Republic of the Philippines

BATANGAS STATE UNIVERSITY

Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

A CASE STUDY FOR IMPLEMENTING

AN IMPROVED INVENTORY MANAGEMENT AND
ITS STRATEGIC PRACTICES IN A COMPANY

In partial fulfilment
Of Semestral Output in CAd 208 – Procurement
and Inventory Management

Submitted by:
Ebora, Gerly D.
Falible, Toni Rose P.

CB, Catherine T. Ysulat, MBM

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

ACKNOWLEDGEMENT

The researchers would like to express our deepest gratitude to our Lord, our God,
for guiding us throughout the process of completing the task given to us and for the
ability to understand the case given us ease of deliverance of the information.

         The researchers also thanked our parents, who’ve continued to support us when
we are experiencing hardship and push us to succeed.

         The researchers would like to express the deepest appreciation to our instructor,
Mrs. Catherine T. Ysulat, for she continually and convincingly conveyed a spirit of
adventure concerning the case study.

         Lastly, the researchers also thanked our dearest classmates for continuous support
for us towards the execution of our case study.
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

EXECUTIVE SUMMARY

This study aims to implement improved inventory management and propose its
strategic practices in a company. Inventory management was centralized as a logistics
function. It is an activity related to the planning, implementation, and monitoring of
needed materials related to operating activities that can be met in time and optimal
amounts of inventory that can be maintained. This study describes the facts relating to
inventory management activities to the case of the company ‘Blockbuster’, associated
with the procurement planning, receipt of inventory, storage and maintenance,
distribution of inventory, and record-keeping; and the like that make use of the best
approach to the strategic practices of a company. All inventories are now managed more
intensively to avoid excess and obsolete inventories. Hence, the task of inventory
management is to find the number of inventories that will fulfill the demand, avoiding
stocks. This paper presents a case study for the assembling company on inventory
management proposing how to improve and implement the best strategic practices of
inventory management in the blockbuster company. It is proposed to use inventory
management to apply the best, efficient, and effective strategic practices to have better
inventory management operations.
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

STATEMENT OF THE PROBLEM

Inventory management helps a business to save money while still meeting the
demands of its clients. In other words, it allows effective operational cost management.
The foundation to every company is what it has in its inventory to handle the supply
chain better. In this paper, the researcher found that the film company 'Blockbuster' is one
of the great examples of knowing the importance of inventory management. The first
Blockbuster store opened in Dallas, Texas, in 1985. David Cook, a computer
programmer, was the company's founder. Cook's experience was instrumental in
Blockbuster's early success. Blockbuster's software was programmed by Cook to monitor
inventory and customer desires as a result, Blockbuster's success was built on its ability
to supply customers with the movies they needed at their local store. It was known for the
best video game and movie rental in its time but at its 2004 peak, Blockbuster employed
over 84,000 people worldwide, with 9,094 rental shops. Six years later, in 2010,
Blockbuster filed for bankruptcy due to $900 million.

The need for more effective inventory management is significant to the said
scenario, this study aims to measure of implementing an improved inventory and its
strategic practices in a company. Specifically, it seeks to determine the importance in the
following key points:

1. supply and demands

2. stocks
3. record-keeping
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

CAUSES OF THE PROBLEM

High-profile, well-known, and well-loved brands are not exempt to inventory

shortages, and many retailers can learn from their mistakes. Blockbuster, which was
driven by physical rental stores, started to struggle toward streaming and mailing
platforms. They were forced to declare bankruptcy because they were unable to adapt
quickly enough. Dallas, Texas was the location of the first Blockbuster store.
Blockbuster's computers were programmed to track inventory and customer preferences.
As a result, Blockbuster's success was built on its ability to provide customers with the
movies they wanted at their local store. This system was helpful in Blockbuster's early
success. Not much of a time when Blockbuster grew by acquiring video and music store
opponents such as Erol, Sound Warehouse, and etc., In 1987, It had become the largest
video chain in the world and, by 1991, Blockbuster owned 1,654 stores in the United
States alone Wayne Huizenga, the founder of Waste Management, paid $18 million for a
controlling interest in Blockbuster with two colleagues. Blockbuster was acquired by
Viacom for $8.4 billion after seven years under Huizenga's leadership. The business, on
the other hand, had indeed failed without Huizenga's leadership. Blockbuster had lost all
of its worth by 1996. Instead, Viacom had use Blockbuster stores to sell Paramount and
MTV merchandise, as well as books, toys, and select clothes. Blockbuster Entertainment
Corporation was renamed Blockbuster, Inc. in 1996, and retail shops were renamed from
Blockbuster Video to simply Blockbuster. The corporation announced plans to move its
headquarters from Fort Lauderdale to Dallas at the end of the year. In 1997, Jim Antioco
became the company's CEO until 2007. Blockbuster refocused on its video rental market,
which resulted in a brief profit boost. However, Blockbuster's popularity was short-lived,
as the company made a number of errors as it came to digital media and competitors.
Namely: Netflix. In reality, when Netflix launched the streaming model and eliminated
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

