INVENTORY MANAGEMENT SYSTEM

Case study Bomah hotel Gulu

By

[GROUP E]
FACULTY OF BASIC SCIENCES AND INFORMATION
TECHNOLOGY

A Project Proposal Submitted to Faculty of Basic Sciences and Information

Technology
for the Study Leading to a Project in Partial Fulfillment of the
Requirements for the Award of the Degree of Bachelor of
Computer Science and Information Technology of Ndejje University.

Supervisor
Yiga Stephen
Department of Computer Science and Information Technology

Faculty of Basic Sciences and Information Technology, Ndejje University

yigaste@gmail.com 0776658443
Email: info@ndejjeuniversity.ac.ug

April, 2014
i

Declaration
We the undersigned, certify to the best of our knowledge, ability and understanding that this
project proposal on inventory management system with reference to Estella Country Side Hotel
is our own effort and has never been submitted before by any other institution for any academic
award.

SN

NAME

REGISTRATION
NUMBER

Nyero Stephen Balton

11/1/314/1961

Ayebazibwe Annita

11/1/314/150

Nakayizzi Aidah

11/1/306/308

Date:

SIGNATURE

Approval
This project report has been submitted for examination with the approval of the supervisor.
Signature..
Date.
Yiga Stephen
[Academic Qualifications]

[Department]
Faculty of Basic Sciences and Information Technology, Ndejje University

ii

Dedication
From infinity of love, direction, provision and up keep we dedicate this piece of work to our
parents who have always been there for us to make us what we are today. May God bless them
all.
To all our lecturers at Ndejje University who have been the great source of inspiration encourage
throughout our years of study at the University,

iii

Acknowledgement
We express our inner most appreciation to the capacities that have worked tirelessly hard to see
us reach this level of education.
Our sincere gratitude goes to our parents, lectures and fellow colleagues who have stood by to
see us through the whole process of coming up with this project proposal.
Special thanks are projected towards the management and staff of Bomah Hotel for giving us the
urge and desire of developing a system to suite and meet their needs. Thank you so very much
and may the almighty God bless and reward you abundantly.

iv

Table of Contents
Declaration...........................................................................................................i
Approval.............................................................................................................ii
Dedication..........................................................................................................iii
Section One: Introduction........................................................................................1
1.1 Introduction.................................................................................................1
1.2 Background.................................................................................................2
1.3 Problem statement.........................................................................................2
1.5 Specific objectives.........................................................................................2
1.6 Scope.........................................................................................................3
1.7 Justification..................................................................................................3
1.8 Significance.................................................................................................3
Section Two: Literature Review................................................................................4
2.1 Introduction.................................................................................................4
2.2 Inventory management....................................................................................5
2.3 Financial management....................................................................................5
2.4 Decision making management..........................................................................6
2.5 Information management.................................................................................7
2.6 Database record management............................................................................7
3.1 Introduction.................................................................................................9
3.1 Research design............................................................................................9
3.2 Study population...........................................................................................9
3.3 Sampling...................................................................................................10
3.3.1 Sampling design....................................................................................10
3.3.2 Sample size..........................................................................................10
3.3.3 Sampling procedure................................................................................10
v

3.4 Study variables...........................................................................................10

3.5 Sources of data...........................................................................................10
3.5.1 Secondary data Collection........................................................................10
3.5.2 Primary Data collection...........................................................................11
3.6 Methods of data collection and instruments........................................................12
3.6.1 Questionnaires.......................................................................................12
3.6.2 Interviews............................................................................................12
3.6.3 Observation..........................................................................................12
3.6.4 Survey research.....................................................................................13
3.7 procedures and administration.........................................................................13
3.8 Data processing analysis and presentation..........................................................13
3.9 Limitations to the study and their solutions.........................................................13
References........................................................................................................15

vi

SECTION 1:
INTRODUCTION
1.1 introductions
This project is to develop an inventory management system for managing different types of
inventory and this system falls in the area (domain) of management information system.
According to Laudon, k.c. and Laudon ,JP (2004), an information system can be
technically defined as a set of interrelated components that collect (or retrieve ),
process ,store and distribute information to support decision making and control in an
organization .In addition to supporting decision making ,coordination and control,
information system may also help managers and workers analyze problems and visualize
complex subject.
According to Davis (1985), defines an information system as an integrated user machine
system for providing information to support operation management and decision making
function in an organization .whereas OBrien(2002),defines an information system as
unorganized combination of people ,hardware ,software, communication networks and
data resources that collect , transform and disseminate information I an organization.
According to Richard .L (2007), management information system is a computer based
system that provides information and support for effective managerial decision making.
The management information system is supported by the organizations operations
information systems and organization databases (and frequently databases of external
data as well).management system typically include reporting system, decision support
system, executive information system and group ware.
In a nutshell management information system can be defined as asset of interrelated
components that collect ,retrieve ,store ,process and distribute information to support
decision making ,control,coordinate,analyse probems,operations ,management and
visualization which also include people data records and activities that process data
andinformation in an organization. Therefore the benefit of the system is to manage and
process transaction which include; easy record keeping, easy information accessibility,
1

