REVIEW OF RELATED LITERATURE/SYSTEMS

Inventory Management Techniques/Practices

Related Literature

In the published study entitled “ Implementation of Inventory Management

Technique in Manufacturing Industry”, Inventory management is the activity involved in
developing and managing the inventory levels of raw materials, semi-finished materials
(work-in-process) and finished goods so that adequate supplies are available and the costs
of over or under stocks are low (Dangore, Ladhe 2022). This study proposed the ABC
analysis which is ranking inventory items based on their importance to the business.
Through this it implies that an effective and efficient organization relies heavily on
inventory management, which plays a crucial role in storing items for future production
needs. Inventory management aims to balance the need to avoid holding too much stock,
which costs money, with ensuring there's enough on hand to meet production needs.

According to another study entitled “Inventory Management and Operational

Performance of Manufacturing Firms in Ghana” it was found that inventory management
practices, particularly strategic supplier partnerships, significantly contribute to
enhancing the operational performance of manufacturing firms in developing economies
like Ghana. The research involved a random sampling of 152 Procurement and
Operations managers and officers from 246 registered manufacturing firms affiliated with
the Association of Ghana Industries, shedding light on the crucial role of strategic
inventory management in driving operational excellence within the Ghanaian
manufacturing sector. Additionally, the study emphasized the importance of
implementing inventory management practices such as demand forecasting, Real-Time
inventory systems, and ABC analysis to further optimize operational efficiency and
performance.

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Related Studies/Systems

As stated by the study entitled "Development of an Inventory Management

System using Association Rule," they applied the rule of Association it is used in
customer analytics to analyze and predict customer behavior in areas such as data on
buying trends and purchase histories.it is noted that many stores still rely on manual
methods for inventory management, leading to inefficiencies and inaccuracies in record-
keeping. Recognizing the potential for improvement, the study introduces a computerized
Inventory Management System (IMS) that leverages Association Rules. This innovative
approach aims to enhance inventory control by automatically identifying patterns and
relationships between items, thereby ensuring more accurate stock management and
timely updates. Through the implementation of this system, the study seeks to address the
shortcomings of manual inventory management practices and pave the way for greater
operational efficiency in retail settings.

According to the study entitled "Digitizing Hardware Shop Management to

Enhance Business Operations" (Yao and Hassim, 2021) the case of Rong Fatt Hardware
Shop in Batu Pahat, Johor, illustrates the common struggle of local hardware businesses
with manual inventory management. Despite offering a range of hardware products, the
shop's reliance on traditional recording methods has led to difficulties in accurately
monitoring stock levels, resulting in profit losses. The proposed solution is the
implementation of an inventory management system to streamline operations. This
system aims to simplify tasks such as checking and updating stock information, offering
enhanced security and reliability compared to manual methods. Additionally, it promises
to track stock flow and generate detailed monthly reports, empowering the owner with
valuable insights for informed decision-making and improved business efficiency.

Smart Inventory Management System of Distribution Industry

According to the system entitled “Smart Inventory Management System of

Distribution Industry” entails its shipping and warehouse capabilities that most of the
processing and distributing goods often rely on to store their products prior to shipping

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them to customers. They proposed a prediction model that can predict the sequential
pattern analysis to predict forthcoming materials in an inventory. Due to the significant
volume of goods typically held, efficient inventory management is essential in this sector.
High levels of stored products can lead to increased inventory and management costs,
potentially reducing warehouse efficiency. Therefore, within this industry, there is a
critical focus on inventory management. This system is important for establishing a
predictive inventory system. It involved surveying experts to identify key issues
associated with inventory management in the processing and distribution sector and
analyzed sequential patterns to derive rules based on the survey's analytical results.

Inventory control systems

Inventory control systems play a pivotal role in the daily operations of organizations,
serving as a cornerstone for optimizing performance and efficiency. The significance of
these systems lies in their ability to effectively manage the flow of goods and materials
throughout the supply chain.

