Manufacturoo Ltd produces widgets. Management recently decided to switch to a new supplier from which to buy raw materials. The new supplier offers equal quality raw materials and exactly equal prices as the old supplier. Neither the old nor the new supplier charge anything for shipping. Unfortunately, management failed to update their purchasing system to account for the following two changes:

CHANGE #1: Minimum order quantity to receive a 10% discount is 900 units for Raw Material A (used to be 500 for old supplier). Manufacturoo Ltd usually purchases between 400 and 1100 units of Raw Material A per month. Raw Material A does not spoil or become obsolete.

1. Would this be considered a systematic or random error? Explain why.

2. How could this data problem affect reports generated during the GL&FR cycle, including the information quality of the financial statements? 3.

CHANGE #2: While prices per unit of Raw Material B are the same as those charged by the old supplier, Raw Material B is packaged differently: it comes in boxes containing one hundred (100) units as opposed to fifty (50) units (old supplier). Manufacturer Ltds purchasing system automatically generates a purchase requisition for 30 boxes once the reorder point of 5 boxes has been reached. Raw Material B does not spoil or become obsolete but is expensive to store due to its large size.

3. How could this data problem, if not detected, affect the performance of the purchasing cycle if the purchase requisition is automatically converted to a purchase order and sent to the supplier? In your answer discuss the implications on financial and managerial reports and related information quality goals.