The document discusses the production cycle, which includes four main activities: product design, planning and scheduling, production operations, and cost accounting. It outlines the objectives, key documents, and business rules for each activity. It also discusses controls that can help ensure the objectives of authorization, validity, recording, asset protection, and compliance are met throughout the production cycle. Automating aspects of the cycle through tools like computer-integrated manufacturing and RFID can help increase productivity, security, and performance.

1. THE PRODUCTION CYCLE POOJITH JAIN 0666444

2. Outline Introduction Production cycle activities Models on each activities Control Objectives Conclusion

3. Introduction The Production Cycle is a recurring set of business activities and related data processing operations associated with the manufacture of products.

4. PRODUCTION CYCLE ACTIVITIES The four basic activities in the production cycle are: Product design Planning and scheduling Production operations Cost accounting

5. General Assumptions Data is persistent and backed up properly System stores data according to integrity constraints System is secure, available and maintainable Information provided by the customer is correct, complete and reliable Only complete and undamaged products are considered as finished goods.

6. PRODUCT DESIGN The objective of product design is to design a product that strikes the optimal balance of: Meeting customer requirements for quality, durability, and functionality; and Minimizing production costs. A simulation software can improve the efficiency and effectiveness of product design.

7. PRODUCT DESIGN Key documents and forms in product design: Bill of Materials: Lists the components that are required to build each product, including part numbers, descriptions,and quantity. Operations List : Lists the sequence of steps required to produce each product, including the equipment needed and the amount of time required.

8. Model Business Rules : Each of the design criteria must be satisfied as much as possible. During redesign, the Bill of material must be rewritten. Each of the databases used are taken care by its responsible authority.

9. PLANNING AND SCHEDULING The objective of the planning and scheduling activity: To develop a production plan that is efficient enough to meet existing orders Anticipated shorter-term demand while minimizing inventories of both raw materials and finished goods.

10. PLANNING AND SCHEDULING There are two common approaches to production planning: Manufacturing Resource Planning (MRP-II) Lean Manufacturing

11. PLANNING AND SCHEDULING Key documents and forms: Master production schedule Production order Materials requisition Move ticket

12. PLANNING AND SCHEDULING Use of information technology: Improve the efficiency of material-handling activities by using: Bar coding of materials to improve speed and accuracy RFID tags can eliminate human intervention in the scanning process

13. Model Business Rule: Mass production is done based on the forecast and lean manufacturing is done based on the customer order. If current inventory < required inventory then, update purchase requisition.

14. PRODUCTION OPERATIONS Production operations vary greatly across companies, depending on the type of product and the degree of automation. The use computer-integrated manufacturing (CIM) can significantly reduce production costs.

15. PRODUCTION OPERATIONS In a lean manufacturing environment , a customer order triggers several actions: System first checks inventory on hand for sufficiency. Calculates labor needs and determines whether overtime or temporary help will be needed. Based on bill of materials, determines what components need to be ordered. The master production schedule is adjusted to include the new order.

16. PRODUCTION OPERATIONS Sharing information across cycles helps companies be more efficient by timing purchases to meet the actual demand. All companies need to keep track of data on: Raw materials used Labor hours expended Machine operations performed Other manufacturing overhead costs incurred

17. Model Business Rule: Raw Material Used==Total Material Requisition - Damaged Materials WIP==WIP + Production orders Production orders= =total production – # damaged products Raw Material Inventory== RMI – Material Requisition

18. COST ACCOUNTING The objectives of cost accounting are: To provide information for planning, controlling, and evaluating the performance of production operations; To provide accurate cost data about products for use in pricing and product mix decisions; and To collect and process information used to calculate inventory and COGS values for the financial statements.

19. COST ACCOUNTING Types of cost accounting systems: Job order costing Process costing

20. COST ACCOUNTING Accounting for Fixed Assets: The AIS must collect and process information about: Property Plant Equipment used in the production cycle. These assets represent a significant portion of total assets for many companies and need to be monitored as an investment.

21. COST ACCOUNTING A system can be used for a job-order or process costing system . Both require that data be accumulated about: Raw materials Direct labor Machinery and equipment usage Manufacturing overhead Information processing procedures The choice of method: Does not affect how data are collected Does affect how costs are assigned to products

22. Model Business Rules WIP==WIP-PO FG==FG+PO

23. Key Performance Indicators Number of products produced per day Average duration between planning and production Percentage of damaged raw materials Percentage of damaged produced products Labour and inventory used per product Defect rates Breakdown frequency Percent of finished goods needing rework Percent of defects discovered by customers

24. CONTROL: OBJECTIVES, THREATS, AND PROCEDURES In the production cycle (or any cycle), a well-designed AIS should provide adequate controls to ensure that the following objectives are met: All transactions are properly authorized All recorded transactions are valid All valid and authorized transactions are recorded All transactions are recorded accurately Assets are safeguarded from loss or theft Business activities are performed efficiently and effectively The company is in compliance with all applicable laws and regulations All disclosures are full and fair

25. CONTROL: OBJECTIVES, THREATS, AND PROCEDURES There are several actions a company can take with respect to any cycle to reduce threats of errors or irregularities. These include: Using simple, easy-to-complete documents with clear instructions Using appropriate application controls, such as validity checks and field checks Providing space on forms to record who completed and who reviewed the Pre-numbering Restricting access to blank documents Using RFID tags when feasible to improve data entry accuracy

26. THREATS Product Design Poor Design Planning and Scheduling Over or Under Production Suboptimal investment in fixed assets Production Operation Theft of inventories and fixed assets Disruption of operations Cost Accounting Inaccurate recording and processing of production activity data General threats Loss, alteration, or unauthorized disclosure of data Poor Performance

27. Conclusion Automated system helps in increasing the productivity and security. Eg: CIM The more we automate the system, easier it is to detect flaws and frauds in the process. Eg: RFID Digital system helps in easy and secure authorization. Eg: coded ID’s AIS helps to identify the appropriate product mix which will eventually help in reducing the production cost.

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