Set Inventory DefaultsSet Inventory DefaultsYou use the Inventory Defaults dialog box to specify ABC breakpoints and several other inventory defaults.
In the Organizations (SP) application, select the organization for which you want to specify the options.
From the Select Action menu, select Inventory Options, then select Inventory Defaults. The Inventory Defaults dialog box opens.
ABC Breakpoint Options. Specify the ABC breakpoint and cycle count values. Enter the breakpoints as decimal values, for example, .30 to represent 30%. Enter the cycle count in days. Refer to ABC Breakpoints, below, for information on setting these values.
Update Cost/Currency Variances on Inventory Costs? Select this checkbox if you want the system to update the variance accounts for the storerooms. Clear the check box if you do not want the system to do this.
Negative Current Balance. This option specifies whether the system will allow users to issue or transfer items with a negative current balance. Select Allow Negative Balance if you want users to be able to issue items with a negative balance. Select Disallow Negative Balance if you want to prevent users from issuing such items.
Note: The system checks balances at the Bin level, not the Storeroom level.
Negative Available Balance. This option specifies whether the system will allow users to issue or transfer items with a negative available balance. Select Allow Negative Available Balance if you want users to be able to issue items with a negative available balance. Select Disallow Negative Available Balance if you want to prevent users from issuing such items.
Note: The system checks balances at the Bin level, not the Storeroom level.
Click OK.
ABC analysis in Inventory lets you quickly identify which inventory items represent your company's greatest monetary investment in terms of dollar value and rate of turnover. This helps ensure that crucial inventory does not fall below minimum levels, and helps keep current balance figures for an item reconciled with the actual count.
The ABC Type value for an item is determined by running the Inventory ABC Analysis report (accessed from the Inventory application or module). This report multiplies the current YTD issued quantity by the last cost of the item and then sorts the items in descending order of the dollar value reached by this calculation.
The system sets the type to A, B, or C based on the percentages you specify in the Inventory Defaults dialog box. You can set the an ABC type to N, to indicate no category. That type is then excluded from the ABC analysis.
For example, you might use the following parameters:
Type A break point 30% (enter .30)
Type B break point 30% (enter .30)
Type C break point 40% (enter .40)
Using the above values, the top 30% of items (by cost) would be type A, the next 30% of items would be type B, and the last 40% would be type C.
The Inventory ABC Analysis report also changes the cycle count for the item, based on the ABC type and the cycle count. If the ABC type is set to N, the cycle count will not be changed.
You set the cycle count to the number of days for each ABC type. For example, the cycle counts might be set as follows:
Type A cycle count 30 days
Type B cycle count 60 days
Type C cycle count 90 days
You can run the Inventory Cycle Count report to show each item that is due for a cycle count in the next month, along with its ABC type.