According to Hossain et al. (2017), inventory control encompasses a systematic approach

aimed at ensuring a seamless and uninterrupted supply of the required quantity and
quality of inventory. Effective inventory control prevents unnecessary investment in
inventories and encompasses various functions such as shipping, purchasing, receiving,
tracking, and reordering of inputs. These interrelated processes form the backbone of
inventory management, facilitating the timely replenishment of stocks and the
optimization of inventory levels to align with demand fluctuations. By streamlining these
operational facets, organizations can enhance operational agility and responsiveness,
thereby gaining a competitive edge in dynamic market environments.

Moreover, an inventory control system plays a vital role in adequately managing assets
and stocks, as well as maintaining precise demand forecasting to minimize unexpected
procurement operations, as noted by Mbugi (2022). This ensures that companies can
execute efficient procurement procedures that align with market demand and supplier

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conditions. Additionally, an effective inventory control system ensures that an
appropriate amount of stock is available to meet customer demand promptly.

In addition, an effective inventory control system significantly impacts financial

performance. Muchaendepi, Mbohwa, Hamandishe, & Kanyepe (2019) underscore the
critical role of inventory management strategies in driving financial outcomes, citing
empirical evidence of a positive correlation between sound inventory management
practices and enhanced financial performance. Conversely, inefficiencies in inventory
control and management can expose organizations to significant financial risks, including
inventory carrying costs, stock obsolescence, and lost sales opportunities.

Inventory Management Policy

A supply chain (SC) is an interconnected system of businesses engaged in various

operations that generate value before being delivered to the final customer as goods and
services [1]. These tasks mostly consist of obtaining raw materials, processing them to
create intermediate and final goods, and delivering those products to the final user. The
integrated management of information and material flows throughout the supply chain is
known as supply chain management or SCM, and it ensures that the appropriate
commodities are delivered at the appropriate time and location in the appropriate amount.

Inventory management has received special attention in this paper's analysis of the SCM
issue. Though supply chain management (SCM) is widely acknowledged as a key source
of competitive advantage, SCM approaches can be challenging to implement, particularly
in the inventory area due to the huge volume of information that needs to be processed
and communicated. The development of suitable networked inventory management
information systems (NIMISs) has received a lot of attention lately in an attempt to
achieve this goal.

Role of Technology in Optimizing Stock Control

The materials utilized in products form a crucial component of manufacturing firms'

working capital, and optimizing their usage is vital for overall business performance. The
motivation for this analysis stemmed from the quest to enhance inventory efficiency,
thereby enhancing competitiveness among companies. A key issue identified is the lack

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of effective inventory management techniques among some managers, prompting a need
to investigate methodologies for maximizing and monitoring inventory levels in
manufacturing processes. In today's context, our study aims to address this gap by
focusing on single-site inventory management, encompassing incoming materials,
materials in process, and finished goods at location production points.

By delineating research boundaries through value stream diagrams, we pinpointed

inventory locations and identified responsible individuals for managing inventory levels
throughout the production cycle. Over the years, numerous researchers have endeavored
to refine the Economic Order Quantity (EOQ) model to suit real-world scenarios,
particularly in manufacturing and supply chain contexts. Insights gleaned from these
historical attempts can inform contemporary inventory systems, especially in uncertain
business and industrial environments.

Thus, this section delves into relevant literature on inventory models and strategies aimed
at optimizing inventory management for industrial sectors. Given the integral role of
product materials in a company's working capital, their efficient utilization is pivotal for
sustained business success. Our study seeks to explore methods for enhancing inventory
productivity, thereby bolstering liquidity for firms. An underlying concern is the
insufficient adoption of effective inventory management techniques by some managers,
emphasizing the importance of researching methodologies to automate and monitor
inventory levels in production systems. Encouraging managerial initiatives aimed at
enhancing operational efficiencies can lead to increased productivity and improved
corporate solvency, benefiting both employees and fostering competitive pricing to
support broader economic growth.

