MIS 2101.001 – Adam Alalouf – Fall 2017

Review 9/7

Review Exercise

Model the following scenario using a swimlane diagram:

Bob is the warehouse manager of Gadgets, Inc. He is tasked with physical inventory counts. If the count is below the desired inventory level, bob has to create a purchase order. If the count is above the desired inventory level, he moves on to the next item. After he is done counting all the items, he makes all his final changes to the PO and submits the PO to his supervisor, Edith, for approval. If Edith sees no issues, she marks the order approved, and Bob sends the PO to the vendor. If Edith spots any issues, she flags the order and sends it back to Bob to correct.


Note that we refer to the order in this scenario as a purchase order, PO, and order, interchangeably. However, in the system, the order will have strictly one instance of terminology. Every transaction in a fully developed system is identified by transaction type. The exact terms vary from organization to organization. In our scenario we will assume the single term is ‘purchase order’.

Follow-up questions

At the end of his inventory count, Bob recorded $1,600,586.00 worth of items. The system showed that the warehouse had $1,724,323.00 in inventory. What is the inventory variance percentage? How will it affect the general ledger? Include a journal entry to show your answer.

Would you be concerned with the variance in this scenario? What steps would you take after learning about the variance in inventory?

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