Post on 19-Nov-2014
CHAPTER 1
Introduction
Inventory to many small business owners is one of the more visible and
tangible aspects of doing business. Raw materials, goods in process and
finished goods all represent various forms of inventory. Each type represents
money tied up until the inventory leaves the company as purchased products.
Likewise, merchandise stocks in a retail store contribute to profits only
when their sale puts money into the cash register. In a literal sense, inventory
refers to stocks of anything necessary to do business. These stocks represent
a large portion of the business investment and must be well managed in order
to maximize profits. In fact, many small businesses cannot absorb the types of
losses arising from poor inventory management. Unless inventories are
controlled, they are unreliable, inefficient and costly.
Inventory management is primarily about specifying the size and
placement of stocked goods. Inventory management is required at different
locations within a facility or within multiple locations of a supply network to
protect the regular and planned course of production against the random
disturbance of running out of materials or goods. The scope of inventory
management also concerns the fine lines between replenishment lead time,
carrying costs of inventory, asset management, inventory forecasting,
inventory valuation, inventory visibility, future inventory price forecasting,
physical inventory, available physical space for inventory, quality
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management, replenishment, returns and defective goods and demand
forecasting.
To maintain an in-stock position of wanted items and to dispose of
unwanted items, it is necessary to establish adequate controls over inventory
on order and inventory in stock. There are several proven purposes that
computer/ technology could do:
Enables the manager to examine the inventory visually to determine if
additional inventory is required. In very small businesses where this
method is used, records may not be needed at all or only for slow
moving or expensive items.
Enables the manager to physically count a small portion of the
inventory each day so that each segment of the inventory is counted
every so many days on a regular basis.
Enables the manager to record the item as it is used on a sheet of
paper. Such information is then used for reorder purposes.
Enables the manager to retain a portion of the price ticket when the
item is sold. The manager can then use the stub to record the item that
was sold.
As a business grows, it may find a need for a more sophisticated and
technical form of inventory control. Today, the use of computer systems to
control inventory is far more feasible for small business than ever before, both
through the widespread existence of computer service organizations and the
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decreasing cost of small-sized computers. Often the justification for such a
computer-based system is enhanced by the fact that company accounting and
billing procedures can also be handled on the computer.
Point-of-sale terminals relay information on each item used or sold.
The manager receives information printouts at regular intervals for review and
action.
Off-line point-of-sale terminals relay information directly to the
supplier's computer who uses the information to ship additional items
automatically to the buyer/inventory manager.
The final method for inventory control is done by an outside agency. A
manufacturer's representative visits the large retailer on a scheduled basis,
takes the stock count and writes the reorder. Unwanted merchandise
is removed from stock and returned to the manufacturer through a
predetermined, authorized procedure.
A principal goal for many of the methods is to determine the minimum
possible annual cost of ordering and stocking each item.
Moreover, business world has become so dependent to computer
technology, for it barely contributes a lot in performing their tasks. On the
other hand, application systems have already made an evolutionary
development to further improve the ever-changing lifestyle and needs of the
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people. A part of these developments are the emergence of various
application systems designed to aid some human incapability like processing
timely information accurately. These computer technology advances are
mostly used by big companies, where instant but correct information is
necessity.
The key solution is the job scope of a distributor business specialist.
Every distributor is assigned to a particular place and has to deal with an own
system to keep track of the sales made. Mostly, a distributor would rely on a
manual system since it will require less maintenance time and less cost. But
since we are now in a fast pacing world, everything needs to be in great
speed but with efficiency. This is where the researchers’ “Personal Distributor
burns burry” comes handy.
Context of the Study
With the increasing innovation of technology worldwide and the
growing needs for business solutions, big or small companies are expanding
to incorporate computerization in their business strategies. For the needs of
the gradually changing market in terms of quantity, variety and complexity,
merchandising businesses tend to indulge in finding better ways of satisfying
their clients.
Headed and owned by Mr. Wee Liang Cheng, Pillars is a major
distributor of Barns burry Industry. Pte. Ltd. Singapore equipments, as in
Airman and Ingersoll-rand Diesel Portable Air Compressors, Electric Diesel
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Generator sets, Miller/Lincoln Diesel/ Rectifier Welders, Forklift Trucks, Aerial
Platforms, Air tools and others.
In 2001, Mr. Wee Liang Cheng, invested in the company and acquired
more than 90% of shares registering it under the Foreign Investments Act
1991. The company once focused on equipment to deliver to the other
country. Since the construction industry slowed down it continued to penetrate
other markets abandoned by its competitors.
Focused on PIEC products in the market, PIEC which stands for Pillars
Industrial Equipments Corporation owned by Mr Wee Liang Cheng, continued
to expand its Merchandise. The company started to supply few pillars
products on markets, which then grew and increased through the years. Now,
the company has about 30 regular equipment exclusively patronizing their
products, not to mention other walk-in clients. Also they currently have 84
employees, marketing and Distribution Pillars has its own marketing sales
force that calls and gets orders from its customers. Right now we have 7 sales
agents.
Assisted by Mr. Wee Liang Cheng, PIEC managed to rival with tight
competitors which led it to become a much experienced company.
The Pillars Industrial Equipment Corporation, which swore to fulfil the
everyday needs of the market for quality PIEC products, needs to monitor the
amount of inventory items lacking and present in their stockrooms.
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Due to the use of manual Sales and Inventory Procedures, the
company is experiencing restrains in growth and development. The company
is incapable of accurately knowing stocks which are currently available in their
warehouses and in timely manner it is because the sales clerk. Though given
a list of available products by a corresponding warehouse supervisor from
each stockroom, cannot have their list updated every time. It would require
every sales clerk to compare each of their records every time to determine all
of the purchased equipments. Aside from purchased equipments; they would
consult with each warehouse supervisor to determine other products taken
out of the stockrooms, due to defects or for the owners' personal usage. In
addition to that, they cannot tally accurately because of the presence of
human errors, which are evident on manual processing.
