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A fi nal task is to assign components and PRTs to specifi c operations. For
example, the routing for the deluxe touring bike illustrated earlier in Figure
6-13 indicates that different components are assigned to different operations.
Typically, components are automatically assigned by the ERP system, based
on the data in the routing. However, they can also be manually assigned or
reassigned to specifi c operations as needed. Any component or PRT that
is not assigned to a specifi c operation is automatically assigned to the fi rst
operation.

Outcomes
The creation of a production order generates several outcomes, including
scheduling, availability checks, reservations, preliminary costing, and creating
necessary purchase requisitions. The scheduling function calculates the dates
when the various operations are to be performed and the capacities that are
needed in the work centers. The scheduling function uses data from the pro-
duction order (e.g., quantity and dates) and work center parameters previously
discussed (e.g., control keys and standard value keys) to complete this task.
If the scheduling data in the production order (e.g., dates) are subsequently
changed, the system can be confi gured to automatically reschedule the order.
In addition, the system performs an availability check to determine
whether the resources (components, PRTs, and capacity) needed to execute
the production order are available. If they are, then the system creates mate-
rial and machine reservations to set aside the necessary resources so they can-
not be used for other purposes. Unlike scheduling, availability checks usually
are not repeated automatically if the production order is changed. Rather, the
system must be instructed manually to perform this check.
Finally, the preliminary cost estimates for the production order are calcu-
lated. Typical costs include direct costs, such as materials and production, and
indirect costs in the form of overhead. Material costs are based on the costs of
the components assigned to the production order; these costs are maintained
in the material master for each material. Production costs are based on data in
the work center such as activity types and formulas that identify which activi-
ties (e.g., labor and setup) are required and in what quantities.
If the production order requires nonstock items, such as consumable
materials, then the system automatically generates purchase requisitions to
acquire them. We discussed the purchase of consumable materials in Chapter 3,
in the sections on account assignment categories. Recall that to purchase con-
sumable materials, an account assignment category is required in the purchase
order. In the context of production, the appropriate account assignment cat-
egory is production order (F), and the production order number is included
in the purchase requisition. The production order acts as a cost object. Recall
from Chapter 3 that a cost object is something that absorbs costs or to which
costs can be allocated.
In addition, production sometimes involves operations that are per-
formed by another company. For example, a component might have to
be painted or polished by a business that specializes in these tasks. For these
operations the company issues a purchase requisition. The requisition will
indicate sub contracting as the item category (see Chapter 4 for a discussion of
item categories). Once again, the production order is included in the requisi-
tion as the cost object.

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