PART 5 Flashcards
It transfer input resources, such as raw materials, direct labor and factory overhead into finish goods or services for sale.
THE CONVERSION CYCLE
It is the central role of conversion cycle and interaction with other business
Traditional Manufacturing Environment
Three (3) Production Method
- Continuous Processing
- Make-to-order Processing
- Batch Processing
this approach firms attain to maintain finish goods inventory at levels needed to meet expected sales demand.
Continuous Processing
it initiated by sales order rather than inventory.
Make-to-order Processing
discrete batches of products. Each item is similar and requires same material and operations
Batch Processing
depicts the primary information flows that integrate these activities and link to the other system.
Batch Processing System
Documents in the Batch Processing System
Production Schedule
Bill of materials
Route Sheets
Work Order
Move Tickets
Materials Requisition
Formal plan to begin production.
Production Schedule
Specifies the types and quantity of raw materials.
Bill of materials
Production path that a particular batch follows during manufacturing.
Route Sheets
specify the materials of production for each batch.
Work Order
work done in each work center and authorize the movement
Move Tickets
authorize the storekeeper to release materials to individual and work center for production purposes
Materials Requisition
the organization functions, the task performed in each function and the documents that trigger or result of tasks.
Batch Production Activities
Production Planning and Control
- Materials and Operation Requirement
- Productions Scheduling
- Work Centers and Storekeeping
info comes from |inventory on hand, sales
forecast, engineering and bill of materials.
Materials and Operation Requirement
influence by time constraints, batch size from
bill of materials and route sheets.
Productions Scheduling
Materials, labor and overhead are required to manufacture a product.
Work Centers and Storekeeping
T or F
When task is complete in particular work center, authorize personnel (supervisor) sign a ticket to proceed on next work center.
True
Inventory Control consists of three main activities such as:
- Provide production planning and control of FG and Raw materials.
- Continually updating the RM inventory.
- Updating the FG goods.
Objective of Inventory Control
Minimize total inventory cost while ensuring the adequate inventories exist to meet demands.
When should the inventory be produce?
- Using Reordering Point (ROP)
- ROP= L x D
- L - Lead time
- D - no. of working days
- Safety stock- additional inventory. (ROP= L x D + S)
How much inventory should be purchase?
- Using Economic Order Quantity (EOQ)
- EOQ= √2CN/K
- C - Ordering cost
- N - No. of units
- K - Carrying cost
Cost Accounting Activities
- Records the financial effects of the physical effects that are occurring in the production process.
- Begins with PP&C department sends the copy of original word order to Cost Accounting
Department.