With those reasons, another problem arises. The company is
having difficulties in identifying products nearly or already depleted. Unless it
is manually checked, the company has no other means of knowing which
items are lacking. This leads to another problem; the company becomes
clueless of when and how many stocks to reorder from its supplies.
Reorder too early and/or too much products would cause the prices
to fluctuate, because the prices of the excess commodities will decrease. The
prices will decrease because the company needs to sell the excess products
fast before they stay in the stockroom longer than usual, adding more
expense and work in maintaining its quality and acceptability, or worst. The
Pillars Industrial Equipment Corporation would like to sell their equipments in
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good condition to its clients. By doing such, products can be free of defects
and accidental mishandlings from their employees. Lastly, the company is
struggling when multiple transactions, inflow and outflow, occurs
simultaneously. Especially in recording those transactions by two or more
employees, for entries are sometimes doubled or omitted from their records.
An employee may record a transaction that is already recorded by
the other employee; or an employee committing an entry, thinking that the
other employee has already recorded it. When it involves only one employee,
it makes the services slower for he/she cannot multitask.
What should happen to Pillars Industrial Equipment Corporation is to
have a centralized record of their products, where authorized users can
record transactions and view the status and quantity of the products in each
warehouse simultaneously. A centralized system that can be used to aid them
in monitoring products moved, flowing in and out of their premises. The
company should be able to handle multiple transactions and record them in a
centralized record in real time. Also they should also be capable of knowing
fast and accurately the availability of their products by having their lists
connected and updated in real time. In identifying the availability of
commodities, the company should also know the products nearly and already
depleted, for them to reorder with appropriate timing. Pillars Industrial
Equipment Corporation should monitor each of the equipments in the
warehouse.
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From the stated problems and needs of this company, the researchers
have decided to propose a business solution entitled "LAN–Based Sales and
Inventory System for Pillars Industrial Equipment Corporation ".
Objective of the Study
In this part the researchers indicate the study's main objective. It will
also present the specific and precise objectives the study has to accomplish in
order to provide a solution to the problems stated in the previous section.
General Objectives
The general objective of this study is to develop a LAN-Based Sales
and Inventory System for Pillars Industrial Equipment Corporation. A system
that would elevate their monitoring capabilities to guarantee more productivity
by bringing efficiency to both employees and customers of the company.
Specific Objectives
To design a computerized system capable of generating sales
and inventory reports, as well as purchased returns and sales
return of the company daily, monthly and annually.
To develop a system that will monitor the sales products new
added items, product availability add items easily sold and which
are not.
To design a system able to remind the company of nearly or
already depleted commodities and critical levels.
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To develop a system that will reduce manual processing done
by the employees in a lesser time.
To test and evaluate the acceptability of the system by
gathering feedback from prospective users and technical experts.
Scope and Limitations of the Study
The Scope and Limitations enumerates the coverage’s and boundaries
of the study, “LAN-Based Sales and Inventory System for Pillars Industrial
Equipment Corporation".
Scope of Study
The study covers the monitoring of inventory items of the company.
The research will upgrade the inventory transactions of the company due to
the failing of the manual system. The study covers the generations of yearly,
monthly and daily reports on sales for the administration. The project includes
monitored access level for administrators, sales clerks and warehouse
attendance.
Limitations of Study
The system doesn’t cover others operations of the main office.
Equipment is the only product that is included in the system. Only the order
slip and reports are printed.
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Significance of the Study
To the Company
The value of this research is the business solution it would bestow
to the PIEC Merchandising. this study will trigger a technology growth to the
company and will uplift its level among modernized businesses. It would also
grant the company an understanding of what computers and Information
Technology Professionals can accomplish for them. The implementation of
this research will strengthen the relationship of the company and its
employees, for simplifying their work and entrusting them with a computerized
system as aid.
To the Employees
The benefit of this study to the employees of Pillars Industrial
Equipment would be the analysis of problems and needs they have with the
task assigned to them. With this analysis, the researchers can administer an
appropriate assistance to them. The study will provide the employees more
speed, functionality and ease by decreasing tedious work and errors. The
research would also grant the employees connectivity, bridging the gap
between them and their workstations. By bringing more confidence to their
work and eliminating unnecessary and redundant processes, the employees
will serve the company and its customers better.
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To the Clients
The customers of PIEC would receive more quality on products and
services with hospitality from the company's employees and from the
company as well. The research will provide the consumers improvements by
analyzing their dissatisfaction with regards to the company's commodities and
services. The clients will obtain faster, reliable and more accurate services,
along with high quality goods from the company. Therefore, the market will
gain a much competitive and satisfying provider of heavy equipments.
To the University
This research would profit the University of the East by promoting
its name as producers of intellectual students. The success of the project will
uplift the reputation and popularity of the university, reaching out to
companies, parents, and potential students. This study will present the
capabilities and knowledge of students on theoretical and hands-on training
on computer hardware and software applications to the Industry.
To the Students
The investigation will supply students a reference for their related
studies, providing an example and an aid for their educational inquiries. The
study would give an insight to students in lower years of what the College Of
Computers Studies and Systems (C.C.S.S) students are required to
accomplish before the graduate. This presents more value to C.C.S.S.
students, depicting their assets and capabilities. It would also add up to the
achievements of the students in this University, especially to the Information
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Technology (I.T.) Students.
To the Researchers
The study would bestow us researchers with more experience and
knowledge about the field we have taken and what opportunities await us. It
would give us a chance to display what we have learned and prove that we
deserve to be called I.T. Professionals. The study would prepare us to the
outside world as professionals and expose us to the world of businesses. The
accomplishment of this project will also give us a sense of completion, self
confidence and pride for our achievement. The study would also promote
teamwork, responsibility and sacrifice we would share and endure to fulfil this
requirement.
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Chapter II
REVIEW RELATED LITERATURE AND STUDIES
This chapter provides a pool of information related to the topic which
aids the researchers in developing the study. All gathered information from
books, periodicals, electronic sources, findings in theses and dissertations
serves as an input to the completion of the study. These unbiased and
relevant resources identify the essential knowledge, advantages,
disadvantages, and basic understanding of the study.
