Process for the Example

Example process

Status

Business transaction

Commitment

1. Status

Purchase order for three PCs at
$1500 each. Delivery dates:
D1: 12/15/1993
D2: 01/15/1994
D3: 02/15/1994
Shipping charges are fixed at $150

Creating a Purchase Order Commitment

2. Status

Goods receipt for two PCs

Partial Reduction of the Purchase Order Commitment

3. Status

Three PCs invoiced at a higher price than quoted on the purchase order:
$2000

Purchase order commitment updated using new price

4. Status

Remaining PC delivered
Goods receipt for one PC

Purchase order commitment reduced to zero

5. Status

Shipping charges invoiced:
$180 instead of $150

Actual Costs Increased