Inventory—Merchandising
Online Process
From purchase ordering: We receive the merchandise reorder report that has the items of inventory that need to be ordered. The purchase order data is then keyed into the computer. The online process involves inserting quantity ordered into three files. The open purchase order file is increased by one record as well as the purchases transaction file. The merchandise inventory master file is noted with the amount of inventory ordered.
From receipts procedure: We obtain the receiving report. The receiving report has the actual number of items received at the receiving dock. The computer process will add quantities received to on-hand balances to two files and update one more. Since the inventory has been received, the open purchase order is closed and the open purchase order file is decreased by one record. Merchandise inventory master file is updated with the quantity received to reflect the current on-hand amount. The last file to be updated with one record is the receipts transactions file.
From sales procedure: We receive the shipping report that will have inventory that was sent to customers. The information is keyed into the computer and the online process involves deducting quantities shipped from on-hand balances. This process updates only the merchandise inventory master file by decreasing the amount of inventory sold. The effect of the merchandise inventory master file would be a credit in inventory.
From return procedures: We receive a credit memo and a purchase memo (also called debit memo). The credit memo would show items that our customers returned to us and the debit/purchase memo would be items that we returned to our supplier. The information from the memo is keyed into the computer and the online process involves changing on-hand balances to reflect adjusted quantities. This process updates the merchandise inventory master file by decreasing inventory (credit) by the amount we returned to our suppliers or by increasing inventory (debit) by the amount our customers returned to us.
This company runs reports daily from the four files. The open purchase order file is used to produce the open and overdue purchase orders report and the individual purchase orders that are sent to the purchasing department. The merchandise inventory master file is used to produce the inventory status report, inventory usage report, expected stock-out report, and merchandise reorder report that are sent to inventory management. The receipts transaction file is used to produce the summary of merchandise receipts that is sent to the receiving manager.