The Quality Building Supplies Company operates six wholesale outlets that sell roofing materials, electrical and plumbing supplies, lumber, and other building materials to general contractors in a large metropolitan area. The company is studying the feasibility of introducing a guaranteed same-day delivery plan, under which it would guarantee delivery within four hours for orders received from approved customers by noon of that day. For orders received in the afternoon, delivery would be guaranteed by 8 a.m. the next day. The company believes that this system would give it a substantial competitive advantage relative to other regional building wholesalers because it would enable contractors to maintain smaller inventories yet still be assured of having building supplies when needed.

You have been asked to help design the proposed system. It will be designed to receive customer orders by phone so that contractors can call from the construction site. Customers will be billed monthly for all puithases. You want to streamline the processing of cash collections and minimize the time it takes to deposit those funds in the company’s bank account.

Required

a. Specify the factors needed to qualify customers for this new service.

b. Identify the input transactions that this system must process and the output documents (excluding reports) that it should produce.

c. Describe several reports that would be useful to management’s implementation of the new credit sales policy. What data need to be collected to produce these reports? What application controls should be in place to ensure that these reports contain complete, accurate, and valid information?

d. Draw a systems flowchart of your proposed system.

e. Describe possible threats to the system and the control procedures required in the new system to address those threats.