Kailua Kamera Shop (KKS) has 2 locations on the island of Oahu, Hawaii. The warehouse is located in Waipahu, HI, an area north of the Honolulu airport. KKS prides themselves on offering quality photography products and knowledgeable sales staff. KKS sells to mostly to local professional photographers looking to purchase cameras, Lenses, filters, tripods, flashes, and other camera gear.

When a customer decides to place an order, they come to the store and speak to a salesclerk who will show them the items they are interested in purchasing. When the customer decides on an item, or items, for purchase, the sales staff enters the sale into the system to update the sales order transaction file. Most sales are made to customers who have previously made product inquiries. If a new customer makes a purchase, the sales clerk will first add the new customer into the system, then create the order. KKS sales personnel may lower the list price of an item with manager approval during the sales process. Customers have 30 days to return goods.

A warehouse worker in Waipahu picks the goods for each order, one order at a time, based on a daily check of the system for open orders. The warehouse worker updates the pick goods transaction file and prints 2 copies of a pick ticket. If there is an out of stock item, the pick will be held up until all items in the order are in the warehouse. Picked items are reviewed by a warehouse manager, who places one pick ticket on an item in each order, then forwards those goods to the shipping department to be shipped to the customer. The other pick ticket is filed by date in the warehouse.

A shipping employee receives the tagged items and keys the information into the system to update the shipping transaction file and print a shipping label. Each shipment goes directly to the customer’s address because the store locations do not have any extra space capacity. Shipping procedures require all tagged items from an order be shipped together the next day using a third party carrier. An electronic shipping log is maintained by the shipping clerk and viewable to all store locations to aid in customer inquiry. An electronic copy of the shipping log is sent to the billing department.

Once notification of shipping is received, a billing clerk charges the customer account for 50% of total charges. The remaining 50% will be billed in 30 days. The billing policy is standard and applies to all customers. A cashier records the customer payments received into KKS’s main checking account. In order to improve internal controls, KKS maintains a separate cash accounts for each transaction cycle. An AR clerk manages past due accounts.

Required: Draw the REA model, with cardinalities, for the operating events, agents and resources in the sales/collection process described above. Use crows feet notation for cardinalities. The REA can be hand-drawn – but neatness is required. Points will be deducted for unprofessional submissions (sloppy work, misspellings). If you use Lucid Chart – use the Flowchart Process symbol for events.

What to Submit:

1. UPLOAD TO BLACKBOARD: Upload an electronic file using the submission link in Assignment 1 folder in Blackboard. The electronic file is required for your assignment to be graded.

HINT:

Look for the operating events first in the above narrative. Operating Events are represented by the “E” in the REA model. Once you have identified the operating events, (be sure they are not informational events – there is a difference!), then look for the resources (“R”) and the agents (“A”) associated with each operating event. Remember the rules:

1. Each operating event must be related to a resource 2. Each operating event must be related to at lease one agent, usually two (on

internal agent and one external agent) 3. Each operating event must be connected to another operating event.

To assist you in picking out the operating events – review Week 3 and the lecture where we discussed the “typical operating events” for the Sales/Collection (Revenue) Cycle and the Purchase/Payment (Expenditure) Cycle of an AIS.

See below for “typical operating events” for the Expenditure Cycle and Revenue Cycle.