Chapter II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter covers the conceptual framework of the researchers

proposed system. It also includes the local and foreign literature and studies,
definition of terms which defines the technical words and terms used in the
system.
Conceptual Framework

INPUT

PROCESS

OUTPUT

Figure 2.1 IPO Diagram

This shows the IPO (Input-process-output) diagram of the system

Record

Manual Record of

More Record that

of Sales and

Sales and

contains Errors,

Inventory

lnventory for LMC

Wasted time and

effort

Figure 2.2 Existing System Diagram

This is the existing system diagram illustrates the problem in the manual
style and system of the company; record that contains errors and wasted time
and energy.
Record
of Sales,
Inventory
and Stocks

Computerized
Records

Less error of
records,

of Sales and
Inventory for LMC

Saves time and

effort efficiently

Figure 2.3 Researchers Proposed System

This is

the researchers

proposed diagram shows the solution to

problem; less errors and saves time and effort efficiently.

Review of Related Literature

This discusses the foreign and local literature. The informations indicated
were gathered in internet sites, journals and various books relating to the
researchers topic.

Foreign Literature
According to Janes (2011) stated that computers are extremely reliable
device and very powerful calculators with some great accessories applications
like word processing problem for all of business activities, regardless of size,
computers have three advantages over other type of office equipment that
process information because computer are faster, more accurate more
economical.
Inventory management systems were created to help dealerships
implement, maintain, and fine-tune their inventory plans. Dealers who use
inventory management systems realize quicker vehicle turns and a higher ROI

than dealers that dont. Choosing the right system can make a significant
contribution to your inventory management efforts. This strategy helps a lot to
come up with a successful outcome. (Zierden, 2009).
According to the U.S. Small Business Administration, Inventory refers to
stocks of anything necessary to do business (U.S. Small Business
Administration, 2010, pp 1-2).

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 spreading the rapidly moving items too thin, Increasing
inventory turnover without sacrificing service, Keeping stock low without
sacrificing performance , Obtaining lower prices by making volume purchases,
Maintaining an adequate inventory without an excess of obsolete items.
According to the

Nicole Fallon(2013), investors in uncertain, rapidly

changing product markets likeconsumer electronics react more strongly to

customer satisfaction. Nokia, for example, saw a rise in its American Customer
Satisfaction Index (ASCI) figure in May, followed by reports of increased interest
from large institutional investors.

According to Stair and Reynolds (2009) on their book, Principles of

Information System, sales and marketing information systems are used to
develop new good and services (product analysis), determine the best location

for production and distribution facilities (place or site analysis), determine the
best advertising and sales approaches (promotion analysis), and set product
prices to get the highest total revenues (price analysis).
Cashman stated in her book System Analysis and Design,(2011) that
transaction processing system data generated by day-to-day business
operations. Transaction processing are efficient because they process a set of
transaction related commands as a group rather than individually to protect data
integrity however, TP systems ensure that if any single element of a transaction
fails, the system does not process the next transaction.
Sales are affected by maany factor besides advertsing, such as product
features, price and availability. Service is the anything which organization offers
to customers. It is the means by which customers needs are satisfied. Service
organizations nee to follow a strategic approach for effecctive service that can
increase customer satisfaction that influences the profitability (Ketler, 2009).

Local Literature
According to PLDT(Manila,Philippines,April 15,2011), small and medium
enterprises, who long for a point-of-sale(POS) system that can track how much
they sell and how muchstock they have left at their stores in real-time and from
anywhere, can now turn to PLDT SME Nation.

Inventory System for Best Choice Rice Dealer by Bisagas, Arivada, and
Tanteo (October 2009). The process of counting the sacks of rice is done
manually, which corresponds to difficulty in tallying the number of available
stocks and sold items.
The Manual generation of inventory reports such as daily, weekly,
quarterly and annual inventory list of records remains as one of their key problem
since the establishment of the business. The transaction processing system for
Best Choice Rice Dealer will minimize the difficulty the owner in processing
inventory. It will monitor the availability of product items for reorder to prevent
under stocking, overstocking or running out of stocks. The system will also
generate necessary reports of inventory such as sales reports.