1.2 Background
Bomah hotel a private organization located in the upscale areas of Gulu, Plot 8 Eden Road PO
Box 931, Gulu near Gulu Referral Hospital in Gulu district, Uganda. It accommodates
customers worldwide provide them with different services. Bomah hotel offers services like
catering services for wedding functions, venues for conferences, restaurant services and
accommodation services. More to that Bomah hotel has centralized department which is the
receptionist department that is responsible for conducting all customer affairs in the hotel
including accommodation f clients.

The clients booking for accommodation, conferences, and wedding services are given a
registration form to fill for bookings which requires the client to provide personal information.
While computers are an ideal mechanism for routine transaction, processing managers
have soon realized computers capability of performing rapid calculations and data
comparison which can produce meaningful information for record management. A fully
structured hotel may rely on a cross platform comprising of both restaurant and hotel
services. This means a gradual increase in loss incurrence due to poor records keeping,
misuse of available stock at hand, inaccurate accounting and book keepings.
An inventory management facility can thus be deployed as a potential tool and
mechanics for managing as well as keeping track of input/output assets, cash inflows and
outflows and basically all the transactions that are taken within the hotel vicinity. Bomah

1.3 Problem statement

Currently, the hotel is having problems in managing the existing stock that is used as
input. Difficulty in allocating, controlling, managing and directing the usage of the
available resources within the hotel premises. As a result, this has led to accumulation of
losses in both the short and long run, misallocation of the available resources and above
all unexpected expenses without a defined positive profit margin
Bomah hotel has got problems due to the way they handle their businesses. The hotel
incurs huge losses daily due to miscalculation and mismanagement of resources for
example the accountant has a lot of work which is done manually and therefore not
effectively completed for example taking records of food consumed and the issuing of
resources sometimes the receptionist also fails to fully account for the clients needs like
breakfast, lunch, and dinner because he/she is concentrating on paperwork and
documents.
Our hotel inventory system will ensure that all the hotels services and goods are indicated
for both the accountant and receptionist to use. The accountant will have all the stock
available with in the hotel stone indicated down so that the hotel does not run out of stoke
which limits services. The system will compute all the items sold and get the price
income of the day. For the receptionist the system will indicate all the available rooms
and resources for the clients which will enable he/she to budget for the charges per clients
stay and fine for those who miss use the rooms.

1.4 Main objective.

The main objective is to design a system with optimum capabilities of accurately
managing the inventories of hotels.

1.5 Specific objectives

i) To issue and print out receipts to customers that check into the hotel for services

ii) To investigate and analyze the current methods and technologies being employed by
the hotel
iii) To reduce on the work load for the receptionist and cashier.
iv) To adapt to appropriate technologies i.e. computer systems which are more
operationally friendly and effective in the hotel business.
v) To implement inventory management system designed using appropriate software and
hardware platforms.
vi) To test and validate the developed system using the case study.

1.6 Scope.
The system will be limited to the management of all inventories of the hotel. The system
will only put into account six users, the hotel manager, systems administrator, cashier,
receptionist, and accountant plus a store keeper

1.7 Justification.
Bomah hotel has realized vast losses in terms of foodstuffs waste and drinks and
beverages mismanagement by its workers because of unrecorded purchase. The hotel has
also lost money due to breakages of the hotel property like beds, soda bottles which have
not been accounted for.

1.8 Significance.
Hotel management system will not only work for Bomah hotel but also the nearby
restaurant and hotels which are also facing similar problems. The system will also help
other information technology experts to get employed through training the other users on
how to get on with the system. The system will also benefit the business men who see
computers because more people will buy computers in order to use the system.

