CHAPTER II

Review of Related Literature and Studies

This Chapter presents relevant literature and studies, which have bearing to the present

study.

2.1 Foreign Related Conceptual Literature

2.1.1 On Billing System

Hatem Mostafa, Egypt, (23 July 2005). Telecommunication companies need an

effective and accurate billing system to be able to assure their revenue. Billing systems process

the usage of network equipment that is used during the service usage into a single Call Detail

Record (CDR). The billing process involves receiving billing records from various networks,

determining the billing rates associated with the billing records, calculating the cost for each

billing record, aggregating these records periodically to generate invoices, sending invoices to

the customer, and collecting payments received from the customer.

Billing system is very complex starting from network elements that generate usage to the

billing system to usage collection, mediation, rating, and invoicing. To simplify the process I will

introduce a simple system usage scenario as shown in the following figure. The system user

navigates through the company site and views company services, and he decides to order one of

the available services. If he has no account, he signs up for a new account, else he signs in. Then

the user asks to conduct an order with the selected service. The service may be prepaid where he

has to pay to have credits to use the service, or it may be postpaid, where he has to pay if the

service has installation or setup fees, and later on he will pay for his usage of each billing cycle.
The billing system should provide service to the user, collect user usage records, and generate

invoices of each credit expire, each billing cycle depends on the billing type, collect payments

and adjust customers' balances.

System Parts: We can divide the system into seven parts, Services, Accounts, Ratings,

Invoices and payments, Reporting, Help Desk, and Devices.

Service: Service is the entity offered by the company and targeted to the customers. Each

service is defined by an engineering employee as a service catalog which includes service type,

name, billing policy, and its default rating profile. All of these attributes are described later in

this article. After service ordering by the customer, it takes a unique ID which is attached with

the account of the customer, provided by the provisioning system to the customer at a certain

date.

Account: The customer account includes customer contact profile information, account

type, login information, and payment method. Each customer account is linked in the system

with specific services offered to this customer, and the customer will be billed depending on his

usage of these services. Customer account belongs to a specific account type, which is related to

some price plans determined by discounts and promotions.

Rating: One of the big issues in any billing system is how, when, and where the

companies should bill their customers. Rating is the process of converting usage records from

one form to another, like converting usage units to its cost. This process is essential in the billing

process as it is the point of conversion of the service usage to revenue value to company, which

is the target of telecommunication companies.

affects any invoices requested by the customer and any payments done by the customer.

Normally the invoices are generated as a result of service hosting or using, and payments are the

customer payments as a result of the invoicing operation.

Invoice: It is the entity generated by the billing system to inform the customer that he

must pay for his service usage or ordering. Each invoice includes the customer account, date of

payment, line items of the invoice, and invoice sales taxes. Invoices affect the account debits in

the billing system.

Payment: It is the process of collecting company money from the customers and

adjusting their balances through adjusting the account debits and credits. The customers receive

receipts of their payments.

Billing Types: Billing types indicate whether and how the users pay to get and use the

services. Postpaid billing and Prepaid billing.

Postpaid Billing: In postpaid billing the customer may pay an insurance payment in

advance, and he may pay the installation or setup fees, and in each billing cycle he will be

invoiced (receive a bill) to pay for his usage of the service.

Prepaid Billing: In prepaid billing the customer buys a given amount of credits

(duration, volume, number of events) and is then allowed to use the corresponding network

resources as long as their account is in credit. Billing system receives customer usage records

from the network elements and adjusts the customer credits. When their credit has been used up,
network usage will be restricted. Prepaid corresponds to a real-time process, because transactions

are only allowed if the user account is in credit, and this has to be checked in real-time.

2.1.2 On Hands-On Inventory Management

Ed C. Mercado, Location: California USA, (December 13, 2007). Better inventory

management translates directly into better cash flow for businesses. However, in order to

successfully manage inventory, businesses must strike a balance between customer demand and

the amount of inventory they keep. Hands-On Inventory Management demonstrates principles

key to developing an inventory management process, which will meet customer needs while

keeping inventory costs at a level reasonable enough to produce a profit.

