Inventory System Essay

Custom Student Mr. Teacher ENG 1001-04 30 November 2016

Inventory System

Inventory management is vitally important for any business that sells a physical product. An inventory system must balance having enough inventories on hand to meet the demand of customers while investing as little money as possible in inventory. Perishable products add another dimension of management considerations because they must be cycled through the inventory system more quickly and stored in a way that preserves their value. An inventory control system is an integrated package of software and hardware used in warehouse operations, and elsewhere, to monitor the quantity, location and status of inventory as well as the related shipping, receiving, picking and put away processes. In common usage, the term may also refer to just the software components. An inventory control system may be used to automate a sales order fulfillment process.

Such a system contains a list of order to be filled, and then prompts workers to pick the necessary items, and provides them with packaging and shipping information. It is a supervision of the supply and storage and accessibility of items in order to insure an adequate supply without excessive oversupply. Inventory management systems are software programs used to maintain, gather and track inventory from the moment it reaches a retail setup to the moment it is sold. Automation has increased the efficiency and accuracy of inventory management, allowing companies to get information about a particular product’s sale levels and whether it is time to reorder at the very moment the item reaches a predefined stock level. The McDonald’s started in 1954. Raymond Kroc who is the founder saw a hamburger stand in San Bernardino, California and visualized a nationwide fast food chain. Kroc tested himself as an ancestor who revolutionized the American restaurant industry.

Actually, Raymond Kroc is esteemed being the Farther of Industry. It became a popular and profitable teen hangout. In 1948, the brothers closed and reopened the restaurant to sell only hamburgers, milkshakes and French fries. As per the information of the McDonald’s history, the major revenue came from hamburgers, which were sold at a nominal price of 15 cents. The restaurant gradually became famous and the McDonald brothers begin franchising their restaurant in the year 1953. The first franchise was taken by Neil Fox and under it; the second McDonald’s restaurant was opened in Fresno, California. It was the first to introduce the Golden Arch design. The third and fourth restaurants were opened in Saginaw, Michigan and Downey, California, respectively. The latter is the oldest McDonald’s restaurant still in operation. In 1954, an entrepreneur and milkshake-mixer salesman, Ray Kroc, acquired the franchise of McDonald’s restaurant for outside California and Arizona.

In effect, Kroc opened his first and the overall ninth restaurant in Illinois, Chicago, and gave birth to McDonald’s Corporation. In 1958, the restaurant chain sold its 100 millionth hamburger. In 1960, Kroc renamed his company as ‘McDonald’s Corporation’. In 1961, Kroc convinced the McDonald brothers to sell the business rights to him for a sum $2.7milion. Later that year, the Hamburger University was opened, which gave away McDonald’s restaurant Bachelor of Hamburgology degrees to students. In 1963, the mascot Ronald McDonald was born as a part of a marketing strategy in US. In 1967, the first restaurant outside US was opened in Richmond, British Columbia. In 1974, the 3000th restaurant opened in Woolwich, United Kingdom, which is the first of the country. Happy Meal was introduced in US in 1979.

In 1984, the company became the main sponsor of the Summer Olympics. The year was also marked by the death of Ray Kroc. In 1988, the first restaurant opened in a communist country in Belgrade, Yugoslavia, followed by the first Soviet restaurant in Moscow (1990). In 1992, the largest McDonald’s was opened in Beijing, China, having over 700 seats and was later demolished. In 1993, the first sea-going restaurant was established, aboard the Finnish Cruise-ferry Silja Europa, sailing between Helsinki and Stockholm. In 1994, McDonald’s bagged the Catalyst Award for its program for ‘fostering leadership development in women’. In 1996, the first Indian restaurant was opened. In 2003, the company launched the ‘I’m lovin’ it’ campaign. In 2005, McDonald’s started its McDelivery service in Singapore. In 2006, the chain announced that it will publish nutritional information on its packaging of all its products, for the benefit of the customers. Considering the huge success and brand McDonald’s has become, the food chain is spread across the world in almost all the major cities of the globe.

