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In this course, we need to undertake a task as complete the course in the course of this semester. This task should be done in group. We choose Metro Department Store as a store to conduct a study on this task. Metro is located in Taman University, Tanjong Malim. The location is not far from campus Sultan Idris Education of University. In the store, we met Mr Figo. We interviewed him as a representative from the store. We interviewed him on October 17, 2011, at Metro Department Store. Title we choose is Inventory Management and Just-in-Time. Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Just-in-Time (JIT) is a strategy for inventory management in which raw materials and components are delivered from the vendor or supplier immediately before they are needed in the manufacturing process. Just-in-time is an inventory system where raw materials are delivered right before they are needed on the assembly line, and finished goods are manufactured just before they are shipped to customers. So, based on the information above, we will make an analysis to the business that we choose.



Metro Department Store was established in 2007. It is now operates at No 10, 12, 13, 14, 15 and 16, Jalan U1, Taman Universiti, 35900 Tanjung Malim, Perak. The owners name is Mr. Hong Tuan Hooi. He opened the business just with his Malaysian Education Certificate (SPM) only. By his big efforts, he success in his business. After four months operating, Metro Department Store started to be known by local people and also the students of Sultan Idris Education of University. Among the items that the shop offers to their customer are various types of shoes and clothing. In addition, Metro Department Store has four employees that work as a full timer and five employees work as a part timer. Most of the part timer workers are UPSIs students. They worked when they have no classes.




The location of Metro Department Store was in the middle of public attraction. This is because it is situated at among the food stores and housing area. So, the local people do not need to go to the Tanjung Malims area just to buy shoes and clothing when they can get all that in Metro Department Store. On top of that, most of the Metro Department Stores regular customers were UPSIs students. The following is the Metro Department Store location map;



Vision Makes Metro Department Store the first choice of its customer and expand its branches. Objectives Able to meet the high demand from their customers. Generate higher profits and returns to the owner. Become a business that captured the hearts of customers by offering a reasonable price in the products and services offered.



Metro Department Store as we already knows, is a type of business of sole proprietorship. This company sold many type of goods include food and non-food. By the ways, we are only will go through to the financial of non-food products that are refers to clothes and shoes in detail. Although it is not the big business, but it still has own financial reporting with their own style of recorded. It is means the financial statements have been prepared without referring to the Generally Accepted Accounting Principles. In addition, the financial statement of the business was updated on 10th of every month. Therefore, in the Metro Store, the owner does exactly all those things include the part of finance and was helped by his clerk. For your knowledge, business finance is essentially the wallet of an organization. In this business, the sole proprietor monitors spending, tracks purchases, develops financial strategies, analyzes cash statements and researches investments on its own. The owner keeps the business' finances in order and on track. Business finance helps companies achieve their financial objective of earning profit. Business finance shapes the direction of companies and provides guidance for financial decisions to meet its goal. It has a great influence over how companies do their business.


Business Capital

Until now, the business remains strong running their business. It is means, with the beginning capital to run the market compiled with the effectiveness and efficiency of the management of businesss finance, the sole trader success in its planning. From the information we gather, the owner brought about RM 150 thousand into the company to start the business. The capital required by a sole proprietorship form of business organization is totally arranged by itself. He provides it from his personal resources by 80 percent and the other 20 percent by borrowing from his friends and relatives. The businesss liability is unlimited, so its difficult for the owner to get the loan from the bank and other financial instruments. Initially, the company had flow out their capital according to spend on buying for the business facilities such as a new cash machine, premise renovation, buying new stocks, business equipments and tools and other costs involved in continuing the business operations. The table below shows the initial amount of capitals that were involved in Metro Department Store: TYPE OF CAPITAL EXPENSES Premise renovation Stocks Business equipments and tools Others included cash machine Total AMOUNT IN RM RM 45,000 RM 60,000 RM 30,000 RM 15,000 RM 150,000

Referred to the statement of the owner, the cost to buy for the stock in 2007 (starting from opening of the business) was RM 60,000. But nowadays, the cost of the stocks has increased to RM 80,000 above because of the increasing in the cost of material in produce the clothes and shoes. It shows that the total capital expenses for this company also increase from year to year.


