Perpetual Help College of Manila

Developing a Point-of-Sale Inventory Management System

for Lord's Grace General Merchandising
using pHp and MySQL

A Thesis Proposal Presented to

Perpetual Help College of Manila

In Partial Fulfilments
of the Requirements for the Degree of
Bachelor of Science in Information Technology

by:

Antonio, Leona Ela R.

Bautista, Lalli P.
Maglunog, Marvin Ian C.
Santos, Ruben Gervey L.
Trambulo, Aida Meleen E.

This thesis is all about “Point-of-Sales and Inventory system for Lord’s Grace General
Merchandising” for the improvement of the manual processing system with regards to the monitoring
of sales and inventory. Businesses at present time are innovative and competitive. They make their
business process transaction into computerized one. The most commonly used system by the
companies today is the sales system and integrates it with an inventory system.
Table of Contents

Chapter I .......................................................................................................................................... 3
Introduction................................................................................................................................. 3
1.1 Background of the Study ........................................................................................................ 4
1.2 Statement of the Problem .................................................................................................... 4
1.3 Objectives of the Study .......................................................................................................... 5
1.4 Significance of the Study ........................................................................................................ 6
1.5 Scope and Limitation ............................................................................................................. 7
1.6 Definition of Terms ................................................................................................................ 8
Chapter II ....................................................................................................................................... 10
Related Literature ...................................................................................................................... 10
2.1 Review of Related Studies.................................................................................................... 10
2.2 Conceptual Framework ........................................................................................................ 12
Chapter III ...................................................................................................................................... 13
Methodology ............................................................................................................................. 13
Data Gathering Procedures and Outputs ................................................................................... 14
3.2 Inquiry............................................................................................................................ 14
CHAPTER IV ................................................................................................................................... 16
DOCUMENTATION OF THE CURRENT SYSTEM ........................................................................... 16
4.1 Profile of the Client .............................................................................................................. 16
4.2 Description of the Existing System ....................................................................................... 16
4.3 Cost Estimation .................................................................................................................... 16
4.4 Data Flow Diagram .............................................................................................................. 18
4.5 Entity Relationship Diagram................................................................................................. 20

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 Chapter I
Introduction
Point of sale (POS) (also sometimes referred to as point of purchase (POP))
or checkout is the location where a transaction occurs. A "checkout" refers to a POS terminal
or more generally to the hardware and software used for checkouts, the equivalent of an
electronic cash register. A POS terminal manages the selling process by a salesperson
accessible interface. The same system allows the creation and printing of the receipt.

A General Merchandising carries a broad selection of products from staple food items
to various household goods to medicine and also miscellaneous items such as candy,
cosmetics, and magazines, as well as light refreshments.

A sale refers to the exchange of product or services for an amount of money or its
equivalent while inventory in business, is a total amount of goods and the act of counting
them. A company owner must know the precise number of items in their storage areas in
order to place orders and control losses. Computerizing both Sales and Inventory System will
make an easier and faster transaction with the customers as well as monitoring the stocks of
the products.

The benefit of Point-of-Sale Inventory System is that this system makes a business
much more efficient, lowering the costs of running the business while improving customer
service and making the business more pleasant to work Computerized inventory system helps
management control the inventories, in turn lowering overall operating costs in the areas of
labour, facilities and logistics. A computerized inventory system also improves customer-
service metrics and fulfilment rates.

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 1.1 Background of the Study
One of the business owners that wish to make an improvement on her business
process is entrepreneur, Mrs. Sally Bermudo, Lord’s Grace General Merchandising owner.
She owned a total of five (5) stores, two (2) Zagu franchise, two (2) reloading stations, and a
Sari Sari Store which started at around 1999. From then, every transaction is being done
manually. It solves the previous problem, being from a tiresome manual system, into a
computerized POS inventory management system wherein its main function is to check and
monitor the sales, income and stock availability. It could also generate reports that would aid
in the management decision making process in making future purchase by providing
information regarding their stock turnover.