Being economic and user friendly, the success rate of the company cannot be doubted. In 1985, the first McDonald’s restaurant in Thailand was opened at Amarin Plaza. Currently, there are more than 100 McDonald’s restaurants nationwide with a ring of convenient services at anytime and anywhere which including breakfast meals from 5.00-11.00 Am., Drive -thru, Dessert kiosk and McCafe. Besides, there is the McDelivery service on 1711 running from 9 Am. until midnight and some restaurant also offer 24-hour service to serve. Through the years, McDonald’s remained the world’s top quick service restaurant. With more than 33,000 branches in more than 120 countries around the globe, McDonald’s has served billions of customers since its first restaurant in 1955. McDonald’s history began even before the onset of the Second World War when brothers Dick and Mac McDonald started a drive-in restaurant business in Riverside California.

Their menu was composed simply of 10-cent hamburgers and other drive-in products. After the war, the brothers opened a new type of restaurant in San Bernardino, California, where a little hamburger man called “Speedee” became the company’s symbol Dick’s and Mac’s endeavors proved so successful that other operators sought out franchises from them. In 1954 Ray Kroc exclusive sales distributor for Multimixer intrigued by the brother’s “Speedee System” visited the latter in San Bernardino, Upon his return to Chicago, Kroc obtained the exclusive licensing rights to the brothers system and had become heir National Franchise Agent in April of the same year construction began on the first restaurant in what was called the Mcdonald’s System Inc.

The famous Golden Arches arrived in the Philippines in 1981 when George T. Yang president of McGeorge Food Industries was awarded franchising privilege in the country by McDonald’s international. The first store opened in the busy university area of Morayta while the second was established in the prime commercial area of Cubao beside New Frontier Theater. And now as they say, the rest is history. With the desire of providing Filipino customers with high quality food and service that meet global standards, George T. Yang, opened the first McDonald’s store along Morayta, Manila in 1981. Since then, McDonald’s has introduced so many innovations that captured the hearts of the Filipinos.

It was McDonald’s who first offered the Value Meals and the Happy Meal. It was McDonald’s who first provided employment opportunities for students. And it was McDonald’s who first played an active role in helping out in the community through McDonald’s Charities. These and so many other “firsts” are the reasons for McDonald’s phenomenal growth! Today, with Kenneth S. Yang at the helm, McDonald’s is now a multi-billion-peso company with almost 274 stores nationwide! And still counting!

Background of the Study

Today McDonald’s is the largest brand of fast food restaurant that serve 52 million customers per day more than 100 countries. With the world-class standard, McDonald’s unites the QSC&V standards strictly all McDonald’s restaurants around the world. McDonald’s is one of the leading restaurant chains in the world, touching the lives of people everyday. The long journey of the burger brand started in 1940, when two brothers, Dick and Mac McDonald opened the first McDonald’s restaurant in San Bernardino, California. Initially, they owned a hotdog stand, but after establishing the restaurant they served around 25 items, which were mostly barbequed.

Statement of the Problem

The study attempts to know the more effective inventory control system that McDonald’s should use. 1. To determine whether Perpetual or Periodic Inventory Control System is to be used by McDonald’s 2. To determine whether McDonald’s performs effectively and efficiently in managing their inventories 3. Are there times when McDonald’s are out of stock because of wrong inventory? 4. Are there any problems in the accounting system of McDonald’s?

Significance of the Study

In order to determine the type of Inventory Control System that McDonald’s should use the researchers showed some of the contributions to the management and customers: For the management-this research study will help them choose the appropriate and more effective type of Inventory Control System in order to improve their management. For the customers-so that they would enjoy freshly made food.


The study covers Inventory Control System such as Periodic and Perpetual System. Periodic System is a type of Inventory Control System in which merchandise purchases are recorded in the purchases account, and the inventory account balance is updated only at the end of each accounting period while Perpetual System is a type which has traditionally been associated with companies that sell small numbers of high-priced items, but the development of modern scanning and computer technology has enabled almost any type of merchandiser to consider using this system. McDonalds follows a Just in Time (JIT) system of inventory management. JIT, as the name suggests, is the system of supplying products to customers as soon as they have ordered for it, with minimal delay between placing the order and getting it in hand.

McDonalds doesn’t begin to cook or assemble or preheat their stuff until they receive a customer order. This was not the case earlier. They had a different approach to inventory management wherein they used to pre-cook a batch of hamburgers and sit under heat lamps. It used to keep them under the lamps for as long as possible and eventually discard whatever they couldn’t sell. Hence customers couldn’t enjoy freshly made food. The only way it could happen was by the customer giving a special order. It also covers the efficiency and effectiveness of McDonald’s in managing their fast food chain, their service and the satisfaction that they would provide for their valued customers.


