CHAPTER II

Review of Related Literature and Study

2.1 Review of Related Literature

2.1.1 Foreign Literature

According to Hold (2010) article, “Inventory refers to stocks of anything

necessary to do business”. The U.S Small Business Administration publication describes what
constitutes successful inventory management balancing cost versus benefits of inventory,
including: Maintaining a wide assortment without sacrificing service; Keeping stock low without
sacrificing performance; Obtaining lower prices by making volume purchases; and Maintaining
an adequate inventory without an excess of obsolute items.

Based on Brigman (2007), Fundamentals of Financial Management, 5th ed.,

companies are increasingly employing Inventory System. A computer start with an inventory
counts in memory. Withdrawals are recorded by the computer as they are made, and the
inventory balance is the constantly revised. When the recorded point is reached, the computer
automatically places an order, when this new order is received, the recorded balance is increased.
Retail stores have carried this system quite far, each item has a magnetic codes, and as on item is
checked out, it passes over an electronic reader, which then adjusts the computers inventory
balance, at the same time the price is fed to cash register tape. When the balance drops to the
recorder point, an order is place. The proponent aim to develop an automated inventory system
which is technically, operationally, and economically. The method used by the proponent to
develop an automated inventory system is Descriptive Method. The proponent conduct several
interviews in order to gather information about the present existing conditions of the inventory
systems, knowing its problems and enhancing it by developing an automated inventory system.
Questionnaires were also distributed to all interviewees for additional information. Using the
descriptive method, the proponent also observe the functionality of the present inventory system,
which help them to discover that Electronic Data Processing is Advantageous than other (Isn’t
this part of the Data Gathering Procedure?).
 On an article written by White (2003), merchandising means selling of products
to retail customers. Merchandisers, also called retailers, buy products from wholesalers and
manufacturers, add a mark-up or gross profit amount, and sell the products to consumers at a
higher price than what they paid. When you go to the mall, all the stores there are retailers, and
you are a retail customer. Retailers deal with an inventory, all the goods (products) they have for
sale. They account for inventory purchases and sales in one of two ways: Periodic and Perpetual.
As the names suggest these methods refer to how often the inventory account balances are
updated.

Based on Henderson (2008), Inventory System Consist: An inventory control

system is used in many warehouse to track the location, quantity and status of goods that are to
be sold. Shipping and receiving of products is scheduled by and inventory control system.
Inventory control uses barcodes and RFID tags to track specific items. An audit, or a physical
count of inventory, is used to find out how many items are in an inventory. Inventory taking is
often required in order to get an accurate count for accounting valuation purposes. Some
inventory items have barcodes attached to them or imprinted on them. These barcodes can be
read during an audit by barcode reading devices.

According to the article of “Paperless Receipt Solution (PRS) System”, by James

Dyson Foundation (August 9, 2015), Configure One’s Web-based E-Catalogue software called
Concept E-Catalogue, is easy to implement and easy to use. Designed for both B2B (business to
business) and B2C (business to consumer) operations, it fully integrates with Configure One’s
configurator and CPQ software. The combined solution of Concept E-Catalogue, Concept E-
Commerce, and Concept Enterprise Product Configurator provides you with a complete
storefront solution that drives incremental revenue for your company. Featuring extensive
content management tools, the E-Catalogue software may be administered and maintained
without programming skills, freeing up your IT team.

According to Oludare O., et. al (2013), SMS is an acronym used in the world of
communications technology. It stands for Short Messaging Service which is a protocol used in
communications that gives way to the exchange of short text messages from one mobile
telephone device to another. SMS or text messaging largely dominates today’s means of
communication since seventy-four percent of all cell phone users send and receive text messages
nowadays. The technology behind SMS has paved the way for the rapid growth of improvement
of text messaging that has now allowed users to broadcast SMS text messages not just from
mobile phones but also from computers with the use of SMS software and through public SMS
gateways. The link between text messaging to SMS technology now conotates the terminology
of “SMS” as the act of texting or sending text messages even with the use of a different
communications protocol.

2.1.2 Local Literature

Based on Abrazhevich (2007), this article describes research into online electronic
payment systems, focusing on the aspects of payment systems that are critical for their
acceptance by end users. Based on our earlier research and a diary study of payments with an
online payment system and with online banking systems of a reputable bank, we proposed a set
of 12 interaction design guidelines. The guidelines have been applied during the implementation
and redesign of a new payment system. A computer scientist with interests in human-computer
interaction, user experience, interaction design, and project management; he is a project manager
and co-founder of Mobilnova.com. Panos Markopoulos is a computer scientist doing research in
intra-family communication, ambient intelligence, and interaction design for children; he is an
Associate Professor in the Department of Industrial Design of the Eindhoven University of
technology. Matthias Rauterberg is a computer scientist and psychologist with interests in
entertainment computing, responsive environments, and user modeling; he is a Full Professor
and head of the Designed Intelligence research group at the Department of Industrial Design of
the Eindhoven University of Technology.

