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CHAPTER ONE
INTRODUCTION
1.1 Background of The Study
Computer has been one of the important discoveries of the century. Most people have over time had a problem of really explaining what a computer is. Today computer perform a lot of functions in various fields of endeavour especially in the field of business especially the database management level, communication and monitoring of sales, keeping inventory list, print report etc. Computers assist in architectural design and much more at the instructional level.
According to Eowa (1986) computer is a machine that stores and manipulates symbols based on the series of user instructions called programs and, according to Okoye (2010) computer is simply defined as an electronic device that can receive a set (group) of instructions by performing a task (calculation).
Computer is a dynamic field due to its continuous change as such that it is user friendly. It has enable people to do things with less effort, it is powerful, accurate, fast, efficient and convenient electronic device, what makes it remarkable is its extreme speed and precision with which it can store, retrieve and manipulate data or information. Since computer is a device used in manipulation of human activities, it has been used in various field among which is inventory control system.
The term ‘Inventory’ as defined by Dupree (1982) as “are goods purchase by a firm for resale or it is an asset held by the business either for future sale in the ordinary course of business or for use in the production of goods or services for future sales”.
This research is carried with Skymax Integrated Network Ltd as Case Study. Skymax Integrated Networks Ltd is primarily an Internet Service Provider (ISP) and also a Power Systems engineering company. It boasts as the only ISP
Licensed by the Nigerian Communications Commission in the North-eastern part of Nigeria to provide internet services. Skymax’s mode of provision of internet by Skymax is through Fixed Wireless internet service and its mode of operation functions around a subscriber signing up to subscribe to the Skymax Broadband internet. Payment is made cash or electronically. An invoice is manually generated by the Sales personnel, who presents a copy the storekeeper. Relevant equipment is then sorted from the store for disbursement to site. The store ate Skymax contains hundreds of Customer Premise Equipment (CPE), Base Transmitter Station Equipment (BTE), machinery and general tools of diverse usability. All inventory of stock, tools etc. is done manually. STATEMENT OF THE PROBLEM The inventory control at Skymax Integrated Networks is done manually. This makes keeping records cumbersome, slow and had several times lead to loss of record, understocking, and inability of Skymax to keep within its job schedules leading to loss of confidence and patronage of its clients.
- AIM AND OBJECTIVES OF THE STUDY
This study aims create a system which will computerize the inventory management at Skymax, quantify maximum stock required at store and ensure proper accounting of such.
- SIGNIFICANCE OF THE STUDY
As the topmost Tier 3 internet service provider in the northeast, this study will help Skymax satisfy its increasing demand for internet service by way of ensuring it does not run out of stock while on the job. Also the study.
- DELIMITATION / SCOPE OF THE STUDY
This automated system is especially created for Skymax Inter. This is to enable the researchers maximise scarce resources as logistics, time, manpower and dealing with very restrictive protocol (of PZ).
CHAPTER TWO
LITRETURE REVIEW
2.1 NATURE OF INVENTORY
In any production establishment such as in a retail store (supermarket), it is necessary keep track of all the goods and services for this, the use of automated inventory control system is a program designed in other to ease the calculation of assets held for a business either for future sales in the ordinary course of business or for use in the Production of goods and services for future sales.
2.2 CLASSIFICATION OF INVENTORY
According to Brenner (1983), inventory is classified based on the individual business depending on the nature of the business; these are either a manufacturing inventory or merchandise inventory account.
A manufacturing entirely will have classified inventory as raw materials, work process and finished goods. The two classes of manufacturing inventory represent the various stages of completion of the production being manufactured for sales.
A single merchandise entirely will classify inventory as a company or establishment that purchases a complete product for the project will basically be on the purpose of resale but this project will basically be on the merchandise (retail) inventory and perpetual inventory system because PZ depot is based on it.
2.3 MERCHANDISING FIRM OPERATORS According to Hemkamp, Leroye, Imdicke and Smith (1981), a merchandising firm is an average length of items it take for the firm to acquire inventory, the inventory to its customers and collect cash for the sale. At the time of purchase, inventory is related at its inquisitional cost in accordance with the cost principles. Cost is defined at all costs principle that are related to the acquisition and preparation of the inventory for sale to customers.
When a sale is made both on assets account and a revenue account are increase in an amount equal to the sale price. In the income statement, the cost of inventory sold during the current period is marched with the revenue received from selling it. Proper matching of cost and revenue is in fact a major objective of accounting for inventory.
Inventory is one of the most continually active assets in a merchandising firm, it is continually being acquired, sold and replaced. According to Dupree Mader
inventory system by being the retail store (supermarket), perpetual inventory control system.
This will improve the manual way of inventory control system by according of addition and withdrawals of inventory in a computer in other to reduce risk of various kind, date shipping method, employees and suppliers identification etc. which will be effective, efficient, fast and safe protection of information by using any of the storage device (Floppy) flash disk etc. In which data can be stored and retrieve with less energy any time it is needed but reliable output, information depending on the correct data entered by the operator (User) in PZ depot.