In this chapter, we will deal with the analysis and careful observations
about the existing system. This will be a great help for the researchers to
identify the strengths and weaknesses of this existing system. This will also
guide the decisions of the researchers on whether to continue working with
the proposed system.
Conceptual Literature
Inventory
An Inventory of is a stock or store the equipments. Firms typically stock
hundreds of items in inventory, ranging from small to things such as pencils,
paper clips, screws, nuts, and bolts to large items such machines, trucks,
construction equipment, and airplanes. Naturally, many of the items a firm
carries in inventory relate to the kind of business it engages in. Thus,
manufacturing firms carry supplies of raw materials, purchased parts, partially
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finished items, and finished goods, as well as spare parts for the machines,
tools, and other supplies. Department stores carry clothing, furniture,
carpeting, stationary, appliances, gifts, cards, and toys. Some also stock
sporting goods, paints, and tools. Hospital stock drugs, surgical supplies, life-
monitoring equipment, sheets, and pillow cases, and more. ‘Supermarkets
stock fresh and canned foods, packaged and frozen foods, household
supplies, magazines, and baked goods, dairy products, produce, and other
items. (Stevenson, 2004)
“Inventories are assets which are held for sale in the ordinary course of
business, in the process of production for such sale in the form of materials or
supplies to be consumed in the production process or in the rendering
services.”
Inventories encompass goods purchased by a retailer and held for
resale, or land and other property held for resale by a subdivision company
and real state developer. Inventories also encompass finished goods
produced, goods in process and materials and supplies awaiting use in the
production process. (Valix, 2006)
Merchandise inventory, inventory, or simply goods for sale, includes
the goods purchased for the principal purpose of reselling them in the ordinary
course of operations. The goods that comprise the merchandise inventory
depend on the nature of the business of the enterprise. For example, a
furniture store has beds, tables, chairs, and bookcases as its merchandise
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inventory. A vehicle dealer has cars, trucks and vans forming part of his
merchandise inventory. (Kimwell, 2005).
A traditional periodic inventory system operates as follows: when
goods for resale are purchased, merchandise purchases, are simply
purchases, is debited at the amount of the acquisition cost. Upon making a
sale, income is recognized by crediting merchandise sales, or simply sales,
based on the selling price of the goods. No separate entry is prepared to
record the decrees in the inventory balance as a result of the sale. There are
no inventory ledgers accounts that need to be updated as the buying and
selling transactions occur. (Kimwell, 2005)
All transactions affecting the inventory balance are recorded as they
occur. The perpetual inventory system acquired its name from the fact that the
inventory records are continuously updated. The acquisition cost, are simply
cost, of products purchased is recorded by debiting merchandise inventory or
inventory account. (Kimwell, 2005)
Inventories are critical assets in operating cycle of many organizations.
An inventory helps in the application of the matching principle. An inventory is
akin to storage tank that can release its content (the costs) when certain
triggering events take place. Even if, in a world of just in time, the role of
inventories is decreasing as management tool for adjusting the needs of cost
minimization and production smoothing to the randomness or seasonality of
demand, inventories still create significant issues in reporting to shareholders:
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(a) inventories are present in immobilization of funds (required to finance the
inventory) (b) the choice of how to attach costs to objects held in inventory
before their sale affects profit. It is therefore important to examine how
inventories are recorded and reported. (Stolowy & Lebas, 2002)
Types of Inventories
1. Cycle Inventory – the portion of total inventory that varies directly with
lot size.
2. Safe stock Inventory – protects against uncertainties in demand, a lead
time, and supply.
3. Anticipation Inventory – inventory used to absorb uneven rates of
demand or supply, which business often face.
4. Pipeline Inventory – inventory moving from point to point in the
materials flow system. (Krajewski & Ritzman, 2000)
Inventory Management
The inventory management system maintains information for multiple
warehouses. Among the many elements for each item at each warehouse, the
system calculates and stores usage rates, stocking level, and movement
classification. This information is easily retrieved allowing for flexible reporting
to management personnel. Usages rates help predict future sales from past
sales.
By establishing stocking levels, the system ensures the item will be
available when the customer requires it. This automation relieves
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management from the worry of running out of stock. Management personnel,
therefore, can concentrate their time in controlling products with high-dollar
movement. Each item is classified by its dollar moved through the warehouse
in a period of time. This classification enables management to identify where
to spend their time in controlling inventory. With all facets working in concert,
the inventory provides the best customer service with minimal labor.
(www.snowbd.com)
According to Jason Gluck man author of the article “Inventory
Management Software”, effective management of finished product inventory is
quite essential for running a business efficiently and profitably. Inventory
strategies and decisions become particularly important in business where
inventory costs form a sizeable part of total marketing costs.
Carrying inventories becomes inescapable in most businesses,
because the producing activities and consuming activities take place at
different times, in different locations and at different rates. Inventories are
made up of several elements: operational stocks kept for meeting the ready
demand at different consumption center. Some stock will be in transit at any
given point of time, while other stock will be in transit at any given point of
time, while other stock will be awaiting shipments. Finally, there are kept for
meeting emergencies. All these make up the total inventory.
While discussing inventory management software, it is important to
keep an eye on the elements of inventory costs. A variety of costs are
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incurred in carrying the inventories. They include interest on capital tied up in
the inventory, warehouse rent, staff salaries, insurance, rates and taxes,
stationery, postage and communication charges, administrative overheads,
costs of handling, unloading and stacking, loss due to damage and
deterioration while on storage and cost of order processing.
In businesses where the turnaround of inventories is rather slow,
interest on the capital tied up in the inventory becomes the most significant
element of the total inventory carrying cost. In fact, inventory cost causes the
most worry to manufacturers today. Increased competition has resulted in the
accumulation of stock in a number of industries. Inventory carrying costs are
on the increase of the products pushes up the inventory carrying costs as the
value of the locked up product goes up in the process. Similarly, every
increase in the interest rates also pushes up the inventory carrying costs.
