3.8 Inventory Flashcards
The Inventory application is used to store information about …
all aspects of inventory materials
What information is monitored or tracked in the Inventory application?
List 3 things
- Storeroom balance of inventory items
- Condition of items and cost of inventory
- Special order items and stocked item usage
Benefit of tracking balances in Inventory application
Balances for an item can be tracked on one page, even if it is in more than one storeroom
How to view picked quantity for an item?
Other Balance Summary Information section on Inventory record
What are the prerequisites to view picked quantity for an item?
Item must be in a pick list
Where are item pick lists created and managed?
Manage Inventory Work Center > Reservations page
How can the requirement for an item be determined?
Method
ABC Analysis
Where can ABC analysis be performed?
Inventory tab
on Inventory application
At what levels can balances of individual items and tools be checked?
- Bin
- Lot
For which entity can balances of individual items and tools be checked?
Each Storeroom
When does reordering of items occur?
Business need
When stock needs to be replenished
In which application(s) can balances be checked?
Inventory application
In which application does reordering of items occur?
Inventory application
True/False: Vendor information cannot be stored in the Inventory application, only Item Master
False: Vendor information can be stored in the Inventory application as well
Benefit of storing vendor information in Inventory
Items can be reordered promptly
The Inventory application can be used to specify the … and … where items are …, and view the … ….
bins
lots
stored
Storeroom locations
What key elements are specified for an Inventory item, in the Inventory application?
2 things
Balances
Costs
The Inventory application can be used to search the database for … … and …
2 things
inventory
items
tools
The Inventory application can be used to …, …, and … inventory items by … and … ….
issue
transfer
return
site
storeroom location
The Inventory application can be used to specify … … and … information
Reordering related
reorder
details
vendor
The Inventory application can be used to … and … … … that are associated with a … …
Rotating items
identify
track
rotating
assets
rotating
item
The Inventory application is used to list all … for which an item is listed as a … or … …
assets
subassembly
spare
part
The Inventory application is used to specify the … of items that can be … over the … …
percentage
received
quantity
ordered
What indicates that items need to be reordered?
Storeroom balance indicates that the items must be replenished
What are the reorder details of an item?
- Reorder point
- Lead time
- Order unit
What are some examples of vendor information that can be stored in the Inventory application?
Related to a part
Manufacturers or models that are associated with each vendor
Define ABC analysis
Technique that identifies the items that represent the greatest investment for the company
What does ABC analysis consider?
Monetary value and turnover rate
Inventory Costs
Costing methods
List these
- Standard cost
- Average cost
- LIFO and FIFO
- Asset costing
Benefit of specifying average cost
Price variations are reflected
What do LIFO and FIFO stand for?
Last-in-first-out
First-in-first-out
Benefit of using LIFO/FIFO costing
Captures and applies the cost of items on receipt
Restrictions of asset costing method
Only available for rotating inventory items
Describe LIFO costing
Uses the receipt of items that are the newest in the stock
Describe FIFO costing
Uses the receipt cost of items that are oldest in stock
Describe the LIFO costing method in application
Provide example
A company that uses the LIFO costing method sells the most expensive (newest) inventory stock first
Benefits of LIFO costing
As the profits are decreased, the company benefits from a lower rate of tax
Describe FIFO costing in application
Provide example
As the older and cheaper goods are sold, the newer and more expensive goods remain as assets to the company
Benefit of using FIFO costing
Prices generally rise overtime because of inflation. As a result the older inventory items in stock can decrease in value - sell first
Describe what issues, transfers, and returns are
Considered as a consolidated group
Methods for monitoring and controlling the movement and consumption of inventory items and tools
What type of records in the database generally capture issues, transfers, and returns?
Inventory Usage records
How are items issued?
Assigned directly to:
- Work Order
- Asset
- Operating location
- GL Account
or
Issued to satisfy reservations
Describe transferring items
Items or tools are transferred from one storeroom to another
Example of when items are issued to satisfy reservations
For use on a work order
Charging entity for issuing items - restrictions?
Must:
- Belong to the same site, or
- Across sites within an organization
Purpose of transferring items
Satisfy requirements for the item in the new location
Restrictions on moving inventory stock between storerooms in different sites
Either:
- Within an organization
- Between separate organizations
What defines an item return?
Inventory items can be returned to the original storeroom if it was issued or transferred to a new storeroom
What are inventory item reservations created for?
Entities
Reservations can be created for inventory items and tools
Describe inventory replenishment
Items are replaced by reserving and reordering the items and tools that are needed
Why is inventory replenishment necessary?
Organizations must replenish inventory stock to stay functional as items and tools are consumed
List types of inventory item reservations
- Hard
- Soft
- Backorder
Purpose of inventory item reservations
Ensure inventory items and tools are replenished in time
Inventory Item Reservations
Hard reservations
Material requests with a specific time frame
What determines whether a hard or soft inventory item reservation is made?
Based on the importance of the inventory requirement
Which applications enable you to automatically set and process reservation types?
- Purchase Orders
- Purchase Requisitions
- Desktop Requisitions
Describe how reservations work on a work order
In the Reservation Type field, reservations are set in the Planned Material line
Describe how reservations work on an internal purchase order
The reservation is set in the Reservation Type hidden field when an attendant storeroom is selected on the PO line
Inventory Item Reservations
What are the characteristics of a hard reservation?