2.7 INVENTORY SYSTEM VALUATION METHOD Inventory is a quantity of goods and materials on hand as state by (Rechhald & Bills 2004). Usually, inventory is called stock. A stock includes finished goods held for sale, goods in the process of production, raw materials, and items that will be consumed in the process of producing saleable goods. Inventories are considered assets on a company’s balance sheet. Inventories are priced on financial statements either at cost value or market value.
Inventory values change according to price fluctuations. The valuation of an inventory directly affects the inventory, total current asset, and total asset balances. There are different methods of valuing inventories used by public and private companies. Such methods include:
i. Specific Identification method: It is the simplest method of valuing inventories. When an inventory item is sold, the inventory account should be reduced or credited, and cost of goods sold should be increased or debited for the amount paid for each inventory item. This method works only when a company knows the cost of every individual item that is sold. Specific identification method works well when the quantity of inventory in a company has a limit and each inventory item is unique.
ii. First-In, First-Out (FIFO) method: FIFO is a method of valuing the cost of goods sold that uses the cost of the oldest items in inventory first. This method is based on the assumption that goods that are sold or used first are those goods that are bought first. Therefore, the cost of goods bought first (first-in) is the cost of goods sold first (first-out). According to FIFO, at the end of a year an inventory would consist of goods most recently placed in inventory. If there is inflation, the cost of goods sold will be at its lowest possible amount. This would help in maximizing net income within an inflationary environment. The downside of that effect is that income taxes will be at their greatest. iii. Last-In, First-Out (LIFO) method: LIFO is an inventory valuing method that assumes that the last items placed in inventory are the first sold during an accounting year. Therefore, when the LIFO method is applied, the inventory at the end of a year consists of the goods placed in inventory at the beginning of the year, rather than at the end. During inflation, when prices are rising, the LIFO method yields a lower ending inventory, a higher cost of goods sold, a lower gross profit, and a lower taxable income. The LIFO Method is preferred by many companies because it has the effect of reducing a company’s taxes and therefore increasing cash flow. iv. Average Cost method: The average cost method takes the average of all units available for sale during the accounting period. The average cost method uses the average cost to determine the value of the cost of goods sold and ending inventory.
The income tax of a taxpayer can be calculated only by including the inventory which must be taken on a basis prescribed by the IRS. The tax will be calculated in as close conformance as possible to the best accounting practice in the trade or business and most clearly reflecting the income.
appeals to many people because you do not have to expend as much cash upfront to set up the technology and software needed to keep track of data. One major shortcoming with this system is that for the entire year, you do not have access to inventory data. For stretch film packaging business, this system can prove humongous especially when there is an increase in sales. Hamlet (2006).
Valuation Methods. After selecting between one of the two methods, value your inventory. The following inventory three methods are used to compute the cost of goods sold and the cost of ending inventory (Banries & Cumy, 2005).
i. Stock Reorder Level: Stock reorder level indicates to the stock controller when it is necessary to reorder certain raw materials or components. The purpose of using this stock reorder level is to enable management to ensure there is sufficient stocks to meet demands from the production department ii. MAXIMUM Stock Level: To avoid cash being tied up in holding unnecessary high levels of stocks, some businesses set up MAXIMUM level of stocks to be held at any one time. iii. MINIMUM Stock Level: Purpose of keeping minimum stock level is to enable the stock controller to avoid running out stock.
- PROBLEMS ASSOCIATED WITH INVENTORY AUTOMATION According to Kenneth (2002). Inefficient inventory management can ruin your business. Be aware that we’re all prone to making costly mistakes that can spell the end for your business. Even Nike wasn’t immune. In early 2000s, lack of inventory control led to the loss of, hold your breath, approximately $ million in sales.
Failure to Accurately Forecast Demand
Inventory management systems, first and foremost, must be free from bugs and data errors. Demand forecasts are critical to producing the right number of items and if the calculations are off, you’re in trouble. The answer is very simple: invest in an inventory tracking software that provides accurate data. (Danny ,2016).
Lack of Automation
If you’re still tracking inventory with Excel, then you could be losing money. Manual tracking takes too much time and won’t get you results. You’re wasting resources and that keeps you from focusing your energy on other areas that can help grow your business.
Improper Training
For most companies who are still using software that’s installed on local computers, issues are common because not everyone knows how to use it properly. When there’s so much to do and only one person who’s familiar with the system, you can be left behind in orders. Lack of proper training can severely affect your ability to keep up with orders.
Inefficient System Implemented Inside the Warehouses
Rubin (2007). It is not uncommon for warehouse managers to fail in finding more efficient ways to handle business. Simply rearranging goods so they’re easily taken out for shipment can save you thousands of naira. Often times, employees take too much time going through the facility, looking for an item. Always remember that wasted time is money lost.
A simple solution is to figure out which items sell more and place them near the shipping area so they can easily get sent out. Sales reports should give you a good idea which items to put close to the door. Additionally, don’t randomly put stuff where there’s available space. Allow a specific area for each product based on popularity so they can be easily retrieved.
account details where restricted for copying, classical example would have been provided. Notwithstanding, the problem remains that customers are not able to identify their payments, purchases etc with SAP and often rely on the trained PZ staffs to help them do so.
