Answered Essay: You are considering starting a new business, Purple Pride Pizza (it has purple sauce). Given the

You are considering starting a new business, Purple Pride Pizza (it has purple sauce). Given the ordering of the conversion cycle, describe how making and selling a pizza would fit into each of the steps in the cycle. Include in your discussion what documents would be included in the pizza production process.

Expert Answer

The order conversion cycle will include following steps.

1. Raw Material Ordered – The raw materials for making pizza,as well as other consumable items have to be ordered first. This will be the first part of the cycle.

2. Finished goods prepared and sold – This is the second stage post receipt of the order. The pizza will be pprepared and sold to the customer.

3. Cash received – The cash received against the order and delivery. Points 2 and 3 may coincide.

The time between point 1 and 2 is called the inventory period where raw material is to be managed with vendor only. It also includes the time of accounts payable. The period between points 2 and 3 ( if any) is called account receivable period.

A typical operations cycle is shown below.

The documents required in the production process.

1. Purchase order of the raw material to be given to the vendor

2. Invoice of the raw material received from vendor against the payment.

3. Entry and issue in the stock holding register.

4. Standard operating procdure and guidelines for pizza making.

5. Standard operating procedure for order taking and delivery.

6. Bill of order showing detailed specifications of the product ordered.

7. Customer’s invoice to be generated at the time of billing.

8. Customer feedback form.

9. Daily, weekly and monthly sales report.

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