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Production and Inventory Cycle - Coggle Diagram
Production and Inventory Cycle
1. Main Functions in the Cycle:
* Production planning and design
,
Production processing
e.g- issuing raw materials to production, movement and transfer of goods from production to finished goods - and
Inventory management
e.g recording of purchased goods
Documents used in cycle
: e.g Raw material issue slips (RMI), Customer Job card (CJC), daily production report, completed production report, transfer to finished goods note etc
3 Main Components
: Inputs, Production Process and Outputs
2.Practical Link/Example of Production planning and design and Production process
:
Production planning and design + Production process: when orders take place amongst others the following must take place...
*After an order has been made the CPO must be completed so that the production planning department can authorise the order. After that a IJC is generated to capture all cost related to production and a daily production report must be completed. Once production is completed, a quality inspection needs to be conducted to detect any defects after the production manager will authorise the goods/order to be transferred to finished goods.
3. Inventory management system controls
:
a) Production entries supported by the relevant documents - e.g RMI, CJC/IJC, GTN etc
b) Storage & dispatch of manufactured inventory - e.g receipts to account for goods, physical protection of inventory, periodic inventory counts etc
c) Maintenance of inventory and master files - e.g monitor deliveries by suppliers, monitor slow moving and damaged goods for scrapping
d) Physical & monitoring controls - perpetual inventory system, issue goods @ SP, gross profit analysis etc
4. Internal controls in the cycle:
a) Completeness & validity - Inventory only leaves the storeroom based on properly authorised documentation
b) Accuracy - by inventory being accurately recorded at the correct quantity and prices
c) Existence - Inventory should be safeguarded against theft and damage
d) Other controls :
• Supervision and review;
• Segregation of duties;
• Rotation of duties;
• Personnel take leave regularly;
• Management control;