Section 2:
Literature Review
2.1 Introduction
The Literature on inventory management practices reviewed identifies effective inventory
management practices as determinants of hotels performance model. Hotel performance
could therefore be improved if effective levels of inventory management practices are
improved. In this section our system compares its proposed performance in hotel
management to the other writers views on hotel inventory management system.
Morris (1995) stressed that inventory management in its broadest perspective is to keep
the most economic amount of one kind of asset in order to facilitate an increase in the
total value of all assets of the organization, human and material resources. In large
organizations with hundreds and thousands of employees, Hotel Management systems
can be used to tag and track employee uniforms and have those sent to laundry
(Collingnon, 2005). Hotel management technologies can also be used for in-room assets
so that hotels can make sure all the services are offered to customers in their allotted
guestrooms. Collingnon (2005) explains that hotels can manage lost and stolen garments,
linens and sheets using this system. It also facilitates in providing efficient laundry
services to customers by reducing the laundry bill discrepancies.

2.2 Inventory management

To reduce stock outs and improve performance, businesses should employ category
management practices and automatic replenishment programs such as continual
replenishment planning or vendor-managed inventory (Basuroy, S., Mantrala, M., and
Walters, G. (2001). To implement category management practices effectively, proper
shelf space allocation must be a priority as the amount of inventory on display may
stimulate demand. Borin et al. (1994) recognizes the effects of shelf space allocation on
stock outs and operating costs and proposes an optimization model for the joint product
assortment and shelf space allocation decision and shows that ignoring the effects of
stock outs can yield less than desired results. Eroglu et al. (2011) posits that shelf space
management has a direct effect on shelf stock outs and suggests that managers should
allocate shelf space not only on the basis of case pack quantity but also on consumer
demand. Deloof (2003) established that shortening inventory conversion period is a
precursor to increasing stock out costs and will eventually result in loss of sale
opportunities hence poor performance.

2.3 Financial management.

On the role of effective inventory management on the performance of businesses,
Sushma & Phubesh (2007) in their study of 23 Indian Consumer Electronics Industry
firms established that businesses inventory management policies had a role to play in
their profitability performance. Lazaridis & Dimitrios (2005) in their study of 131
companies listed in the Athens Stock Exchange showed that mismanagement of inventory
will lead to tying up excess capital at the expense of profitable operations and suggested
that managers can create value for their firms by keeping inventory to an optimum level.
Also, Rajeev (2008) in his study of 91 Indian Machine Tool SMEs to evaluate the
relationship between inventory management practices and inventory cost established that
effective inventory management practices have a positive impact on the inventory
performance of businesses and also have an eventual effect on the performance of
businesses.
Juan & Mertinez (2002) in their study of 8872 small and medium-sized Spanish firms
5

also demonstrated that managers of firms can create value by reducing the number of
days of inventory. Effective inventory management processes helps increase operational
efficiency of firms; improves customer service; reduces inventory and distribution costs;
and enables businesses track items and their expiration dates consequently balance
between availability and demand (Pandey, 2004).
According to (Atrill, 2006), Prudent inventory management requires the analysis of the
costs of maintaining certain levels of inventory as there are costs involved in holding too
much stock and there are also costs involved in holding too little hence the need to put in
place an effective stock management system to ensure reliable sales forecasts .As Ross et
al. (2008) observed, the Economic Order Quantity (EOQ) model is an approach of
determining the optimal inventory level that takes into account the inventory carrying
costs, stock-out costs and total costs which are helpful in the determination of the
appropriate inventory levels to hold. Grablowsky (1984) observed that large businesses
rely more on quantitative techniques, such as EOQ and linear programming, to provide
additional information for decision-making, while small firms make use of management
judgment without quantitative back up.

2.4 Decision making management

Inventory Management plays a decisive role in the enhancement of efficiency and
competitiveness of business enterprises. Therefore, there is increased need for business
enterprises to embrace effective inventory management practices as a strategy to improve
their competitiveness (Rajeev, 2008). Effective inventory management entails holding an
appropriate amount of inventory. Too much inventory consumes physical space, creates a
financial burden, and increases the possibility of damage, spoilage and loss. On the other
hand, too little inventory often disrupts business operations, and increases the likelihood
of poor customer service (Dimitrios, 2008).
In the hotel industry, Collingnon (2005) suggested that in many luxury and
upscale hotels, hundreds of thousands of dollars of assets such as valuable paintings,
high end furnishings, electronic equipment and fine china and silverware can be tagged
rather than protecting them 24/7. While saving on the costs of maintenance, these
technologies can also reduce the costs of labor. Smart RFID tags can be used for auditing
6

activities by tracking revenue-generating equipment by making sure value items are

rightly placed. It also facilitates in tracking items that may need servicing, repair or
replacement (Collingnon, 2005 & Patnaik,
2004). While protecting the assets and tracking the inventory through RFID technologies,
hotel organizations can focus on providing efficient and effective service to its customers.

