2. MEANING
PRODUCTION
The processes and methods employed to
transform tangible inputs (raw materials,
semifinished goods, or subassemblies)
and intangible inputs (ideas, information, knowledge)
into goods or services.
PURCHASE
Purchase is to obtain ownership of a security or
other asset in exchange for money or value also
called buy.
Now we are going to understand their procedure as
to how it is carried on in companies/factories further…..
4. PURCHASE
• PURCHASE INDENT
It is a document used in purchase process where
seller sends buyer a quotation regarding the goods to be
purchased as the buyer’s open enquiry with the product’s
details such as it’s price, quantity, etc.
The details to be filled in the Purchase Indent
include as follows-
Date, name of the indentor, type, budget, year,
details of item with specifications, signatures of respective
persons.
5.
6. PURCHASE ORDER
After a Purchase Indent is accepted by a buyer, the
buyer issues a Purchase Order which is a legal offer by the
buyer to the seller as for Purchase. The seller has also to
acceptsuch document without which the order stands
cancelled.
The Purchase Order includes the following details to
be filled in it-
Date, address of both co.s, validity, items with the
requirement and their details as to how much is required,
terms and conditions by buyer, mode of payment …
7.
8. GOODS RECEIPT
The seller receives the Purchase Order it becomes a
Sales Order for the seller.
As a purchase Order is received by the seller, the seller if
accepts the order, then Goods Receipt is created to end the
Order process.
The details filled in the note include as follows-
Supplier’s name; Supplier’s A/c no.; date; details of items as
quantity ordered, description…
9.
10. PURCHASE
As the process-Purchase Indent, Order, Goods Receipt,
the final step is to purchase the goods i.e. to acquire the
ownership of items/goods, after the mode of payment and
delivery terms.
This Purchase Document includes or is a compilation
of the previous process i.e. it has all the information from
buyer to seller, their details; the goods description with its
details, rule followed (MODVATABLE, NON-
MODVATABLE,..), DUE DATE OF Document, some
additional information like batch no,etc., Excise duty is
calculated & shown in this document, the main document
shows the DECLARATION & TERMS AND
CONDITIONS,..
11. BILL OF MATERIAL
A BILL OF MATERIAL(BOM) is a list of the raw
materials, sub-assemblies, intermediate assemblies, sub-
components, components, parts and the quantities of each
needed to manufacture an end product.
It is prepared by the PLANNING Department.
A BOM is a list as above, as in it, the materials are
recorded which are required to produce a finished product,
which contains what is required and how much is required for
a finished product to be produced.
For eg.- To produce a pen- how much plastic granules,
refills,.. Is required and in what quantity. It is recorded in a
BILL OF MATERIAL.
12.
13. WORK ORDER
A WORK ORDER is a order prepared by Planning
department for Production Department in order to produce
Finished Product.
A Work Order is a document which is prepared to
order to produce a specified quantity and as per the Bill Of
Material.
A WORK ORDER is thus a document, which
contains a product’s details with it’s quantity, rate, Bill Of
Material, amount calculation…
14.
15. INPUT TO PRODUCTION
This is a process where the factors of Production are
sent in the factory for producing the finished product.A
document is created as a fact that materials are been changed
and concentrated for output.
OUTPUT FROM PRODUCTION
This is a process where the Finished Products are
been produced and thus there is a output of materials/inputs. A
document is creaed as a fact that Finished goods are produced
& thus ready for sales or delivery.
