Indicate Inventory Valuation Method

Explanation

Use this activity to define the default inventory valuation method used for inventory parts at your site. This mandatory task is to be performed by a system administrator or equivalent person.

There are four inventory valuation methods from which you can choose:

Type	Description
Weighted Average	Inventory value will be recalculated at every new purchase order arrival based on the purchase price. IFS/Costing will not affect the inventory value when this valuation method is used.
Standard Cost	Default. Inventory value will be based on a fixed value that is either manually entered on the inventory part, or calculated in IFS/Costing.
First In First Out	FIFO. Inventory value will vary between different purchase order receipts based on the purchase price. When the stock is shipped, the cost will be calculated based on the FIFO method.
Last In First Out	LIFO. Inventory value will vary between different purchase order receipts based on the purchase price. When the stock is shipped, the cost will be calculated based on the LIFO method.

Prerequisites

This activity has the following prerequisites:

• The site must be created.
• Depending on which inventory valuation method you choose the value in the Negative Onhand field cannot be set to allow negative quantities onhand.

System Effects

As a result of this activity:

• The defined inventory valuation method is the default value for all inventory parts entered at this site.
• The inventory valuation method can be changed at the part level.

Pages

Site

Activity Diagrams

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