ITEC 4999: Case Study: Larry’s Sartorial Shoppe

Case Study: Larry’s Sartorial Shoppe

The following is a case study to describe the data needs of a small company. The descriptive material includes:

• Background
• Business processes
• Personnel
• Forms and Documents
• Interviews

Background

Larry Fitzpatrick is a successful tailor who caters to local business people. The bulk of his business volume is “off the rack” suits, and his shop stocks several designer products. Larry’s heart, and a considerable amount of his time, goes into the custom-tailored suits he makes for his favorite customers, executives who can afford to pay more for this work.

Until now, Larry operated from notes in his pocket and manual bookkeeping ledgers. The business has grown to the point that Larry can no longer keep up with the accounts, manage expenses, and control his business. He has little choice but to automate by implementing a modern database system for accounting, payroll, inventory control, and sales.

Business Processes

#	Process	Main Tasks
1	Selling	Tracking prospects, recording sales, order confirmations, invoicing, etc.
2	Manufacturing (fitting, cutting and sewing)	Ordering, recording and tracking work progress
3	Materials ordering, receiving and stocking	Controlling manufacturing materials
4	Inventory control	Accepting, recording, tracking consumption and costs
5	Daily balancing	Reconciling credits and debits
6	Payroll	Tracking and paying for work accomplished
7	Accounts receivable	Tracking moneys owed the company
8	Accounts payable	Tracking what the company owes creditors and vendors

Personnel (position: name – process responsibility)

1. Owner: Larry – all
2. Sales manager: John – 1, 5
3. Sales persons: Renae, Rachel, and Timothy
4. Bookkeeper: Jennifer – 5, 6, 7, 8
5. Assembly manager: Dylan – 2, 3, 4, 6
6. Workers: Jeremy, Linda, and Mary
7. Purchasing manager: Derrick – 2, 3, 4

Forms and Documents

(Figures 1 through 13 represent skeletal data descriptions—input and output—of the manual system.)

1. Customer Invoice
2. Commission Statement
3. Vendor Data Card
4. Vendor Invoice
5. Inventory Report
6. Purchase Order
7. Daily Sales Summary
8. Time Card
9. Payroll Check and Summary Form
10. Federal 941 Payroll Tax Withholding Summary
11. General Ledger
12. Bank Deposit Record
13. Cash Register Ticket

Figure 1. Customer Invoice

Larry’s Sartorial Shoppe   Date: _____________ Invoice number: 99999	Customer
Address
City
□ Cash        □ Visa        □ MC
Item	Description	Stock number	Quantity	Price	Ext. Price
Salesman: ________________________________________	Sub-total
Sales tax
Total

Figure 2. Commission Statement

COMMISSION STATEMENT Salesperson: __________________ Reporting Date: _____________
Sales date	Invoice	Retail Total	Commission
Totals

Figure 3. Vendor Data Card

Shelby Fabrics Inc.                                              Vendor ID: 88888

234 Main Street                                Customer Service Contact: Rick James Shelby, North Carolina 23992          Telephone: 704-455-4544

Product line: fabrics – wool, linen,

Figure 4. Vendor Invoice

Vendor Name   Sold to:	Customer ID: ___________ Shipping Date: _________
Order date:
PO number:
Item	Description	Quantity	Units	Price	Ext Price
	Sub-total
Shipping
Total

Figure 5. Inventory Report

Inventory Report for Period Ending:  ____________
Item	Description	Starting Inventory	Sales	Ending Inventory	Thresholds	Order

Figure 6. Purchase Order

Larry’s Sartorial Shoppe 123 Main Street East Bay, North Carolina 27290	Supplier ID: ____________	PO Number	22222
Order Date:
Shipping Date:
Terms	Net 30
Federal Tax ID: 56-49494949                                                             NC Tax ID: 304-393939
Item	Description	Quantity	Units	Price	Amount
Ship by: Comment:       Authorized by: ________________________________	Sub-total
Discount %
Tax
Shipping
Total

Figure 7. Daily Sales Summary

Manager name:		Date:
Cash register amount at start of day
Number cash sales actions		Cash sales
Number credit card sales actions		Credit card sales
Number check sales actions		Check sales
Total sales actions		Total sales
Total amount refunded
	Overage/shortage			Balance
	Comments:

Figure 8. Time Card

Name:	ID:
Date	Time in	Time Out	Hours
Total Hours:

Figure 9. Payroll Check and Summary Form

Check no: 9999                      Date: ____________ Larry’s Sartorial Shoppe   Pay to the order of: ______________________________ $ __________._____   Amount: _________________________ Dollars   Payer name: _____________________________	Name:
SSN	Current	Year to Date
Gross Pay
FICA
FITA
Med
State
Net Pay

