The Part Inventory Parameters frame allows you to view and modify the Physical Inventory parameters for a particular part. These parameters determine how parts are counted during a physical inventory.
To view or modify the parameters for a specific part, start by entering the inventory location of the part in the Location field at the top of the frame.
Part Identification:
Part Number - Enter the part number from Part Main here; the part must be a valid part at the inventory location selected. You can also double click in the field to select a part from the list of values (LOV).
X Refs - This field will populate automatically with any cross references for the part.
Description - Read-only, description will populate automatically with the value from Part Main.
Manufacturer - Read-only, Part Manufacturer will populate automatically with the value from Part Main.
Status - Active/Inactive, read-only value from Part Main.
Type - New/Used/Rebuilt, read-only value from Part Main.
For a more in depth explanation of ABC Codes, see ABC Class Codes.
Physical Inventory Parameters:
Cycle Count - A Cycle Count is one method for collecting physical inventory counts. Cycle Count Codes determine how often a physical inventory count is performed on a specific part. Enter a code or double click in the field to select one from the list of values (LOV).
Next Physical Inventory Date - Date of the next scheduled physical inventory, read-only.
Cycle Count Baseline Date - Used as the baseline to schedule future counts.
Current Physical Inventory ID - If the part is currently part of an existing Physical Inventory, that ID will display in this field.
ABC Parameters:
ABC Class codes are user-defined inventory movement codes assigned to stock parts used to indicate slow, medium, and fast moving parts for the purpose of reordering those parts, specifically this pertains to ‘automatic’ reordering.
If you are using the ‘manual’ reordering option, ABC Class Codes will not need to be setup unless you want to use them to help control Physical Inventory Counting.
The System Values will populate automatically if the part has valid ABC Class Code assigned on the Part Inventory Location Manager frame (Reorder tab). You can enter Override Values if necessary.
For a more in depth explanation of ABC Codes, see ABC Class Codes.
Last Physical Inventory:
This section will display the data from previous Physical Inventories involving the part. Each record lists the Date, Quantity, Price, Value, and Variance for the part.
Part Inventory Pricing
System Flag 1058 - Type of pricing to use for inventory values? Is used to determine the inventory pricing method used in M5.
A part’s inventory price is calculated at the time of receipt, based on the pricing method in force. Four pricing methods are available in M5, and each one works differently:
SYSAVG (System Average)
LOCAVG (Location Average)
LOCSTD (Location Standard)
SYSSTD (System Standard).
The pricing method is typically chosen at the implementation of the system and is never changed. This method and the other methods are discussed in detail below.
SYSAVG (System Average)
System Average pricing will average the price for stock parts every time the part is received. A new price is calculated from the on-hand value at all locations and the receipt value. The formula is the same as the Location Average method, but the on-hand quantity used is the sum of the quantities at all locations. The resultant unit price is then written back to all locations. For a given part, the price will be the same at all locations. For instance, location A has part PH16 with a quantity of 1 with a price of $10.00. The part is received again with a quantity of 1 with a price of $12.00 at location B. The new price for each part at every location is $11.00.
LOCAVG (Location Average)
Location Average pricing does the same averaging of parts but at the location level. The reason this is useful is that inventory locations can be in various places with the price of parts being effected regionally. This will mean that the same part PH16 for instance can be a different price from one location to the next. This method is recommended as best practice from AssetWorks and System Flag 1058 is defaulted to LOCAVG (Location Average).
A new price is calculated from the on-hand value and the received value. That is, the result of the current on-hand quantity times the old price, is added to the result of the received quantity times the receipt price, yielding a dollar value, that is then divided by the sum of the current on-hand quantity and the received quantity.
In formula form:
New_price =
((qty_on_hand * old_price) + (received_qty * received_price)) / (qty_on_hand + received_qty)
Example:
qty * price = value
on-hand 2 $ 5 $ 10
receipt _ 8 4 32
10 42
new price $4.20
RAV (Rounding Adjustment Value) Amount
There are screens and components in M5 that will average the cost of inventory. The numbers in the LOCAVG (Location Average) example above were chosen so that the calculations are easy to follow. In the real world, the resultant price will likely include fractions of a cent. The price is rounded off to the nearest cent, but we don’t throw the fractional portion away. Its value is stored in a field called ‘RAV Amount’ – Rounding Adjustment Value.
By using RAV, money that was lost or gained by rounding the average unit price or by issuing at a different price than the current pricing method is wrapped back into the next average price. It is important to understand that RAV can be a negative value or a postive value but will be pennies and NOT a significant amount.
The average unit price calculation includes the RAV, and is always performed independent of the current pricing method. The average unit price calculation is only performed when parts are received and returned.
When the next receipt occurs, this amount is added to the total dollar value just before dividing by the total quantity to get the new unit price. In the example above, if the ‘RAV Amount’ had been $0.40, the total dollar value would have been $42.40, yielding a new unit price of $4.24 instead of $4.20. In that way, the fractional portion of the previous receipt is put back into the inventory valuation.
The RAV Amount is not applicable when using the Standard pricing methods, because no calculation of the price occurs. It is also not applicable for non-stock parts under any pricing method.
New Location AUP = Old L.A. RAV + (Old OHQ x Old LAUP) + (Rcv Qty x Rcv UP)
_____________________________________________________
(Old OHQ + Rcv Qty)
Note: The system average price is derived from the location average price.
When a new location average unit price is calculated, a new RAV value is calculated:
New L.A. RAV = New OHQ x (New LAUP – (round of New LAUP))
Abbreviations:
AVP = Average Unit Price
L.A. = Location Average
LAUP = Location Average Unit Price
RAV = Rounding Adjustment Value
OHQ = On-hand Quantity
Rcv Qty = Received Quantity
Rcv UP = Received Unit Price
LOCSTD (Location Standard)
Location Standard pricing is a standard price set on Part Inventory Location Manager and will be set for a part at a single location. Again, no matter what the price the part is received at, the price upon issue will always be the standard price set on the location. It is only changed on this frame.
SYSSTD (System Standard)
System Standard pricing is a standard price set on the Part Main Catalog frame. The old price is not changed. No matter what cost the part is received at, the cost when issuing the part is established solely by the user-entered value of Standard pricing field on the Part Main Catalog. A receipt under this method will not affect the standard price, regardless of the price of the receipt. It is only changed on this frame.
Additional Considerations
A part’s price is not directly changeable unless it is changed through the Part Inventory
Adjustment frame. This frame is authorized through System Security. The price is always the result of receipts (except for the SYSSTD and LOCSTD method). The price of non-stock parts is less ‘protected’, because the user may change it at the time of receipt, and therefore affect the resultant price.
When a new part is added in Part Inventory Location Manager frame, the price entered in the ‘Standard Price’ field will be used. This occurs regardless of the pricing method in force.
For non-stock parts, no averaging occurs under any pricing method. The price is set as a part is received. The price can be set differently each time and is valid for that issue.
If a non-stock part order is partially received, only the first receipt will update the inventory price and the order price. This prevents a single order of two or more of a part from generating different unit prices from the same order.
For more details see the Inventory Application User Training Guide.
Last Updated: 03/29/2019
NOTE: To view a list of System Flags and Role Privileges that may impact this screen, hover over the screen title in M5 to display the bubble help/tooltip. At the bottom of the bubble help/tool tip, there is a Settings hyperlink. Click that hyperlink to display the list of flags and privileges.
Additional training and technical documents on this subject may be available in the Resource Files area.