CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
Introduction
Business is a word that is commonly
used in many different languages. But exactly what does it mean? The concept
and activities of business have increased in modern times. Traditionally,
business simply meant exchange or trade for things people wanted or needed.
Today it has more technical definition. One definition of business is the
production, distribution, and sale of goods and services for profit. To examine
this definition, we look at its various parts. First, production is the
creation of services or the changing of materials into products. One example is
the conversion of iron ore into metal car parts. Next, are these products
needed to be moved from the factory to the market place. This is known as
distribution. Third is the sale of goods and services. Sale is the exchange of
a product or service for money. Goods are products that people either need or
want.
Business then is the combination of all these activities:
production, distribution, and sale. However, there is one other important
factor. This factor is the creation of profit or economic surplus. Profit is
the money that remains after all the expenses are paid. Creating an economic
surplus or profit is, therefore, a primary goal of business activity.
Inventories are essential for keeping the production wheels
moving, keep the market going and the distribution system intact. They serve as
lubrication and spring for the production and distribution systems of
organizations. Inventories make possible the smooth and efficient operation of
manufacturing organizations by decoupling individual segments of the total
operation. Purchased parts inventory permits activities of the purchasing and
supply department personnel to be planned, controlled and concluded somewhat
independently of shop-product operations.
Management is very critical about
any shortage of inventory items required for production. Any increase in the
redundancy of machinery or operations due to shortages of inventory may lead to
production loss and its associated costs. These two aspects call for continuous
inventory control. Inventory control and management not only looks at the
physical balance of materials but also at aspects of minimizing the inventory
cost.
The classic dilemma in inventory
management is maintained in high service levels to meet the needs of customers
while avoiding high stocks regardless of the type of 2 items or even the
department for which such stock is purchased,
One of the most important
sections of a Inventory system is the accounting section which is the focus of
this project. The financial accounting module deals with cash/bank,
receipt/payments etc. The accounting section is directed with the
responsibility of ensuring that there are proper and prudent financial records
of all activity carried out within the business. Efficient accounting system in
business enhances the continuity of the business and facilitates business
activities. This will eliminate errors, time wastage, and rigorous work
involved in manual method.
Computerization of Web based
inventory management system involves the bringing of computer upon the
activities of an account in business. In this project, our interest will focus
on the computerized business accounting as concern Sony Electrical Enterprise
in particular.
1.1 STATEMENT OF PROBLEM
For many organizations, there is
no doubt that inventory management enhances their operations. But for this
growing establishment their most tasking problem is the calculation, recording,
and computation as well as generating of reports is done manually which is
tedious, time consuming and error prone. These has been a major challenge.
1.2 OBJECTIVE OF THE RESEARCH
WORK
The major objective of this
research work is to develop a Java web application that will aid in:
i.
Keeping
account of daily sales
ii.
Detecting
errors concerning finance/accounting
iii.
Generating
accounting report whenever the computer is being instructed
iv.
Eliminating
the time wasted in manual accounting, calculation, and summation
v.
Relieving
the accountant of rigorous work involved in manual method.
vi.
Establish
the costs incurred by the firm through inventory management.
vii.
Establish
the different kinds of inventory kept at God's Anchor Electrical.
1.3 SIGNIFICANCE OF THE STUDY
The findings of the study will
provide well–researched information, which can be useful to researchers for
academic purposes in the area of inventory management. To the stores and
Procurement department staff, the study hopes to provide them with useful
information like the recommended techniques of inventory control so as to meet
their customer’s and organization’s needs. To the firm’s management, the
recommendations of the study may enable them to design inventory management
policies to improve the smooth running of the firm, thereby satisfying
customers and generally minimizing costs.
1.4 SCOPE OF STUDY
This study is focused on the
Accounting section of Business. It is regarded as being important because it
gives the general interpretation of the activities done by a business
financially. The scope of the study will be limited to the impact of inventory
management on the performance of an organization.
1.5 DEFINITION OF TERMS
The following terms will be
defined since they are mostly used in this research work.
i.
Definition
of Business- This is an organization engaged in the trade of goods, services,
or both to consumers.
ii.
Definition
of Accounting- This is the act of recording, classifying and summarizing in a
significant manner and in terms of money, transactions, and events which are in
part at least, of financial character, and interpreting the result thereof.
iii.
Definition
of system- This is a set of elements and relationships which are different from
relationships of the set or its elements to other elements or sets.
iv.
Definition
of computer- This is a programmable machine designed to sequentially and
automatically carry out a sequence of arithmetic or logical operations.
v.
Definition
of inventory- a complete list of items such as property, goods in stock, or the
contents of a building.
vi.
Definition
of management- Management in business and organizations is an art that
coordinates the efforts of people to accomplish goals and objectives using
available resources efficiently and effectively.
vii.
Definition
of inventory management- Inventory management is a science primarily about
specifying the shape and percentage of stocked goods.
viii.
Definition
of organization- an organized body of people with a particular purpose,
especially a business, society, association, etc.