Chapter Ii Review of Related Studies

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Inventory systems maintain information about activities within firms that ensure the delivery of products to customers. The subsystems that perform these functions include sales, manufacturing, warehousing, ordering, and receiving. In different firms the activities associated with each of these areas may not be strictly contained within separate subsystems, but these functions must be performed in sequence in order to have a well-run inventory control system. In today's business environment, even small and mid-sized businesses have come to rely on computerized inventory management systems. Certainly, there are plenty of small retail outlets, manufacturers, and other businesses that continue to rely on manual means of inventory tracking. Indeed, for some small businesses, like convenience stores, shoe stores, or nurseries, purchase of an electronic inventory tracking system might constitute a wasteful use of financial resources. But for other firms operating in industries that feature high volume turnover of raw materials and/or finished products, computerized tracking systems have emerged as a key component of business strategies aimed at increasing productivity and maintaining competitiveness. Moreover, the research recommends that organizations have to use perpetual inventory system, because it gives them continues record of changes in inventory in the inventory account. That is all purchases and sales of goods are recorded directly in the inventory account as they occur, and it will be easier to make physical counting and to find accurate inventory in the financial statement. To adopt the technological change, they must use their recording systems particularly financial recording of the business into computerized system, because this system is less error and less time consuming than manual system. The researcher strongly recommends the business organization to keep in mind the importance of physical counting in inventory control because physical...
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