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BUS 301 Exam CHP 9 and 10
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Terms in this set (34)
ME
An enterprise-level, scalable manufacturing business solution that enables manufacturers to manage and control manufacturing and shop floor operations. It provides a multi-faceted set of features that integrates business systems to the shop floor, allowing for complete component and material-level visibility for single and global installations. It produces products based on the method of production that suits the org. Input is planned orders. Includes conversion of planned orders into production orders, scheduling and releasing of planned orders, and the staging of resources and materials. It then manufactures finished product and is completed with financial settlement of the order output.
standard price
How you value your product; The estimate of the value of the unit based on the materials used, activities, and other costs.
Production Resource Tools (PRT)
Tools that are used in the production process but are not "fixed" on the shop floor. They are portable tools such as measurement devices, torque wrenches, portable welders, or jigs. They are not consumed as part of the manufacturing process but used by the people and machines doing the manufacturing. They are assigned to operations in a routing and have capacity and are subject to availability checks.
activity type
productive output of a cost center. How we measure or monetize activities (output). Used to internally move the productive output from one cost object to another cost object. After creating this, a relationship between an activity type and cost center is created, and that relationship is given a monetary value.
Planned order
output of MRP. First step in ME process; is analyzed to determined what is needed for it to be produced. Production manager looks at planned order proposed scheduling dates to decide how it fits into overall production schedule. An availability check is done for needed raw materials or components (dependent requirements). If dependent requirements are part of a purchase requisition or purchase order that has not yet been received, the order will not be executed until all the required dependent requirements have been received. Combination of data from Bom and routing. Contains what material is being proposed, how much is needed, and proposed scheduling information.
Production proposal
Another word for a planned order.
Production order
after it is decided that the planned order fits into the overall schedule, it is converted into this. Trigger to start manufacturing process based on the specifics of that individual order. When planned order is converted into this, SAP assigns a unique identifier (number) to the production order. It creates a special temporary cost object and assigns the production order number to that cost object. Used to control production operations and determine associated costs. After it is created, it references a BOM to determine the necessary components to produce the material. Then places a reservation on each of the components.
schedule and release
determining the dates of when the order should be released so manufacturing can begin. Scheduling part calculates and determines production dates and capacity requirements for all operations within an order. By using the calculated capacities and constraints, the production order is scheduled. Also conducts a material availability check and capacity requirements are checked for the proposed date range. Then, it is released at either order/header or operation level, and then the production order cost object is open for posting at either level.
Planned costs
Planned labor and planned material amounts and costs from the BOM and routing. "Best guess" numbers. They are calculated upon creation of the planned order and are the basis for comparison.
actual costs
What is used or consumed in the manufacturing process.
goods issue
process of raw material withdrawal from stock for the production order. Ensures proper materials are taken from inventory. Ensures value of that material is assigned to the production order. Materials are used to produce the finished goods. Production line produces the material, and upon completion of production run, actual value of the goods that have been issued is confirmed in the production order cost object.
Execution
actual physical manufacturing of the product. People and machines in our production line operate as expected, and output of production order is as expected. This step continues to use production order data, BOM, and routing to drive all activities.
confirmation
Updating the production order in SAP. Records 3 things: 1) the yield or actual number of units produced 2) the actual materials consumed in the process 3) actual effort, whether labor, machine, or other activity type multiplied by the time taken. Used to monitor and track progression of an order through its production cycle. Tell the company planned vs actual production levels and costs and what has been completed. Essential for realistic production planning and control of the order.
goods receipt
When newly manufactured materials are added to the finished goods inventory. The acceptance of the confirmed quantity of output from the production order into finished goods inventory (stock). Represents both the physical movement of the materials into the storage locations of inventory management and the SAP transactions for material movement and accounting.
settlement
balancing of planned costs and actual costs, assigning a value to the lower of the two sides so that the order is in balance.
variance
how far the production order is in dollars from the planned amount. Difference between actual and planned cost of production order. Recorded in FI. May be "real" or "imagined". Imagined is inaccurate master data.
settlement rule
what postings within SAP are executed with; attached to the production order when it was created. People do not calculate the variance and apply it.
Availability check
Determines material availability for the customer's requested delivery date. System looks to see if the company has or will have materials (inventory in stock) that can be shipped to fulfill the sales order. Looks at current inventory levels, planned orders, production orders, purchase requisitions and purchase orders. Considers all inward and outward inventory movements, including other outward shipments (reservations) that fulfill other sales orders and inward flows from manufacturing or purchasing of products (planned goods receipt dates in the future). This step is completed in conjunction with determination of the delivery schedule.
availability to promise (ATP)
The date a company can promise the material will be delivered. System will determine this date using backward and forward schedule rules defined by the company.
condition master record
Includes prices, surcharges, discounts, freights, and taxes. Can be dependent on various data. Created at the combined org level of a sales org and distribution channel. This is because different distribution channels (wholesale, retail) have different pricing. Can also maintain a customer specific material price or define a discount dependent on the customer.
