How does the procedure for determining inventory requirements differ between a basic batch processing system and batch processing with real-time data input of sales and receipts of inventory? What about for the procedures used by the receiving department?

Answer 1

A system which employs real-time data entry of sales will update the inventory levels more frequently. Thus, when a sale depletes the inventory level to the reorder point, the system will flag it for reorder more quickly than if it had to wait for a batch update of the inventory records. The sooner the item is ordered, the sooner it will be received. With respect to the real-time receipt of inventory, the inventory will be updated immediately to show the accurate amount which is on hand. Thus, a customer wishing to know how soon they may have an item shipped will receive more accurate information regarding the status of the firm's inventory levels. Thus, the customer benefits from better stocking of inventory and better information regarding the inventory levels.

The receiving department uses real-time data entry; they enter the purchase order number and a receiving screen prompts the clerk for the quantities of goods received. This system should cause less discrepancies due to poor handwriting, carelessness, and loss of the receiving report form.