Business Expenses

This part is about the expense thats come out while running the business. For your knowledge, any cost of doing business resulting from revenue generating activities is called expenses.

Expenses that involved in this business are including rental expenses, utilities expenses (electric current and water usage), common expenses, stationary expenses, salary expenses and others. From the information we gained, the monthly rental payment for this business decrease from a year ago where the rental is RM 1,500. Before this, monthly rental payment is RM 1,800. Under certain reason, the rental was reducing from the usual rate. Then, the salary were divided into two categories where there are for full-time workers and part-time workers. Full time workers were paid basic by RM 550 plus with the overtime fee, allowance and Social Security Organization (SOCSO) whereas the part-time workers were paid the fee by hour rate of work where the owner paid them RM 2.50 ~ RM2.80 per hour. Besides, the utility expenses for this business are around RM 200 to RM 300 per month. It is depends on the rate of usage the facilities like current electric and water by the employees.


Business Revenues and Profits

Metro Department Store measures their profits by Break-Even Point which the amounts of revenues are equal with the amount of cost. According to the market environment and demanding from the customers which are most probably come from area of Tanjung Malim, the company can get a higher profit but sometimes they will get some losses and reached at break-even point only. Higher profits they can get especially when it is not the semester break because what we can see, they major customer are come from the student from the nearer university that is Sultan Idris University of Education. Through the information given, the highest profit that this company can get is around RM 15,000 to RM 25,000. In order to gain the profits like that, the company placing a range of markup price on their product about 10 percent to 50 percent depends on the quality and design of the product to attract the customer to choose their product rather than competitors product. 4.0 BUSINESS OPERATION

In general, Metro Department Store has been operating almost four or five years ago and still strong in running their business at Taman University area although in nearer area, there are many

competitor sold an almost same product like that company. For an example, Yang Yang Economic Market, Big Ten Market and Brilliant Supermarket. The company operates every day even on weekend. The business time usually starting from 9.30 a.m. until 10.00 p.m. but now, the opening still same just the different on the closing time that is around 10.30 p.m. to 11.00 p.m. It is because the number of customers was increasing from day to day especially on weekdays from Monday to Thursday. Therefore, the working time for his employees is already fixed by the owner where the fulltime worker will work every day and only get one rest day in a week between Mondays to Friday. By the way, the rest day between each employee will be different. That way can help the company to reduce expenses from the side of pay the salary of the employees without hired more employees. Meanwhile, the part-time employees did not have the rest day because they only work about two or three day in a week and four to five hour in a day. So, they no need to have the rest day. Then, about the inventory management, the company will make ordered regularly on every month. However, it is depends on the inventory turnover and demanding from the customer. More detail about this point will be discussed in subtopic inventory management.



Inventory or stock for all type of businesses is more than just materials and goods that are kept in a warehouse or storage. It plays a significant role in a companys physical assets. Those stocks represent a financial investment which means, if they are not being used properly, it can drain a companys cash flow. To make sure that they do not just throw their money away only on stocks, a company should spend bit manpower on monitoring inventory which are known as stock management. Inventory management is primarily about specifying the shape and percentage 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. The scope of inventory management concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation,

inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. Management of the inventories, with the primary objective of determining or controlling stock levels within the physical distribution function to balance the need for product availability against the need for minimizing stock holding and handling costs. Metro Department Store run a business based on business clothes and footwear. Supply of clothes and footwear sourced from suppliers from all over the country like Johor and Kuala Lumpur. However, many suppliers come from Kuala Lumpur as closer to the business location. The example of clothes suppliers are Catwalk Original, Sixty-eight Fashion, La Vinci, Susanna, and Lina-leza the designer fashion. When the transmission distance closer, delivery costs are much cheaper. Usually supplies online is made one or two months, also depending on the needs and demands of customers and over time. As we know, fashion is always changing with time. Therefore, the garments are ordered from suppliers are also constantly vary depending on customer needs and fashion. Clothes from the previous fashion and clothes ordered fewer more ordered latest fashion. The quantity of clothes and footwear also booked depending on the season. When it's the festive season, ordered supplies more than usual today because of the festive season, consumer demand for clothing and footwear will increase. Usually clothes online up to 15 to 20 cartoons each month compared to normal days only 10 cartoons each month. 1 cartoon usually contains 24 to 30 pieces of various types of clothes. Price of one cartoon of clothes is about RM200 and above, depending on the quality, brand and designs of the clothes. Dealers will have an advantage when buying stock in a lot of suppliers. Advantages are as receive a higher discount and get free gifts such as cartoons of each of 24 pieces, will receive free a piece of cloth. Then, form the period of the ordered product, the stock will arrive after one week makes an ordered. Besides, the business also can get the stock on time where the supplier come to the company and the owner make an ordered on that time.

