Gil Bryan S.

Balot
Guro
Unit of Competency
: Perform
Purchasing and
Inventory of
Production
Materials
Module No. Module Title : Performing
3
Purchasing and
Inventory of Production
Materials
Sourcing is a complete process of
obtaining goods and services from
preparation and processing of a
requisition to receipt and
approval of the invoice for
payment.
Services are intangible products that
are not goods (tangible products),
such as accounting, banking,
cleaning, consultancy, education,
insurance, know how, medical
treatment, transportation.
Stockpile is a comparatively
large stock of essential goods or
materials, built up to withstand
long holdups or scarcity due to
natural calamities, strikes, or war.

Inventory is an itemized
catalog or list of tangible goods or
property, or
the intangible attributes or qualities.
PURCHASING OF GOODS AND
SERVICES FROM
THE LOCAL SOURCES
We are very lucky nowadays enjoying and
benefiting from the advantages that
technology brings to our life. When we go to
the supermarkets and department stores, lots
of goods and services are there available for
your needs. With various shopping malls we
have in the entire Philippines, you will not
think of going abroad to purchase the things
that you want.
 Why do you prefer to purchase from local
sources? Purchasing local goods and services is
patronizing our own products resulting to some
of the following benefits:

 it stops the value of colonial mentality not only

among young children;
 it gives additional income to the government
through tax collection;
 it maximizes the use of our natural resources
from raw materials to the finished products;
 it develops the skills of the Filipino people
making them more innovative, creative and
productive; and
 it gives affordable price for seasonal and
quality products, fruits and vegetables.
 Factors do you consider when
purchasing goods and services from
the local sources? Whether you sell
PRODUCTS or sell SERVICES as
part of your business, skillful,
careful and wise purchasing is an
important part of your business. It
can determine whether or not you
will make a profit. Here are
some important points to consider
when purchasing goods and
services:
 study the profile of the local producers
 research on the daily average
consumption of the customers
 know your customers
 find out the right place to buy
 determine how much to procure
 check the track record of each
supplier
 get the behavior of the patrons
towards the products and services
 ensure the sustainability of the items
 VENN DIAGRAM

DIFFERENCES SIMILARITI DIFFERENCES

ES
 As a young entrepreneur, how can
you show the responsible ways of
purchasing activities on any of the
possible situations you may consider?
Write your answer on the blank sheets
below.
1. ____________________________________________________________
_____________________________________________________________
2. _____________________________________________________________
_____________________________________________________________
3. _____________________________________________________________
_____________________________________________________________
4. _____________________________________________________________
_____________________________________________________________
5. _____________________________________________________________
_____________________________________________________________
LET US APPLY WHAT YOU HAVE LEARNED
Directions: Find out the available goods and
services in your community and compare them
with other communities using the Venn diagram
in any of the following categories:

1. Profile of the Producers

2. Customer’s Average Consumption
3. Profile of the Customers
4. Right Place to Buy
5. Determine How Much to Procure
6. Check the Track record
7. Behavior of the Patrons
8. Sustainability of the items
LESSON 2

UTILIZE STANDARD
INVENTORY CONTROL
OF THE PRODUCTION
MATERIAL
Control is an approach or
strategy that checks and
balance resources
needed in the
continuous operation of the
business.
Inventories are stocks of goods
and materials available for
production or
manufacturing.
Process refers to the step – by -
step manner of operation making
product from raw
materials into finished outputs.

Stocks are the inventory

itself in various forms.
CONDUCTING
INVENTORY
CONTROL
OF GOODS AND
SERVICES
One delicate task of an entrepreneur is to
maintain an inventory control of goods
and services. There must be an
assurance that the owner will not run out
of stock in the production phase of his
business. These are much accounted for
from raw materials to the finished
expected outputs. All related activities of
purchasing require control management.
There must be no shortages of materials
since sources and supplies are locally
checked and available for the business.
 The use of stock card is a good strategy
to control records of stocks of goods and
materials. There are three types of
inventories described below:

1.Raw-Materials Inventory (RMI).

These are stockpile of materials for
inputs of production. (Examples are
textile in roll and threads in
boxes stocked in a warehouse for the
garment industry.)
2.Work-In-Process Inventory (WIPI).
These are partially completed
products requiring further processing
including sets of unfinished
goods for production process. These
unfinished items are for
fabrication or for further processing
stocked in buffer storage.
(Examples are the baby dress
garments with body parts only waiting
for the sleeve and collar sewing
operations)
1.Finished-Goods Inventory.
These are the final outputs
of production ready for
delivery to the market or
customers. (Examples are
bags, shoes, t-shirts,
computers, calculators, books
and others.
 To control is not only to check
physically but to list down stocks and
balances on a stock card before
deciding to do the purchasing activity.
It is important to declare the minimum
and maximum stock of every item
needed in the business operation. The
important sources like the suppliers
and stores (including business places)
are reflected in the stock card including
the date of purchase and the price as
reference.
 In this stock card, it is important to
update the daily record to tally the actual
stocks against what is reflected on the
stock card. This would help an
entrepreneur to know what, when, where
and how many items are to be purchased
at a time to sustain the inventory of goods
and services. Every stock card must be a
reliable piece of reference. All items
received and used should be updated at
all times.
 Below are examples of stock
cards that you may use. Of
course, you may also design your
own stock card. The stock card-
1 is for itemized inventory record
per item or individual; while
stock card – 2 is for the collective
inventory record of all the files of
stock card - 1.
 TENEZA’S MEAT & FISH PRODUCT
COMPANY
S TOCK CARD-1
(Individual/Per Item)
Stock Card No. Min. Stock Supplier:
Item: Max. Stock Re-Order Stock
+ Deliveries - Withdrawals BALANCE Withdrawn by:
Date (qty./units) (qty./units) (qty./units) (Person/Department)
 TENEZA’S MEAT & FISH PRODUCT COMPANY
S TOCK CARD-2
(Collective Items from Stock card – 1)