According to Henderson (2004), they have three major advantages by using

inventory system, there are: (Time savings, Accuracy, and Consistency) which helps a lot for a
businessman to increase the sales of their business. Time Savings, as the old saying goes, “time
is money”. The amount of time that can be saved by a business is, perhaps, the biggest benefit of
using a computerized inventory system. A great example of this benefit is the retail industry. In
cases where a shop maintains all data manually, its manager must reconcile each sales receipt
with every piece of physical inventory. Depending on the size of the establishments and how
many different products are sold, this can be a daunting and time consuming task. If that same
store, however, used a computerized point of sale (POS) system, the master inventory list would
be updated electronically each time a sale is made. The only thing a manager would have to do
each day is print out the report highlighting the inventory to be restocked. Accuracy, an
additional benefit of using a computerized inventory system is the accuracy it ensures.
Eighteenth century English poet Alexander Pope is often quoted as having said, “To error is
human”. When an inventory list is maintained by hand, the margin of error widens with each
update. If one mathematical calculation is wrong or one type is made, disaster may occur. For
instance, if a clerk accidentally adds a zero to the end of a purchase order, a business could
potentially end up paying for 10,000 units of merchandise as opposed to the 1,000 that is actually
needed. Consistency, a small business operates most efficiently when its processes are executed
in a consistent manner. By using a computerized inventory system, a business owner can
ensures that all orders, reports and other documents relating to inventory are uniform in their
presentation, regardless of who has created them. This will allow ease of reading. In addition,
uniformity creates a professional appearance, which can go a long way to impress associates,
such as potential investors.

On an article written by Sanders (2010), Computer-based system is a complex

system wherein information technology plays a major role. It makes the work easier, faster and
more accurate. Due to that fact, the automated scheme has become essential to small and big
companies for they are expected to give the best services possible. Nevertheless, some
businesses still prefer sticking with the system that is not integrated with technology. Profitable
causes are computer illiterate staff and lack of funds. Companies, especially the big ones are
recommended to switch from manual to automated systems because this will improve the
efficiency and productivity of the business which will up lift the industry’s reputation. One of
the most sought after automated systems of different companies is a purchasing and inventory
system which comes hand in hands. A purchasing and inventory system is very important in
every organization because a good and inventory management can create an excellent
productivity. Primarily, inventory work consists of input, output and restock. Input is a process
of buying new products into the inventory and replacing the old products with the new ones.
Meanwhile output is a procedure of taking out the products for the inventory for sales or usage
and refill the insufficient products or escalating demands. Most of the retailing market is using
traditional way in the inventory management system where a person is assigned to check and
record the stock by hand using pen and paper. It is where operations with regards to all the stock
will be archived.

Based on Kaizer (2008), Inventory control systems maintain Information about

activities within firms that ensure the delivery of products to customers. The subsystems that
perform these functions include sales, manufacturing, warehousing, ordering, and receiving. In
different firms the activities associated with each of these areas may not be strictly contained
within separate subsystems, but these functions must be performed in sequence in order to have a
well-run inventory control system. In today’s business environment, even small and mid-sized
businesses have come to rely on computerized inventory management systems. Certainly, there
are plenty of small retail outlets, manufacturers, and other businesses that continue to rely on
manual means of inventory tracking. Indeed, for some small businesses, like convenience stores,
shoe stores, or nurseries, purchase of an electronic inventory tracking system might constitute a
wasteful use of financial resources. But for other firms operating in industries that feature high
volume turnover of raw materials and/or finished products, computerized tracking systems have
emerged as a key component of business strategies as aimed at increasing productivity and
maintaining competitiveness. Moreover, the recent development of powerful computer programs
capable of addressing a wide variety of record keeping needs including inventory management in
one integrated system have also contributed to the growing popularity of electronic inventory
control options. Given such developments, it is little wonder that business experts commonly
cite inventory management as a vital element that can spell the difference between success and
failure in today’s keenly competitive business world.

