number of problems like running out of inventory in a rush, spoilage

and waste from over ordering and a lack of knowledge and control over the restaurant as a

whole. This can translate to lost sales, angry customers and a whole lot of wasted time and

money.

“Organizing your food items in advance makes your inventory less complicated. Separate your

ingredients into groups, such as dairy products, produce, seafood and meat. By grouping similar

items together, you avoid criss-crossing the kitchen and storage rooms during the inventory.

Save additional inventory time by organizing your stored food items in the order in which you

will record them during the inventory.” – Leaf Group Ltd, 2020.

Local Related Literature

According to Mohan (2012), inventory management is extremely important in any industry and

even more so in the food industry. With the items being perishable, the complexity of inventory

management increases. Fast food restaurants face a tough challenge in deciding their inventory
 Dio’s Star One Food Inventory Management

levels. If they stock too much, a lot of the items are going to go bad resulting in a loss. Similarly

if the under stock, all customers can’t be served and hence they will move to other restaurants.

So these restaurants should be extremely careful in managing their inventories. Each fast food

chains their own model to replenish their inventory. Typically items which are top sellers are

replenished as and when the stock gets over and the other items are ordered periodically

(every week, month, etc.). The restaurants have adopted new methods which take into

consideration the consumption of items during specific times of the day and stock their

inventories accordingly. For example: More sandwiches are sold during lunch time. So the store

would stock more bread during the afternoon period and less during the other times.

According to Chester Tampol, Mang Inasal Pasig Rotonda has its control system in which Food

Cost Paper Cost (FCPC) are part of it which they manage beginning and ending inventory. It also

includes computation and percentage of receive and used raw items/products in order to

monitor variances monthly. They have specific days to order for wet and dry items as for the ice

and vegetables, they order it every day. If the inventories of products are not balance in actual

products, it is usually being charge to someone in which the product or items assigned. Amount

of the product is charge three times the cost of the product.

 Dio’s Star One Food Inventory Management

CHAPTER 3

Research Methodology

This chapter represents the discussion of the research methods and techniques which the

researchers used to conduct the study. It includes the respondents of the study and research

instrument used in analyzing and interpreting the data.

Research Design

In this study, interview method was used in to obtaining necessary information on Dio's Star

One. It helped the researchers to find possible solution in making an efficient management of

perishable inventory.

Participants

The respondents of this study comprised of the owner of the business, mainly Dioselito Palisoc.
 Dio’s Star One Food Inventory Management

Research Instrument

The researchers utilized a self-made questionnaire as the main data gathering instrument of the

study. The questionnaire was conducted to elicit information from the respondents in order to

meet the required objectives of the study. The questionnaire covers every detail included on

Chapter 1 such as the company profile, inventory handling, problems of the business, sales, and

supply.

Procedures

The researchers formulated the research title and presented to the adviser for approval. After

approval of the title, the researchers immediately started to search for information using

various resources such as books, online journals, internet, published and unpublished thesis.

Next to it, the construction of self-made questionnaire to be used as a guide for the research to

be done is prepared. We asked personally for the approval of the business owner on identifying

the title and the purpose of the study.

 Dio’s Star One Food Inventory Management

Questionnaire

The researchers interviewed Mr. Dioselito Palisoc, owner of Dio's Star One. The following

questions were asked to understand the business:

A. Company profile

1. Who are the owner/owners of the business?

2. When was the business established?

3. What is the nature of business?

4. Where is the location?

5. What is the mission and vision of the business?

6. How many employees do you have?

7. How many branches do you have?

B. Business Operations

1. Where do you get your supplies?

 Dio’s Star One Food Inventory Management

2. How much inventory ordered and how often?

3. What are the menu available?

4. How do you maintain your food inventory?

5. What are the prices of each menu?

6. How much is the average sales per day?

7. What is the mark up?

8. What is the customer mode of payment?

9. Are there instances where there are spoiled inventory?

10. How to avoid spoilage?

11. What are the challenges faced by the business?

12. When the time sale is the highest and lowest?

13. How do you compete in the market place?

14. What are the safety and security measures of the business?

15. Is the business available online?

16. Do you have a Facebook page?

17. What are the plans for future expansion?

 Dio’s Star One Food Inventory Management

CHAPTER IV

ALTERNATIVE COURSE OF ACTION

This chapter presents the alternative courses of action which the researchers propose for Dio’s

Star One to help in addressing the focal issue laid down in the previous chapter.

Alternative Course of Action 1: Implementation of Stringent Procedure and usage of MS Excel

on Taking Inventory

The researchers find it beneficial for the Dio’s StarOne to use a computerized Inventory System

to record their materials and inventories for more accurate recording of their products,

maximize their time and production, to have back-up records, an easy access of inventory

records, reorder point and for fast computation of cost. Also, the business does not have any

clear guidelines or procedures in place and in that way they could be losing money every shift

due to inventory spillage. Giving the personnel stricter procedure and proper training will

improve their inventory system in regards with their purchasing and ordering of materials. It

will also avoid spoilage, spillage, inefficient or incorrect food or drink preparation process,

customer complaint resolutions, and theft.