Related Studies and/or Systems

Inventory Management Practices

As stated by the study entitled "Development of an Inventory Management System using

Association Rule," it is noted that many stores still rely on manual methods for inventory

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management, leading to inefficiencies and inaccuracies in record-keeping. Recognizing
the potential for improvement, the study introduces a computerized Inventory
Management System (IMS) that leverages Association Rules. This innovative approach
aims to enhance inventory control by automatically identifying patterns and relationships
between items, thereby ensuring more accurate stock management and timely updates.
Through the implementation of this system, the study seeks to address the shortcomings
of manual inventory management practices and pave the way for greater operational
efficiency in retail settings.

According to the study entitled "Digitizing Hardware Shop Management to Enhance

Business Operations" (Yao and Hassim, 2021) the case of Rong Fatt Hardware Shop in
Batu Pahat, Johor, illustrates the common struggle of local hardware businesses with
manual inventory management. Despite offering a range of hardware products, the shop's
reliance on traditional recording methods has led to difficulties in accurately monitoring
stock levels, resulting in profit losses. The proposed solution is the implementation of an
inventory management system to streamline operations. This system aims to simplify
tasks such as checking and updating stock information, offering enhanced security and
reliability compared to manual methods. Additionally, it promises to track stock flow and
generate detailed monthly reports, empowering the owner with valuable insights for
informed decision-making and improved business efficiency.

Smart Inventory Management System of Distribution Industry

According to the study entitled “Smart Inventory Management System of Distribution

Industry” stated that most of the processing and distributing goods often rely on
warehouses to store their products prior to shipping them to customers. Due to the
significant volume of goods typically held, efficient inventory management is essential in
this sector. High levels of stored products can lead to increased inventory and
management costs, potentially reducing warehouse efficiency. Therefore, within this
industry, there is a critical focus on inventory management. This study is important for
establishing a predictive inventory system. It involved surveying experts to identify key
issues associated with inventory management in the processing and distribution sector
and analyzed sequential patterns to derive rules based on the survey's analytical results.

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Inventory Control Systems

A recent study by Chaubey(2019), an Inventory Management System for most of the

business entities in the Republic of India that include several features to assist the special
experts in a company who calculates and checks the total sales and gives the possibility
for usual workers to place an order if stock is out of inventory. The proponent creates a
product module that shows the availability of the product and their price.The proponent
creates a user management module where users have the opportunity to log in and log out
the site and serves as a protection from unauthorized access. The proponent creates a
sales module that shows the sold products, total sales and date sold.

Fig. 1. Admin Dashboard page

Inventory Management Policy

Inventory management is a crucial component of supply chain management (SCM) since

it has an impact on both pricing and manufacturing. By choosing the appropriate
inventory replenishment procedures and taking into account several different factors,
inventory managers can minimize inventory costs while maximizing the quality of
service provided to customers. The primary driving force behind our writing on this topic
was the dearth of a comprehensive study that compiles all of the prior research on the
applications of Industry 4.0 and IoT to inventory management.

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The present investigation examined the effects of Industry 4.0 technologies, specifically
the Internet of Things, on inventory management. It is advantageous to upgrade a supply
chain to an integrated supply chain 4.0. Considering how fourth-generation technology
differs from other generations, it appears that traditional inventory replenishment
methods are not adapting to new technologies quickly enough or handling Internet of
Things systems effectively.

Role of Technology in Optimizing Stock Control

Inventory optimization plays a pivotal role in determining the success or failure of a

business (Shafi, 2014). Pauly (2018) highlights that one of the primary objectives of
inventory optimization is to improve customer service, reduce lead times, cut costs, and
align with market demands. Mittal (2014) further defines inventory optimization as the
application of supply chain techniques aimed at enhancing inventory control and
management across an extensive supply network, integrating the latest methodologies
and technologies.

