Q5 Designist Pty Ltd.

34 Points

Grading comment:

Designist Pty Ltd. is a parent holding company of three subsidiaries.

The first subsidiary is ArCustom, which designs and installs household furniture and cabinets. It is known for its unique designs and on-time installation. Due to the nature of their products, ArCustom frequently requests for new suppliers to be added, often for once-off purchases.

The second subsidiary is EZCraft, which installs flat-pack (ready-to-assemble) household furniture and cabinets. It has little variety in its product range; however, it is well-known for its low price and rapid installation.

The third subsidiary is Buildesign, which manufactures/purchases the furniture and cabinet components for the other two subsidiaries.

To increase efficiency, Designist has recently introduced a new ERP System. Once a kitchen is designed and specifications determined (ArCustom) or the warehouse identifies low inventory level (EZCraft), the ERP identifies all the individual components (via an MRP) that are needed and then sends out a request for quotation to all vendors able to supply the specified components at the required quantity level.

A week after the requests for quotes, the system automatically processes the quotes and automatically turns them into a Purchase Order. These are then verified by the Purchase Clerk.

While Designist is set up as three businesses, for the purpose of this question, you can assume that it operates as one (group) entity, with two separate and distinct sales channels.

(a) To which transaction cycle does the process shown in the diagram on the previous page belong and what is the objective(s) of that cycle? (2 marks)

(b) Identify any economic events in the process, as depicted in the diagram. If there is no economic event, then identify the key business event depicted in the diagram. Your answer should explain why the event you identified is an economic or business event. (2 marks)

(c) Duality relationships link economic events. What is the economic event linked by duality to the economic event identified in (b) above? Explain the relationship.

If you identified a business event in (b), then identify the economic events in the transaction cycle the business event relates to. (3 marks)

(d)The quotes are prepared based on a purchase requisition created by an MRP (Materials Requirement Planning). Explain to the Manager of Designist what an MRP is and how it works. You answer should also identify the risk an MRP is designed to minimise with reference to the information quality goals.(5marks)

(e)

Outline the advantages and disadvantages of using approved vendors to the Manager of Designist. Your answer should identify what risks are minimised by using approved vendors and impacts on information quality goals.

(f)

Does the process shown in the diagram shown support BOTH the low-cost strategy of EZCraft and the on-time reputation of ArCustom? Explain why/why not? If not, what changes need to be made to the process to allow this and what additional data (if any) would be needed for this control to work.

Note: it can be assumed that ArCustom installation date calculations include normal process and manufacturing times, and that EZCraft is able to manage inventory levels to avoid stockouts.

(g)Is the matching of Purchase Order to Quote an effective and necessary control? Explain why or why not.