The proponents are to develop a new POS Inventory Management System that is
“Client-based”, meaning, it incorporates a bar code system to account for inventory sales and
acquisition of inventory. The proposed POS Inventory Management System would be able to
check and monitor for sales and income as well as stock availability with the use of a search
function, it could also reduce inventory within the database in the event of a sale by using a
barcode scanner, it could also generate sales forecasts reports, inventory turnover reports and
would be able to issue purchase orders upon the “Auto-Management” System that is
incorporated within the algorithms of the system.

1.2 Statement of the Problem

1.2.1 General Problem
1.2.1 .1 How to design, develop, and implement a POS Inventory
Management System for Lord's Grace General Merchandising that will
improve their current sales operation and inventory process.

1.2.2 Specific Problem

The specific problem that would be encountered by this relates to the

following:

1.2.2.1 How to create sales module that will accurately compute for
the total amount of item/s ordered by the customer?

1.2.2.2 How to develop a module that will monitor items that reaches
critical level?

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 1.2.2.3 How to create report generation module that will print
necessary reports?

1.2.2.4 How to design a module for management of product records?

1.3 Objectives of the Study

The objectives are presented to provide the proponent an accurate estimate on
needs to be done in order for the system to be accurately represented. These
are:

1.3.1 General Objective

1.3.1 To design, develop and implement a POS Inventory

Management System for Lord’s Grace General Merchandise that will
improve the current sales and inventory transactions and maximize the
company's performance in terms of sales process and inventory
transactions by creating a program using PHP and My SQL.

1.3.2 Specific Objective/s

The proponent would like to address several specific objectives:

1.3.2.1 To develop a sales module that will accurately compute for the
total amount of item/s purchased by a customer.

1.3.2.2 To incorporate features such as monitoring of the stock

availability, recording and summarizing of inventory wherein it alerts
the user if any of the inventory item is in critical level.

1.3.2.3 To enable the generation of reports that assists the management

in making timely decision.

1.3.2.4 To create a database that will store the records of the products,
sales and reports

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1.4 Significance of the Study
The study is to solve the previous problem of the company by making the company's point-
of-sale inventory management system policies more efficient. A common problem for small
business owners is that they fail to address the proper management of their stocks. On the
event that they do take note of the problem, it becomes a tedious task of manually recording
and summarizing information that they fail to come up with reports to make quick
management decisions.

The study seeks to benefit the following:

1. Students and Faculty

The system would help both the students and faculty of Perpetual Help College of
Manila a s teaching reference with regard to conceptualizing stand-alone programs
primarily, regarding point-of-sale inventory management and its database design.

2. Lord's Grace General Merchandising

The study seeks to assist the client's management by creating a point-of-sale inventory
management system that automates their recording and summarizing of their
inventory. It allows the generation of reports that assists the management in making
timely-decisions. it could help the decision making process by incorporating an "auto-
management" feature wherein it alerts the user if any of the inventory item is in their
critical level. It will also prevent theft by just being there.

3. Small Business Retailers

In an event that small business retailers would automate their point-of-sale inventory,
this study would give them an insight on sales and inventory automation. This would
serve as a tool to make a computerized POS Inventory management system work for
according to their needs.

4. Future Researchers
Future researchers of information technology topics might refer to this study for any
of their respective research.

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1.5 Scope and Limitation
As per the system's scope, the proponents are to develop a new Point-of Sale
Inventory Management System of Lord's Grace General Merchandising that is "Client-
based", meaning, it incorporate a bar code system to account for the inventory sales and
acquisition of inventory. It would only cater to checking and monitoring of the stock
availability, sales, and income and also the recording and summarizing of inventory. This
includes the addition, reduction and editing of items and stocks, recommendation of the
"auto-management" purchasing feature whether the product has already reached the critical
number of stocks. It could be able to determine the price of an item and could also generate
sales forecasts reports and inventory reports. Also, with the designated system administrator
could add, reduce and edit the inventory names and details found on the database and user
accessibility.

