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In partial fulfillment of our requirements

in
Business Policy & Strategy

Submitted to:
Engr. Augusto Matias

Submitted by:
Abinal, Mariam
Barro, Hazel
Limbag, Lanie
Lingad, Jercy

December 5, 2016

Chapter 2
2.1.1. Description of the general context in which the problem is to be viewed and discussed
Effective inventory management is the core of supply chain management excellence. In such
an industry where it is necessary to handle large amounts of inventory as a supply chain for
consumers, being able to effectively respond to any issues that may arise is a key skill that any
management needs.
In this strategic plan, we aim to be able to manage change in the future rather than react to it.
This planning process has provided us with a system to lead, manage, and improve the inventory
processes in a well-planned, integrated manner based on our strategies. We will focus on Hava
Asia and develop a long-term strategy for their inventory management processes that will help
increase the efficiency of their business and move them towards the visions and missions they
have set towards.

2.1.2. Description of the situation in and the process by which the problem arose and
developed
According to Margaret Rouse, supply chain management (SCM) is the oversight of materials,
information,and finances as they move in a process from supplier to manufacturer to wholesaler
to retailer to consumer. It involves coordinating and integrating these flows both within and
among companies. It is said that the ultimate goal of any effective supply chain management is to
reduce inventory (with the assumption that products are available when needed).
In a hardware supply chain like Hava Asia, it is important to have an efficient way to manage
inventories so that daily operational activities may run smoothly. But with a large amount of

supply that needs to be tracked on a daily basis, one also needs to be knowledgeable about how
to handle and organize the inventory according to the system they employ.
Our understanding of inventory management practices is still little. According to a research
done by CSCO Insights (2011), it is only in the last decade that the direct link between inventory
management effectiveness and corporate cashflow generation has been well understood, or
maybe more accurately has finally received board level interest.
Hava Asias vision and mission involves being at the top in both quality and choice for
consumers, which is why inventory management must be addressed properly in order for it to
reach its goals. The materials that the firm uses includes raw materials such as ordinary plastic,
ABS plastic, or wood, which are all materials that need to be treated with due care. Thus,
implementing an organized and effective inventory management system is necessary.
An efficient management of a companies inventory has a bearing on its cash flow. A
disorganized inventory can lead to corporate loss if not handled properly. Most companies keep
their inventory levels down while maintaining or even improving customer service levels.

2.1.3. Objective of the Study

The objective of this study is to be able to identify inventory management practices that can
be applied to Hava Asia and determine the best one that can be used for application and
implementation.

2.1.4. Methodology
2.1.4.1. Sources of Data
The respondents of this study were the employees of Hava Asia. The
employee respondents were randomly chosen from the department that handles the
company inventory. The data sampling was used with the random sampling method. The
survey method was used to extract data.
2.1.4.2. Data Gathering Procedures
The researches have used the Descriptive Research Method wherein the
study is focused on present situations. It involves the recording, description, analysis and
the presentation of the present system, composition, processes, or phenomena.
Under the Descriptive Research Method, the researchers used the Survey
Method, which is otherwise known as normative survey. The results and findings of the
study should always be compared with the industry standards. With the survey method,
the researchers are able to statistically study the specific areas where they must
concentrate. Findings regarding the common practices being done and the methods which
ae commonly adopted by the employees are obtained with the use of the survey method.
2.1.5. Scope and Limitations of the Study
This study aims to analyze the inventory management problem of Hava Asia and find longterm solutions to remedy it.

It will focus on studying inventory management practices and selecting which applies best to
the companys operation. It will focus on both the present and the future performance of Hava
Asias inventory management wherein improvements would be made should problems arise.
This is beneficial to the company because it may help to enhance their profitability through
effectively managing their inventory in the long run.
2.1.6. Definition of Terms
1. Inventory Management - is a science primarily about specifying the shape and placement
of stocked goods. It is required at different locations within a facility or within many locations of
a supply network to precede the regular and planned course of production and stock of materials.
2. Profitability - is the ability of a business to earn a profit. A profit is what is left of the
revenue a business generates after it pays all expenses directly related to the generation of the
revenue, such as producing a product, and other expenses related to the conduct of the business
activities.
3. Supply Chain Management - of the flow of goods and services, involves the movement
and storage of raw materials, of work-in-process inventory, and of finished goods from point of
origin to point of consumption.