You have completed your new employee rotational program and are now familiar with the make, buy and sell work processes at Pen Inc. You have been asked to lead the team that is introducing new products, JPEN and Cray, to the marketplace.

Your primary responsibility is to monitor all aspects of the new production introduction, from planning the material to the receipt of payment from the customer.

• Note the material types and inventory of each of these products.
• Inventory levels in the planning worksheet represent the inventory levels before you run MRP.
• Take a few minutes to familiarize yourself with the planning worksheet now.

Production Planning (PP)

As you know, Pen Inc. is a make-to-stock company, and the production levels are driven by planned independent requirements (PIRs) that were defined in the planning process.

The PIRs are as follows:

• JPEN 110 (each)
• CRAY 100 (dozen)

You will do the calculations that MRP would do and determine the output. Record these values in the “MRP Shortage” field for finished goods inventory, trading goods inventory and raw materials inventory on your planning worksheet. Enter zero for any value that does not have a shortage. You will have at least one material shortage.

Procure-to-pay (MM)

Using the material shortage that you calculated in planning, proceed with the procure-to-pay process to obtain the required materials. Enter the quantity of goods to be purchased on the planning worksheet in the “P2P Impact” column for each material. If you are not ordering material, enter a zero to show you have considered it.

Complete the required postings in the T-account worksheet for the P2P process. Use Pen Parts Inc. as your vendor if you are ordering raw materials. Use Slick Pens Inc. if you are ordering trading goods. You may or may not require both.

Manufacturing Execution (ME)

Synchronous to the P2P process execution the planned order is converted to a production order and scheduled.

Fill in the blank portions for labor and material expense on the worksheet for the production order calculations. These at the bottom of the planning worksheet.

Enter the number of materials involved with the ME process in the “ME Impact” column on the planning worksheet. If the material is not involved with the ME process, enter a zero to show you have considered it.

The scheduled day arrives, and the manufacturing process is executed consuming raw materials and labor and generating finished goods. Complete the ME process and make the appropriate postings on the attached T-account worksheet.

Order-to-Cash (SD)

As the manufacturing process is underway, Pen Inc. receives a sales order from Air Bear Bakery, a wholesale customer. Air Bear orders 50 JPENs and 50 boxes (dozen) CRAYs.

Make the appropriate calculations on the planning worksheet showing the number of material used in the SD process in the “SD Impact” column. Complete the OTC process by entering postings for the OTC process on the attached T-account worksheet.

Product lifecycle

Following the completion of the OTC process for Air Bear, calculate MRP again and explain what output is generated. Capture your calculations on the Planning worksheet in the “MRP Shortage #2” worksheet. There are no T-account postings required for this step.