Sole Footwear, Inc., is a manufacturer of a popular line of casual shoes and sandals that has experienced significant growth within the past 18 months. The unique design of its product line has always been the key to the company’s success. It is currently still using a system consisting of manual job costing sheets and inventory cards. Although this system was satisfactory in the past, the company’s recent growth has resulted in various problems with operations and inventory control. The biggest problem is with meeting the production and delivery schedules. Many products are delivered late because the products are not completed on time. In addition, some products are delayed in the production process because the required materials are out of stock; it sometimes takes a week or more to restock back‐ordered materials. To make matters worse, the company has been unable to control waste of its raw materials. There are significant quantities of materials left over after the production runs. These excess materials are eventually written off because no known scrap market exists.

Job costing sheets and inventory cards are updated at the end of each week. It takes nearly a week for the production clerks to update the accounting records from these documents. When customers inquire about the status of their orders, the production clerks use the job costing sheets to estimate delivery dates. Because of the back‐order problems, though, these estimates are often overly optimistic. This inability to provide accurate delivery dates has been a serious source of customer dissatisfaction.

The production and inventory managers have recognized the need for the company to improve its system of tracking customer orders and maintaining raw materials inventory. They have tried to convince top management of the need to improve the timeliness of information flow between the production, inventory, and accounting departments. However, top management believes that customers will be willing to wait for their orders because the products are in high demand. Furthermore, top management is reluctant to spend money on automation.

Recently, competitors have started to imitate Sole’s footwear designs, and some customers have hinted that they are tempted to place future orders with these competitor companies. Sole’s production and inventory managers are making another plea to top management for a new computerized inventory information system.

Required:

a. List the problems with the existing system at Sole’s Footwear.

b. Identify the relevant information that the production and inventory managers need to accumulate in order to support the decision to automate the conversion process.

c. List specific items that could be provided by an automated system, and describe how this could be essential to the company’s continued success.