(www.inventory-info.com)
According to Punongbayan and Araullo, authors of the magazine
“Accounting Alert”, here are the new significant Provisions and Changes in
Accounting
1. Inventories should be carried at the lower cost (i.e., those cost incurred
in the normal course of business in bringing the product of services to
its present location and condition) and net realizable value (i.e., the
estimated selling price in the ordinary course of business less the
estimated costs of completing the product and making the sale).
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2. The cost of inventories of a service provider includes labor and other
costs of personnel directly engaged in providing the service, including
supervisory personnel, and attributes overheads. Cost does not include
profit margins or non-attributable overheads.
3. Reversal of previous inventory write-down is required for subsequent
increase in value of inventories.
4. Compared with current requirements and practice, the new standard:
- Prohibits capitalization of exchange differences as part of
inventory costs.
- Prohibits LIFO inventory costing method.
- Provides circumstances that would trigger a reversal of a prior
period write-down of inventories which shall be recognized as a
- Reduction in the amount of inventories recognized as an
expenses. (Punongbayan & Araullo, 2005)
In telecommunications magazine Americas Issue “The Watchword Is
Automated Inventory Management Roundtable” written by Martin Creaner,
Inventory management systems long have been viewed as trouble spots,
especially for large incumbent operators with a lot of legacy equipment.
With the rollout of new and innovative services, which draw on complex
combinations of both network and service inventories, service providers are
heading into unsharpened waters. Now the watchword appears to be
automated inventory management to improve efficiency, flexibility and
consistency. Inventory management seems to be in a period of change, which
includes recent mergers and acquisitions among some of the top vendors, so
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it would be useful to chat with the leading and gauge their thoughts about this
ever changing market. (Creaner, 2006)
In the European Journal of Operational Research issue “Forecasting
daily supermarket sales using exponentially weighted quantise regression”
written by James Taylor, Inventory control systems typically require the
frequent updating of forecasts for many different products. In addition to point
predictions, interval forecasts for many different product. In addition to point
predictions, interval forecast for many different products. In addition to point
predictions, interval forecast are needed to set appropriate levels of safety
stock. The series considered in this paper are characterized by high volatility
and skewers, which are both time varying. These features motivate the
consideration of forecasting methods that are robust with regard to
distributional assumptions. The widespread use of exponential smoothing for
point forecasting in inventory control motivates the development of the
approach for interval forecasting. In this paper, we construct interval forecasts
from quantise predictions generated using exponentially weighted quantise
regression. The approach amounts to exponential smoothing of the
cumulative distributive function, and can be viewed as an extension of
generalized exponential smoothing to quantise forecasting. Empirical results
are encouraging, with improvements over traditional methods being
particularly apparent when the approach is used as the basis for robust point
forecasting. (Taylor, 2006)
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Merchandising
A merchandising business is an entity engaged in the activities of
buying and selling of products. The main difference merchandising and the
servicing business is the existing of physical products sold to the customers.
Merchandising sells products in order to generate revenue while servicing
renders service to generate revenue. Merchandising is also different from
manufacturing business because it does not produce its own product for sale.
It obtains products from a manufacturer or a supplier, either at the retail level
or the wholesale level. Other terms used to describe merchandising business
are “trading enterprise”, “trading firm” or buy and sell business. (Valencia,
2006)
Sales
Manually checking the stock of an item at the point-of-sale is time
consuming, if not annoying for the customer and employee. Providing an
item’s real-time quantity available for sale eliminates the need for manual
stock checking. Real time is accomplished by updating when the event
occurs. The quantity available for sale is calculated by subtracting quantity
reserved for sales orders from quantity on hand. The quantity available for
sale is maintained real-time every rime an invoice is printed. Knowing the
quantity available is important in reducing the labor involved in filling customer
orders, as well as in providing high customer service. Location information on
an item is also available to the salesman, through a comprehensive location
system. All of these features combine to help the salesman service the
customer in an informed and timely manner. (www.snowbd.com)
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Warehousing
Warehousing is the management of materials while they are in storage.
It includes storing, dispersing, ordering, and accounting for all materials and
finished goods from the beginning to end of the production process.
Warehousing facilities may range from small stockroom to large,
highly mechanized storage.
In Computers & Operations Research issue “Loss of customer goodwill
in the incapacitated single level lot-sizing problem” by Aksen, Deniz. Loss of
customer goodwill in incapacitated single level lot-sizing is studied with a
mixed integer programming model extending the well-known Wagner Whit in
(WW) model. The objective is to maximize profit from production and sales of
a single good over a finite planning horizon. Demand, costs, and prices vary
with time. Unsatisfied demand cannot be backordered. It leads to the
immediate loss of profit from sales. Previous models augment the total cost
objective by this lost profit. The difference of the proposed model is that
unsatisfied demand in a given period causes the demand in the next period to
shrink due to the loss of customer goodwill. A neighborhood search and
restoration heuristic is developed that tries to adjust optimal lot sizes of the
original no-goodwill-loss model to the situation with goodwill loss. Its
performance is compared with the WW solution, and with the commercial
solver CPLEX 8.1 on 360 test problems of various period lengths. (AKSEN,
2007)
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Networking
Because the world topology basically means shape, the term network
topology refers to the shape of a network – how all nodes (points) of a
network are wired together. There are several different topologies in which
networks are wired, and the choice of a topology is often your most important
choice when you plan a network. The different topologies have different costs
(oath install and maintain), different levels of performance, and different levels
of reliability. (Hall berg, 2003)
Networking is the practice of linking two or more computing devices
together for the purpose of sharing data. Networks are built with a mix of
computer hardware and computer software. (compnetworking.about.com)
“Networking is primarily about improving the flow of information
amongst group and people to gain greater access to mutual support, facilities
and resources. It means of empowerment, enabling people to gain greater
influence over the decision making that affects our lives”. (www.navca.org.uk)
A Local Area Network (LAN) is a group of computers and other devices
that are connected together by a common medium. LAN’s typically join
computers that are physically close together, such as in the same room or
building. Only a limited number of computers and other devices can be
connected on a single LAN. The limitations vary based upon the medium
connecting the computers and devices as well as upon the LAN software
being used. (McLead & Schell, 2002)
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Local Area Network, in computer science, is a collection of
interconnected computers that can share data, applications, and resources,
such as printers. Computers in a LAN are separated by distances of up to a
few kilometres and are typically used in offices or across university campuses.
