Inventory Control
Small Business Information Systems
Professor Barry Floyd
Agenda
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Understand the Inventory Control
function
Understand how MS Dynamics
implements/supports managing
inventory
– Lots of details, including inventory
valuation, standard vendors,
Questions?
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What items do I have in stock? How many do I
have?
How often should I buy an item?
When should I buy an item?
When I buy something, how much of it should I
buy?
What is the current value of my inventory?
Have I lost anything? Why? Theft? Breakage?
How can computer systems help me with all this
crap? Where’s Professor Grosse when I really need
him?
Why aren’t there any donuts here today? Or coffee?
I really need coffee today … hmmm, maybe this
Floyd guy bring me some coffee?
Microsoft
Great Plains
Integration
Inventory Overview
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Inventory Overview
Case …
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Fabrikam, Inc. has decided to expand their
inventory. Due to the demand, they have decided to
start selling xxx as an item in Inventory Control.
In order to speed up the time it takes to enter a
new xxx,you decide to create a new Item Class
called XXXX to default some of the setup in
advance.
Finally in order to determine the success of the new
product line, you have been asked to create a
SmartList query to report the sales of all items in
the XXXX class. While you haven’t sold any to date,
you decide to be proactive and set a system-wide
query for this purpose.
What do we need to know
to do this?
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What does it mean to setup inventory?
– What is an Inventory Class? Why does
setting one up improve performance?
– What does it mean to setup an inventory
item? What are the components of an
inventory item?
First Step …
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Set up an inventory class …
Item Classes
Item Classes
Item types describe the type of item or
the status of the item. They determine
which accounts are posted to when
included on a transaction:
Sales Inventory
Discontinued
Kit
Misc Charges
Services
Flat Fee
Valuation Method
Determine how the costs of inventory
items are calculated:
FIFO perpetual
LIFO perpetual
Moving average perpetual
FIFO periodic
LIFO periodic
Valuation method
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FIFO Perpetual
– Items purchased first are considered sold first. Detailed info is
kept on each item. Current cost is cost of first item acquired.
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FIFO Periodic
– Items purchased first are considered sold first and are valued at
their standard cost. At end of year, standard cost can be adjusted
to the current cost.
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Moving average perpetual
– The of items with the same item number is totaled an average
cost is assigned to the items. Average cost is revalued
throughout the period.
Note: Perpetual has inventories updates after each transaction, in
periodic, inventory counts are updated ‘periodically’
First in … First out (perpetual)
Last in … First out (perpetual)
Weighted moving average (perpetual)
Track
Determines how (and if) you wish to track
inventory items:
Serial Number (each item has a serial
number)
Lots (good for things like fabric, paint, etc
that were created at the same time using
same dye or ink).
Lot Categories
When you create a lot category, you can
define up to three attributes associated
with the lot and two dates. Here the user
defined ‘distributor’ as an attribute. When
you add an item, you can say that item
was distributed by Company xxx.
Sales Tax Option
Indicates if you want to charge tax on
this class of items when you sell them.
You can charge taxes in a number of
different ways: based on where they
are when they get it (shipped address
or if they pick it up, your warehouse).
Allow back order
When you sell an item and run out of
them, this allows you to issue an
immediate backorder and associate it
with that order.
Revalue inventory for
cost variance
If the item class will be for sales
inventory or discontinued items, and if
the Valuation Method is LIFO Perpetual,
FIFO Perpetual, or Average Perpetual,
you can specify whether purchase
receipts for the item should be revalued
when cost variances (actual invoiced
cost) exceed certain levels.
Maintain History
Indicates how much history information
that you wish to keep around.
Calendar and Fiscal year is a summary
of posted information. Calendar keeps
summaries by month, fiscal keeps it by
the fiscal periods you set up for your
business.
Transaction and distribution history
includes detailed information about
each transaction and the distributions
entered.
Units of Measure
Indicates the various units you use to
buy and sell your products.
So if you buy by the case and have a
value associated with the case, if you
sell by, say a can, then it calculates the
cost of that individual can when it
updates cost of goods sold.
Units of
Measure
Pricing
Price groups and
Price level ….
Pricing
Price Group
Price groups are identifiers that you can
assign to items that have similar pricing
structures. You can use price groups to
specify the items to be included when
you update price lists.
Pricing
A price group would identify all the
items that have this pricing structure.
Price Level
Price levels is a way of creating
different pricing structures for items.
You can create different pricing levels
for different customers. For example,
you could create ‘wholesale’ and ‘retail’
pricing levels.
Pricing
Here is an example of the price levels
‘Wholesale’ and ‘retail’..