The limitations presented in the study of Lord's Grace General Merchandising's POS
Inventory System are as follows:

The Research Setting

The proponents believes that this study is applicable only for Lord's Grace General
Merchandising sales and inventory operations. Any similarities with its business
policies and recommended implementation of its POS inventory management are
encouraged as a part of the system study.

The Availability of Data

In this study, the proponents would refer to the availability of data found during
inquiry of Sally Bermudo, owner of the business. The questions asked deals about the
sales and inventory management policies of the store. Specifically, methods of
recording and summarizing sales and inventory information, company's safety stock
level policy, company background, and day to day operations such as the in and out of
products, sales report and inventory.

Bank to bank transaction is not covered by this proposal

Inventory of processed foods will not be covered in this proposal

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1.6 Definition of Terms

Client. A customer; a person, company, that seeks the advice of a professional man or
woman.

Computer. It is a machine that manipulates data according to a set of instructions.

Computerized System. A functional unit, consisting of one or more computers and

associated software, that (a) uses a common storage for all or part of a program and also for
all or part of the data necessary for the execution of the program, (b) executes user-
written or user-designated programs, and (c) performs user-designated date manipulation,
including arithmetic and logic operation. Note: A computer system may be a stand-alone
system or may consist of several interconnected systems.

Information Technology. IT is the study, design, development, implementation, support or

management of computer-based information system, particularly software applications.

Internet. It is a global system of interconnected computer networks that use the standardized
Internet Protocol Suite (TCP/IP), serving billion of users worldwide. It is a network of
network that consists of millions of private and public, academic business, and government
networks of local to global scope that are linked by cooper wires, fiber-optic cables, wireless
connections, and other technologies. The internet carries a vast array of information resources
and services, most notably the inter-linked hypertext documents of the World Wide Web
(WWW) and the infrastructure to support the electronic mail. In addition, it supports popular
services such as online chat, file transfer and file sharing

Inventory Management. 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.

Manual System. It is a system involving data processing which does not make use of stored-
program computing equipment; by this somewhat arbitrary definition, system using other
types of tabulating equipment, such as the card-programmed calculator, are considered to be
manual.

Point-of Sale. Point of sales systems are checkout locations in business operations where
transactions occur. The checkout location is a point of sale or POS terminal, which is just a
computer used as a cash register. Point of sales terminals and systems make perpetual
inventory control systems possible.

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Point of Sale Inventory Management. A point of sale inventory management system is a
step up from the use of a cash register. Small, start-up businesses who sell services and not
products may be able to survive with just a cash register and a simple accounting system. If
your business is product-based, chances are you will eventually have to switch to at least a
basic point of sale inventory system. With a point of sale system, you don't have to worry
how much inventory you have on hand. The point of sale system keeps track of that and you
have the information at a glance. A point of sale inventory management system allows a
business owner to have more than one business location and adequately keep track of
inventory at each without being present. No more worries about employee theft or pricing
inconsistency between one location and another. The boss can be away and not worry about
employee theft. Employee efficiency can be maintained. Point of sale systems take care of
those problems that result when management isn't present.

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 Chapter II

Related Literature
In exploration, we find new techniques, new knowledge, even develop new substances,
gadgets, equipment, processes or procedures, imagination and skill is employed by the
researchers. The commodities, new devices, services, in technology are needs of man for a
better, fuller life which is the concern of the research. These useful arts are the products of
the technological environment and the end-user is society in general. The fast growing trend
and innovation in technologies today prompts researchers to conduct studies about, both local
and foreign that is related to those studies.

2.1 Review of Related Studies

The following statements given are related to our study about the point of sale inventory
management system which is found very useful for the proponents in making the system.

"It is nearly impossible to overemphasize the importance of keeping inventory levels under
control," Ronald Pachura wrote in an article for IIE Solutions. "Whether the problems
incurred are caused by carrying too little or too much inventory, manufacturers need to
become aware that inventory control is not just a materials management or warehouse
department issue. The purchasing, receiving, engineering, manufacturing, and accounting
departments all contribute to the accuracy of the inventory methods and records." 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. Writing in Production and Inventory Management Journal, Godwin Udo described
telecommunications technology as a critical organizational asset that can help a company
realize important competitive gains in the area of inventory management. According to Udo,
companies that make good use of this technology are far better equipped to succeed than
those who rely on outdated or unwieldy methods of inventory and sales control.