2.5 Information management

In the past, researchers apart from hotel industry have stated that RFID technologies can
be used to identify the available inventories and provide information of the assets in
organizations (Kok et al., 2008; Hau & Ozer, 2007 & Atali et al., 2006). While inventory
and system user errors do occur quite frequently, there are not many studies that have
identified them. While the traditional inventory management methods presume to have
100% reliable information, in actual fact most hotels have only uneven guesstimates of
actual inventory. In hotel or lodging literature there are very few studies that focus on
implementing RFIDs for asset and inventory management. According to Iwin (2006)
hotel management system facilities the sharing of information, presentation and how it
can be used affirmatively to maintain on going and external inventory management to
which a hotel embraces its crucial long term success.

2.6 Database record management

According to sawyer (2000) utilities are variety of sophisticated technologies to store and
retrieve data efficiently. It provides easy access to data and provides data security (such
as data authentication). Gerald (1999) defines a Database as a collection of data. Some of
the tasks, using a computer system, are to store and manage data. To handle these tasks, a
specialized computer system known as Database Management System. (DBMS) is
needed. A DBMS stores, processes and retrieves data. A database is a pool of data that
has been edited and is shareable between application systems linking data stored in
different files together to ease access. The simplest way to reduce the incidence of
inconsistent data is to eliminate unnecessary duplication of data. This term implies that
data should be stored as a common pool shared between application systems. This pool of
7

data sharable between applications is the enterprise database. Data which is unnecessary
duplicated is redundant in the sense that duplication adds no information; hence we use
the term non redundant in the database. A collection of non-redundant sharable data
between different applications is database.

Section 3:
Methodology
8

3.1 Introduction.
The project will be intended to design an inventory management system for Bomah Hotel
located in the upscale area of Gulu near Gulu Referral hospital in Gulu district. The
system will present the platform against which data will be gathered. It will discuss the
research design, study population, sampling, and study variables, sources of data, data
collection methods and instruments, data processing, analysis and presentation and
limitations of the study.

3.1 Research design

The project team will use a cross sectional survey design basing on the use of qualitative
and quantitative approaches to gather data and descriptive mechanisms to collect the
information and describe how Bomah Hotel Inventories are managed. This system will be
used to explain the extent and intensity of the problem that is existing in their current
system and possible solution to the problem in the inventory management system of the
Hotel.

3.2 Study population

The study will comprise of Manager, Accountant, Systems administrator, Receptionist,
cashier and the store keeper of Bomah Hotel in Gulu district.

3.3 Sampling
3.3.1 Sampling design
The project will mainly use two methodologies. These will be stratified sampling, and
simple random sampling methodology.

3.3.2 Sample size

The study will involve five (5) respondents. This sample size will be assumed by the
project team to be representative enough of the entire population.

3.3.3 Sampling procedure

Stratified random sampling to be used in that Hotel will be divided into five strata of
Stock, Reception, Cashier, Accounts and Manager. Each stratum in this case will
represent a department. (1) respondant will be selected from each stratum.

3.4 Study variables

The independent variable is Inventory Management; the dependent variable is
performance of a system. That is to say, the study will be carried out to establish the
relationship among the inventory management system for Bomah Hotel located in Gulu
district.

3.5 Sources of data

Two sources of data will be used for purposes of research. These will include primary
data and secondary data.

3.5.1 Secondary data Collection

Roston (2001) defines secondary data as that kind of data that is available, already
reported by some other scholars. Secondary data includes policy documents and abstracts
of the various scholars relating to the topic of discussion in question. Secondary data for
this project will be got from sources like libraries, archived records from the Bomah
Hotel, records of other selected Hotels, government publications, online information, text
books, newspapers, and unpublished project reports. This is because it will readily be
available and easier to comprehend, as it comprises of extensively projected work.

3.5.2 Primary Data collection

According to Roston (2001), primary data is that kind of data that has been gathered for
the first time, it has never been reported anywhere. Short comings of secondary data
10

sources such as out datedness and inadequacy in terms of coverage, necessitates the use
of primary source for first data. Self-administered questionnaire will be used and this will
enable the project team to cover a large population quickly and at reasonable cost.

3.6 Methods of data collection and instruments.

3.6.1 Questionnaires.
A questionnaire is a reformulated written set of questions to which respondents record
their answers, usually within rather closely defined alternatives. The questionnaire will be
used on the basis that the variables under study cannot be observed for instance the
views, opinions, perceptions and feelings of the respondents. The questionnaire will
equally be used because the information has to be collected from a large sample within a
short period of time yet the respondents can read and write (Sekaran, 2003).The
11

questionnaire will be used in collection of data from respondents (working staff of

Bomah Hotel). The questionnaires will consist of both open and close ended questions
administered to respondents of Bomah Hotel, Gulu district

3.6.2 Interviews
The project team will also administer interviews. An interview is a dialogue between an
interviewer and interviewee. It is an organized conversation aimed at gathering data about
a particular topic. This is a method where a researcher interviews respondents to obtain
information on the issue of interest. In this case, the interviews during this research will
be structured and will specifically be administered to staff of Bomah Hotel.

