Give three examples of each of the three main types of business processes. Tom owns a small recreational trailer business in a suburban community located close to the mountains. The community is relatively small but growing at a fast rate. Tom's business is growing, not because of his effective sales style and personality, but due to the growth of the community. Tom's competition thus far has been nearly nonexistent, but as the area grows he expects to encounter increasing competition.
Tom sells mostly trailers for vacationing and camping. When customers arrive on Tom's lot, they are greeted by a salesperson. The salesperson may show the customers the trailers on the lot, but the salesperson need not be present during the entire showing. Depending on customer preference, the salesperson will either take the customer on a tour or the customer may roam the lot freely, inspecting trailers at their leisure.
Since recreational trailers are fairly large-ticket items, customers often leave the lot without making a purchase, only to return another day after making the decision to purchase a trailer. When a customer decides to make a purchase, the salesperson initiates a series of procedures to properly document the order and sale transaction. First, the salesperson determines the model of the selected trailer and offers the customer a list of options that correspond to the particular model. The customer may (1) purchase a trailer off the lot with no added features, (2) purchase a trailer off the lot with additional features, or (3) special order a trailer that is not currently on the lot.
In most cases, customers do not pay cash for their trailers. If, however, the customer pays cash, a simple sales contract is prepared and the customer drives off with a trailer. The majority of the customers use an installment method of purchase. Before an installment purchase is authorized, the customer's credit must be verified to determine credit worthiness.
With an installment purchase, an installment agreement is prepared in addition to the sales contract. Tom has arranged financing through a local bank for all installment sales. When an installment sale is made, the bank sends Tom a lump-sum payment equal to the price of the trailer. Instead of making payment to Tom, customers pay the bank plus interest. In either case, Tom receives a lump-sum payment for each trailer sold, whether that lump-sum comes from the customer or from the bank.
Once the credit is approved, the customer can take delivery of the trailer. This involves a delivery person inspecting and cleaning the trailer. The customer may pick up the trailer or have the delivery person tow it to the customer's house.
Required:
Tom's Trailer Sales has identified the following events of interest: Customer Looks at Trailers; Customer Orders Trailer; Deliver Trailer; and Receive Payment.
a. What business process is described?
b. What resource flows (in and out) exist in this business process?
c. For each resource inflow, identify the economic event that uses it up, and for each resource outflow, identify the economic event that produces it.
d. Create an REA business process level model for this business process; make sure to include attributes and cardinalities.