Managing Inventory Based on Per Unit Consumption of Material Receipt

Managing Inventory Based on Per Unit Consumption of Material Receipt

Several businesses, especially Textiles and Readymade Garments buy only the raw materials from their suppliers and supply the raw materials to workers / agencies. In turn, they get the finished goods which is further sold to the end customers. An example would be a business buying rolls of shirting / suiting or pant material and supplying the same to the workers and getting in return the finshed shirts or pants. In such business, it is important to identify how many meter of raw material were supplied and how many finshed goods could be received or was received. This is not just limited to textile business example but also applicable to many other business who supply raw material and receive back the finished goods.

A part of solution already exists in RetailEasy where our users can use the material issue and materia receipt concept. To know more about this please click there link here and here.

As an extension to this module we have introduced "per unit consumed" based transaction in material receipt. Let us understand this with help of an example. Before that the following steps have to be followed to configure.

Step 1: Enabling the tools configuration

Goto Tools->Configuration->Configuration->Inventory->Material Issue/Receipt Config->Manage Material Receipt inventory and cost based on per unit consumed qty and enable this configuration.




Step 2: Making the inward of raw material

Here we have taken an example where 5 qty of 38.2 meter roll of a particular item is bought. Please see the attached purchase example. Please note that the landing cost for 1 meter for this shirt roll is 183.75



Step 3: Issue the raw material

For this example we are issuing a total of 25 meter to the worker (supplier)****.



Step 4: Make Material Receipt Entry



Here, one can note couple of changes highlighted in the image.
  1. Per Unit Consumed Qty: This column refers to the amount of unit consumed from the material issued item in order to make 1 qty of the item being received.
  2. Color change of Landing column: This indicates that the landing cost of the items being received are auto calculated based on the per uniq consumed qty and the charge amount the user is entering.
  3. Previous Received Qty: This number specifies the out of the issued qty, how much qty is already received in earlier receipts.
  4. Pending Qty: This number specifies, how much qty is still pending to be received based on the prior receipts already done.
  5. Write off Qty: This number specifies the write off qty which the user chose to write off from the issued qty and mark the material issue as completed. Thus, that particular issue will no longer be available for further receipts.
Thus, in the above case for the Slno 1 line item, we are saying that out of the 25 meter issued to the worker, in order to make a single Shirt of size 32, we require 2.5 units. In other words, we need 2.5 meter of issued item to get 1 shirt. Similarly, for the Slno 2 line item, we have entered 2.75 as consumed qty indicating that for getting a single finished shirt of size 34 the worker consume 2.75 meter of the issued item.

The overall consumed qty out of the 25 meter (unit) issued thus becomes 2.5*2 + 2.75*2 = 10.5 meter (unit)

Landing Cost Calculation:

For both the shirts we have assumed that it takes 100/- rupees for stitching and other expenses for 2 shirts each. Thus, landing cost of the Slno 1 line item is calculated as follows:

Formula:
[(Landed price for 1 meter(unit) of the issued item*Per Unit Consumed Qty*Qty)+Charge]/Qty

Landing cost = [(183.75*2.5*2)+100]/2 = 509.38.
Similarly, landed price for the Slno 2 item is calculated to be 555.31

Writing off the pending qty:

When meter (units) are dealt with, there is a high chance that not all the issued qty would be consumed. There will be some minor fraction which will be always left. In order to address this we have provided the option to write off the pending qty so that the Materia Issue ID can be marked with Completed status. In order to write off the pending qty, user needs to configure the amount of qty they would like to set for the application to prompt them to write off the pending qty. This has to be done in the tools configuration as shown in the image below. For this example, we have taken an example of 0.5.





The application will prompt user with the above shown message. As we can observe, before this entry, the overall pending qty was 14.5. Slno 1 line item has consumed 12.5 qty and Slno 2 line item has consumed 1.90 leaving behind 0.25 qty. As this is less than the value given in the above configuration, the application will prompt this message and on clicking Yes, the application will write off the 0.25 qty against the issue id and mark the issue as closed.

Reports:

We can view the material issue and receipt details in the following reports as shown in the images below.


 

Compatible Version:
This functionality is supported from RC379.

****Limitation:
In order for this functionality to work, it is mandatory that material issue contains only 1 line item. In case, the user tries to add any other line items, application will show the following validation message.



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