A LAN enables the fast and effective transfer of information within a group of
users and reduces
Operational costs. (Encarta.msn.com)
A local area network (LAN) is a computer network covering a small
geographic area, like home, office, or group of buildings. Current LANs are
most likely to be based on switched IEEE 802.3 Ethernet technology, running
at 10, 100 of 1,000 Mbit/s, or on IEEE 802.11 Wi-Fi technology. Each node or
computer in the LAN has its own computing power but it can also access
other devices on the LAN subject to the permissions it has been allowed.
These could include data, processing power, and the ability to communicate
or chat with other users in the network. (www.wikipedia.com)
A local area network is a short-distance network used to link a group of
computers together within a building. 10BaseT Ethernet is the most commonly
used form of LAN. A piece of hardware called a hub serves as the common
wiring point, enabling data to be sent from one machine to another over the
network. LANs are typically limited to distances of less than 500 meters and
provide low-cost, high-bandwidth networking capabilities within a small
geographical area. (www.cnet.com)
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Local area network (LAN), a computer dedicated to sharing data
among several single-user workstations or personal computers, each of which
is called a node. A LAN can have from two to several hundred such nodes,
each separated by distances of several feet to as much as a mile, and should
be distinguished from connections among computers over public carriers,
such as telephone circuits, that are used for other purposes. Because of the
relatively small areas involved, the nodes in a LAN can be connected by
special high-data rate cables. A metropolitan area network (MAN) is defined
as being restricted to a larger area (maximum distances of 50-60 miles) than
a LAN but one still small enough so that dedicated links (such as microwave
links) can be used. (www.infoplease.com)
The advent of personal computers changed the type of information
sent over office computer networks. Terminal were no longer “dumb”, but
contained the power to perform their own instructions and maintain their own
memories. This took considerable pressure off mainframe devices, whose
energies could now be devoted to more complex tasks.
LANs allowed for the transmission of data between workers. In turn,
they enabled this shared data to be directed to a common printer, serving a
larger group of users. This eliminated the need for each worker to have a
printer and ensured that the one printer provided was not underutilized. In
addition, LANs allowed data to be called up directly on other workers
computer, providing immediate communication and eliminating the need for
paper. The most common application was in interoffice communications, or
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electronic mail (e-mail). Messages could be directed to one or several people
and copied to several more over the LAN. As a result, an e-mail system
became something of an official record of communications between workers.
Addresses became obligated to respond to e-mail messages in a timely
manner because their failure to answer could be easily documented for
supervisors.
Personal computers transformed LANs from mere shared processors
to fully integrated communication devices. With processing power distributed
among several computers, the mainframe’s main role was eclipsed and
complex processing, administrative functions, and data file storage became
the job of a new device, the file server. Today, there are many different types
of LANs. For example, many Macintosh computers use AppleTalk, while IBM
computers commonly use Ethernets. (www.answers.com)
Network Topology
A network topology refers to either the physical or logical layout of a
network installation.
Physical Topology when in the context of networking refers to the
physical layout of the devices connected to the network, including the
location and cable installation.
The Logical Topology refers to the way it actually operates (transfer
data) as opposed to its layout.
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There are four main network topologies (and mixtures of the four) in common
use today.
Bus
Mesh
Ring
Star
The Bus Topology
This type of network topology is generally used with Ethernet networks.
A Bus topology can be both Physical and Logical. The Bus topology is one of
the simplest of the four network topologies to use, in its most basic form it is
simply a case of running one cable (referred to as the backbone) from the first
device/PC in the network to the last device/PC, and then add any further
devices/PCs to the existing cable (backbone) between the first and last
machines.
This topology is probably the cheapest network type of all to initially
setup, as only one cable is used the installation is fairly simple and
economical. The problems can come when trying to add a device to an
existing Bus topology network. To add a device requires physically linking it to
the existing backbone which can turn out to be a major job.
Another consideration if using a bus topology for a network is fault
tolerance, or the lack of it, this type of network transfer data by passing
27
messages through the same cable, so a break in any part of the cable will
bring the whole network down. Each device will check to see if the message is
contents to its network card’s onboard RAM and process it accordingly.
(www.helpwithpcs.com)
The Mesh Topology
This type of network topology boasts the highest fault tolerance of all of
the network topologies; it is also usually the most expensive. In a mesh
topology each device/PC is connected to every other device/PC in the
network by its own cable, which means vast amounts of cables for any
sizeable network. The Mesh topology provides fault tolerance by having
separate cables for each connection, allowing any one cable to break without
interfering with the rest of the network. Unfortunately, because each
connection needs its own cable a Mesh topology can get very expensive.
Every time you add a client to a mesh network you have to run cables to each
of the other devices.
The amount of cables you will need for a mesh network can be
calculated by:
CN = (D*(D-1))/2
(where CN is Cables needed, and D is the amount of devices on the network)
When you need to add a single device to a Mesh network the job can
be very complex, for example if you had a network of 15 devices, to add one
device would mean adding 15 cables to the network. (www.helpwithpcs.com)
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The Ring Topology
The physical ring topology is rarely used this days; a Ring topology
networks the devices by connecting each device to its two neighboring
devices. Data is passed one way from device to device, fault tolerance in a
physical ring topology is non existent, if one device/cable fails then the whole
network goes down. Adding a new device to an existing physical Ring network
can be complicated as any new device needs to go in between the existing
devices. (www.helpwithpcs.com)
The Star Topology
A physical Star topology connects the devices via a centralized unit
such as a Hub or a Switch. A Star topology gives great fault tolerance as any
device/cable failure will not affect the rest of the network (unless the
centralizing device or server (if vital) fails). Physically adding new devices to a
Star network is very simple compared to any of the other topologies; you
simply run a cable from the new device to the hub/switch.
