In this Document

APPLIES TO:

SYMPTOMS

 Transactions on item caused the item's cost to be considered as incorrect.

CHANGES

 It has been found that on Direct Org Transfer transactions (and WIP Assembly Return transactions), that the system is in fact calculating item's cost as intended.

CAUSE

The following simulation explains the way the system actually calculates item's cost and why it is correct (intended behavior):

Take item X. Take O1 and O2 organizations.

The item is being Direct Org Transferred from O1 to O2 and from O2 to O1, then being WIP Assembly Returned.

Actual brief description on the transactions flow:

The cost is raised up to 1793.509225 after 800 quantity transfer from organizations O1 to O2; then transfer 800 quantity back from O2 to O1 and then WIP Assembly Return this 800 quantity to the WIP job.
This issue occurred because Inter-Org parameter 'Elemental visibility enabled' is set as 'No' for both O1 -->  O2 and O2 --> O1.

1.  'Elemental visibility enabled' = 'No' means that when transferring the item, its cost of all levels and all cost elements from source organization will be summed up as "This Level Material Cost" and used as incoming cost in target (receiving) organization.

2.  Below is the formula used to calculate new cost, more important, it is calculated per organization/ cost group/ level/ cost element.

New Cost = (current on-hand quantity X current inventory cost + incoming transaction quantity X incoming transaction cost) / (current on-hand quantity + incoming transaction quantity)

Based on the above 2 points, let's take two (2) Direct Org Transfer transactions and analyze the impact on the item's cost in both organizations:

Detailed description and explanations on the transactions flow and item cost calculation:

Before 1st Direct Org Transfer transaction:
Organization: O1
Quantity = 986

Cost Information:

Organization: O2
Quantity = 0

Cost Information: No cost information

After 1st Direct Org Transfer transaction (O1 --> O2)
Organization: O1
Quantity = 186

Cost Information:

Organization: O2
Quantity = 800

Cost Information:

The level in O2 now is "This level" because of point 1 ('Elemental visibility enabled' = 'No')

The cost is the same "416.9908949" because of point 2 (current on-hand quantity=0, see the calculation formula on New Cost)

After 2nd Direct Org Transfer transaction (O2 --> O1)

Organization: O2
Quantity = 0

Cost Information:

Organization: O1
Quantity = 186 + 800 = 986

Cost Information:

Now return 800 quantity to the WIP job with the below Cost Information:

Here, the cost used for WIP Assembly Return is the one from the Previous level, because they were completed (a WIP Completion transaction) in the Previous level, at a cost of 418.3442714

After the WIP Assembly Return transaction:

Organization: O1
Quantity = 986 - 800 = 186

Cost Information:

As cost could not be negative, the Cost Processor has set it to 0.

The detailed simulation above clearly shows that the system is correctly calculating the item's cost and behaves as intended, based on points 1 and 2.

SOLUTION

• The immediate solution to this 0 cost issue is to perform an Average Cost Update transaction on the problematic item:

(Cost Management) Item Costs > Average Cost Update > Update Costs

• To prevent this issue from reoccurring, the setup of Inter-Org parameter 'Elemental visibility' needs to be reviewed.