The text explains basic inventory principles, calculations, and techniques using real-

world examples. Different operational situations require different inventory planning and

replenishment approaches; hence, this book emphasizes the prerequisites needed for success in a

number of different industries. These prerequisites include top management support, a clear

definition of responsibilities and alignment of goals throughout the company, as well as

uncomplicated item identification. The author stresses the importance of accurate record keeping

and delineates the most common causes of inaccurate records. He provides solutions to mitigate

these causes and demonstrates how businesses can develop and administer a cycle counting

program that will lead to a well-managed physical inventory. Using a building-block approach,

Hands-On Inventory Management gives a clear view of what steps must be taken to strike a

profitable balance between customer demand and inventory.

of what steps must be taken to strike a profitable balance between customer demand and

inventory.

2.2 Local Related Conceptual Literature

2.2.1 On Inventory Management System

Monchie Dela Cruz (March 2007). Currently, most industries already have been an

existing computerized system operational in most departments. When introducing

computerization to a certain department, most companies would prefer an application which can

easily connected with the existing systems of other departments. A lot of time, cost and effort

can be saved with the ease of portability to the other systems during system integration. One of

the most commonly used computerized system of a company, is an inventory system. An

Inventory System is an application that tracks inventory and gauges replenishment when needed

of an automated system for monitoring inventory, as well as any moving or active item.

Inventory system also provides the basic function for warehouse operation, including physical

inventory, receiving issuance and picking, as well as management features such as queries,

reporting and barcode.

The new inventory system will introduce bar-coding and serial number system for easy

handling of inventory items. It will also provide better monitoring of price and stock inventory

by introducing pre-alarm features for defined critical conditions. Online inquiry of inventory

data, paperless picking and receiving of item will also be available. Migration of necessary data

from the old system to the new system may be considered to minimize re-encoding.
2.2.2 On Sales and Inventory Management with Bum-Buys.com

Savs Fores, Philippines, (2010). Reaching thousands of customers every day, Bum-

buys.com is an online outlet for partners looking for a simple way to sell merchandise. Sales and

inventory management, as Bum-Buys calls it, is an effective way of keeping customers and

merchants as close as they can get; with complete logistical support, ad and marketing

campaigns, Bum-Buys.com takes what the seller has and connects it with a prospective

customer.

To some it may seem like Bum-Buys.com is doing all the work, but to those who do have

merchandise they would like to sell, its something worth looking into. You see, most

independent and small business usually cant compete in one area of business the cost and

hassle of logistics. It doesnt matter if you have a product that sells like crazy if you cant ship it

to the customer and there are many small and independent businesses that cant. By taking

what inventory the seller has, Bum-buys.com lists the products to a targeted audience, and once

its been successfully sold, it takes care of all and any shipping matters. So the seller only has to

worry about acquiring or manufacturing the product, not marketing it or shipping it.

Once a listed item has been successfully ordered, the seller is notified via email or SMS,

and all they have to do is prepare the package for pickup. Bum-buys.com incorporates lower

shipping rates than most companies, increasing revenue for those with something to sell. After

the product has been shipped, you can easily check its shipping progress online and see where

its at.
 With the ability to present your products on partners sites, your inventory will be shown

to the best demographic it suits with marketing revenue allocated to this specific purpose.

Instead of marketing what youre selling on your own, Bum-Buys.com has already done the

work and can do it for you but better. Not only will partner sites show your inventory to

potential customers, Bum-Buys.com has a wide variety of payment options, so any kind of

customer will be able to make a purchase.

From inventory and sales management, including free sales reports, the ability to view

your entire inventory online and track all sold, shipped items online, too Bum-Buys.com is

for those who only wish to make serious sales online. With developed marketing techniques, a

customer rewards system, and product exclusivity, inventory has never been more accessible to

the customer than eve

2.3 Foreign Related Studies

2.3.1 On Inventory Management System: Case Study

Ravi, Indian State of Haryana, (08 May 2010). Inventory management basically deals

with the effectively and efficiently controlling the inventories or the stock by any organization.

Now a days, many concepts and techniques are available for controlling inventories.