Operation Year: ________

Beginning +Total Deliveries Cumulative
Mont Item Balance -Total Withdrawals Balance
h
 Below is an example of a filled-up stock card,

TENEZA’S MEAT & FISH PRODUCT COMPANY

S TOCK CARD-1
(Individual/Per Item)

Stock Card No. 1 Min. Stock: 3 bags Supplier: MVC Company

Item: TVP/Textured Vegetable Protein
Max. Stock: 25 bags Re-Order Stock: 20 bags

+ Deliveries - Withdrawals BALANCE Withdrawn by:

Date (qty./units) (qty./units) (qty./units) (Person/Department)

Balance Forwarded 20 bags Ms. Sol Saldivar

2009
May 25 5 bags 15 Mr. Rene Delfino

26 8 7 Jun (Mixing Section)

27 4 3 Reynaldo (Receiving Sec)
28 20 bags (OR#1221, P750/bag) 23 Leony (MVC Co.)
29 5 18 Perchy (DepEd)
June 2 16 2 Marian (Packaging Dept)
3 20 bags (OR#1221, P750/bag) 22 Leony (MVC CO.)
4 1 21 Jenny (Shipping Dept.)
10 2 19 Via (Manufacturing Dept)
11 2 17 Jun (Mixing Section)
12 2 15 Reynaldo (Receiving Sec)
13 1 14 Via (Manufacturing Dept)
14 1 13 Reynaldo (Receiving Sec)
15 1 12 Jun (Mixing Section)
 LET US APPLY WHAT YOU HAVE LEARNED
Directions:
Following the Stock Card No. 1 (above) for Textured Vegetable
Protein of Teneza’s Meat & Fish Product Company, assume business
operation and consider your own business reflecting data on the
appropriate columns available. Copy the stock card on your activity
notebook and use it on your business now.

Name of your business: ________________________________________

S TOCK CARD-1
(Individual/Per Item)

Stock Card No. Min. Stock: Supplier:

Item: Max. Stock: Re-Order Stock:
+ Deliveries - Withdrawals BALANCE Withdrawn by:
Date (qty./units) (qty./units) (qty./units) (Person/Department)

Balance Forwarded
Directions: Let us find out how much you already know about production
cost and pricing of products or services. Answer the questions below
honestly and write the letter of the corresponding answer in your activity
notebook.

1. Things or products like apple, cucumber, carrots, tomatoes and corn

are examples of what products?
a. grown products
b. manufactured products
c. processed products

2. The dresses we have, bags we use and shoes we wear, are examples of
what products?
a. grown products
b. manufactured products
c. processed products

3. Maximized use of the natural resources, nurturing entrepreneurial

skills
of the Filipino people and additional income of the government through
tax collection are examples of what in purchasing activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process
4. Assessing the profile of the producers and customers and
checking the track record of the suppliers are examples of what
in purchasing activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process

5.These are stock files of materials for the inputs of production.

a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

6.These are partially completed products requiring further

processing including sets of unfinished goods for production
process.
a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory
7.These are the final outputs of production ready for delivery to the
customers.
a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

8. Stock card #1 has information and data that are categorized in what
cluster of items?
a. collective
b. group
c. individual

9. Stock card #2 has information and data that are categorized in what
cluster of items?
a. collective
b. group
c. individual

10. When you need to purchase or avail of goods and services without the
need to leave the country, how do you classify these resources?
a. export resources
b. imported resources
c. local resources
1.What function of an entrepreneur involves the guiding, leading and
supervision of the employees for the achievement of organizational goals
a. controlling
b. Directing
c. planning

2.Which is NOT a step in controlling process?

a. measure actual performance
b. establish standard
c. Design an improvement plan

3.Recruitment trainings and development for employees are things done in

what step of staffing?
a. conduct job analysis
b. workload assessment
c. Designing an improvement

4.Which term refers to anything that can be offered to a market that might
satisfy a want or need?
a. Product
b. price
c. service
5.What terms pertains to the itemized catalog or list of tangible goods or
property
a. Inventory
b. directing
c. stockpile

6.The term pertains to a place where goods are offered for sale
a. Market
b. product
c. service

7. Can goods hotdogs and instant noodles are what type of product?
a. manufactured
b. Processed
c. grown

8.Which of the following pertains to a large stock of essential goods or

materials,built up with a withstand long hold ups?
a. inventory
b. market
c. Stockpile
9.What purchasing activity will stop the value of colonial mentality not only
among the young children but with the entrepreneur?
a. rules in purchasing activity
b. factors in purchasing goods and services
c. Benefit of purchasing activity

10. Stock card no.1 has information and data that are categorized in what
cluster of item?
a. collective
b. group
c. individual

11. Stock card no.2 has information and data that are categorized in what
cluster of item?
a. collective
b. group
c. individual

12.Which of the following is more delicate to manage because it is a work

that someone has to provide to others with satisfaction?
a. product
b. Services
c. goods
13.Which of the following pertains the act of designing and producing the
container for a product ?
a. Packaging
b. product
c. price

14. This is one of the steps in staffing for you to learn the requirement of
personnel?
a. designing an improvement plan
b. group
c. Conduct job analysis

15. Which of the following means making sure those activities done in the
interprise are kn conformity with what has been planned?
a. organizing
b. planning
c. Controlling
1. B 9. C
2. C 10. C
3. C 11. A
4. A 12. B
5. A 13. A
6. A 14. C
7. B 15. C
8. C