These practices involve models utilized by organizations to oversee and regulate their
stocks. Stevenson (2010) describes inventory optimization practices as systems
implemented to maintain optimal stock levels within an organization. This includes
activities such as recording and monitoring stock levels, forecasting material and product
demand, and making decisions regarding order quantity, timing, and method.

Ensuring customer access to products and services upon demand is a central aspect of
inventory optimization (Miller, 2012). It directly impacts organizational efficiency and
effectiveness, thereby influencing overall performance (Dabholkar & Overby, 2012).
These practices are tailored to meet and exceed customer demands and expectations,
striking a balance between inventory costs and customer satisfaction levels.

In Canada, discrepancies between inventory levels and customer demand often stem from
organizational failure to adhere to baseline inventory control principles (Ogbo &
Onekanma, 2011). Effective inventory optimization practices should aim to meet
customer demand and prevent stock-outs without incurring excessive inventory costs.

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Striking the right balance is crucial for overall organizational performance (Cachon &
Olivares, 2010).

A robust inventory optimization strategy should logically determine order quantity,

timing, and method while considering customer demands and expectations. Discrepancies
between inventory levels and customer needs can lead to organizational performance
disparities. Therefore, it's essential to align inventory management practices closely with
customer demand and expectations.

Fig 2. Just-In-Time Stock & Ordering Management

Inventory management poses a widespread challenge in the manufacturing sector,

regardless of a company's size. Instead of relying on conventional production planning
and control systems, which have often faltered in managing inventory effectively, Just-in-
Time (JIT) inventory management offers significant advantages. JIT facilitates the
reduction of manufacturing waste, levels of in-process and finished goods inventories,

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and ensures goods are received only when and where needed in the production process,
thus adapting to ever-changing demands.

The aim of this study was to establish a functional JIT system for stock ordering, control,
and management in manufacturing companies. This system is designed to accommodate
various activities, individuals, and issues related to the production and distribution of
goods and services. It establishes a robust connection between different functional units
within a production setup and addresses structural, procedural, and personnel-related
issues through four layers: customer interface, control interface, supplier interface, and
production control interface.

The experimental investigation of this system focused on the ordering management of

Eko Supreme Resources and Natural Prime Resources in Lagos, Nigeria. Four categories
of criteria were identified as potential raw materials before implementation. Analysis of
the data collected during the study demonstrated that the proposed JIT system has the
potential to minimize costs and maximize profits in the ordering process of both
companies. It was also evident that the JIT inventory method offers substantial
improvements over conventional methods in terms of accessibility, organizational and
structural flexibility, and significantly reduced processing time.

These findings support the application of JIT inventory management principles, crucial
for business survival amidst the challenges posed by some traditional inventory methods
in the modern business economy.

Synthesis

The capstone project “Optimizing Inventory Management: Streamlining Order

Processing and Stock Control” aligns closely with the discussed research findings
on efficient inventory management practices. By modernizing inventory
management methods and optimizing order processing and stock control systems,
the project aims to address the critical needs highlighted in the literature.

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 Additionally, the project’s objective of improving efficiency, accuracy, and
responsiveness in inventory management operations resonates with the research
emphasis on the significance of efficient inventory management across various
industrial sectors. It aims to maintain optimal levels of raw materials, work-in-
progress, and finished goods to minimize costs associated with excess or
insufficient stocks while ensuring future production needs are met.

Moreover, the project’ s focus on leveraging advanced technologies such as

automated order processing, real-time inventory tracking, and predictive analytics
mirrors the research’s advocacy for technical advancements to streamline
processes and boost productivity in inventory management. By implementing
these technologies, the project seeks to minimize manual interventions, decrease
errors, and optimize inventory levels, aligning with the goal of enhancing
operational efficiencies highlighted in the literature.