There are very remarkable examples for controlling inventories like some models to

determine order quantities, techniques for forecasting demands, etc. Basically the concept and

techniques that are mainly used in controlling and effectively managing the inventory is based on

mathematical assumptions and modeling inventory situations. Although this approach to

planning resources but its value can be questioned in dealing with practical inventory control

problems.

This case study is divided into various parts. First of all the purpose of the inventory

management, why do we need to study it, what all areas are taken under consideration of the

inventory control (i.e. its scope), then the technology used by the Harish Bakers (Shop in

Gurgaon) to efficiently manage their inventory. Then we will deal with the system on which they

are currently working with, what were their requirements, who all are going to use that system,

what are its constraints, what were the problems faced by them when they were not having the

system and what requirements were put by them to the people who made their project.

Within the area of inventory we found traditionally few topics that played an important

role in the inventory control management.

First of all inventory management basically deals with the order quantities, order intervals and

finally the complete inventory control systems.

The first topic is concerned with regards to order quantities or how much we order. In

order to determine economic order quantities, several costs associated with inventories play a

part, such as ordering costs and inventory carrying costs. The second topic regards the order

interval or when to order. In this respect demand and lead time processes are important. Finally,

the topic regards the inventory control system. Common subjects concerning systems for

controlling inventories are information systems. These three aspects represent the traditional
characteristics of an inventory situation. In addition to that they are considered to be starting

points for improving the inventory system.

A significant example concerning inventory management is allocation of responsibilities

and authorities. Inventory control problems can easily arise when for instance nobody is in the

organization is responsible for the inventory or the responsible person has insufficient authorities

to carry out the task.

Likewise, high inventory values indicating a lack of control may just be the result of

inaccurate inventory records or of a reporting system that doesnt function well. A functional

area listed above utilizes the information contained with the inventory management control

system and asset repository of information.

The inventory management discipline encompasses all system and data elements from the

mainframe to the server level throughout the enterprise. All mainframe and data network based

hardware and software assets must be identified and entered into the inventory system. Any

changes to these environments must be reflected in the inventory system. Financial and technical

product information must be available through the inventory system, as needed to support the

functional responsibilities of personnel within the finance and contracts management department.

We all know that many requests originate from the side of users, employees in the

organization but these requests are not clearly indicated or stated. Therefore before any system is

developed to fulfill such requests we must understand what the originator of the requests wants

from the system. All this is studied under the category of the request clarification. In our case of

inventory management of a bakery shop in Gurgaon after going through their documents we
found the below mentioned framework that arouse for solving the inventory control and

management problems.

Inventory control management deals with the controlling stock, orders, daily, weekly and

monthly orders of how much company purchases the stocks, and utilizes the stock. So using all

this data there is analysis carried out on how the inventory system should be modified or

redesigned to meet its requirement. Another table mentioned below gives us an overview of how

the inventory control system should be prepared and what all dimensions should be taken under

consideration so as to develop an efficient system that is able to control and efficiently manage

the inventories.

First of all in feasibility analysis we take into account whether the proposed system

would be feasible by performing various feasibility analysis tests like technical feasibility,

operational feasibility, economic feasibility, etc. So in order to study all this, let us have an

overview of the goals of proposed system or see what all objectives people had when they

approached some company to develop the system to manage their inventory shop.

2.3.2 On Improving Inventory Management in Small Business: A Case Study

Lining Bai; Ying Zhong Jnkping (University, Jnkping International Business

School) Sweden (2008). The growth of small business is fast and their impact on the economy is

becoming bigger. How to manage the inventory effectively and efficiently often is a challenge

for these small businesses. The study took place at HEM-SOL FORSALJNINGS AB, a company

involved in gym sports equipment wholesale. For HEM-SOL two inventory problems, stock-out
and overstock occur frequently. The company wants to improve its efficiency and is considering

a change in the inventory management.

The study is considered as qualitative single-case study. Data collection is mainly

through the interviews with the top manager and other staff involved in inventory control

operations. Secondary data is retrieved from the information system to provide the annual

purchasing and sales report about twenty items using a purposive sampling approach. Data

analysis follows the theoretical framework.