Automation can drastically affect all phases of inventory management, including counting
and monitoring of inventory items; recording and retrieval of item storage locations;
recording changes to inventory; and anticipating inventory needs, including inventory
handling requirements. This is true even of stand-alone systems that are not integrated with
other areas of the business. But many analysts indicate that productivity and hence
profitability aims that are garnered through use of automated systems can be increased when
a business integrates its inventory control systems with other systems, such as accounting and
sales, to better manage inventory levels. According to Dennis Eskow in PC Week, business
executives are "increasingly integrating financial data, such as accounts receivable, with sales
information that includes customer histories. The goal: to control inventory quarter to quarter,
so it doesn't come back to bite the bottom line. Key components of an integrated system are
general ledger, electronic data interchange, database connectivity, and connections to a range
of vertical business applications." David Cahn, a director of product strategy for business

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applications at a firm in New York, confirmed this view in an interview with Eskow: "What
drives business is optimization of working capital. The amount of control you have on
inventory equals the optimization of the capital. That's why it's so important to integrate the
inventory data with everything else."

Point of sale (POS) systems are electronic systems that provide businesses with the capability
to retain and analyse a wide variety of inventory and transaction data on a continuous basis.
POS systems have been touted as valuable tools for a wide variety of business purposes,
including refining target marketing strategies; tracking supplier purchases; determining
customer purchasing patterns; analysing sales (on a daily, monthly, or annual basis) of each
inventory item, department, or supplier; and creating reports for use in making purchases,
reorders, etc. Basic point of sale systems currently in use include standalone electronic cash
registers, also known as ECRs; ECR-based network systems; and controller-based systems.
All function essentially as sales and cash management tools, but each has features that are
unique.

Point of sale systems, like many other computer based innovations, continue to change and
develop at a rapid pace. In addition, the demand for POS systems has spawned many new
manufacturers, each of which offer a dizzying array of standard and optional POS features to
their customers. For example, some electronic POS systems now cover hand-held scanning
devices, customer promotions, credit-card confirmations, counterfeit money checks, and staff
scheduling. Given the expense involved and the proliferating number of POS software
packages, small business owners should make sure that they adequately research both their
current and future needs before making a purchase, so that they are able to acquire a
customized POS system that best fills their current operating requirements and can
accommodate future changes in the business. "Consider value don't make your decision on
price alone," counselled National Petroleum News. "Look for a high level of connectivity and
compatibility with a multitude of peripherals. Demand customization capabilities. Don't
accept a system that's almost what you want when today's technology makes it possible to
customize one to exactly what you need."

Sources:
Blair, Adam. "POS Data to Power Efficient Distribution." Supermarket News. March
22, 1999.
Durocher, Joseph. "Point of Departure: Don't Think of Your POS System as Merely a
Cashbox but Rather as a Management Tool." Restaurant Business. September 1,
1994.
Eskow, Dennis. "Rising Stock: Integrated Inventory Systems Help Companies Shoot
Economic Rapids." PC Week, 5 June 1995.
Field, Christopher. "POS Man Always Rings Twice." Computing. October 22, 1998.

POS Inventory for Lord’s Grace General Merchandising using pHp and MySQL Page 11
 Murphy, Patricia A. "Cash Management Issues Foster Electronic Payments at Point of
Sale."Stores. July 1999.
"Systems to Keep the Checkout Counter Humming." Chain
Store Age Executive. October 1990.
Pachura, Ronald. "When Is Enough, Enough? Inventory Control Contributes Directly
to a Company's Profitability." IIE Solutions, October 1998.
Udo, Godwin J. "The Impact of Telecommunications on Inventory
Management." Production and Inventory Management Journal, spring 1993.