2.1.3 Synopsis

The foreign and local studies mentioned above are related to the proponent
proposed system in terms of using POS with E-Catalogue and Inventory System with SMS
Notification on their business. It has been mentioned that inventory system is more functional
because of the distinctive performance in the aspect of speed, accuracy and stability of the
system means that inventory and POS system with E-Catalogue and SMS Notification can
increased production efficiency and reduce time and effort of an individual. The said foreign and
local studies contribute ideas to the proponent order to originate the proposed study.

2.2 Review of Related Studies

2.2.1 Foreign Studies

In the study of Ferrer (2001), Under the Koread Red Ginseng Enterprise Sales and
Inventory System, the proponent came up with a computerized sales and inventory system. The
proponent used database to easy access of files and for easier and faster processing of the selling
and inventory transaction. The program was designated to generate reports such as monthly
reports, inventory reports, sales invoice and list of items.

In connection with the proposed system, the proponent proposed a new and faster
way of processing business transactions. The system also helped the user to know availability of
the products. It also helped the manager to monitor the stocks and to get immediate notice for
acquisition of additional products.

The proponent acquires knowledge about the file processing and report
generations through this study. It also gives the proponent ideas to create the proposed system’s
reports in online sales and inventory system. Automation is mandatory, thus automated report
generation for precise reports is to be included in the proponent’s proposed system.

In a study by Aparanjitha (2008), this project is aimed to developing in online

Sales and Inventory Management System (SIMS) for a departmental store. This system can be
used to store the details of the inventory, update the inventory based on the sale details, produce
receipts for sales, generate sales and inventory reports periodically, etc. This is one integrated
system that contains both the user component (used by salesperson, sales manager, inventory
managers, etc.) and the admin component (used by the administrators for performing admin level
functions such as adding new items to the inventory, changing the price of an item, etc.). This
system runs on multiple terminals, offer GUI to its users and connects to a common database(s).

The proponent acquires knowledge on real time inventor, generations of receipts

and security features where in restricted information are only accessible by employees,
managers, administrators, etch. The proposed system can be accessible by employees,
administrators and customers, making online transaction possible.

2.2.2 Local Studies

According to Distors (2007), in her study Sales Monitoring System, the

accelerated work structure of the company proper monitoring is essential in order to keep track
of the company’s sales activities. Her system aims to come up with an efficient, and accurate
mechanized system of preparing invoices that will keep track of the daily transaction and
generate reports. Important information will be provided by this studying order to prove that the
computerization of the company’s operation and achieve a more reliable and efficient means of
monitoring day to day activities. Her system focuses on the analysis and design of the sales
monitoring system which will monitor the stacks inventory of the sales departments. This
system of hers is somewhat related to our study but our system focuses more on the inventory
monitoring system of a trading company.

As a stated at the book of Passion (2004), to improve their efficiency and reduce
their cost of operation. Reports are more timely and accurate. Computers have a large capacity
to store data and tremendous speed to manipulate and recall data to the format a user wished to
use which introduction of microcomputer computation of business is more affordable.

Lewis (2002), stated that: the reason for using computers vary from person to
person. Some of the computers in business are to perform accuracy, to be as productivity, to
decrease bottle necks or hassles, to alter cash flows, or to simply elevate your status.

According to Sybex Inc (2000), visual basic provides a graphical environment in

which the users usually designed the forms and control that become the building block of tour
application. Visual Basic support many useful tools that will help the user to be more
productive. The hardware of a POS system is also distinctive and important. A typical system
includes a display screen for the clerk, a customer display, a cash drawer, a credit card swiping
system, a printer, and a bar code scanner, along with the computer loaded with the POS software.
Custom features may be added or removed, depending on the industry. A restaurant POS
system, for example, may have a feature which prints order tickets directly in the kitchen, or a
grocery store may have an integrated scale for weighing goods.

2.2.3 Synthesis

The foreign and local literatures mentioned above are related to the proponent
proposed system in terms of using Point of Sales, and Inventory System on their business or
establishments. The Financial management system can be used in different business
establishment engaged in sales. The said foreign and local studies contribute ideas to the
proponent in order to originate the proposed literature.

2.3 Justification of the Study

The information gathered by the proponent has a big help in the development of
the study. The facts and data contained in related literatures and studies are related to the
proponent proposed study. It gives realistic ideas, guides and an alysis to be able to come up
with the proposed study.

The related literatures as well as related studies stated previously have similarities
and differences. Both systems are similar when it comes to usability in POS and Inventory
system.

The set of foreign and local studies and literatures stated above has been one of
the basis of the proponent on how the proposed system will be useful. It also provides ideas to
the proponent proposed study.