late fees, this was one of the key reasons Blockbuster lost market share. After a while,
Blockbuster teamed up with BMI to create a cutting-edge way to borrow video games
and music. Blockbuster will host a server that will house all of the video games. The
system addressed the inventory issue by allowing every customer to leave with a game in
their hands and their money securely deposited in the cash register. Later on, the
blockbuster attempted to buy Netflix, but it did not happen due to the fact that the
company had apply for bankruptcy already. Nevertheless, looking at the scenario, the
approach of the company wherein they have already accepted a lot of retailers and
changes of CEO had gave the company to encounter countless of challenges as Inventory
levels must be kept low to prevent obsolescence caused by overstocking while also
avoiding stock-outs, which occur when a customer's preferred product type, color, or
quantity is unavailable at the shop since it has been sold out but assigning inventory
policies has appeared to be operationally infeasible (Kapalka,1992) One of the
expectations to an inventory control agent is to determine where and how many
microchips can be assembled. It contains data on potential minimum reserves – safety
storage, future demand forecasting algorithms, and production capacity. (Plinre,2015)
Inventory crises can be catastrophic to a business and its brand, resulting in short-term
financial losses, a drop in stock values, or even bankruptcy and closure. It is solemnly
obvious that the company went downhill due to its’ poor inventory management.
Retailers could have made even more money through improvements in distribution and
inventory management. 
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

DECISION CRITERIA AND ALTERNATIVE SOLUTIONS

The focus of the causes of the problem is the poor inventory management specifically, the
company’s approach towards the existing problem. As the blockbuster company started to
go downhill after:

1. the over-retailing in its’ first year;

2. the company had shown inconsistency of what should be the focus of company;
3. and not keeping up with its’ competitors.

Specifically, Blockbuster owned 1,654 stores in the United States alone in which
to consider is a bit high for a starting company, it had also become the largest video chain
in the world. An implementation should be considered to calculate movement of the
company to know anticipated challenges as it has document that details tasks, their
responsible participants, and their approximate completion period. Another thing to
consider is its’ acceptability to management as every retail store represents the company
name can and it may affect its reputation. Another concern is the inconsistency that the
company had shown. Recalling out to the company’s history it has been stated that the
company has changed CEO over time and each CEO had different focuses to sell in the
market, originally in where it is established in 1985, it focuses on the renting movies and
films as years past the company started sell Paramount and MTV merchandise, as well as
books, toys, and select clothes. Overtime, the company starts acquiring video and music
store opponents such as Erol, Sound Warehouse, and etc., After a while, Blockbuster
cooperated with BMI to enable their consumer to borrow video games and music.
Considering the acceptance of management that they have established a firm in one
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

industry, consumer may expect (and as the company should) have consistent in that
certain region. The said movement may also affect the inventory of the company as they
add-up more sector in their inventory and not every store can keep-up. Lastly, is the
incompetence of the company, as mentioned in the scenario, Blockbuster had its’
competitors namely: Netflix, the said company did not make consumer pay late fees, due
to its’ convenience consumers were attracted. Blockbuster did not keep-up with it.
Implementation of the said promo should be considered as it shown how a small
business, Netflix, compete with the largest video chain in the world.
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

RECOMMENDED SOLUTIONS, IMPLEMENTATION AND JUSTIFICATION

This study is highly recommended for the following:

To the students
The study gave the readers a clear example of a how the blockbuster company
went downhill due to its’ poor inventory management, that may help the students
especially those who is taking business related course in a way that they’ll get to read
about inventory more. In which, they can imagine themselves the worst-case scenarios
and be able to mind the consequences of disregarding the inventory plan.

To the teachers
The study could serve as reference for explaining consequences of failed
approach on inventory in the field of business. By that, they could teach the students to
have more liability in their works as they will be using these lessons in their future jobs
for managing the inventories effectively.