Are prioritized and cannot be superseded
What customizations can be made pertaining to hard reservations?
- It can be specified for the reorder process to only include hard reservations
- It can also be specified that inventory items can only be issued from a storeroom if it has a hard reservation
Inventory Item Reservations
Soft Reservations
Requests that do not have a specific timeframe
Inventory Item Reservations
Purpose of soft reservations
Ensure that the item or tool is available for issue at any time
Inventory Item Reservations
What does a backorder reservation indicate?
- That an inventory item or tool can only have hard reservations, and
- The reservation quantity must be satisfied by the available balance on the inventory record
Inventory item reservations
What is required to enable usage of the backorder reservation type?
Organizations application > disallow negative availability (for that organization)
When can inventory items be reordered?
Items or tools can be reordered when:
- The storeroom balance indicates that the items must be replenished, or
- If they are listed on approved work orders
When can approved work orders be issued (for reordering items)?
Within being received into the inventory
Where is the Reorder action found?
Inventory application > More Actions > Reorder
List the options in the Reorder Details tab within the Inventory application
- Safety Stock
- Lead Time
- Economic Order Quantity
- Reorder Point
- Reorder?
Inventory application > Reorder Details tab
Safety Stock
The minimum amount of stock that is required for the item
Inventory application > Reorder Details tab
Lead Time
The number of days it takes from ordering to receiving the item
Inventory application > Reorder Details tab
Economic Order Quantity
The quantity of items to order which provides the best economic value
Inventory application > Reorder Details tab
Reorder Point
The balance at which the item is reordered
Inventory application > Reorder Details tab
Reorder?
Denotes whether the item should be reordered
List the options in the Reorder Items dialog
- Ignore Reorder Point?
- Reorder Direct Issue Items and Services?
- Consider Contracts When Creating PRs/POs?
- All Items in Storeroom?
- Include Soft Reservations?
Reorder Items dialog
Ignore Reorder Point
Allows the user to reorder the item without validating the items quantity to the reorder point
Reorder Items dialog
Reorder Direct Issue Items and Services?
Allows the user to reorder direct issue items and services
Reorder Items dialog
Consider Contracts When Creating PRs/POs?
Allows the user to reorder items and consider contracts
Reorder Items dialog
All Items in Storeroom?
Indicates whether to reorder all of the items in the selected storeroom
Reorder Items dialog
Include Soft Reservations?
Indicates whether to include soft reservations when selecting items for reorder
Purpose of reorder locks
When an item is reordered, a lock is placed on the storeroom being restocked to prevent other users from reordering items for the same storeroom at the same time
How to remove reorder locks
Select Reorder > Clear Reorder Locks
When is current balance adjustment generally done?
When a simple error is made in issuing or receiving
What accounts are affected by a current balance adjustment?
Control GL Account - credited
Shrinkage Cost Account - debited
Where are Control GL Account and Shrinkage Cost Account codes obtained?
Storeroom configuration specified in the Storerooms application
What is the difference between adjusting the current balance and adjusting the physical counts?
Accounting-based
Current balance adjustment: correction for an error - the item was not lost in any way
Physical count adjustment: item has been lost and/or has disappeared
When are physical counts performed?
Generally performed at specified intervals
Describe GL Transactions during Physical Counts
Use the Storeroom’s Shrinkage Account as both the GL Debit Account and GL Credit Account
What is needed for the physical count to become the current balance?
Needs to be reconciled
What is the restriction on items that can have physical count adjustments?
Non-rotating items only
What inventory management system do most companies use?
Just-in-time inventory management system
Purpose of using just-in-time inventory management system
Reduce stocking levels and associated carrying costs
What are purchasing and stock levels based on, when using a just-in-time system for maintenance?
Upcoming work (rather than past usage)
What is the advantage (justification) for using the just-in-time inventory management system?
Parts and assets can become obsolete and processes can change.
Therefore, looking back may not be as useful as looking forward when considering inventory needs
How does Maximo accommodate just-in-time inventory systems?
Allows reorder quantities to be set
Which Maximo applications be used to determine what items will be needed in the future, and how?
Preventive Maintenance
Condition Monitoring
Use these to schedule and plan upcoming maintenance and inspection work
What is the Service Items application used for?
Insert and maintain services that are requisitioned, either on a frequent or infrequent basis
Functionality of Service Items application
List these
- Allows for the creation of service item records
- View or manage a list of vendor companies that supply the service item
What is the Tools application used for?
Create and maintain information on the tools used on jobs
Where is Tools information referenced?
Job Plans and Work Orders
What does the Tools application function similarly to?
Application
Item Master
What is the Stocked Tools application used for?
Manage existing tools in storerooms
What does the Stocked Tools application function similarly to?
Application
Inventory
Describe the usefulness of Units of Measure and Conversions
If the units of measure do not match when an item is received or transferred into a storeroom, the product looks for a conversion ratio to determine the stocking balance
What is associated to an item when it is added to a storeroom?
Order unit
Issue unit
True/False: Add/Modify Units of Measure is available in the Inventory application only
False: Add/Modify Units of Measure can be used in more than 1 application
