Purchasing Department. Upon receipt of the purchase requisition, the purchasing
department prepares a five-part purchase order. Copies go to the vendors, accounts payable,
receiving, data processing, and the purchasing department’s own file.
The system in Figure 10.1 employs manual procedures to control the ordering process.
A computer program identifies inventory requirements and prepares traditional purchase
requisitions, thus allowing the purchasing agent to verify the purchase transaction before
placing the order. Some firms use this technique to reduce the risk of placing unnecessary
1 This may be batch or real time, depending on the revenue and conversion cycle systems that interface
with the expenditure cycle. The raw materials and finished goods inventory files link these three transaction
cycles together. The design of one system influences the others. For example, if sales processing (revenue
cycle) reduces inventories in real time, the system will naturally identify inventory requirements in
real time also. This is true even if the purchases system is batch oriented.