Star topologies are very common, especially in Ethernet networks;
also, they are commonly mixed with one of the other topologies to create a
hybrid topology. (www.helpwithpcs.com)
Internet
An electronic network of computers that includes nearly every
university, government, and research facility in the world. Also included are
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many commercial sites. It started with four interconnected computers in 1969
and was known as ARPA net. (www.orafaq.com)
Data Flow Diagram
Data flow diagram is a well known approach to visualize the data
processing in business analysis field. A data flow diagram is strong in
illustrating the relationship of processes, data stores and external entities in
business information system. (www.visual-paradigm.com)
Crossover cable
A type of networking cable that connects two computers or network
devices directly to one another. When purchasing this type of cable, the
packaging must indicate that it’s a crossover cable for the required network
interface: otherwise, it’s likely a typical straight through cable. Often,
crossover cables are used to connect two computers with network cards
together without using a network hub, network router, or network switch.
(www.computerhope.com)
Rollover cable
Type of network cable that connects a dumb terminal or computer to a
network switch or router console port. Often this type of cable is flat or yellow
to help prevent any type of confusion between other Cat5 network cables.
(www.computerhope.com)
STP cable
Short for Shielded Twisted-Pair cable, STP is a type of cable originally
developed by IBM for Token Ring that consists of two individual wires
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wrapped in a foil shielding to help provide a more reliable data
communication. (www.computerhope.com)
Twisted-pair cable
A type of cable made by intertwining two separate insulated wires
together. There are two types of twisted pair: shielded and unshielded.
Shielded Twisted Pair (STP) has a fine wire mesh surrounding the wires to
protect the transmission; Unshielded Twisted Pair (UTP) does not. Shielded
cable is used in older telephone networks, network, and data communications
to reduce outside interference. (www.computerhope.com)
Coaxial cable
A cable that is used in video, communications and audio. This type of
cable has high bandwidths and greater transmission capacity.
(www.computerhope.com)
Review of Related Studies
Foreign Studies
In practice of inventory management customer-oriented service
measures play an important role. If inventory managers of stock points in a
supply chain promise specific times of delivery that cannot be met due to a
lack of stock, lead times at downstream stock points increase, causing
substantial adverse effects on customer satisfaction. Hence, it is of
considerable interest to understand the trade-off between safety stock and
customer waiting time. In this paper, we investigate this waiting time in an
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inventory system under compound renewal demand. We provide an
approximation for the distribution function of the customer waiting time and we
determine the minimal reorder level subject to a maximum average waiting
time. In a numerical study we test the performance of our approximation.
Moreover, we investigate the effects of the performance of the waiting time in
case the underlying demand process is indeed a compound renewal, while a
discrete time model is used. (Kiesmuller, 2006)
Vendor-managed inventory (VMI) is a widely used co-operative inventory
policy in supply chains in which each enterprise has its autonomy in pricing. In
this paper, a leader “follower Stackable game in a VMI supply chain is
discussed where the manufacturer, as a leader, produces a single product
with a limited production capacity and delivers it at a wholesale price to
multiple different retailers, as the followers, who then sell the product in
dispersed and independent markets at retail prices. An algorithm is then
developed to determine the equilibrium of the Stackable game. Finally, a
numerical study is conducted to understand the influence of the Stackable
equilibrium and market-related parameters on the profits of the manufacturer
and its retailers. Through a numerical example, our research demonstrates
that: (a) the market-related parameters have significant influence on the
manufacturer’s and its retailer’s profits; (b) a retailer’s profit may not
necessarily be lowered when it is charged with a higher inventory cost by the
manufacturer; and (c) the equilibrium of the Stackable equilibrium benefits the
manufacturer. (Yu, 2006)
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Among several approaches to derive the distribution of lead time
demand, this paper concerns with a compound distribution approach. The
mostly known analytic models using the compound distribution approach have
been done by non-recognition of the compound nature of some components
to reduce the analytic task. In order to provide some precautions to
researchers and practitioners, this paper conducts a theoretical examination
and clarifies the assumptions implicitly made by the analytic models. In
addition, comparison experiments under various situations are also
conducted. (Park, 2007)
This paper considers a single-echelon inventory system with a
warehouse facing compound Poisson customer demand. Normally the
warehouse replenishes from an outside supplier according to a continuous
review reorder point policy. However, it is also possible to use emergency
orders. Such orders incur additional costs but have a much shorter lead time.
We consider standard holding and backorder costs as well as ordering costs.
A heuristic decision rule for triggering emergency orders is suggested. The
decision rule minimizes the expected costs under the assumption that there is
only a single possibility for emergency replenishments, but the rule is used
repeatedly as a heuristic. Given a certain reorder point policy for normal
replenishments, our decision rule will always reduce the expected costs. A
simulation study illustrates that the suggested technique performs well under
different conditions. (Axsater, 2007)
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We consider a two-echelon inventory system with a number of non-
identical, independent retailers at the lower echelon and a single supplier at
the upper echelon. Each retailer experiences Poisson demand and operates a
base stock policy with backorders. The supplier manufactures to order and
holds no stock. Orders are produced, in first-come first-served sequence, with
a fixed production time. The supplier therefore functions as an M/D/1 queue.