This research study is limited only in San Pedro, Laguna. McDonald’s in San Pedro Laguna is located in Cataquiz Subdivision, National Hi-Way, San Pedro, Laguna.
Null Hypothesis:
There is no significant difference in Inventory Control System in either Periodic System or Perpetual System. Alternative Hypothesis:
Is there any significant difference in Inventory Control System in either Periodic System or Perpetual System?

1. Inventory-The value of materials and goods held by an organization (1) to support production (raw materials, subassemblies, work in process), (2) for support activities (repair, maintenance, consumables), or (3) for sale or customer service (merchandise, finished goods, spare parts). 2. Control-Device or mechanism installed or instituted to guide or regulate the activities or operation of an apparatus, machine, person, or system. 3. System-An organized, purposeful structure that consists of interrelated and interdependent elements (components, entities, factors, members, parts etc.).

These elements continually influence one another (directly or indirectly) to maintain their activity and the existence of the system, in order to achieve the goal of the system. 4. Inventory Control System-A database used for storing and administering all types of data required for efficient and accurate warehouse inventory management. This may include modules or fields for keeping track of all items and locations, requisitions, back orders, required levels of inventory on hand, reorder points, lead times, inventory error tracking, and more. This type of system may interface with an ERP and other applications. 5. Effective-Having the desired result.

6. Efficient-performing or functioning in the best possible manner with the least waste of time and effort; having and using requisite knowledge, skill, and industry; competent; capable 7. Management-The directors and managers who have the power and responsibility to make decisions and oversee an enterprise. 8. The size of management can range from one person in a small organization to hundreds or thousands of managers in multinational companies. In large organizations, the board of directors defines the policy which is then carried out by the chief executive officer, or CEO. Some people agree that in order to evaluate a company’s current and future worth, the most important factors are the quality and experience of the managers

9. Perishable-goods that can lose its usefulness and value if not appropriately stored or transported, or if not utilized within certain period. 10. Periodic- a type of Inventory Control System in which merchandise purchases are recorded in the purchases account, and the inventory account balance is updated only at the end of each accounting period 11. Perpetual- a type which has traditionally been associated with companies that sell small numbers of high-priced items, but the development of modern scanning and computer technology has enabled almost any type of merchandiser to consider using this system. 12. Integrated- Strategy aimed at unifying different marketing methods such as mass marketing, one-to-one marketing, and direct marketing. Its objective is to complement and reinforce the market impact of each method, and to employ the market data generated by these efforts in product development, pricing, distribution, customer service, etc. 13. Information- Data that is (1) accurate and timely, (2) specific and organized for a purpose, (3) presented within a context that gives it meaning and relevance, and (4) can lead to an increase in understanding and decrease in uncertainty

14. Process- Sequence of interdependent and linked procedures which, at every stage, consume one or more resources (employee time, energy, machines, money) to convert inputs (data, material, parts, etc.) into outputs. These outputs then serve as inputs for the next stage until a known goal or end result is reached. 15. Accessibility- Extent to which a consumer or user can obtain a good or service at the time it is needed; Ease with which a facility or location can be reached from other locations 16. Storage- Non-transitory, semi-permanent or long-term, containment, holding, leaving, or placement of goods or materials, usually with the intention of retrieving them at a later time. It does not include the interim accumulation of a limited amount during processing, maintenance, or repair.

17. Software component- A software component is a unit of composition with contractually specified interfaces and explicit context dependencies only. A software component can be deployed independently and is subject to composition by third parties 18. Packaging- Processes (such as cleaning, drying, preserving) and materials (such as glass, metal, paper or paperboard, plastic) employed to contain, handle, protect, and/or transport an article. Role of packaging is broadening and may include functions such as to attract attention, assist in promotion, provide machine identification (barcodes, etc.), impart essential or additional information, and help in utilization. See also packing.

19. Shipping- The process of transporting an item, usually through the mail. Shipping is a very basic, common way of getting an item from one place to another, or from one person to another. 20. Franchise- Commerce: (1) A privilege granted to make or market a good or service under a patented process or trademarked name. (2) A business operating under such privilege. 21. Fast food chain- a chain of restaurants serving inexpensive food, such as hamburgers and fried chicken, prepared and served quickly.

Free Inventory System Essay Sample


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  • University/College: University of Arkansas System

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 30 November 2016

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