1. Inventory Flowchart Page 4 Cynthia Truong Annie Tang Yan Yan May Liu Mercy Muitah

2. Part 1 Specifications for special sales orders are received from engineering design department A Production planning clerk enters the data into the computer The computer updates the data to two magnetic disks as Product specification file (specifies what parts are needed) and Operations (routing) file (specifies where to go from each machine)

3. Part 2 Determine the production needs manually by Sales forecast (forecasted sales made by the sales department) and Back- order report (orders that have been placed by customers, but production item is not available to meet customer needs).

4. Part 2 (Continued) The Production requirements by product is created and the data is entered into the computer at the end of each day.

5. Part 3 We merge the information from the routine (Product specification file and operations (routing) file) and specialized area (Production requirements by products) and prepare production and material needs.

6. Part 3 (Continued) The computer updates the information to 4 magnetic disks as four master files: Raw material inventory file (how many raw materials we have), Machine loading file (what raw materials to load up the machines), Open production orders file (orders that are still in the process), and Production schedule file (the schedule for machines, labor, when to receive raw materials, etc.).

7. Part 4 With updated information, a copy of Bills of materials, Operations lists, and Sales order are created. Bills of materials is the document that specifies the part number, description, and quantity of each component used in a product.

8. Part 4 (Continued) Operations lists is the document that specifies the labor and machine requirements needed to manufacture the product.

9. Part 4 (Continued) Sales Order is the document created during sales order entry, listing the item numbers, quantities, prices, and terms of the sales. All three above documents are send to the customer as acknowledgement.

10. Part 5 A copy of Production order, Move tickets, Materials issue cards are also created with updated information.

11. Part 5 (Continued) Production order is a document authorizing the manufacture of a specified quantity of a particular product. It lists the operations to be performed, the quantity to be produced, and the location to which the finished product is to be delivered.

12. Part 5 (Continued) Move tickets are documents that identify the internal transfer of inventory, the location to which they are transferred, and the time of the transfer. All three documents above are sent to Production operations department

13. Part 6 The Revised production schedule is prepared and sent to Production work center.

14. Part 7 The Materials requirements report is also prepared and sent to purchasing processing department.

15. Possible Internal Control Improvement Back up control-Multiple back up copies of files are recommended. One can be stored on-site and another stored off-site. Data entering edit control-Completeness checks can verify that all required data is entered. Specifications for special sales orders need to get approval by the credit department before entering- Since this are not regular sales orders and probably are high cost items, it’s important to ensure that they are approved by the Sales manager. Signatures on the Sales Order request is one way of ensuring approval. Accurate sales forecasts and inventory records-Without accurate reports, overproduction and underproduction can occur. Overproduction can lead to surplus creating cash flow problems since resources are tied up in inventory. Underproduction on the other hand can lead to shortage thus loss of sales and customer dissatisfaction Proper segregation of duties- In this case, the person entering the data at the end of the day, should not been the one determining production needs..

16. Thank you!