Adrianna D' Almeida



Adrianna D' Almeida

Brianne Galvin

Linda Lim

Felix Kwong

Jose Maningding

Wing Pong

Acc 305 with Dr. Martin

Summer 2004

System Flowchart of an Inventory Management System

(Retail Company) page 2*

First of all, there are 4 terminals.

1. Purchase Ordering Procedure

2. Receipts Procedure

3. Sales Procedure

4. Return Procedure

The following documents are received from each terminal:

a. Merchandise Reorder report

b. Receiving report

c. Shipping report

d. Credit Memo and Purchase Memo (Purchase Memo is also called a Debit Memo)

1. The Merchandise Reorder Report Document is received from the Purchase Ordering Procedure. The clerk then manually keys in the purchase order data into the system and inserts the quantity being ordered into the inventory records. The Inventory Ordered data is saved to offline disk in the Open Purchase Order File, the Purchase Transaction File and the Merchandise Inventory Master File. The system updates the open purchase order file (which contains all uncompleted purchase orders), the purchase transaction file (for all new purchases), and the merchandise inventory master file (indicating expected receiving date and quantity).

2. From the receiving department, receiving reports (inspection report by receiving clerk) are received and entered into the system. This information is stored on an offline disk in the Open Purchase Order File, the Merchandise Inventory Master File, and the Receipts Transaction File. This will update the open purchase order file to complete and close the associated P.O. records. Also, the system will update the receipts transaction file and reflect the receiving of the merchandises. An online process is completed by adding quantities received to on hand balances. Inventory level are increased and reflected in the merchandise inventory master file.

3. Shipping reports are received from the sales procedure. The shipped merchandise information, such as item number, SKU, item name and shipped quantity will be manually keyed into the computer by the clerk. Quantities shipped will be deducted from on-hand inventory balances and update the offline storage disk called the Merchandise Inventory Master File.

4. If merchandise is returned by customers, credit memos are issued and a copy is received from the return procedure. Debit memos (also from the return procedure) are received from our vendors when we return inventory that we have purchased for sale and are dissatisfied with. These memos are then manually keyed into the computer in order to reflect the changes made to the inventory level. This information is stored in the offline disk called the Merchandise Inventory Master File.

5. Different reports are then printed out daily or printed out when the managers in various departments request the updated reports. The Open & Overdue Purchase Orders report is printed from the Open Purchase Order file and the Purchases Transaction file and attached to the original purchase order document and sent to the purchasing manager. The Inventory Status and Inventory Usage reports are printed from the Merchandise Inventory Master File. The Expected Stock-Out and Merchandise Reorder report are also printed from the Merchandise Inventory Master File. The Inventory Status, Inventory Usage, Expected Stock-Out, and Merchandise Reorder reports are sent to the Inventory Management. The Summary of Merchandise Receipts is printed from the Receipts Transaction File and sent to the Receiving Manager.

What information is included in the reports and how is it utilized by the managers who receive it?

The Purchasing Manager needs the actual “purchase order” (document), because it contains important vendor required information and quantities of inventory on order. The Purchasing Manager needs to make sure all information regarding vendor and inventory are accurate for it may have huge consequences.

The Purchasing Manager needs the “Open & Overdue Purchase Orders Report,” so that he/she can follow-up with vendors concerning delays in shipment, shortfalls in quality, and to make sure merchandise will be ready for sale.

□ Open & Overdue Purchase Orders Report – Information of vendors, their specific orders yet to be shipped, received and or overdue.

□ Along with this report, a “purchase order” document (from the purchase order procedure terminal) is also sent to the Purchasing Manager to see what new orders will need to be satisfied.

The Inventory Management department manager needs these 4 reports to successfully control inventory flow and to maintain inventory costs.

1. Inventory Status Report – Information regarding quantity on hand and descriptions of the items. Also shows the current inventory level for different merchandise items. In addition to any items that may be damaged.

2. Inventory Usage Report – Is used to trace the consumption of the inventory. Information describing how inventory has been effected by processes such as purchase ordering, returns, sales and receipts procedures.

3. Expected Stock-out Report, which will predict the date of inventory stock-out and quantity. The Sales team will use this report to update their available for sales items.

4. Merchandise reorder report – Information regarding what merchandise needs to be reordered (given sales predictions) and their quantities and deadlines for receiving it.

The Receiving Manager needs this report to account for all merchandise receipts.

➢ Summary of Merchandise Receipts Report– Information of all merchandise that has been received on purchase order.

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