Rea Diagram for Food and Beverage Company

Topics: Supply chain management terms, Customer, Money Pages: 11 (3043 words) Published: December 25, 2010
F&B Integrated REA Diagram
This integrated REA diagram combines 4 individual cycles together, Revenue cycle indicated in blue shape, Expenditure cycle indicated in green shape, Production cycle indicated in red shape and Human Resource cycle indicated in orange shape.

There are 4 integrated resources divided into 2 types which are tangible and intangible. Tangible resources include ‘Inventory (Raw material)’ , ‘Inventory (Finished goods)’, ‘machine&equipment’ and ‘Cash’. Only intangible resource shown in this REA diagram is ‘Employee time and skill’. There is also one integrated event, ‘Disburse cash’ , which is linked to 3 events, ‘receive raw material’ (Expenditure cycle) , ‘Acquire PPE’(Expenditure cycle) and ‘record time worked’( in Human Resource cycle).

According to economic duality , Inventory (Raw material) is increased by ordering and receiving raw material (Expenditure cycle) and decreased by being used in issuing raw material(Production cycle). At the same time, Inventory(finished goods) is increased by producing finished goods(Production Cycle) and decreased by taking day-to-day order and shipping goods to customer. Cash resource is increased by collecting payment and is decreased by disbursing to employee as salary and to supplier as payment to ordered goods or PPE. Revenue cycle

The cardinality between two events
Take estimated weekly order

Confirm&take day-to-day order

At this present, F&B has only two customers, its branch retail store and Starbuck. Every week both of them have to send ‘estimated order’ of demanded finished goods for the next coming week in advance so as to let F&B arrange sufficient inventory. Every afternoon F&B confirms and takes day-to-day order from both of the two customers. The ordered goods are going to be shipped tomorrow morning. Collect payment

Ship goods to customer

Therefore, each ‘take estimated weekly order’ may involve zero ‘confirm&take day-to-day order’ due to cancelling estimated order. And maximum cardinality is many because there can be up to 7 confirmations for each ‘take estimated weekly order’. On the contrary each ‘confirm&take day-to-day order’ may involve zero ‘take estimated weekly order’ due to sudden change in demanded goods, and can maximum involve only one take estimated weekly order’.

‘confirm&take day-to-day order’ and ‘ship goods to customer’ occur in sequence,therefore there is a span of time which makes minimum cardinality between them be zero. Note that F&B take order and ship goods day by day, so each ‘confirm&take day-to-day order’ cannot relate to more than one ‘ship goods to customer’ . As previously stated, F&B confirms and takes day-to-day order from customers every afternoon, and the ordered goods are going to be shipped tomorrow morning. Therefore, each ‘ship goods to customer’ involves one and not more than one ‘confirm&take day-to-day order’.

F&B usually bills customer on 15th of every month and grants its customer 60 days credit term. Moreover F&B has no policy to let its customers install their payment. Consequently, each ‘ship goods to customer’ may involve no ‘collect payment’and can be maximum involve only one ‘collect payment’. Besides for batch billing, zero cardinality is also allowed for the case that F&B has delivered defected goods or that customer ignores payment.

Because ‘collect payment is a sequential event of ‘ship goods to customer’, each ‘collect payment’ has to involve at least one ‘ship goods to customer’ and can be maximum to many ‘ship goods to customer’ for batch billing .

The cardinality between event and agent
For each event that occurs, there is at least one and only one agent involving for accountability reason. For example, each ‘ship goods to customer’ can be involve one and only one customer, and only one employee has to account for this event.

For each employee (agent), ‘employee’ is linked to event with zero minimum cardinality which is allowed for new...
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