To the future researchers

The study can be a reference to the researcher, as the ideas and the facts
presented in this paper may have strengthen their current studies in the future towards
inventory management topics

According to Pline, reasons why firms needed to have inventories, to meet

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

anticipated demand; To smooth production requirements; To protect against stock-outs;

To take advantage of order cycles; To hedge against price increases or to take advantage
of quantity discounts; To permit operations; To decouple components of the production-
distribution system. Blockbuster owned 1,654 stores in the United States alone in which
to consider is a bit high for a starting company, it had also become the largest video
chain in the world. Since it has a document that lists projects, their accountable
partners, and their estimated delivery time, an execution should be considered to
measure the company's movement and realize expected obstacles. Acknowledging the
acceptance of management is significant, since each retail location reflects the brand
name and may have an impact on its image. As the retailers of the company can affect
the factors under the production-distribution system, order cycles, and the smooth
production requirement due to its’ geographical location- the implemented policy in the
specific place of where the retailers is. Meanwhile, the inconsistency that the company is
solemnly visible it may affect the factor under, to hedge against price increases or to
take advantage of quantity discounts, To permit operations, and to meet anticipated
demand. Originally founded in 1985, the firm offers a wide range on renting movies and
films; but, in recent years, the company has begun to distribute Paramount and MTV
merchandise, as well as books, toys, and select apparel. Over time, the firm begins to
obtain competitors in the video and music stores, such as Erol, Sound Warehouse, and
others. Blockbuster then partnered with BMI to allow their customers to video games
and music. Given that the Owner have formed a firm in one industry, customers may
demand and the business should provide consistency in that field. The mentioned
activity should be addressed as it may have an effect on the company's inventory, as
they add more sectors to their inventory, and not every store can keep up. Eventually,
there is the company's incompetence; as mentioned in the scenario, Blockbuster had
competitors. Netflix, for example, did not charge late payments to customers, and
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

customers were drawn to the service because of its convenience. Blockbuster was
unable to keep up. The promotion's implementation can be considered because it
demonstrates how a small company, Netflix, can compete with the world's biggest video
chain. Being not consistent can affect the firms to take advantage of order cycles, To
hedge against price increases or to take advantage of quantity discounts and to
anticipate demands. All the said factors can be considered as part of an inventory
management as this may affect the firms’ inventory due to the fact that it influences
Financial Factors, Suppliers, Product Type, and Management. Inventory control is a
difficult problem in supply chain management. Companies must maintain inventories in
stores to meet consumer demand; however, these inventories incur consistent supply,
resulting in a frozen fund that may be lost. As a result, inventory management's goal is to
find the right amount of inventory to meet demand while preventing overstocking.
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

CONCLUSION

Inventory management is essential to every company, having inventories.

Companies need to have stock, but in such amount to avoid out-of-stock and overstock
situations. It can be related to the scenario in the said study where in the Blockbuster
have a lot of retails right from the moment the business was established. Inventory
management can improve company’s inventory control existing situation and decrease
costs of the company. Agent system, in turn, proposes the automation of this process, it
can support several forecasting methods and it reacts to changes in the environment. In
which related to the response of Blockbuster disregarding its’ competitor. According to
Pline’s experiment, it can be concluded that timely reaction to changes in the
environment can propose better results. As for the said scenario of the Blockbuster, they
did not have a reaction and this may relate to what the millennials call on “chill-lang” as
the corporation demonstrates that they care for their existing customers rather than
threatening competition. Implementing an improved inventory management and strategic
practices in a company can innovate the factors affecting the inventory specifically, the
supply-demand chain, stocks, and record-keeping.

EXTERNAL SOURCING
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
Pablo Borbon Main I
Rizal Avenue, Batangas City
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Customs Administration Department

The data was gathered in this following links:

https://www.netsuite.com/portal/resource/articles/inventory-management/inventory-
management-challenges.shtml

https://www.forbes.com/sites/jonathansalembaskin/2013/11/08/the-internet-didnt-kill-
blockbuster-the-company-did-it-to-itself/?sh=390558a26488

https://www.businessinsider.com/the-rise-and-fall-of-blockbuster-video-streaming-
2020-1

https://www.e-careers.com/connected/10-business-that-failed-due-to-poor-
management

Case Study on Inventory Management Improvement by Darya Plinere1 (file:///home/chronos/u-

3b27d0cae6ca41edaa2b590ce496cecc7920fde4/MyFiles/Downloads/Case_Study_on_Inventory_Man
agement_Improvement%20(2).pdf)

Inventory Management Analysis and Improvement of Inventory Control Procedures: Case Study in
the Secretariat of the Tax Court by Ferry Andika Harmen

(file:///home/chronos/u-
3b27d0cae6ca41edaa2b590ce496cecc7920fde4/MyFiles/Downloads/25896791%20(3).pdf)

Inventory Management Improvement in small bussiness by Lining bai (file:///home/chronos/u-

3b27d0cae6ca41edaa2b590ce496cecc7920fde4/MyFiles/Downloads/FULLTEXT01%20(2).pdf)