Office Warehouse, Inc.
Office Warehouse, Inc. is a wholesale distributor of office supplies, such as disks, stationery, file
cabinets, and related items. Customers receive an updated catalog annually and place orders over
the phone. The company accepts and processes on average 100 orders per day and is open for
business 240 days per year. Business hours are from 9am till 5pm. The average price per order is
$300, 70% of which covers COGS (purchase price, purchasing costs, inventory related costs, etc.).
The company’s organizational chart is depicted in Figure 1.
2 Accounting 2 order Computer 2 W/h
Clerks Entry Clerks Admin. Clerks
Mailroom 2 Shipping/
Clerk Receiving Clerks
The salaries (including related costs) are depicted in Table 1.
General Manager 120,000
Accounting Clerk 70,000
Sales Manager 100,000
Warehouse Manager 100,000
Order Entry Clerk 50,000
Mailroom Clerk 30,000
Warehouse Clerk 60,000
Shipping/ Receiving 60,000
ComputerAdmin 80,000 The amortizations of computer system and warehouse equipment costs are $100,000 per year. The
company is located in the city, where the cost of office space is $300,000 per year and the costs of
utilities plus other costs of day to day operation is $200,000.
Narrative of the Order Entry and Shipping processes
When a customer calls in with an order, a clerk asks for the customer ID and name. The clerk keys
in the customer number, and the computer retrieves the customer record from the customer
database and displays it on the clerk's screen. The clerk compares the customer name to the data
on the screen to ensure that the customer is legitimate. If everything checks out, the clerk enters
the customer's order. After the order is entered, the computer compares the amount of the order to
the available credit to ensure that the purchase does not exceed the credit amount limit.
This results in the creation of an entry in the sales event data store and an allocation of inventory.
At the end of the day, the sales event data is processed against the customer data and the inventory
data, and the sales order is recorded in the sales order master data store. At the same time, a
customer acknowledgement is printed in the mailroom and is mailed to the customer. Also, a
picking ticket is printed in the warehouse and will be used to assemble the customer's order.
The completed order (goods and attached picking ticket) is forwarded to the shipping department.
The shipping clerk keys the sales order number into t