The researchers hence are coming in to provide an automation system that not just simply works within a Local Area Network (LAN), but also that which is simple and yet gets the job done and further address the presentation of account details in a concise, decipherable manner and is assimilable. This system will not necessarily replace SAP however, the output of this proposed system may form the input for SAP. The catch is that less internet resource is utilized eventually, as work goes on with or without internet. Cases of distrust and rifts with PZ Yola staff which rises out of lack of understanding (by customers) of the accounting output of SAP will be significantly mitigated, further more hands will become active at PZ Yola as the simple system becomes more usable to PZ staffs as against the current case of less staffs using SAP owing to its sophistication and lack of training.
CHAPTER THREE
SYSTEM ANALYSIS AND DESIGN
3.1 ANALYSIS OF THE EXISTING SYSTEM
The present system uses SAP’s cloud Paas. This forms the backbone of the current Inventory Control System of PZ Cussons PLC for their whole global outlets. Over-the-Air programming (OtA) is how the software is installed on user’s computer together with access credential generation and authentication. All transactions from payment confirmation, sales, invoice generation and supply are monitored real-time from Manchester UK. The UX is calibrated to suit only trained professionals considering the usage of lingos that are very unique to PZ. SAP works by Considering the limitations as highlighted in Chapter 1.4 of this project, the backend of the program remained inaccessible to the researchers, not withstanding the fact that the researchers were extensively briefed on the functionality of the current system as presented above.
Advantages of the existing system:
a) The system cannot keep inventory by its self or without human help.
b) Compilation of inventory records consumes a lot of time and Manpower.
c) Some records get lost over time while some are not easily found.
d) It involves lot of paperwork and data processing is very slow.
e) The environment is not user friendly.
f) The system does not calculate and give financial reports at a glance and as such, the degree of decision making in urgent matters is not applicable.
g) The system is unable to detect faults within the system in case of rectifying fraud.
Database Design The operational database is designed below using the format of the PZ Depot. The design made to accommodate database design, representation, character type, field size and decimal where necessary. Table 3.3.1 SALES TABLE DESIGN
Items Description Type of Item Size of Item Categories of item Text 15
Price per item Currency 10
Quantity needed Number 10
Price outcome Currency 10
Quantity available Number 15
Total price Currency 20
Table 3.3.2 PURCHASE FORM DESIGN
Item Description Item Type Item Size Categories (Brand) Text 15
Price per item Currency 10
Quantity supplied Number 10
Price outcome Currency 20
Quantity in Stock Number 20
Total price Currency 20
3.4 STRUCTURE OF PZ DEPOT.
The organization structure contains the hierarchy of the various head of services in PZ Depot., they are;
Board of directors: These are the bodies of appointed members in the organisation who jointly overseas the activities carried out.
The bodies likewise have subdivisions with different duties assigned to each body. In PZ Depot, they have:
CUSTOMERS TABLE
Personnel manager: He is in charge of the department that deals with employment, training, support, records etc. Collaborately the Assistant general finance manager, the Assistant general manager, the administrative manager and the technical manager form this department.
Administrative manager: He oversees the support operations of the organisation. He is also known as office manager that he has to keep the department running smoothly. He was collaborate with the Chief accountant, Sales manager, Admin clerk, Purchase manager, Admin supervisor.
Sales manager: the sales manager works in collaboration with the Depot manager and sales executives. He is responsible for keeping the sales team up and doing. He assigns sales territories, setting quotas, mentoring the members of her sales team, building a sales plan, hiring and firing sales people.
Sales executive : he is one among the team of the sales manager. The sales executive works and collaborate with the secretary, security, sales clerk, casual, cashier to see to the maximization of sales and likewise to see to the commercial success of the company’s goods and services.
Inventory Environment
Purchase and Sales Interface
Inventory Control System File View Window
Purchase Item ID: Purchase Date: Description of Item: Quantity: Cost Price: Total Price: Quantity of Sales: Sales: Total Sales: Supplier’s Name: Address: Phone No.:
17/08/2016^2 Laptop 60000178120000020132000200 Adamu Shows 08107003143 Yola Close^ SaveDeleteUpdateClearSearch
Stock Report
3.5 SYSTEM REQUIREMENTS
It is necessary to have the following hardware and software in place.
Minimum hardware requirements Minimum software requirements
Microprocessor at least 800mhz speed Operating system-window2000 or higher AVGA card that support 120 * 00screen resolution
Programming language Visual Basic 6.
Display monitor Database package Physical memory 256MB A good mouse
Purchase Report AVAILABLE ITEMS IN THE STOCK
Item ID
Purchase Date
Description of Item
Quanti ty at Hand
Supplier’s Name
Addre ss
Phone No.
1 Television -5 inventory Mubi 080743 2 17/08/ 6
Laptop 178 Adamu Shows
Yola 081070
3 25/07/ 6
Desktop 3 JOHN ADAMU
Mubi N
DSTV Decoder 42 Kamal Abdula
Yalwa 098765
8 01/08/ 6
Microphones 67 Shows Mubi 080762