2.2 Conceptual Framework

MANAGEMENT
CURRENT POINT OF SALE INVENTORY MANAGEMENT
SYSTEM POLICIES AND PROCEDURES

PURCHASING
RECEIVING
STORAGE
ISSUING
REPORTING

SWOT
ANALYSIS
F
E
REQUIREMENTS
E
D
B
ENHANCEMENT OF POINT OF SALE A
MANAGEMENT & INVENTORY MANAGEMENT SYSTEM C
ACCOUNTINGTHEORI
ES CONCEPTS K
TECHNIQUES

ENHANCED POINT OF SALE

INVENTORY MANAGEMENT SYSTEM

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 Chapter III
Methodology
The POS Inventory Management System for Lord’s Grace General Merchandising calls for a
Rapid Application Development. As coined by James Martin, Rapid Application
Development (RAD) is a development lifecycle designed to give much faster development
and higher-quality results than those achieved with the traditional lifecycle. It is designed to
take the maximum advantage of powerful development software that has evolved recently.
(Hsu, 1997-2000) The development is divided into 4 phases: Requirements Planning phase,
User design phase, Construction phase, and Cutover phase.

Table 2.1 Rapid Application Development (RAD) Lifecycle in comparison to the Traditional System
Development Life Cycle.

In the “Requirements Planning” phase, the proponent divides it into two important
procedures: the system analysis and the system planning. For the system analysis, the
proponents conduct an observation and an inquiry about the client’s existing process. Here,
the proponents gather data about the existing system. In system planning, the proponents
determine the client’s need, the system development objectives, scope and limitations,
systems requirements. In this phase, a management authorization is required from the client
to continue the system development process.

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 The “User design” phase, the proponents formulate a prototype with a user design that
would allow the client to understand, modify and approve the user interface that the client
needs.

In the “Construction” phase, this focuses on the hard coding of the logarithms
embedded on system. On this phase, the system is being tested in a module setting where
after a requirement has been met, the application is sent back to the “User design” phase to
apply the certain revisions that could affect the user interface.

In the “Cutover” phase, the proponents conduct an implementation plan where the old
recording of inventory would be replaced by the new automated POS Inventory Management
System. In this phase, the proponents also initiate a maintenance plan where the Inventory
Management System would be checked and tested regularly upon the agreed time for bugs
and errors.

Data Gathering Procedures and Outputs

From the “Requirements Planning” phase, the proponents are to conduct one data
gathering procedures and this was: inquiry.
Inquiry is done in order to determine additional requirements analysis for the
proposed POS inventory management system.

3.2 Inquiry
The proponent interviewed Mr. & Mrs. Phoebus and Sally Bermudo, owners, of
Lord's Grace General Merchandising. Inquiry is done to acquire supporting information in the
inventory management system of the client.

The inquiry process is documented as follows:

Interview happened on August 2, 2012, Thursday, at 3:00 PM.

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 The following are the questions asked:

◦ Give a brief background of your company

 Name of your company?
 Who manages the company?
 What kind of business is your company in?
 How long has your company been in business?

◦ Project Specific Questions

 What is the purpose of this project?
 Describe how you envision the finished project
 Is there any existing documentation or other introductory information
for this project? (This could include user's manuals, functional
specifications, design specifications, or even memos and emails.)
 How much, if any, of this project is already complete or underway?
 Who are the primary users of the product, and what is their technical
level? Are they familiar with this technology already?

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 CHAPTER IV

DOCUMENTATION OF THE CURRENT SYSTEM

4.1 Profile of the Client

Lord’s Grace General Merchandising is owned by, husband and wife, Phoebus and
Sally Bermudo. The business started around the 1990’s where Sally Bermudo was asked by a
friend to help her recover a nearly bankrupt sari-sari store. From here, she got around 20,000
and started the business again in Manotok, Quezon City.

The company later grew into a Mini Grocery and expanded its business throughout
the Metro. As of now, the Bermudo’s owns a total of five stores: Two Zagu Franchise, two
reloading stations and a mini grocery.