 Dio’s Star One Food Inventory Management

To achieve this stringent procedure, we will start with giving solutions on their current

procedure on taking an inventory.

Flowchart 1: Current Inventory Process

 Dio’s Star One Food Inventory Management

1. The procedure begins at the storage room when inventory levels drop to reorder levels.

2. The assigned personnel prepare a purchase requisition and purchase order for each

vendor and upon receipt of the goods they count, weigh and inspect for spoilage.

3. A worker then update the inventory list manually on a printed spread sheet, give the

invoice to the manager for record and organize the goods on the storage room.

4. Once they receive sales order form, they manually check on the storage, get the raw

material they needed using FIFO method and give it to the cook for it to be a finished

product.

5. The ordering form is recorded at two copies, one for the sales personnel and one for the

kitchen or storage room.

6. They will update the inventory list manually every after shift and check if they have the

same inventory levels with the cashier.

As we observed at their current procedure they really lack in inventory control and takes a lot

of time because they do it manually that is why we came up with this stringent procedure and

made them an excel inventory management for computerized recording.

Dio’s Star One Food Inventory Management
 Dio’s Star One Food Inventory Management

Flowchart 2: Proposed Inventory Procedure / Process

Dio’s Star One Food Inventory Management
 Dio’s Star One Food Inventory Management

On this stricter procedure we focus on inventory control so that the workers will be forced to

follow the new rules and be more accurate on taking inventory. We added stock request before

and after taking out the stock. They will need an approval of the manager before they purchase

and take out an item. They will have two copies for receiving (receiving report) that will be for

the record of the manager and on the stock room so that they will surely count and inspect the

goods.

In addition, there will be an assigned personnel to do a quality check before it comes out of the

kitchen. The manager will have an excel inventory that allows him to check easily for reorder

point, inventory count and sales order. In this situation they can record both manually and

computerized to save time and also to monitor the inventory conveniently.

Presentation 1: Computerized Inventory using MS Excel

Dio’s Star One Food Inventory Management
 Dio’s Star One Food Inventory Management

Using MS Excel Inventory program will help the business for the convenience of taking an

inventory. We program the data that is easy to use. In the Raw Items Sheet every item have a

product code to easily encode it and avoid typing the name of the item all over again, the

quantity per recipe in grams and the price per gram. Purchases Sheet includes all the items

purchased or the inventory in and Sales Sheet includes all the sales order or the inventory out.

Inventory Sheet includes all the details from purchases to ending inventory and the most

important the reorder point. The orange columns indicate that the stocks reached the reorder

point and have to restock again. The program is ready to use and all their going to do is to save

and update every after shift.

 Dio’s Star One Food Inventory Management

The advantages of having MS Excel program are automation of manual tasks, minimize

inventory costs and maximize sales & profits, achieve efficiency and productivity in operations,

real time management information and saved back-up records like google cloud. Disadvantages

would be the system crash, technology cost and the accuracy still depends on the encoder.

Alternative Course of Action 2: Hire an Inventory Control Staff

The researchers find that the Inventory system of the Dio’s Star One is handled by the store

owner and the employee who is assigned on a certain shift. The business does not have any

clear guidelines or procedures in place and in that way they could be losing money every shift

due to inventory spillage. Hiring personnel will give them more opportunity to improve their

inventory system in regards with their purchasing and ordering of materials.

The first step is to post a job hiring position for an Inventory Control Staff in the Public

Employment Service Office (PESO) of the Municipality of San Pedro with these credentials:

 Graduate of any Business Course (BS Accountancy, BS in Business Administration …)

 Ability to interpret and apply company policies and procedures.

 Excellent written communication skills.

 Ability to understand, reconcile, and substantiate balances in associated General Ledger

accounts.

 Gives attention to detail and follows instructions.

 Dio’s Star One Food Inventory Management

 Ability to work both independently.

 Ability to stay organized and multi-task in a professional and efficient manner.

 Establishes goals and works toward achievement.

 Proficiency in data entry.

 Displays expense and cost control in decision making.

 Knowledge of common filing procedures.

The job description of the ICS would be:

 Conducts the Division inventory accounting functions accurately and in accordance with

company guidelines, and ensures the General Ledger accurately reflects the value of

inventory on hand.

 Reviews and processes inventory price change accounts, as well as store orders to

ensure accurate billing of items selected by the Warehouse.

 Assists operations and warehouse personnel with regard to inventory account inquiries

and reconciliation.

 Documents designated General Ledger balances at year end in accordance with

company guidelines in order to prepare for annual audit.

 Processes and prepares inventory journal entries and manual receiving when necessary.

