Inventory Control Procedures

Inventory status are retrieved from the Sales Management System. The inventory records

include a quantity on hand and a desired quantity on hand for all grocery types in the inventory

database. Each day, the inventory control clerk monitors the balance of inventories in the

database, showing those items that have reached their reorder points. Then, the clerk prints a

purchase requisition (PR) from the system and approves the reordering of inventory by signing

the PR. Then, the clerk forwards the approved PR to the Purchasing Department.

Purchasing Procedures

Upon receiving the approved PR, the purchasing clerk keys in purchasing data to prepare

purchase order (PO), selects a supplier from the registered supplier file in the purchase

database, update the PO file and creates a purchase order on the purchasing system. Once the

purchase order is saved, the completed purchase order is printed in four copies. PO1 is sent to

the supplier, PO2 is sent to the Inventory Control Department, PO3 (blind copy) is sent to the

1Receiving Department and PO4 is sent to the Accounts Payable Department. The approved PR

is filed. In certain situation, if the chosen supplier is unable to fulfill the order, urgent order

request will be made to any other supplier available in Alor Setar area. No purchase requisition

is issued in this situation.

Receiving Procedures

When the inventory arrives at the Receiving Department from the supplier, the receiving

employees are expected to check and count the inventory, and compares the actual quantity to

the quantity stated in the attached packing slip and PO3. This process is, however, unmonitored

and based on trust to the employees. Then, the employee keys in the PO number and records

the actual quantity of inventory received in the receiving database to create a receiving report

(RR). Four copies of RR are printed from the database. The receiving clerk keeps PO3 and PS

in a file. RR1 is sent to the Inventory Control department to update the inventory balances in

the inventory database. RR1 is then filed in the Inventory Control Department. RR2 is sent to

the Purchasing Department to be filed. RR3 is sent together with the inventory to the

Warehouse. Finally, RR4 is sent to the Accounts Payable Department.

Accounts Payable Procedures

Earlier on, Accounts Payable Department received PO4 and RR4. Both documents are filed

temporarily. When invoice arrived from the supplier, Accounts Payable clerk performs three

way match of PO4, RR4 and Supplier Invoice. After verifying the accuracy of invoice, the

clerk keys in the invoice data into the Accounts Payable (AP) database to update purchase

journal and AP subsidiary ledger. The three documents of PO4, RR4 and Supplier Invoice are

filed. A journal voucher is printed and sent to the General Ledger Department.

question

Prepare the following diagrams to represent the purchasing process at Feast E-Mart Sdn. Bhd.

(a) A context diagram.

(b) A logical data flow diagram.