In conclusion, the capstone project represents a significant stride toward

modernizing inventory management practices by embracing contemporary
inventory management principles. By implementing innovative technologies and
streamlined processes, the project seeks to elevate business operations, enhance
customer service, reduce costs, and align with market demands, ultimately
fostering economic growth across industrial sectors, in line with the insights
derived from the discussed research.

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 TECHNICAL BACKGROUND

Overview of Current Technologies to be used in the System

Research Methodology

Fig 3. Phases of Iterative SDLC Model

The iterative model is eligible for the capstone project “Optimizing Inventory
Management: Streamlining Order Processing and Stock Control” due to various
factors outlines in the project description whereas, given the project’s goal of
modernizing inventory management and improving order processing and stock
control, an iterative approach is ideal. It allows the researchers to tackle
complexity in a manageable stage, focusing on specific tasks like implementing
automated order processing and real-time inventory tracking in each iteration.

Moreover, the project aims for ongoing enhancements in efficiency and accuracy.
With an iterative model, the researchers can gather feedback after each iteration,
incorporating it into subsequent ones to gradually refine the system. The project
acknowledges the need to adapt to market demands and evolving business
requirements. An iterative approach accommodates changes throughout the
development process, ensuring alignment with stakeholders’ needs without

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 disrupting the timeline. The model also provides the researchers to identify and
address issues early, ensuring the final product meets expectations.

Just-In-Time Theory

Just-in-Time (JIT) inventory management is a strategic approach that intertwines closely

with the research focus on optimizing inventory management for 2-7 & 8 Hardware. JIT
emphasizes receiving goods from suppliers precisely when they are needed, aiming to
curtail inventory holding costs and elevate inventory turnover rates.

Moreover, by implementing JIT principles in 2-7&8 Hardware it can minimize the

amount of stock held in inventory, thereby reducing the need for excessive working
capital and optimizing financial resources. This reduction in inventory levels not only
mitigates holding costs but also contributes to higher returns on investment for the
organization. Furthermore, JIT encourages a lean and efficient supply chain, fostering
agility and responsiveness to customer demands.

In essence, JIT theory offers valuable insights and strategies for enhancing inventory
management practices within the research context. By integrating JIT principles into the
optimization efforts, 2-7&8 Hardware can effectively streamline its operations, improve
order processing efficiency, and maintain optimal stock control, ultimately driving
greater profitability and customer satisfaction.

Six Sigma in Business Theory

According to the article entitled “The Theory of Six Sigma” application of the Six Sigma
presents a framework for optimizing inventory management processes, particularly in the
context of streamlining order processing and stock control for businesses like 2-7 & 8
Hardware. By incorporating the five-step DMAIC approach – Define, Measure, Analyze,
Improve, and Control – organizations can systematically identify inefficiencies, rectify
operational constraints, and enhance overall performance.

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 ● Define – define who the customer is; what the customer wants; and how our

company can do it better than the competition.

● Measure – in this step the process as the process is walked and documented, a

detailed process map with every activity, the time allocated to the activity and
how the length each activity takes is produced.

● Analyze – look at the data from the measure activity and determine how the

process can be performed better with less variability and develop this new
process.

● Improve – put the new process into place and test it to make sure it works.

● Control - put controls in place to institutionalize the process and ensure that it

works as designed.

Implementing the Five Steps of Six Sigma (DMAIC) in inventory management offers a
structured problem-solving approach that systematically addresses inefficiencies and
enhances overall performance. By following this methodology, The System proposed to
the client can methodically define, measure, analyze, improve, and control their inventory
processes outcomes.

Database Normalization Theory

Database normalization theory provides structured guidelines for reducing data

redundancy within databases, thereby addressing associated problems effectively.
Recently, scholars have extended these principles to modular systems such as software,
hardware, and organizational structures, formalizing the concept of normalized systems.

Relating this theory to the proposed Inventory System, implementing principles of

database normalization and normalized systems could profoundly influence inventory
management processes. By adhering to normalization guidelines, the inventory system

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can minimize data redundancy, ensuring that information is stored efficiently and
accurately. This streamlined approach can enhance inventory tracking, order processing,
and stock control by providing a unified and reliable database structure.

