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Pricing and Costing Decisions as a Control Device

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					             Page 7 Project
          AIS Online Production
Cycle Information System & ERP System

Team members in order of appearance:
            Rie Rios
          Alex Sanjur
             Hai Do
            Lili Azimi
        Cole Edmondson
                                       Online Production Cycle Information System
                                                                                                                                                                                Factory
                                       Production                     Engineering                          Cost
             Sales                                                                                                                      Inventory
                                        Planning                                                        Accounting                                                        Workstations

           Forecasts                     Production                         Product                         Standard                            Materials                            Production
          and Orders                     orders and                       Specifications                     costs &                           Requisitions                             data
                                         schedules                                                          overhead
                                                                                                              rates




                                                                 Online Production                                     Manufacturing
                 General                                            information                                           control                                           CIM
                 Ledger                                                system                                          specifications                                    Interface




Production
  Cycle




                                                                                                           Inventor
                                                                             schedule
                                                                             Producti




                                                                                                                                   Productio
                                                      Operatio
                           materials




                                                                                                                                                              Progress
                                                                                                                                   n orders
                                                                              Master




                                                                                                                                                              Work in
                                                       ns list
                            Bill of




                                                                                on




                                                                                                              y
Databases                                                                                                                                                                               Instructions
                                                                                                                                                                                            and
                                                                                                                                                                                         schedules




                                                                                             Inquiry
                                                                                           Processing
                                                                                            System




                                        Production                     Productio
                                           status                       n status                          Cost                          Performan
                                          reports                       reports                         Analyses                            ce
                                                                                                                                         reports

                                                                    Production                        Cost                         Factory
                                         Sales
                                                                     Planning                      Accounting                     Supervisor
        Symbols Review
   Online Keying – Data entered by online device
   Example: Terminal or personal Computer


On-line Storage – Data stored in a temporary online file in a
Direct access such as a disk



  Magnetic disk – Data stored permanently on a magnetic disk;
  This is used as master files and databases


Computer Processing – Computer performed processing function
Usually results with a change in data and/or information.


  Display – Information displayed by an online output
  Examples: Terminal, monitor or screen.
Sequential & Simultaneous Process
                 Production       Engineering           Cost                                 Factory
  Sales                                                                Inventory           Workstations
                  Planning                           Accounting

Forecasts        Production         Product                               Materials
                                                       Standard                                Production
   and           orders and       Specifications                         Requisitions
                                                        costs &                                   data
 Orders          schedules                             overhead
                                                         rates


                                  Online                     Manufacturin
    Gener                      Production                      g control                     CIM
      al                       information                   specification                Interface
    Ledger                        system                           s


   The Sales department enters sales forecasts and customer special order information, then the production
   planning department uses that information and data about current inventory levels to develop the
   master production schedule, from there the engineering department accesses the bill of materials and
   operations list files and these two documents have the specifications of new products to be created,
   these two files examine the design of similar products, they also access the general ledger and inventory
   files for information about the costs of alternative product designs.
   New records are added to the production order file to authorize the production of specific goods. At that
   same time, new records are added to the work in process file to accumulate cost data. The list of
   operations to be performed is displayed at the appropriate workstation. Corresponding instructions are
   also sent to the CIM interface to guide the operation of computerized machinery and robots.
   Cost accounting has three principal steps which are to provide information for planning, controlling and
   evaluating the performance of the production operation, second is to provide accurate cost data about
   products for use in pricing and product mix decisions and third to collect and process the information
   used to calculate the inventory and cost of goods sold that appear in the company’s financial statements,
   all these elements in order to be successfully integrated must collect data in real time in order for
   management to make timely decisions. In this case this diagram can be used to implement either a job
   order or process costing system because both systems require accumulating data about four basic kinds
   of costs; raw materials, direct labor, machinery and equipment as well as manufacturing overhead.
   Materials requisitions are sent to the inventory stores department to authorize the release of raw
   materials to production.
                                   Online Production Cycle Information System
                                                                                                                                                                            Factory
                                   Production                     Engineering                          Cost
          Sales                                                                                                                     Inventory
                                    Planning                                                        Accounting                                                        Workstations