We are interested in the performance characteristics (average inventory,
average backorder level) at each retailer. By finding the distribution of order
lead time and hence the distribution of demand during order lead time, we find
the steady state inventory and backorder levels based on the assumption that
order lead times are independent of demand during order lead time at a
retailer. We also propose two alternative approximation procedures based on
assumed forms for the order lead time distribution. Finally we provide a
derivation of the steady state inventory and backorder levels which will be
exact as long as there is no transportation time on orders between the
supplier and retailers. A numerical comparison is made between the exact
and approximate measures. We conclude by recommending an approach
which is intuitive and computationally straightforward. (Olsson, 2007)
Local Studies
According to the Thesis about Sales and Inventory System Floor
Center Company) the objective of their study is to develop a direct connection
for point of sales and inventory system for the two branches of Floor Center,
which is beneficial to management’s decision-making, which also includes the
monitoring of the inventory levels to lessen and prevent out of stock situation
34
resulting to customer satisfaction and over stocking which satisfies the
business owner. (Molina, 2006)
PC City online sales monitoring and inventory system allows the
viewing of the sales and inventory of the 3 branches remotely on a daily basis.
Providing statistical analysis data of sales by year, month, and day being able
to determine the percentage of increase or decrease in the sales of
equipment and services. (Gonzales, 2006)
The objective of the study is to improve the company’s current system
by creating a LAN-based system that would integrate the company’s major
transaction sales and inventory monitoring system. Creating a more efficient
and easier way of data retrieval and a more convenient approach of data
encoding. (Bueno, 2006)
The objective of the study is to computerize a Sale and inventory
system to change the system, and realize the progress of the system by
developing a fast, accurate and efficient system inventor. (Madrona, 2006)
The study illustrates a greater convenience in the manual transaction
of the Inventory and Point of sales of the company Odyssey. Also reducing
the amount of clerical work involved in the monitoring operation as well as
providing album search of the store. (Camba, 2006)
35
Abstract
This paper studies a periodic-review pricing and inventory control
problem for a retailer, which faces stochastic price-sensitive demand, under
quite general modelling assumptions. Any unsatisfied demand is lost, and any
leftover inventory at the end of the finite selling horizon has a salvage value.
The cost component for the retailer includes holding, shortage, and both
variable and fixed ordering costs. The retailer's objective is to maximize its
discounted expected profit over the selling horizon by dynamically deciding on
the optimal pricing and replenishment policy for each period. We show that,
under a mild assumption on the additive demand function, at the beginning of
each period an (s,S) policy is optimal for replenishment, and the value of the
optimal price depends on the inventory level after the replenishment decision
has been done. Our numerical study also suggests that for a sufficiently long
selling horizon, the optimal policy is almost stationary. Furthermore, the fixed
ordering cost (K) plays a significant role in our modeling framework.
Specifically, any increase in K results in lower s and higher S. On the other
hand, the profit impact of dynamically changing the retail price, contrasted
with a single fixed price throughout the selling horizon, also increases with K.
We demonstrate that using the optimal policy values from a model with
backordering of unmet demands as approximations in our model might result
in significant profit penalty. (© 2005 Wiley Periodicals, Inc. Naval Research
Logistics, 2006
This paper shows that vendor-managed inventory is also used fine in
household electrical appliances sector. Taking Electrolux Italia as an example,
36
the implementation of this technique is presented and analysed, highlighting
the various processes involved (sales forecasting, capacity need forecasting,
master planning, replenishment need calculation, dispatch planning,
shipping), parameters (target stock, replenishment need, dispatch plan,
assigned stock, etc.) needed to regulate vendor managed inventory. The
paper points out the benefits obtained following the implementation of this
technique and presents based on the case the variables that define and
characterize the conditions under which it can be applied.
For the (S-1,S) lost sales inventory model with multiple demand
classes that have different lost sales penalty cost parameters, three accurate
and efficient heuristic algorithms are presented that, at a given base stock
level, aim to find optimal values for the critical levels, i.e., values that minimize
inventory holding and penalty cost.
37
PROCESS DESIGN A
COMPUTERIZED SYSTEM CAPABLE OF GENERATING REPORTS.
DESIGN A SYSTEM ABLE TO REMIND THE COMPANY ABOUT ITS PRODUCTS.
DEVELOP A CENTRALIZED SYSTEM CAPABLE OF MONITORING THE PRODUCTS OF THE COMPANY MORE EFFICIENT.
Conceptual Framework
This section presents the several elements needed for the project
completion and identifies its relationship with each other through the Input-
Process-Output Model. The following figure displays the conceptual
framework of the study, depicting the various inputs essential to the study and
the procedures we need to accomplish to arrive with the proposed system.
Figure 2 Conceptual Framework
38
OUTPUT
Sales and Inventory System For
Pillars Industrial Equipment Company
Input The proponents must also have a list in SQL database, Visual basic programming to come up with an effective and user-friendly system interface.
Schemes Activity
Definition of Terms
This part contains the terminologies and definitions used in the study.
These definitions will assist the readers as it have had assisted the
researchers. It will enrich our understanding of the system, the business, and
our vocabulary as well.
Availability
Evaluation criterion: Availability is the completeness of the system with
regards to the objectives it should achieve. The performance of the system
measured according to the specifications and needs of the potential users.
A network topology in which nodes are connected to a single cable with
terminators at each end.
Business-to-business (B2B)
Business-to-business is the relationship between enterprises, contrary
to relations between enterprises and other groups (e.g consumers, public
administration).
Coaxial Cable
Coaxial cable is an electrical cable consisting of a round conducting
wire, surrounded by an insulating spacer, surrounded by a cylindrical
conducting sheath, and usually surrounded by a final insulating layer.
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Commodities
Bulk goods such as grains, metals, livestock, oil, cotton, coffee, sugar
and cocoa. They can either be sold on the spot market for immediate delivery
or on the commodities exchanges for later delivery. Trade on commodities
exchanges is usually in the form of futures contracts.
Content
Evaluation criterion: Content refers to the overall appearance and
features of the system. The content must be updated and appropriates for its
purpose.
Crossover Cable
A twisted pair patch wired in such a way as to route the transmit
signals from one piece of equipment to the receive signals from one piece of
equipment to the receive signals of another piece of equipment, and vice
versa.
Customer
Customer is an individual with whom one must deal, one that buys
goods and service.
Data Flow Diagram
Data Flow Diagram is graphic representation of the “flow” of data
through business functions or processes. More generally, a data flow diagram
is used for the visualization of data processing. It illustrates the processes,
40
data stores, external entities, data flows in a business or other system and the
relationships between these things.