Price Method
Price methods are ways of determining
how you set your prices. Methods
include:
Currency amount
% of list price
% markup – Current cost
% margin – Current cost
% markup- Standard cost
% margin – Standard cost
Price method
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Currency amount
– Flat amount
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% of list price
– List price * price percentage
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% Markup – current cost
– Current cost * (100% + price percentage)
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% Margin – current cost
– [(current cost * price percentage)/ (100% - price
percentage)]
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Ok, give an example of what this means for your
business …
Pricing
This pricing method is ‘currency’, where
the price is simply specified.
Purchase Tax Options
Identifies your tax options when you
buy stuff …
User categories
Great Plains way of allowing the user to
create their own categories for
classifying items. This is similar in
nature to the notion of ‘class’ in
QuickBooks.
Accounts
When transactions are created, these
are the accounts that get updated ….
heavy duty accounting work here.
Accounts
Ok, where were we?
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Oh yeah, we want to create a new class.
Do the following ….
Set user date to 10/31/07
Add an item class and accounts
Add an item
You can get this info from the class web
site: click on Inventory Case
Add item class, then we’ll talk about adding
an item…
The Item Maintenance Window allows
users to control and modify records
Item options
(also look at categories)
Price lists
Additional steps are shown
in the following slides
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Add phone to a site
Add stock counts
Add purchasing information
Assign a vendor
Add Phone to a site: Click on
GO TO then vendors
Stock counts
Add purchasing information
Assign vendor
Assign vendor details
Assign vendor details
Restricts you to see only those vendors
assigned to this item.
Assign vendor details
Manually entered, not updated.
Reference only.
Assign vendor details
Updated automatically from Purchase
Order Processing
Assign vendor details
Min and Max quantities you can order
from this vendor.
Assign vendor details
Amount you’ve determined to be the
most economical order quantity.
Assign vendor details
If you are manufacturing, this is used to
adjust suggested order quantities when
using Period Order Quantity or Lot for
Lot order policy.
Assign vendor details
Automatically updated when buying.
Assign vendor details
You get to choose the purchasing UofM
that will default into the Purchase
Order for this item. You can choose the
one from the Item Card or from the
Item Vendor. If you choose Item
Vendor, you choose the UofM right
here.
Assign vendor details
FOB means Free On Board and that
designates the point where at which
the buyer takes ownership of an item
shipment from a vendor.
Assign vendor details
Receipts will automatically get updated
with each receipt of goods from this
vendor. You can put in the default value
here.
Assign vendor details
You can put this in if you’ve calculated
it. If you use the Purchase Order
Processing module this gets updated.
[(number of receipts) * (average lead
time) + (received date – ordered
date)]/(number of receipts + 1)
Assign vendor details
Planning lead time reflects the TOTAL
time to get an item available. You add
additional “internal days” to reflect the
average lead time and the number of
days to actually create the order.
Summary
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The inventory application is a very
complicated application, especially
when compared to QuickBooks.
We’ll review queries and reporting, but
this exercise gives you an idea of the
power that GP Dynamics provides.
Preferences & Default
Entries
Sites and Beginning
Quantities
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With Inventory Control, you can define
sites—such as storage areas or
warehouses—and then assign items to
sites.
Using a Site(s)
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You might need to define only one site
and assign all items to it.
You might need to define several sites
and assign items to them, along with
information about lot numbers, serial
numbers, and bins.
Defining A Site
Standard Pricing
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Currencies, price levels, units of
measure, and quantity ranges combine
in price lists to give you different
options for pricing your inventory for
customers.
Standard Pricing
Conditions
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You’re using Invoicing.
You want price lists to be updated
automatically when the current cost or
standard cost of an item changes.
You have a fairly simple pricing
structure, and don’t need additional
tiers.
Standard Pricing Cont’d
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If you’re using standard pricing, you can
define price levels and price groups for use
with price lists.
A price level is a pricing tier that can be
assigned to items, customers, and
prospects.
For example, you might create a Wholesale
price level and a Retail price level—and then
assign the Wholesale price level to certain
customers.
Creating a price level
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Use the Price Level Setup window to
create price levels.
If you’re going to use price lists, you
must create at least one price level.
Each price list must include at least
one price level.
Creating a price group
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If you have several items that will
have very similar price lists, you can
group those items by creating a price
group.
You can create as many price groups
as you like. Price groups are optional.
Price Group Maintenance
Window
ABC Analysis
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With ABC analysis, you can identify which
items are most critical, somewhat critical,
and least important to your business.
Then you can manage those accordingly
“A” – Most important items
“B” – Somewhat important
“C” – might have minimal records with
periodic review
Critique
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Great program, but need to have an
expert to make sure that it runs
smoothly.
For the average employee, they need
both knowledge and experience to
fully understand the program.
High vs. Low
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keep inventory high to fulfill orders
promptly and keep customers happy
keep inventory low to reduce
investments and make more capital
available
stock
Purchasing Schedule
Reorder Point
Minimum Quantity
time
Ordering Quantity
Dollars
Po
Acq
Quantity
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