Figure 10. Federal 941 Payroll Tax Withholding Summary

Federal 941        1st Qtr. 2012 Month FITA FICA Med Monthly Deposits Gross Pay 1 781.06 426.03 99.64 1,832.40 6,871.42 2 753.83 395.77 92.56 1,730.50 6,383.37 3 740.18 386.33 90.35 1,693.54 6,231.13 Grand Total 2,275.07 1,208.13 282.55 5,256.44 19,485.92             2 Total wages and 19,485.92   3 Total income tax 2,275.07 5 Adjusted total income tax 2,275.07 6 a Taxable SS wages 19,485.92 x 12.4 % 6 b 2,416.25   7a Taxable Med wages 19,485.92 x 2.9 % 7 b 565.09   8 Total social security and Medicare taxes (add lines 6b and 7b 2,981.35   10 Adjusted total of Social Security and Medicare 2,981.35 11 Total taxes (add lines 5 and 10 5,256.42 14 Total deposits for the quarter ending: _____________________ See above 15 Balance 0 17 a   17 b   17 c   17 d     Note: for block 17,  take data from first, second and third month data at top of this report North Carolina State Withholding Tax Gross Pay       $19,485.92    State taxes withheld:          $1,056.47

Figure 11. General Ledger

Larry’s Sartorial Shoppe General Ledger    Date: ______________________   Balance brought forward (date) ______________
Code	Description	Credit	Debit	Net

Figure 12. Bank Deposit Record

Bank deposit record                                     Serial no. 1234 Account: 04393884 Date of deposit: __________________
Note: It is company policy to deposit all receipts daily.	Total of checks deposited
Total cash deposited
Total deposited
Comment:

Figure 13. Cash Register Ticket

Larry’s Sartorial Shoppe Register no: 43233 Date: ___________
Item 1 2 3 4 5	Type           Sub-tot Tax Total	Amount

Interviews

Larry (owner and CEO) – “I started my business 30 years ago. Most of the time, I was able to keep track of accounts but, in the last couple of years, my business has grown and I cannot manage it anymore the way I used to. I think all my employees are honest and hard workers but lately I have been unable to track inventory and customers. Jennifer is having greater difficulty with billing and paying bills, because of the volume we now have and I cannot afford to hire more accounting staff. We tried that and found the paperwork just got more complex. I think everybody is honest, but keeping track of inventory and costs creates a lot of work. Besides, it is not very effective. I really need a system that can tell what we have on hand, what we need to order, and which are our best customers. I really need to provide better service to our customers. I really need a system that would allow me to target sales to the highest-volume customers and be able to select the types of merchandise they want. Now that I have so many salesmen, I cannot keep track of what the customers are buying like I could when it was just me and Dylan running the company. I also need accurate reports of inventory, what types of items we have in stock, what colors, fabrics, sizes, the wholesale and retail values, and so on. There are excessive paper logs to maintain, and it takes a lot of time to retrieve records. It is also very challenging to communicate and collaborate with various company personnel about matters such as sales, balancing, etc. The trade is now so competitive that I really have to watch my costs, and that means controlling inventory and being very smart about what I order for inventory. What can you do for me?”

John (sales manager) – “I really like working for Mr. Fitzpatrick, but I just cannot provide the type of service to our customers like he says he used to when he was selling clothing in the shop. The volume is just too much and we cannot expect all the salesmen to know the personal tastes of every customer, but that is what we need to provide the service they want. We really need to know which customers like what, when new inventory will arrive, and what has already arrived but is not in the showroom. And, the paperwork is getting worse. We really need better data. A key issue we have to address is when to sell on credit. A few customers are, at times, overextended with their accounts, and we really should not sell to them on credit. We need to know what their outstanding balances are at the time they order or come into the shop. We need an efficient way in which each salesman can store customer information that can be easily, yet securely, accessed by other sales personnel.

“I need detailed information about what our salesmen are doing so that I can help them focus on the right merchandise with the correct customers, and frankly, I need to know which salesmen are just lazy.

“The way we do it now, we have to fill out invoices, take manual inventory and total cash receipts, balance the cash register, and count the cash, and so on. There is a lot of work that has to be done at the end of every day after we close the shop. I would like to be able to just count the cash and know what the total deposits should be; every time there is a mistake, we have to start over.”

Jennifer (bookkeeper) – “Well, as you know, this is a growing company and I just cannot handle the paperwork like I used to. It is just too time-consuming to post daily ledgers, reconcile daily sales reports and cash receipts and deposits. I need a way to automate the data and be able to hold the people responsible who actually handle the money and inventory. I also need to merge the store sales information, which can then be easily accessed by any other authorized personnel. Some salespeople are on commission, but the senior employees are salaried. I would like to just print the checks and do the audits on a regular schedule, rather than having to manually process invoices and time cards to figure out who should get paid what and how much tax to deduct. Just the tax numbers for sales and payroll are a lot of work.”

Dylan (manufacturing) – “My problem is just keeping track of what work orders have been received, how much has been completed on each job, who is doing the work, and when it will be completed. It is too much work for one person and it slows down work when each worker has to keep all kinds of records. The records are never accurate or worth trying to use. I need a way to know exactly what is going on at all times so I can more efficiently assign work to my employees. It would be very beneficial if I can somehow share information with other personnel, view their logs, and exchange information more efficiently.”

Derrick (purchasing) – “I have a lot of vendors, and we stock a lot of different patterns and fabrics. I need to know exactly how much I have in stock, the usage rates, and what materials will be needed for pending orders, so that I can order the goods in time for the work to start. It causes real problems when we have to stop work on a project just because we have run out of the correct materials. I need to be able to coordinate with Dylan and update information about work orders and materials needed for completing them. You can just guess what it does to our relationship with our customers when we deliver products late. We have a lot of waste in dead stock: materials that just sit on the shelf because we ordered too much or the wrong materials for the customer’s order. There must be a better way.”