       Forecasts                     Production                         Product                         Standard                            Materials                            Production
      and Orders                     orders and                       Specifications                     costs &                           Requisitions                             data
                                     schedules                                                          overhead
                                                                                                          rates




                                                             Online Production                                     Manufacturing
             General                                            information                                           control                                           CIM
             Ledger                                                system                                          specifications                                    Interface




Production
  Cycle




                                                                                                       Inventor
                                                                         schedule
                                                                         Producti




                                                                                                                               Productio
                                                  Operatio
                       materials




                                                                                                                                                          Progress
                                                                                                                               n orders
                                                                          Master




                                                                                                                                                          Work in
                                                   ns list
                        Bill of




                                                                            on




                                                                                                          y
Databases
                                                                                                                                                                                    Instructions
                                                                                                                                                                                        and
                                                                                                                                                                                     schedules




                                                                                         Inquiry
                                                                                       Processing
                                                                                        System




                                    Production                     Productio
                                       status                       n status                          Cost                          Performan
                                      reports                       reports                         Analyses                            ce
                                                                                                                                     reports

                                                                Production                        Cost                         Factory
                                     Sales
                                                                 Planning                      Accounting                     Supervisor
Online Production Cycle Information System
       Data Input/Retrieval Terminals
                                                             Cost Accounting
 Sales            The sales department enters sales
                  forecasts and customer special order                       New records are added to the work-in-
                  information based on previous sales                        process file to accumulate cost data
  Forecasts       and other calculations as well                 Standard
     and          receive information about sales                 costs &    Data about machinery and equipment
   Orders         transactions so they’ll know when to           overhead    usage are collected at each production
                  initiate the purchase or production              rates     step, often with data about labor costs
                  of more inventory but only if the                          as well as utilities, depreciation,
                  credit of the customer is approved.                        supervisory salaries.


 Production Planning                                         Inventory
                                                                                      When production is initiated, the
                   Production planning uses that                               issuance of a materials requisition
                   information and data on current                             triggers a debit (increase) to work in
  Production       inventory levels to develop a               Materials       process and a credit (decrease) to raw
  orders and       master production schedule.                Requisitions     materials inventory.
  schedules        New records are added to the                                       Work in process is credited and
                   production order file to authorize                          raw materials are debited for any
                   the production of goods.                                    amounts returned to inventory.




 Engineering                                                 Factory Workstations
                   Engineering specifications result in
                   new records for both the bill of                          Data that contains the list of materials used in
                   materials and the operations list file.
   Product         To create these lists, engineering         Production     production either by specific item or the complete
 Specifications    accesses both files to view designs of        data        totals based on a reference of time, as well as
                   similar products.                                         units of measurement and amounts used from one
                   They also access the general ledger                       period to another and the percentage of change
                   and inventory files for info about                        between the compared dates or periods.
                   alternate designs.
                 Online Production Cycle
                   Information System
                  Contains summary level data for every asset, liability, revenue and expense
   Gener
     al
                  account of the organization.
   Ledge          In the production cycle the general ledger accumulates data about four basic
     r
                  costs: raw materials, direct labor,
                  Machinery and equipment, and manufacturing overhead.

    Online        An Online system that electronically processes production data from the origin to
 Production
 information      the user.
    system        Needs online data entry terminal and direct access files, storage media, so each
                  master record can be accessed.


