Fairfax Bread Company
Fairfax Bread Company (FBC) is a national bread company focused on using high quality ingredients with retail locations in Fairfax, Washington DC, Baltimore and Philadelphia. The company was started by a father and son who each have an entrepreneurial spirit and a love of warm bread.
In order to manage the various locations and maintain consistent product quality between those
locations, ingredients for each location are ordered from thecorporate office headquarters in
Fairfax. The orders are based on input from each store manager and shipped directly to each
Description of the Acquisition Process
The Fairfax Bread Company acquisition cycle begins when the store manager reviews the
ingredient inventory on a daily basis to determine what is needed. If the review shows an order
is needed, the store manager creates a purchase requisition in the system using the inventory and
purchase requisition files. Once the purchase requisition for their store location is entered, the
store manager prints one copy of the purchase requisition which is filed in the store manager’s
office by date.A purchasing agent at corporate prints the day’s purchase requisition requests entered for each location from the system. Based on the purchase requisition form and contact with vendors, the
purchase agent enters the information into the company database to create a purchase order. The
purchase agent pays for goods at the time of order using the company credit card. In order to
take advantage of possible price discounts, the purchase agent may negotiate costs with the
vendor if necessary. The purchase agent may also combine purchase requisitions to achieve
volume discounts. Since each vendor does not supply all ingredients, multiple purchase orders
are often needed in order to fulfill each request. The computer process accesses the vendor and
inventory files and updates the purchase order and cash disbursement files. Three copies of the
purchase order are subsequently printed. One copy is sent to the vendor, one copy is sent to store
receiving and one copy is filed with the purchase requisition by date in the purchasing
As a general corporate policy, FBC requires disclosure of related party transactions and in an
attempt to avoid kickback schemes, this policy applies to vendor and purchasing department
employees. If a related party is identified, the accounting manager will determine how best to
maintain arms-length transactions. A receiving clerk at each location is responsible for receiving, inspecting and recording each delivery for correct items, quantity and quality. When a delivery comes in, a receiving clerk reviews the goods and compares them to the purchase order document
received from purchasing.
If there is a difference between received goods and the purchase order, the store manager
resolves the discrepancy. Sometimes the difference is because the vendor allows items to be
backordered and has only sent the items available at that time. The receiving clerk keys the data
into the system to update the inventory file and the received goods file and prints 2 copies of the
receiving report. Then the receiving clerk files the purchase order form and receiving report part
1 together by vendor name and sends part 2 of the receiving report to Accounting. Fairfax Bread Company may need to return ingredients to vendors if the items were sent incorrectly or do not meet quality standards. The receiving clerk will contact the vendor and arrange for the return of goods.
1.Conceptual Model: Draw an REA model with cardinalitiesfor the operating events in the
acquisition process described above. Make sure you differentiate between the operating
events and the information events.
2.Logical Model: List each database table required, complete with key attributes (primary
keys), foreign keys, and non-key attributes. Label each keys.