4.2 Description of the Existing System

Lord’s Grace General Merchandising uses a manual recording of its inventory system. The
process starts upon acquisition of inventory where the manager issues a purchase order.
Upon approval by the owner, the purchase order is sent to the supplier.

When the inventory is received from the supplier, the assistant-in-charge records the
transaction in a journal by indicating the date received along with the product name and
quantity of the product received. This information is cross-referenced to the purchase order to
see if the quantity delivered is equal to the approved purchase order.

The release of inventory to the warehouse is last process to the client’s inventory system. The
client does not keep a manual record for the sale nor the release of the inventory and only
relies on gut-feel and memory.

A manual inventory count is also conducted twice times a week to record inventory data.

4.3 Cost Estimation

Existing Inventory Management System

Log Book (Php 80.00x6) PHP 480.00

Ball pen (Php 20.00x12) PHP 240.00

Bond Paper (Php 30.00x12) PHP 360.00

Total Existing Cost PHP 1080.00

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Proposed Inventory Management System

HARDWARE

Cash Register PHP 20,000

Bar Code Scanner PHP 1,990

Printer PHP 4,100 PHP 25,090.00

SOFTWARE

Operating System (Windows XP) PHP 3,000

Spreadsheet and Word Processor (Open Office) FREE

Program Development Cost PHP 25,000 PHP 28,000.00

TOTAL CASH OUTLAY PHP 53,090.00

BENEFITS

The proponents believes that with the aid of the new Inventory Management System,
the company could increase its annual profit by PHP 40,000. Due to the timely purchases and
better reports to aid in the decision making process.

TOTAL BENEFIT / ANNUM PHP 40,000.00

PAYBACK PERIOD

PHP 55,090 / PHP 40,000 = 1.38 YEARS

This means that Lord’s Grace General Merchandising can recover the cost of
investment in 1.38 years after purchase.

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4.4 Data Flow Diagram

4.4.1 Existing System

Figure 1.0 Existing System DFD

The process starts on acquisition of inventory where the manager issues a purchase order.

Upon approval by the owner, the purchase order is sent to the supplier.

When the inventory is received from the supplier, the assistant-in-charge records the
transaction in a journal by indicating the date received along with the product name and
quantity of the product received.

The release of inventory to the warehouse is last process to the client’s inventory system.

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 4.4.2 Proposed System

Figure2.0 Proposed System DFD

The process starts on the initial acquisition of the inventory. The manager fills up an order
form and it goes through the Inventory Management System software where the data from the
order from will be inputted. The resulting information will then be transferred to the purchase
order database and the hard copy of the purchase order would be sent to the supplier.

Upon receipt, the employee records the inventory information to the product database and the
information about the details of the inventory to the receipt database. The next process is the
release of the inventory from the warehouse. The actual inventory is released to the
customers and the inventory release information will be stored in the release database. The
final process is about the auto-management feature of the system. The system would initiate a
suggested order form that the manager could approve in order to generate a purchase order
form to send to the supplier.

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4.5 Entity Relationship Diagram
PURCHASE ORDER
PRODUCT
PK – Purchase
PK – Product Order #
Name Product ID
Product ID Supplier ID
Price Quantity
Quantity Date
Safety Stock Employee #

RECEIPT SUPPLIER
PK – Bill of Lading
# PK – Supplier ID
Product ID Supplier Name
Supplier ID
Quantity Received
Date

RELEASE EMPLOYEE
PK – Release # PK – Employee ID
Product ID Employee Name
Employee ID Username
Quantity Released Password
Date

Figure 3.0 Entity Relationship Diagram

The entity-relationship diagram of Lord’s Grace General Merchandising consists of 6 tables.

The first interaction is where the administrator records the following: the employee’s
personal information and access, the product information and the supplier name and code on
the system’s database. Following that, the supervisors from the purchasing department,
receiving department and the warehouse releasing department interacts with the system as to
provide the information that would be coming from their work (i.e. purchasing department
supervisor supplies purchase order transactions).

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