Small businesses have limited financial resources and bargaining power. Long-distance

suppliers, big fluctuation of demand and lack of formalized inventory control system result in

HEM-SOL bad performance on inventory management. The authors analyze the collected data

and establish a formal inventory control system as the solution to improve the companys

inventory management.

2.4 Local Related Studies

2.4.1 On Inventory Management System

Richell S. Santos, University of the Philippines Los Banos (2007) Considers items to

be in inventory if they are waiting to be used or sold. Measures are taken to increase the

inventory level of those items that are frequently out of stock. On the other hand, those items
with the slow use are often ignored, the reason why too many of them are carried in inventory.

This situation leads to unwanted cases such as the following: money is tied up unnecessary

inventory; valuable space is used unreasonable; and item may depreciate, deteriorate or become

obsolete. However, if too few items are held in inventory, a loss of profit may occur, due to the

loss of sales and of the probable loss of reliability of the company due to the unfilled demands.

This will lead to additional manpower or cost may be associated with stocks outs, the annual cost

to refill inventory stock may be excessive because stock must be ordered frequently or in some

cases, the company may even have shut down because of the lack of raw materials.

The major objective of this study is to produce a system that would aid the owners small

business in deciding when and how much to order, to help them minimize the inventory costs.

Inventory Management System aims to help managers to monitor the inventory level of their

product by computing for the optimum reorder point and order quantity that would minimize the

total inventory costs. This is for both seasonal and perishable products as well as multi-period

products that have random demands and lead time. The system will warn the manager if a certain

items current inventory level is nearing the predicted date of the reorder point. Graphs that

would help the managers visualize the situation, is also available. Another feature is the

correlation analysis between two items series of inventory level in a given range of date.

2.4.2 On Order and Sales System Of Buns n Pizza Pureza Branch

Team Leader: Randy Waniwan Members: Audie R. V. Jacido, Roewinsor S. Bantugan,

Anthony Marco , Pureza Sta. Cruz Manila, (1 Sep 2009). Ordering system throughout the

world has relied on pens and papers. Problems such as missing orders and information sent to the

wrong place arise. Furthermore, some could not be able to handle the massive volume of orders.
Under the old manual ordering

systems, it takes up too much time to process.

Real time ordering and improved efficiency has been the focus of entrepreneurs. As with

many business scenarios, getting rid of paper improves efficiency, reduces human error and

allows information to flow to an infrastructure without a time consuming data input process.

There is also less chance of handwritten orders being misread and a higher customer turnaround

as customers will be served faster. In accordance to this, the software developers proposed the

Bans and Pizza computerized ordering system. The system is developed specially to meet the

needs of Bans and Pizza. In all business ventures, it is a must to use the resources to the best

advantage.

Since there are three establishments in one management, the counter is located at

Pureza. Given the setup, Bans and Pizza customers need to go the said counter just to

order food. In addition, the high volume of sound system makes it difficult to

communicate with the staff.

The counter doesnt serve Bans and Pizza alone. The percentage of customer of the two

other establishments is much higher to Bans and Pizza customers especially during peak hours. If

Bans and Pizza use an ordering system, it would lighten the load for the staff and likewise

enhance customer service.

Buns and Pizza Ordering system is an integration of different operations: ordering,

pricing, and billing systems, customers input orders directly into the computer, which

communicates the customers order to the kitchen. The fixed terminal number identifies
which customer ordered which. A staff prints out the bill. Additional orders may be

accepted by the kitchen only if the bill hasnt been printed.

Their current system is actually manual. They have no existing computerized order and

sales system. Due to the manual system that they have, their services slow down. In their current

system, problems like missing order, loss of data, and wrong delivery details could possibly

occur.

The computerized order and sales system can lessen the time consume in writing the order

of the customer. In computerized order, the cashier can select from the displayed menu and

automatically add the item in the total amount. The system can record all the transaction in one

day and can view it by weekly and monthly. The system computes the data more accurate than

the manual system. Data redundancy can be avoided to this system.