Inventory Management

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AN INVENTORY MANAGEMENT SYSTEM FOR

ITALFIL PORCELAIN TRADING COMPANY

Arceli M. Basi

Holy Angel University

An Inventory Management System for Italfil Porcelain Trading Company

Every organization whether manufacturing or trading in nature constantly strives to determine the appropriate logistic system and to maintain optimum inventory to be able to meet its requirements and avoid over or under stocking of inventory and even pilferages that can impact the financial figures.

The ideal inventory and proper merchandise turnover will vary from one market to another. Average industry figures serve as a guide for comparison. Too large an inventory may not be justified because the turnover does not warrant investment. On the other hand, because products are not available to meet demand, too small an inventory may minimize sales and profits as customers go somewhere else to buy what they want where it is immediately available. Minimum inventories based on reordering time need to become important aspects of buying activity. Carrying costs, material purchases, and storage costs are all expensive. However, stock-outs are expensive also. All of those costs can be minimized by efficient inventory policies.

The aim of the study is to achieve an optimized inventory management system for Italfil Porcelain Trading Company (IPTC). This study is limited to the establishment of an inventory management system for IPTC with the help of model. Also, the study is limited to the establishment of the system and will only outline the day-to-day operations of inventory management.

IPTC maintains inventory of its regular products on its warehouse and the daily inventory operations start when the sales executive or sales coordinator receives a Purchase Order (P.O.) from customers, this P.O. contains all information about the order i.e. customers details, project name, project location, contact person, contact details, delivery address, schedule of delivery, agreed discount, description of items, quantity, unit price and delivery charge. The P.O. is often process by the sales coordinator and forwarded to the warehouse man for proper allocation of items ordered. When all items are ready, the warehouse man prepares the Delivery Invoice (D.I.) and loads the items on the truck to be delivered to the customer. The D.I. contains corresponding items quantity loaded in each truck; it is then checked by IPTC warehouse team leader and signed by the authorized customer representative when everything is acceptable. Before the truck leaves the company premises, the items loaded on the truck are double check by the guard on duty for proper quantity and description based on the D.I. Delivery may either be customer pick-up in the warehouse or straight delivery to the site by IPTC.

The items delivered are in boxes and in different quantities depending on the size of the items. There are instances that items being ordered are not available at the branch office in Pasig, the warehouse supervisor will then have to make a request for transfer from the head office in Pampanga or vice-versa. All items being sold by IPTC are being imported from China, delivery lead-time is a very crucial factor to optimized inventory.

Italfil Porcelain Trading Company, a formerly manufacturing company, was established by the Nepomuceno Group of Companies on January 27, 1997, situated at a Special Economic Zone for export-oriented companies in Bacolor, Pampanga. Italfil started its commercial operations in January 1999.

In December 2005 Italfil shut-down its manufacturing plant due to the high production cost brought by the increasing prices of LPG and other local and imported raw materials. In January 2006, Italfil concentrated in selling/distributing its build up inventory of locally...
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