The aim of the paper is to describe using REA framework to model enterprise planning not only at the operational level but also at the policy level. Using policy level enlarges the possibility of the models on the base of the REA framework because the policy level in this way represents metalevel of the model. The policy level of the REA framework itself is comprised of both the typification and grouping semantic abstractions and the Commitment entity. This entity may be viewed as either a sublayer or a middle layer of the REA framework. The Commitment entity belongs to the fundamental entities of the policy level but has some specifications that are expressed by the fulfillment relationship. This many-to-many relationship forms the link to the operational level. The paper thinks over the problem and suggests some solution that gets the Commitment entity closer to the typification semantic abstraction.REA framework; policy level; production planning model; typification; grouping; cardinality

Hucka, Miroslav

Hunka, Frantisek

Kasik, Josef

Vymetal, Dominik

English

Research Papers in Economics

   
Enterprise Planning Model Using REA Ontology  
 
Frantisek Hunka
1, Miroslav Hucka
2, Josef Kasik
2, Dominik Vymetal
3 
emails: frantisek.hunka@osu.cz, (miroslav.hucka, josef.kasik)@vsb.cz, vymetal@opf.slu.cz 
 
Abstract 
The aim of the paper is to describe using REA framework to model enterprise planning not only 
at the operational level but also at the policy level. Using policy level enlarges the possibility of 
the models on the base of the REA framework because the policy level in this way represents 
metalevel of the model. The policy level of the REA framework itself is comprised of both the 
typification and grouping semantic abstractions and the Commitment entity. This entity may be 
viewed as either a sublayer or a middle layer of the REA framework. The Commitment entity 
belongs to the fundamental entities of the policy level but has some specifications that are 
expressed by the fulfillment relationship. This many-to-many relationship forms the link to the 
operational level. The paper thinks over the problem and suggests some solution that gets the 
Commitment entity closer to the typification semantic abstraction. 
 
Keywords: REA framework; policy level; production planning model; typification; grouping; 
cardinality 
 
Introduction 
 
Two core semantic abstractions represent policy level at the REA framework by Geerts and 
McCarthy (2006): typification and grouping. In short, the main task of the policy level is to give 
answer to the questions: what could, should or must occur. In general the policy level also gives 
the answers to the questions: what is planned or scheduled. The later questions are answered by 
the Commitment entity, which has the main relation to the Event entity at the operational level. 
At the first sight the Commitment entity contains planned or scheduled information while the 
Event entity comprises the actual information, which may be the same or different from the 
scheduled information. 
  
From this point of view it may be seemed that the typification semantic abstraction can be also 
use in this case. However, the relationship between the Commitment entity and the Event entity 
has also broader meaning that is expressed by a many-to-many relationship. There are not only 
cases when a Commitment entity is related to one or several Event entities but there also exist 
cases when a single Event entity is related to several Commitment entities. This gives the reason 
why the relationship between the Commitment entity and the Event entity is created by the 
fulfillment relationship.  
 
The grouping semantic abstraction is used when set-level characteristics are of interest and may 
even create an integral part together with the typification semantic abstraction. By this semantic 
abstraction a collection of individual entities may be specified with respect to some common 
properties.  
  
                                                 
1 University of Ostrava, 
2 VSB – Technical University of Ostrava, 
3 Silesian University in Opava   
Czech Republic    
Method of Advancement and Results 
 
Enterprise Planning Model, which is used for illustration of our approach, is composed of three 
parts: Material Purchase Model – Fig. 1, Production Planning Model – Fig. 2 and Sale Model – 
Fig. 3. In the schematic representation of the models we were also inspired by the Purchase Order 
pattern and the Schedule pattern described by Hruby (2006). Material Purchase Model describes 
a Purchase Order between Enterprise (purchaser) and Supplier. The model has two commitments, 
the Purchase Line and the Payment Line. In the model material under the specification of the 
material type was purchased at the price agreed before (Cash Type) and paid in the form of Cash. 
 
 
 
Fig. 1 Material Purchase Process 
 
 
The Production Planning consists of five decrement commitments; Labor Requisition, Workplace 
Requisition, Tool Requisition, Part Requisition and Material Requisition paired through 
conversion reciprocity with the increment commitment Production Line. The Part Requisition 
commitment and Material Requisition commitment are promises by a Warehouse Clerk to make a 
specific amount of Part Types and Material Type available to the Worker. The Tool Requisition 
commitment is a promise by the Workhouse Clerk that tools of specified Tool Types will be 
available to the Worker, and a promise by the Worker to deliver the tools back. The Labor 
Requisition commitment is a promise by the Worker to the Supervisor to consume worker’s 
Labor in a specific time. The Workplace commitment is a promise by the Supervisor to the 
Worker that a specified Workplace will be available to the Worker in specific time. Each 
commitment either uses reservation or consumes reservation of the adequate resource type. The 
operational level of the model is closely bounded with the policy level and contains five adequate    
Economic Event corresponding earlier described commitments. Resource types have their 
counterparts in the operational level in the form of resources. 
    
