| # Inventory Analysis You can use Inventory Analysis to perform these analyses: ABC analysis slow-moving analysis inventory valuation method Inventory variance posting The difference between the valuation amount that is recorded after the receipt of goods and the updated value for that particular receipt. Processing of inventory variances results in financial transactions that clear the interim variance account, and if possible assign the variance to inventory. An inventory variance can be created: If the receipt price is changed after the receipt is confirmed If the invoice price differs from the receipt price If a production order is closed and the actual cost price differs from the estimated cost price Inventory valuation Inventory can be valuated using different valuation methods in ERP Enterprise such as Fixed transfer price (FTP), Moving-average unit cost (MAUC). Valuation methods result in a particular inventory value in the ledger. The value in the ledger does not always represent the real value of the inventory. Moving Average Unit Cost (MAUC) Moving-average unit cost (MAUC) is an inventory valuation method that is used for accounting purposes. The MAUC is the average value for each unit of the current inventory. Inventory is valued against the average receipt price. For each new receipt, the MAUC is updated. To calculate the inventory value for an item, the MAUC inventory valuation method uses all types of transactions. MAUC is the financial method of inventory valuation. To perform an ABC analysis ABC analysis is the logistical method of inventory valuation. ABC analysis categorizes the items based on the level of priority and the quantity of their usage. To perform a slow-moving analysis A slow-moving analysis is another logistical method of inventory valuation. slow-moving analysis calculates the turnover rates that are compared with the slow-moving percentage. This calculation results in a classification of items into ten categories in which the best category has the highest ratio of actual issue/inventory on hand. To calculate demand forecast for each period The level of demand that is expected in future periods. The demand forecast is based on historical demand data and can be used to determine the optimal safety stock and reorder point. The buffer inventory necessary to meet fluctuations in demand and delivery lead time. In general, safety stock is a quantity of inventory planned to be in inventory to protect against fluctuations in demand or supply. In the context of master production scheduling, safety stock is the additional inventory and capacity planned as protection against forecast errors and short-term changes in the backlog. Calculation of demand forecast for each item and period depends on the value of the Forecast Method field in the Item - Warehousing (whwmd4100s000) session: Moving Average Exponential Smoothing Previous Year's Calculation Last Period's Demand |