Production Cycle System

Topics: Cost accounting, Flowchart, Inventory Pages: 3 (737 words) Published: June 9, 2013
Data Flow Diagram

Production Planning Department
Product Design

Operations ListMPS

Production Order Preparation Program

Production Order

Factory Workers
Parts Department Clerks

Raw Materials

Final Product

System Flow Chart
Prepare MPS

Prepare production order
Production order preparation system

Add production order to production Order Master

Review open production orders

Work in Process
Raw materials release

Cost analysis

Production Cycle Problem

The first step in the production cycle is product design. Poor product design drives up the costs in several ways. Using to many unique components when producing similar products increases the costs associating with material inventory. 65%-80% of the cost of a product is set at the design stage. Design decisions will affect every part of production cycle. To mitigate the threat accountants should participate in the product design activity to analyze the most beneficial use of components and production process.

The second step in the production cycle is planning and scheduling. The main threats in this step is under- or overproduction. Overproduction can result an excess of supply versus demand, creating potential cash flow issues because resources are tied up in inventory. Underproduction can result in loss of sales and customer dissatisfaction. These threats can be reduces by accurate and current sales forecasts, data about inventory on hand, Master production schedule has to be adjusted according to the information received. Proper approval and authorization of production orders is another source of control that can prevent over- or underproduction.

The third step in the production cycle is manufacture of...
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