Question

Fly Away Luggage Shop is a small retail establishment located in a large shopping mall. This shop has implemented the following procedures regarding inventory items: a. Whenever Fly Away receives a shipment of new inventory, the items are taken directly to the stockroom. Fly Away’s accountant uses the vendor’s invoice to record the amount of inventory received. b. Because the shop carries high-quality, designer luggage, all inventory items are tagged with a control device that activates an alarm if a tagged item is removed from the store. c. Because the display area of the store is limited, only a sample of each piece of luggage is kept on the selling floor. Whenever a customer selects a piece of luggage, the salesclerk retrieves the appropriate piece from the store’s stockroom. Because all salesclerks need access to the stockroom, it is not locked. The stockroom is adjacent to the break room used by all mall employees. State whether each of these procedures is appropriate or inappropriate. If it is inap- propriate, state why

Answer 1

Going by above procedure: lets see each step and categorise which is appropriate or in-appropriate. If inappropriate, will try giving the reason :

• Whenever Fly Away receives a shipment of new inventory, the items are taken directly to the stockroom. Fly Away’s accountant uses the vendor’s invoice to record the amount of inventory received. :: Appropriate - As a tool to increase stringent control, quantity and product coding as against received goods should be inspected via physical inspection
• Because the shop carries high-quality, designer luggage, all inventory items are tagged with a control device that activates an alarm if a tagged item is removed from the store. :: Inappropriate: Considering stock is kept in store room, the usage of control device is a good decision but the fact that goods are majorly kept in store room, devise should track movement from store room as well.
• Because the display area of the store is limited, only a sample of each piece of luggage is kept on the selling floor. Whenever a customer selects a piece of luggage, the salesclerk retrieves the appropriate piece from the store’s stockroom. :: Inappropriate :The fact that control device is removed at time of taking goods from store room, the effectiveness of control device gets nullified. Further, the goods removed by sales person should be tracked in respect of who is retrieiving the goods since the goods are high value and thus needs tracking at better level.
• Because all salesclerks need access to the stockroom, it is not locked. :: Inappropriate: The gate should remain always closed and accessed only by sales staff and the purchase team. They should use access pass or locks wherein access is only provided basis biometric. Further, outflow and inflow movement needs to be tracked.
• The stockroom is adjacent to the break room used by all mall employees.:: Inappropriate : The fact that it is close room and gate is not locked, any person can enter which can result in theft or negligence. The stock room is ok to be closed to break room but it should always remain close with entry only for staff allowed. Also, the entity should install a CCTV camera for survaillance purpose.