This week's book giveaway is in the OCAJP 8 forum. We're giving away four copies of OCA Java SE 8 Programmer I Study Guide and have Edward Finegan & Robert Liguori on-line! See this thread for details.
You can do whatever you want as long as you justify and make your solution understandable for the assessor. My opinion is that you don't need to go for this level of detail. An ER diagram is not necessary and would be out of the scope of the project. However, as I said, you can include one in your assumptions doc if that makes you more confortable to explain your solution.