In addition, usually when makes and ordered, we never forgot to think about the risk that may come out. Through the information gathered from the owner, he usually received the stock in good condition and rarely received problem product such as from aspect wrong design, size, and other. However, they got a warranty if they received damaged stock where they can return the product in period of one month. After given period, they need to face its loss because of the damaged stock cannot be sold.



As noted above, the fashion is always changing with time, hence the demand for oldest fashion apparel and footwear will decrease. This caused the stocks of clothes and old shoes are not sold out. If left alone, it will cause waste. So, to overcome the problems, the business needs to make a promotion in order to clearance the stock and get the money back. To encourage people to buy clothes and shoes, large-scale campaign will be conducted. During the campaign, for the footwear, the price of all sales will decline to reach RM10 a pair. For clothes, the customer will get a purchase with a discount from 10 percent to 25 percent depending on the type of clothes. Highest discount for each garment during the campaign can reach up to 50%. At this point, the business does not get profit but it is fine to the owner because he got his money back.



In our opinions, budget is one of the most important things to be a successful businessman. Budget plans that more systematic will make the business cash flow more efficient. Therefore, there is few ideas that we think could help Metro Saver business grow were: 1. Make sure inventory plans more systematic and well organized.

As a businessman, we suggest that the owner should prepare and decide the quantity of the monthly inventory that will be added every month to be more organized. This will make it easier for the owner to record and the action when there is over budget. Therefore, the

inventory plan needs to be plan properly by the owner so that they can record the profit and loss of their business.

2. Set the business main goal for a budget period.

Goal is the most important thing for a business to be successful. A good businessman will set a goal for their business. Therefore, Metro Saver need to set a goal that they want to achieved in a certain budget period. The goal set has to be related with the shop profit so that the business will not bankrupt. This goal also needs to be emphasized into all the workers so that they will work hard and work together to achieve the goal.

3. Use the internet and reward system.

Nowadays, internet is no longer something that odd and strange to peoples. So, as a businessman we have to take this opportunity to put and sell their product on the internet. On top of that, as an owner we could use a reward system to motivate our workers. By giving out a bonus to those who can achieved a target will make them more productive.

4. A good customer service.

To make a business more successful we must treat our customer properly no matter a regular customer or a new customer. We also need to emphasize the customer comes first and customer always right policy. We even can provide a delivery service to improve our business.




From the information above, we already make an analysis to the business of Metro Department Store. As you already knows, that business has operates about four to five years till now. The businesss owner is a Chinese people. It sold three types of products which are grocery, clothes and footwear. However, we are focus on the two product that are clothes and footwear for easier to discuss. That type of business is sole appropriate. To start the business, the owner use itself money to establish that market. It uses a lot of money around RM 150,000. Then, our analysis focus more on its inventory management where the business arrange its inventory more based on its knowledge and had a little bit differences with the theory inventory management. They make an ordered referred to the demanding of their customer. By applying that management concept, it can reduce the risk from the aspect of the product fail to sale. In order to calculate the profits, the business uses the Break-Even Point where the revenue equal to the total of costs. By that method, they can know how many profits they get in each day. The business has some problems that need to overcome for the businesses achieve its objectives and vision. So, we already provide four of improvement suggestion to the business as it guidance. We hope the owner can manage its business and employees with successfully.