Manufacturin      Is a temporary online storage medium where adequate controls to meet
  g control
specifications    production cycle objectives
                  Where transactions are recorded accurately




    CIM           Computer Integrated Manufacturing is where the instructions to guide operation
 Interface        of machinery and robots.
                                   Online Production Cycle Information System
                                                                                                                                                                            Factory
                                   Production                     Engineering                          Cost
          Sales                                                                                                                     Inventory
                                    Planning                                                        Accounting                                                        Workstations

       Forecasts                     Production                         Product                         Standard                            Materials                            Production
      and Orders                     orders and                       Specifications                     costs &                           Requisitions                             data
                                     schedules                                                          overhead
                                                                                                          rates




                                                             Online Production                                     Manufacturing
             General                                            information                                           control                                           CIM
             Ledger                                                system                                          specifications                                    Interface




Production
  Cycle




                                                                                                       Inventor
                                                                         schedule
                                                                         Producti




                                                                                                                               Productio
                                                  Operatio
                       materials




                                                                                                                                                          Progress
                                                                                                                               n orders
                                                                          Master




                                                                                                                                                          Work in
                                                   ns list
                        Bill of




                                                                            on




                                                                                                          y
Databases
                                                                                                                                                                                    Instructions
                                                                                                                                                                                        and
                                                                                                                                                                                     schedules




                                                                                         Inquiry
                                                                                       Processing
                                                                                        System




                                    Production                     Productio
                                       status                       n status                          Cost                          Performan
                                      reports                       reports                         Analyses                            ce
                                                                                                                                     reports

                                                                Production                        Cost                         Factory
                                     Sales
                                                                 Planning                      Accounting                     Supervisor
              Specifies the part number,
              description, and Quantity                                 Materials ready to be sold
              of each component used
   material




                                            Inventory
              in a finished
   Bill of

   s          Product




              Specifies how much of each
              Product, which equipment to                            Authorizes the manufacture of
                                                                     A specified quantity of particular
 Operations




              Use, and how long each step




                                                        Production
              Should take                                            Product. Lists where finished product
                                                                     Should be delivered, also collects data




                                                        orders
                                                                     About each activity.
 list




              Specifies how much each                                 Work that is still incomplete, still in
              product and when the                                    The process of being made.
Production




              product is produced during
schedule




                                            Progres
                                            Work in
Master




              the planning period.          s
        Sales                        Cost Accounting

       Production                      Cost
       status                          Analyses
       reports


                                   Provide accurate cost data
Report used to see how much        about product for use in
Is available to sell and what is   pricing and product mix
Available to sell                  decision


 Production planning               Factory Supervisors

        Production
        status                         Performance
        reports                        reports

                                   Provides information for
The report is used to see if       planning, controlling,
enough Is being produced.          and evaluating the
                                   performance of production
                                   operations
                               Threats and Controls
Over-or Underproduction
*Proper approval of production orders
*Restrict access to the production scheduling program using passwords and user IDs.

Theft or destruction of inventories
*Restrict physical access to work-in-process and finished goods inventories
*Documenting all materials movements
*Periodic counts of inventory

Inaccurate cost data
*Automate data collection using RFID technology, bar-code scanners, and other devices
* Periodic reconciliation of records with physical counts

Poor Product Design
*Reducing or eliminating unique components when producing similar products.
*Simplifying the complexity involved in the design
*Analysis of accurate data about the relationship between components and finished goods.
*Analysis of warranty and repair costs to identify the primary causes of product failure, in order to redesign
    products to improve quality.

Disruption of Operations
*Backup power sources, like generators, and uninterruptible power supply devices should be acquired to
    ensure that critical equipment and machinery is not damaged by loss of electrical power and that
    important processes can continue on schedule.
*Investigate disaster preparedness of key suppliers and identify alternative sources for critical components.
         Production Cycle Control
               Objectives
In addition to the above a production
  cycle in an ERP system should meet
  the following:

•   All production activities are by authorized users
•   WIP & fixed assets are safeguarded
•   All production transactions in the cycle are
    recorded
•   All production transactions in the cycle are
    accurate
•   All production transactions in the cycle are
    backed up and protected
•   Production cycle activities are efficient
Hyundai Manufacturing Process
Thank You

				
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