 Maintains accurate store and warehouse perpetual inventories and assists

administratively in full and partial inventory counting procedures.

 Dio’s Star One Food Inventory Management

 Works proactively to identify, investigate, and report irregularities within designated

area of responsibility.

 Upholds the security and confidentiality of documents and data within area of

responsibility.

The employee will be trained by the owner to be familiarized with the company’s guidelines

and procedures regarding their inventories, and will have to work on Monday to Saturday at

8:00am to 5:00pm.

The advantages of hiring will lessen the owner’s duties and responsibilities and it will maximize

the inventory controls. Disadvantages would be increase in salary expense and the first month

of training will be burdensome for the owner’s time management in the company.

Alternative Course of Action 3: Automated/Computerized Inventory Management System

Dio’s Star One currently keeps a manual recording system of their inventory. This makes a lot

of time given that the business operates for 24 hours and have to do it repeatedly every after

shift and the tendency of this routine is the inventory spillage. This means if the inventory is not
 Dio’s Star One Food Inventory Management

accurate for the earlier shift it will carry-on until the next succeeding shifts. This is why it is

better for the business to shift to an Automated or Computerized Inventory System.

Automated inventory management software can save restaurant owners time by automating

ingredient stock counts and purchase orders. This can also help restaurant owners financially by

calculating menu item costs, monitoring food waste and portioning, and offering insights on

what items are the most profitable. The best systems are costly and either a part of the point-

of-sale (POS) system or seamlessly integrated so data is calculated in real-time.

Lavu is a restaurant management and POS system. Out of all the software systems we

evaluated, Lavu is the only program that offers features like automated low stock alerts, recipe

costing, and purchase order management at a competitive price of less than $80 or P4,000 per

month, making Lavu the best inventory management system for restaurant owners.

Lavu is a cloud-based software system. The POS features run on iPads, but the back-office

management features, including inventory, can be accessed from any internet-connected

device. With Lavu inventory, businesses can get real-time inventory updates based on sales,

create purchase orders, see the value of inventory on hand, tie menu items together with

ingredients, and see where you can cut back on wasteful spending. Lavu is one of the only

restaurant POS and inventory management software systems that includes tools to manage

vendor relationships directly within the platform.

 Dio’s Star One Food Inventory Management

Presentation 1: LAVU Inventory Dashboard and Inventory Settings

 Dio’s Star One Food Inventory Management

With Lavu, Dio’s Star One can keep track of stock by tying ingredient items and quantities to

menu items, including modifiers. Lavu’s system keeps track of stock levels in real-time, and can

alert servers when an ingredient or menu item is about to run out. Ingredient-level tracking is a

crucial inventory management feature for restaurants, and all of the systems have this

capability.

Presentation 2: Lavu Purchase Order & Vendor Management

 Dio’s Star One Food Inventory Management

With Lavu, they can generate purchase orders based on real-time stock updates. They can also

list vendor details within Lavu to manage vendor relations in one place. Lavu lets them choose

to update stock levels automatically by purchase order or by manually adjusting stock levels.

Users of LAVU like it because it is easy to learn and use. The interface is customizable, which

users really like. Some negative reviews report efficiency and helpfulness issues with customer

service. But on the other side, Lavu’s average customer review is not as high as some of the

other systems like TouchBistro, Upserve, and Toast and it is still very expensive for Dio’s to

invest on software like this.

 Dio’s Star One Food Inventory Management

CHAPTER 5

RECOMMENDATION AND CONCLUSION

This chapter contains the alternative course of action proposed and chosen by the researchers

and the conclusion of the whole study.

Selected Alternative

Alternative Course of Action 1: Implementation of Stringent Procedure and Usage of MS Excel

on Taking Inventory is recommended by the researchers for Dio’s Star One to help them

monitor their inventories. This will improve their daily transactions and maximize their time in

recording the transactions of the company while having accurate inventory of their products.

This System will benefit the business to become more productive in other functions in the

business and the entity will have a proper report if there is an income or loss.

It may be time consuming and costly at the first few months but the benefits of this kind of

Inventory management system will surely be a longtime running that will profit the company.
 Dio’s Star One Food Inventory Management

Conclusion

This study is conducted to assess the Food Inventory Management System of Dio’s Star One and

to subsequently propose a more efficient inventory management, after realizing that the

company only uses a manual inventory system, the researchers mainly focus their attention to

resolve this problem especially that the entity is one of the competitive store in place, is not

appropriate for the kind of system they are using.

The researchers then proposed to Dio’s Star One an Implementation of Stringent Procedure and

usage of MS Excel on Taking Inventory, this system will definitely improve their inventory

monitoring, count and recording of their inventory and sales. This will lessen the time of the

owner in the store recording transactions in a manual process and having accurate inventory of

their products and become more productive to do his/her other functions in the business.

Having MS Excel inventory system the business will have a more accurate basis for their re-

ordering process, material count, and a more proper report if there is an income or loss.