Database
Database is a collection of logically related data designed to meet the
information needs of one or more users. It is a collection of records stored in a
computer in a systematic way, so that a computer program can consult it to
answer questions.
Database Management System (DBMS)
Data Management System is a system or software designed to
manage a database, and run operations on the data requested by numerous
clients.
Database Model
Database Model is a theory or specification describing how a database
is structured and used.
Delivery Note
A document which specifies the quantity of equipments to be delivered.
Depleted
Something no longer sufficient: “supplies are low”, “our funds are
depleted”
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Depicting
Represents by a picture, portray in words. To describe something.
Ecommerce
Ecommerce is one of the most important aspects of the Internet to
emerge or allows people to exchange goods/ services immediately. It consists
primarily of the distributing, buying, selling, marketing, and servicing of
products or services over electronic systems such as the Internet and other
computer networks.
Electronic Business, or “e-business”
May be defined broadly as any business process that relies on an
automated information system.
Enhancement
Enhancement refers to the development of the current existing system
to have a more accurate and useful system.
Fluctuate
Be unstable; “The stock market fluctuates”
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Functionality
Evaluation criterion; Functionality or operability of the system based on
the specifications. The system’s ease, convenience and user friendliness are
also considered.
Inventory
Inventory consists of a list of equipments and materials held available
in stock.
Inventory Management
It enables an organization to meet or exceed customer’s expectations
of product availability while maximizing net profits or minimizing cost.
Inventory System
Refers to the software used to plan and track inventory balances and
activities.
Invoice
A written record of goods or services provided with the amount charged
for them, sent to a customer for payment.
Logical Topology
A network computing term used to describe the arrangement of
devices on a network and how they communicate with one another.
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Maintainability
Evaluation criterion; Maintainability refers to the testability of the
system. It also measures the ease of maintenance, modifications and
upgrading of the system.
Merchandise
A product or anything that can be offered to a market that might satisfy
a want or need. However it is much more than just a physical object. It is the
complete bundle of benefits or satisfactions that buyers perceive they will
obtain if they purchase the product. It is the sum of all physical, psychological,
symbolic, and service attributes.
Merchandising
The management of stock in supermarkets and other non-specialist
sales outlets in order to ensure the display of the fastest selling titles.
Mesh Topology
The topology of a network whose components are all connected
directly to every other component.
Modem
A device that enables a computer to send and receive information over
a phone line.
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Network
A communication system consisting of a group of broadcasting stations
that all transmit the same programs; “the networks complete to broadcast
important sports events. Network is a system of interconnected electronic
components or circuits.
Networking
The linking of a number of devices, such as computer, workstations,
printers, and AV gear into a network (system) fo the purpose of sharing
resources.
Network Topology
The physical or logical layout of the nodes in a network.
Official receipt
A document which acknowledge that a sum of money has been paid. It
can be used as legal proof of payment.
Payment
Agreed between two parties to pay for rendering service.
Physical Topology
Depicts the physical layout of the network.
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Point of Sale (POS)
This can mean a retail shop, a checkout counter in a shop, or a
variable location where a transaction occurs.
Process
Manipulate data, which can be represented by data flow diagram,
object model with methods.
Redundancy
The repetition of an act needlessly, redundant refers to the quality or
state of being redundant, that is: exceeding what is necessary or normal; or
duplication. This can have a negative connotation, especially in rhetoric:
superfluous or repetitive; or a positive implication, especially in engineering:
serving as a duplicate for preventing failure of an entire system.
Reliability
Evaluation criterion: Reliability is the ability of the system to provide
desired results accurately, having performances free from failures. The
system must be able to recover itself, especially the information it holds, if
errors occur.
Retailer
A retailer sells goods or commodities directly to the consumers at a
retail price.
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Retailing
All activities directly related to the sale of goods and services to the
ultimate consumer for personal, non-business use.
Reorder Point
For slow moving products and especially if the lead-time is short, you
may want to program in a minimum reorder point which is the equivalent of
one average sale.
RFID
Radio Frequency Identification refers to the technology that uses
devices attached to objects that transmit data to an RFID receiver.
Ring Topology
A network configuration in which nodes are attached to the main
communication line in a logical or physical ring shape connected with each
other
Rollover Cable
A type of network cable that connects a dumb terminal or computer to
a network switch or route console port.
Sales
Transaction that involves the transfer of services/products for money.
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Server
A computer that provides services to other computers, or the software
that runs on it.
Shielded Twisted-Pair Cable
A type of cable originally developed by IBM for Token Ring that
consists of two individual wires wrapped in a foil shielding to help provide a
more reliable data communication.
Software
Written programs or procedures or rules and associated documentation
pertaining to the operation of a computer system and that are stored in read/
write memory.
Star Topology
A network configuration based on a central hub, from which nodes
radiate in a star-shaped pattern.
System
System is a collection of interrelated parts that comprises a single
function.
Tedious
Long-winded: using or containing too many words; “long-winded (or
windy) speakers”, “verbose and ineffective instructional methods”,
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“newspapers of the day printed long wordy editorials”, proceedings were
delayed by wordy disputes”.
Theoretical
Sometimes used to describe a result that is predicted by theory but has
not yet been adequately tested by observation or experiment. It is not
uncommon for a theory to produce predictions that are later confirmed by
experiment.
Transaction
Transaction is a record of business conducted at a meeting
proceedings and events.
Twisted-Pair Cable
A type of cable made by intertwining two separate insulated wires
together.
Unshielded Twisted Pair Cable
A popular type of cable used in computer networking that consists of
two shielded wires twisted around each other.
Warehouse
Storage for goods and merchandise of an establishment or company.
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Warehousing
Warehousing is the management of materials while they are in storage.
Workstations
A class of computers small enough in size and cost to be used by a
small group or an individual in their own work location yet powerful enough for
large-scale scientific and engineering applications. Typically with a Unix
operating system and good graphics.
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