 
Fig. 2 Production Planning Process    
The third model describes Sale Model and is composed of the Customer Order as a contract with 
relationship to the Customer and Enterprise entity. The Customer Order comprises two 
commitments, the Order Line and the Payment Line. At the operational level each commitment 
has its corresponding event entity. 
 
 
 
Fig. 3 Sale process 
 
 
Discussion 
 
In the presented results the Commitment entity plays an important role at the policy level of the 
REA framework. The current REA framework distinguishes two levels, the operation level 
(lower level) connected with the current facts that occurred in a company and the policy level 
(upper level) linked with the future activities and guidelines such as plans, commitments and 
control activities. However, the policy level is not a homogenous one but is created by two 
“sublevels”. One is represented by the Commitment entity with the fulfillment relationship by 
which it is related to the operational level. The other represents entities created by the typification 
and grouping semantic abstractions, which use the typification, grouping and policy relationship. 
It can be said that two sublevels form “stratification” of the policy level. 
 
By its character the Commitment entity is semantically very close to the other “typed” entities in 
the policy level in the scope of the relationship to the operational level. The main difference 
between the fulfillment relationship and the typification relationship is cardinality. While the 
typification relationship represents a one-to-many relation, the fulfillment relationship forms a 
many-to-many relationship. Commitment Pattern see Hruby (2006) describes it all in a more 
detailed way – see the Fig. 4.  
    
The issue is that one economic commitment can be fulfilled by several economic events, and one 
economic event can be fulfilled by several economic commitments. A typical example of this 
situation is production run resulting in a lot that has been planed based on several sales 
contracts.The main aim of the proposal is to replace a many-to-many relationship by one-to-many 
relationship, which is unambiguous and in general more acceptable for software systems.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fig. 4 Commitment and economic event 
Source Hruby (2006) 
 
This ambiguity between both entities requires some specific solution in the form of unambiguous 
relationship. In case of the unambiguous relationship between the commitment entity and event 
entity the current fulfillment relationship could be replaced by the typification relationship. 
  
To make the relationship unambiguous some auxiliary entity has to be added to the current 
structure. In this case the CommittedElement entity is used to divide The Commitment entity into 
smaller parts so that each part corresponds only to one event entity. The whole solution is 
illustrated in the Fig. 5, where we use {or} restriction to indicate that only one relationship is in 
force.  
 
Conclusion 
 
The typification and grouping semantic abstractions specify policy-level extension of the REA 
framework. These abstractions enable to work with the types of declared entities and with a 
special form of aggregation with set-level characteristics. The Economic Commitment entity with 
its fulfillment relationship stands a bit outside of the above mentioned abstractions. In the paper 
we tried to bring this entity closer to the typification and grouping semantic abstractions by 
introducing a new entity called CommittedElement. The Commitment entity can be composed in 
this way of these entities. In the proposal there are two possibilities separated by the {or} 
relationship. In this way there are two possible cases:  
•  there is a one-to many relationship between the Commitment Entity and the Event entity 
expressed by the typification relationship;  
Scheduled value
Scheduled data of event
Commitment
Actual value
Actual data of event
Economic Event
fulfillment
0..*
1..*   
•  or the Commitment entity consists the CommittedElement entities with the grouping 
relationship, and next there is a relation one-to-many expressed by the fulfillment 
relationship between the Event entity and the CommittedElement entity. 
 
In our view the proposed solution gets the Commitment entity closer to the typification and 
grouping semantic abstraction.  
 
 
 
Fig.5. Proposed modification of Commitment and economic event  
 
Acknowledgements 
 
The paper was supported by the grant reference No. 402/08/0277 provided by The Grant Agency 
of the Czech Republic.  
 
References 
 
Geerts, G., L, McCarthy, W.,E. (2006) Policy-Level Specification in REA Enterprise Information 
Systems. Journal of Information Systems. Vol 20, No. 2 pp. 37-63. 
Geerts, G.,L, McCarthy W.,E. (2000) The Ontological Foundation of the REA Enterprise 
Information Systems. Paper presented at the Annual Meeting of the American Accounting 
Association. Philadelphia, PA. 
Geerts, G.,L, McCarthy W.,E. (2002) An Ontological Analysis of the Primitives of the Extended 
REA Enterprise Information Architecture at http://www.msu.edu/user/mccarth4/ 
Hruby, P. (2006)  Model-Driven Design Using Business Patterns. Springer-Verlag Berlin 
Heidelberg     
Martin J, Odell J.,J. (1998) Object-Oriented Methods a Foundation. Prentice Hall PTR Upper 
Saddle River, New Jersey 

An Ontological Analysis of the Primitives of the Extended REA Enterprise Information Architecture at http://www.msu.edu/user/mccarth4/ Hruby,

Policy-Level Specification in REA Enterprise Information Systems.

The Ontological Foundation of the REA Enterprise Information Systems. Paper presented at the Annual Meeting of the American Accounting Association.

Enterprise planning model using REA ontology

Enterprise planning model using REA ontology

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