WHAT IS CONVERSION CYCLE?

TRANSFORMATION + SERIES OF EVENTS

Transforms input resources, raw materials,

labor and overhead into finished products
or services for sale.
PRODUCTION METHOD
Manufacturing • It is the processing of raw materials into finished goods
through the use of tools and processes.
process

• is the process of syncing and planning the steps in the

Production manufacturing process to ensure that production runs
Schedule smoothly and customers receive what they ordered on
schedule.

Bill of materials • is an extensive list of raw materials, components, and

assemblies required to construct, manufacture or repair
(BOM) a product or service.

• is a document which lists the exact

Route sheet sequence of operations needed to
complete the job.
 • is typically a written request that the
Work Order customer makes for specific items or
services.

Move • documents transfer of parts and materials

through the factory.
ticket

Materials • lists the items to be picked from inventory

and used in the production process or in the
provision of a service to a customer, usually
Requisition for a specific job.
1. MATERIALS AND
OPERATIONS REQUIREMENT

2. PRODUCT SCHEDULING
 The actual production operations begin when
workers obtain raw materials from storekeeping in exchange
for materials requisitions.

Minimize total inventory cost while ensuring that

adequate inventories exist to meet current demand.
ECONOMIC ORDER QUANTITY (EOQ)
-The objective of the EOQ model is to reduce total
inventory costs.
EXAMPLE:
RE-ORDER POINT
-can determine when to purchase.
- record the financial effects of the physical events
that are occurring in the production process.
 SEGREGATION OF DUTIES
*One objective of this
control procedure is to
separate the tasks of
transaction authorization and
transaction processing.
*Another control objective is
to segregate record keeping from
asset custody
- work centers oversee the usage of RM in
the production process.

-Supervisors also observe and review timekeeping

activities.
 -the objective of this control
technique is to establish an audit trail
for each transaction.

-Verification steps in the

conversion cycle
 World class companies produce the
best possible product, at the best
possible price, exactly when the
customer needs it.
COMPANY -follows the philosophy of
Lean Manufacturing

Based on the just-in-time (JIT) production model. This

manufacturing approach is in direct opposition to traditional
manufacturing, which is typified by high inventory levels, large
production lot sizes, process inefficiencies, and waste. The
goal of lean production is improved efficiency and
effectiveness in every area, including product design, supplier
interaction, factory operations, employee management, and
customer relations.
 Pull Perfect Waste Team
processing Quality Minimization Attitude

Established
Inventory Production
Supplier
Production Flexibility
Relation
 Traditional
Manufacturing

Value Stream Islands of

Mapping Technology

Computer-
Integrated
Manufacturing
1
• Inaccurate cost allocations

2
• Promotes Nonlean Behavior

3
• Time Lag

4
• Financial Orientation
 -is a method of allocating costs to products and
services to facilitate better planning and control. It accomplishes
this by assigning cost to activities based on their use of
resources and assigning cost to cost objects based on their use
of activities.