3.6.3 Observation
The project team will observe the receipt from sales that the Hotel operators have pinned
in the shelves of the hotel as well as counter books that are being used to record the
customers who take goods on credit. The observation method will be to reveal whether
the respondents use the counter books to record all the transactions made implying that
they have records keeping system.

3.6.4 Survey research

This research strategy is preferred because it permits the collection of data through
questionnaires administered to a sample and that the data collected by this design can be
used to suggest reasons for particular relationships between variables and produce models
for these relationships .A survey design is also preferred for it facilitates the collection of
a considerable amount of data quickly, efficiently and accurately.
When studying inventory management, there is a need to further study these variables,
customer needs vendor partnerships, technology, data integrity, and performance
measurements (Lee & Kleiner, 2001, p. 40) and their effects on inventory management.

12

In customer satisfaction, there may need to be further study on customer satisfaction

surveys and their effectiveness.

3.7 procedures and administration

The project team will receive a letter from the faculty Dean of Science and IT of Ndejje
University to legalize the purpose of the study in the Hotel. In addition, the letter will
satisfy the respondents and remove fear from them that the research is for study purpose
only.

3.8 Data analysis

In data analysis an investigation on the current system in terms of operation collected will
be checked for completeness, categorized, coded, and entered into a computer where it
will be summarized into frequency tables.

3.9 Limitations to the study and their solutions

During this course of the study in this Hotel, the project team will expect to face the
following problems while in the field. The respondent will fear to give out the right
information because they may think of the project team to be a government agent that
may give them problems. The project team will explain to the respondents that the study
is purposely for academic use with the legal letter from the Dean of faculty as a proof to
this.
There will be shortage of money, a factor which will affect transport and accessibility to
the area of stud, print of questionnaires and report. However, the project team will
overcome this by getting financial support from parents and friends.
The project team will expect poor information and data from respondents because some
respondents may not have accurate data on the top. The project team will select
respondents who have who have qualifications so that the research is accurate.

13

References

I.

(Atrill, P. (2006). Financial management for decision makers, (4th Ed), Prentice Hall.

II.

Baron, O., Berman, O., and Perry, D. (2010). Shelf Space Management When Demand
Depends on the Inventory Level Production and Operations Management. pp. 113, 2010
Production and Operations Management Society

14

III.

.Basuroy, S., Mantrala, M., and Walters, G. (2001). The impact of category management
on retailer prices and performance: theory and evidence. Journal of Marketing, 65 (4),1633.

IV.

Borin, N., Farris, P. W., and Freeland, J.R. (1994). A model for determining product
category assortment and shelf space allocation, Decision Sciences, 25 (3),359-84.

V.

Bowen, M., Morara, M., and Mureithi S. (2009). Management of business challenges
among small and micro enterprises in Nairobi-Kenya. KCA Journal of Business
Management 2(1),

VI.

Cachon, G. P., and Olivares, M. (2010). Drivers of finished-goods inventory in the US

automobile industry. Journal of Management Science, 56 (1), 202-216.

VII.

Deloof, M. (2003). Does Working Capital Management Affect Profitability of Belgian

Firms?. Journal of Business Finance and Accounting,30 (314), 573 587.

VIII.

Dimitrios, P. (2008). The effect of inventory management on firm performance.

International Journal of Productivity and Performance Management. 57 (5)

IX.

Eroglu, C., Brent, W., and Waller, M. (2011). Consumer driven retail operations. The
moderating effect of consumer demand and case pack quantity. International Journal of
Physical distribution and logistics management, 41 (5), 420-434

X.

Field, A. (2005). Discovering Statistics Using SPSS, 2nd Ed, London : SAGE
Publications.

XI.
XII.

FSD Kenya (2009). National survey of financial services access. Kenya : Finaccess,
Grablowsky, B. J. (1984). Financial Management of Inventory. Journal of Small Business
Management, 22

15

XIII.

Grablowsky, B., and Rowell, D. ( 1980 ). Small Business Financial Management: Theory
and Practice. Norfolk, Va: Old Dominion University.

XIV.

Gruen, T., and Corsten, D. (2007), A Comprehensive Guide to Retail Out-of-Stock

Reduction in the Fast Moving Consumer Goods Industry, Grocery Manufacturers

16