The Expenditure cycle

The primary objective of the expenditure cycle is to minimize the total cost of acquiring and maintaining inventory, supplies and services.

The three basic AIS functions in the expenditure cycle are:
–How do we capture and process data?
–How do we store and organize the data for decisions?
–How do we provide controls to safeguard resources (including data)?


The three basic activities performed in the expenditure cycle are:
–Ordering goods, supplies, and services
–Receiving and storing these items
–Paying for these items


–Ordering goods, supplies, and services:
Key decisions in this process involve identifying what, when, and how much to purchase and from whom
One of the key factors affecting this process is the inventory control method to be used.
-- three alternate approaches to inventory control:
•Economic Order Quantity (EOQ)
•Just in Time Inventory (JIT)
•Materials Requirements Planning (MRP)