In the study from Averion, Gaela, and Libo (2009) entitled Monitoring and
Inventory for discovery Mall.com, it stated that:
It will minimize the difficulty of the manager in processing inventory
because physical counting products, stocks and computing inventory summary
will be the system job. It will monitor the availability of products, items to prevent
under stocking, over stocking and running out of stocks. The system will also
simplify the transaction between dealer and supplier relationship because of the
updated supplier information and price list of items will correspond to
collaboration with other supplier.
An article by Junaito Villegas (June 23, 2009) entitled Inventory controls
are key to dissuade employees from stealing states that:

Computers can only do much, but coupled with inculcating honesty among staff
and instituting the appropriate deterrents, they can work very well in minimizing
losses and pilferages. It is therefore highly advisable to do both the manual and
the computerized inventory system in a retail and wholesale business.
Josefina Estolas in the book Fundamentals of Research (2009), in
exploration, we find new techniques, knowledge, even developed new
substances, gadgets, equipments, processes or procedures, imagination and
skill is employed by the researcher. The commodities, new devices, services, in
technology are needs of man for a better fuller life which is concern of the
research. These useful arts are the product of the technological environment and
the end-user is society in general.

Review of Related Studies

This presents both of foreign and local studies. Informations were
gathered in other dissertations and research projects in the internet and schools.

Foreign studies
According to a recent Aberdeen Group study(March 2012), companies are
prioritizing supply chain visibility, inventory optimization, supply chain analytics,
and supply chain outsourcing as ways to cut supply chain management (SCM)
costs this year.

According to IBM(October 2012) Innovations such as just-in-time

manufacturing bar codes and RFID tags have revolutionized supply chain
management. Unfortunately these innovations have brought with it staggering
amounts of data to deal with. This white paper outlines some of the major factors
affecting inventory and supply chain management.

Local Studies
According to J.De Leon and M. Ferrer (2009) Under the Koread Red
Ginseng Enterprise Sales and Inventory System, the researchers came up with a
computerized sales and inventory system. The proponents 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.
Based on the research entitled Computerized Sales and Inventory system
for Ronmon Trading (de Alday, Espino, Ragudo), 2010, the replacement of the
manual system with the proposed system provided more efficient and accurate
processing of transaction. The said system is much reliable, eliminated errors
and inaccurate information, and provided valuable reports with integrity.

Also stated in the research, Sales and Inventory System For Schema
Megacenter (Almeda, Daez, Geronimo), the proposed system are not just only
accurate, realiable, and fast in processing transactions rather it is also provided
more systematic way of transacting with the members and through the billing
system also helped the employees to save a lot of time on transaction
processing.
Based on the research entitled Computerized Sales and Inventory system
for Ronmon Trading (de Alday, Espino, Ragudo), 2010, the replacement of the
manual system with the proposed system provided more efficient and accurate
processing of transaction. The said system is much reliable, eliminated errors
and inaccurate information, and provided valuable reports with integrity.
Also stated in the research, Sales and Inventory System For Schema
Megacenter (Almeda, Daez, Geronimo), the proposed system are not just only
accurate, reliable, and fast in processing transactions rather it is also provided
more systematic way of transacting with the members and through the billing
system also helped the employees to save a lot of time on transaction
processing.
In the study entitled Osaka Sales and Inventory System (Laranang,
Maao and Naola, 2009) states that business nowadays takes the advantage of
using modern technology to improve their status and ensuring an efficient and
newer way to make their work easier. They state that the main problem of the

Osaka Iridology is what modern effective tool must be use in creating and
developing a sales and inventory system that will manage efficiently their
transaction. So they develop a system that inclusively for the transaction of
Osaka Iridology, such as monitoring of their medicine and their daily sales.

Definition of terms
The definition of terms are operationally and technically defined based on
the context of the study.
Conceptual Framework. Used in research to outline possible courses of
action or to present a preferred approach to an idea or thought.
Data. It refers to qualitative or quantitative attributes of a variable or set of
variables.
Data Flow Diagram. A graphical representation of "flow" of data through
out an information system
Hardware.

Component devices which are typically installed into or

peripheral to a computer case to create a personal computer upon which system

software is installed including a firmware interface such as a BIOS and an
operating system which supports application software that performs the
operator's desired functions.

Information.

Any kind of event that affects the state of a dynamic

system.
Inventory.

A list compiled for some formal purpose, such as the details

of an estate going to probate, or the contents of a house let furnished.

Sales- the act of selling a product or service in return for money or other
compensation.
Software.

A conceptual entity which is a set of computer programs,

procedures, and associated documentation concerned with the operation of a

data processing system.
System. A set of interacting or interdependent components forming an
integrated whole.
SDLC (System Development Live Cycle). A process of creating or altering
information systems, and the models and methodologies that people use to
develop these systems.
TPS (Transaction Processing System).

A type of information system that

collects, stores, modifies and retrieves the data transactions of an enterprise.