customer
Can be other businesses (wholesale) or end consumers (retail). Has a need or want to be filled, and they contact "us" to fulfill that need.
customer master record
Must be created for each customer of the business. Contains data that controls how business transactions are recorded and processed by the system. A unique customer number identifies a customer master record. Each customer has a customer number assigned, and the customer master record contains data such as name, address, and payment terms. Has a general data view, accounting view, and sales area view.
customer-material information record
An approach that allows the seller to make special notes and instructions in the system for a customer as it relates to a specific material. Includes customer specific material number, customer specific material description, customer specific data on deliveries and delivery tolerances.
distribution channel
The means through which salable materials or services (items that can be sold) reach customers. Can be several distribution channels assigned to a sales organization, but each sales organization must have at least one distribution channel. Represents a company's strategies for the distribution of goods and services to its customers. Allows a company to define responsibilities, achieve flexibility in pricing between different kinds of customers, and differentiate sales, statistics, and reporting. Examples include wholesale, retail, internet, direct.
division
Simply used to group materials (products) and services. Represents a grouping of goods and services. Sales org can have several divisions assigned to it, but there must be at least one division assigned to each sales org. Can represent a product group, and the organization can also conduct analysis and reporting by division.
document flow
Allows you to find the status of an order at any point in time. System updates order status every time a change is made to any document created in the order-to-cash process. Provides a current picture as to the status of a sales order at both the header and line item levels. Can also show status overview of any individual document.
order-to-cash (OTC)
Includes the goods movement, shipping, and logistics functions of order fulfillment.
Post goods issue
Point in time that indicates the legal change in ownership. Title of goods change from seller to buyer, and a reduction in the seller's inventory takes place. Ends with a delivery note and updates status of shipping documents.
Retail
When the customer is an end consumer.
Sales area
The unique combination of the sales org, distribution channel, and division. It define the distribution channel that a sales org can use to sell products/services from a certain division. Can only belong to one company code. Dictates the customer master data view, which means that during the processing of SD documents (transactions) the SAP system accesses various master data according to the sales area.
Sales org
Highest summation level for SD. Includes all items of an order, outbound delivery, or a billing document belonging to this. This groups the enterprise according to the requirements of the SD and is uniquely assigned to a company code. More than one sales org can be assigned to a company code, but a sales org can only belong to one company code. Responsible for the distribution of goods and services, negotiating sales conditions (pricing), product liability, and rights of recourse on returned or damaged products.
Schedule lines
Uniquely belongs to a line item. Contains delivery quantities and dates for each line item. Used for partial deliveries. If you want to know when a certain product (material) will be received, that info is stored in this.
SD
allows an organization to maintain prices (conditions) of products (materials) for customers and provide sales support to customers. Manages sales from the creation of orders through delivery and receipt of payment form the customer. Consists of all master data, system configuration, and transactions necessary to complete the order-to-cash business process. Provides a complete sales management solution for a broad range of industries. Part of the logistics module that supports customers, starting from inquiries, quotations, and sales orders all the way to customer billing. Allows companies to input their customer sales price, check for open orders, forecast sales, and much more.
Wholesale
When we sell to other businesses; a type of customer.
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Calculate the sales, cost and profit variances for Kinibali Timber Ltd. $$ \begin{array}{|l|c|c|c|} \hline& \textbf { Budgeted figures } & \textbf { Actual figures } & \textbf { Variances } \\ \hline \text { Sales revenue } & 660 & 700 & - \\ \text { Direct labour } & 150 & 180 & - \\ \text { Direct materials } & 120 & 170 & - \\ \text { Fixed costs } & 60 & 50 & - \\ \text { Profit } & - & - & - \\ \hline \end{array} $$
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The Chinese government is becoming increasingly concerned about higher rates of inflation. Rising oil and petrol prices have increased costs to industry and firms are being forced to raise their prices to cover these higher costs. In addition, rising demand for food from a wealthier population, together with supply problems resulting in excess demand, have led to the price of pork rising by $63 \%$ and fresh vegetable prices by $46 \%$. The People's Bank of China increased interest rates by a further $0.27 \%$. This was the third increase in less than a year. A spokesman from Goldman Sachs, the investment bank, reported that the increase shows that the central bank is now much more prepared to use interest rates to manage the economy and tighten monetary policy at the first signs of the booming economy overheating. Partly as a result of these increases in interest rates, China's GDP increased by $7.7 \%$ in $2013$, and some analysts believe this should be more sustainable than the much higher rates experienced in $2007-08$. However, Chinese leaders still face conflicting pressures in balancing the top priority of maintaining highspeed economic growth to create millions of new jobs each year, with managing growing environmental problems and rising cost-push pressures causing higher inflation. Analyse how an increase in Chinese interest rates might have an impact on demand for a firm’s products and on a firm’s costs.
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