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C H A P TER 7 The Conversion Cycle 307

each batch run, the number of items in the batch tends to be large. This is the most common method
of production and is used to manufacture products such as automobiles, household appliances,
canned goods, automotive tires, and textbooks. The discussion in this chapter is based on a batch
processing environment.

BATCH PROCESSING SYSTEM
The DFD in Figure 7-2 provides a conceptual overview of the batch processing system, which consists of
four basic processes: plan and control production, perform production operations, maintain inventory
control, and perform cost accounting. As in previous chapters, the conceptual system discussion is
intended to be technology-neutral. The tasks described in this section may be performed manually or by
computer. The figure also depicts the primary information flows (documents) that integrate these activ-
ities and link them to other cycles and systems. Again, system documents are technology-neutral and
may be hard copy or digital. We begin our study of batch processing with a review of the purpose and
content of these documents.

Documents in the Batch Processing System
A manufacturing process such as that shown in Figure 7-2 could be triggered by either individual sales
orders from the revenue cycle or by a sales forecast the marketing system provides. For discussion pur-
poses, we will assume the latter. The sales forecast shows the expected demand for a firm’s FG for a
given period. For some firms, marketing may produce a forecast of annual demand by product. For firms
with seasonal swings in sales, the forecast will be for a shorter period (quarterly or monthly) that can be
revised in accordance with economic conditions.

The production schedule is the formal plan and authorization to begin production. This document
describes the specific products to be made, the quantities to be produced in each batch, and the manu-
facturing timetable for starting and completing production. Figure 7-3 contains an example of a pro-
duction schedule.
The bill of materials (BOM), an example of which is illustrated in Figure 7-4, specifies the types and
quantities of the raw material (RM) and subassemblies used in producing a single unit of finished prod-
uct. The RM requirements for an entire batch are determined by multiplying the BOM by the number
of items in the batch.
A route sheet, illustrated in Figure 7-5, shows the production path that a particular batch of product
follows during manufacturing. It is similar conceptually to a BOM. Whereas the BOM specifies mate-
rial requirements, the route sheet specifies the sequence of operations (machining or assembly) and the
standard time allocated to each task.
The work order (or production order) draws from BOMs and route sheets to specify the materials and
production (machining, assembly, and so on) for each batch. These, together with move tickets
(described next), initiate the manufacturing process in the production departments. Figure 7-6 presents
a work order.
A move ticket, shown in Figure 7-7, records work done in each work center and authorizes the move-
ment of the job or batch from one work center to the next.
A materials requisition authorizes the storekeeper to release materials (and subassemblies) to individu-
als or work centers in the production process. This document usually specifies only standard quantities.
Materials needed in excess of standard amounts require separate requisitions that may be identified ex-
plicitly as excess materials requisitions. This allows for closer control over the production process by
highlighting excess material usage. In some cases, less than the standard amount of material is used in
production. When this happens, the work centers return the unused materials to the storeroom accompa-
nied by a materials return ticket. Figure 7-8 presents a format that could serve all three purposes.

Batch Production Activities
The flowchart in Figure 7-9 provides a physical view of the batch processing system. The flowchart illus-
trates the organization functions involved, the tasks performed in each function, and the documents that