Production Cycle System
Data Flow Diagram
Production Planning Department
Product Design
Operations List MPS
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
Production Planning Department
Product Design
Operations List MPS
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