Design Theory Principles

Design theory principles are integral to the development of an effective inventory

management system, aligning with the objectives of the study on streamlining order
processing and stock control for 2-7 & 8 Hardware. These principles provide a
framework for structuring the system to optimize efficiency, accuracy, scalability, and
flexibility.

1. Alignment: Ensuring elements within the inventory system are aligned with the
overarching objectives and message of the business. Aligning inventory processes
ensures clarity and organization, aiding in effective communication and
understanding.

2. Repetition: Introducing consistent elements throughout the inventory system aids

in familiarity and comprehension.

3. Contrast: Utilizing contrasting elements to emphasize key aspects of the

inventory system.

4. Hierarchy: Establishing a hierarchy of items within the inventory system to

prioritize tasks and information.

5. Balance: Creating equilibrium within the inventory system to ensure smooth

operations and user experience.

Implementing the design theory principles into the design of The Inventory
Management System will help ensure it effectively communicates, operates
efficiently, and adapts seamlessly to the evolving needs of 2-7&8 Hardware.

Theory of Inventory Management based on demand forecasting

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 According to this Theory Efficient supply chain management is all about making
sure customers get the best service possible while spending as little money as possible on
moving goods around. One big problem that can make costs go up is having too much
stuff sitting around in different parts of the supply chain. This happens when the amount
of stuff a company buys or makes doesn't match up with how much people actually want
to buy. When there's too much stuff, it's called surplus stock. To fix this, the first step is
figuring out how much stuff people are likely to want to buy. This is where demand
forecasting comes in. It's like making a guess about how many people will want to buy
something in the future.

Furthermore, implementing effective demand forecasting in the inventory

management system offers several benefits. By accurately predicting demand, you can
optimize inventory levels, ensuring sufficient stock to meet customer needs without
excess surplus. This reduction in surplus inventory leads to cost savings by minimizing
storage and handling expenses.

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 Gantt Chart of Activities Complete Ongoing

MONTH FEBRUAR SEPTEMB NOVEMBE DECEMBE

MARCH APRIL MAY JUNE JULY AUGUST OCTOBER JANUARY
Y ER R R

ACTIVITY
Conceptualizatio Project
n Title

Initial
RRL
Project
Scope &
Objective
s
Functiona
l
Requirem
ents
Questions
for
Interview
Search for
Data Gathering
Client
Client’s
Interview
Requirements
Chapter 1
Document
Chapter 2

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 Chapter 3
System
System Design Flow
Diagram
Prototype
of
Mobile
Prototype
of Web
Mobile
Development Applicati
on Coding
Website
Coding
Testing of
the
Testing Mobile
Applicati
on
Testing
of the
Website
Initial
launch of
Deployment
the
system
Official
launch of
the
system
Post-
Maintenance deployme
nt support

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Resources

● Hardware
○ Monitor
○ Keyboard
○ Mouse
○ Mobile Phones (Android for Android Studio emulation)
○ Laptop/Computer
■ Recommended Requirements:
● CPU :(64 bit Processor)Intel Core i5/ AMD Ryzen 5
● GPU : Geforce 1050 ti
● RAM : 16gb
● PSU : 450 watts
● Storage : 128gb SSD

● Software
○ Android Studio (Hedgehog version and above)
The proponents will use Android Studio to create the android
application of the system.
■ Languages:
● Java
● Structured Query Language
○ Visual Studio Code
The proponents will use Visual Studio Code as the editor for the
web application of the system.
■ Languages:
● Javascript
● CSS
● PHP
● Structured Query Language
○ Firebase Database

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 The proponents will use Firebase as the database of the system.
■ Languages:
● Structured Query Language
○ Canva
The proponents will use Canva to create our own icons, logos and
background images.
○ Figma
The proponents will use Figma for the prototype of the system.

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