Tag Archives: Manufacturing

Not-so-elementary costing: The Change

They say the only constant is change. I’d say that the only other constant is error. We humans tend to err. Give a repeatable task to a human, and they’ll mess it up every once in a while. Some call it the human factor.

One of the many repeatable tasks in Microsoft Dynamics NAV is setting up items. If you remember my rant about mandatory fields, and how I said they were baaad, there might be an even more baaad kind of fields: the default value fields. Because the system simply inserts a value into these fields without asking for your say, and if anything is easy, it’s only so easy to overlook these. Yep, you have a chance to voice your oppinion on these, but having got to hurry for a cup of coffe with Mary from accounting, admit it, you’re gonna leave that default FIFO costing method for an item every once in a while, even though it should really have been Average. Then you’ll start posting. Then your phone rings and starts screaming at you about a moron who screwed up items again.

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Output journal confusion

A few days ago, I’ve got a question from a customer, about an alleged bug in Microsoft Dynamics NAV. According to online help, when you are posting output in manufacturing module, the last line of the type Output in the journal will actually adjust the inventory level. However, what is not explained is how the figure in this field is calculated, and why exactly that way.

When you decide to post an output of a production order, you specify the released production order for which you want to post the output, then call the function Explode Routing. After this function completes its chore, users unfamiliar with how manufacturing works can get quite confused, because two of the fields the procedure fills in contain unexpected values. These two fields are Output Quantity, and Scrap Quantity.

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Scrap doesn’t just happen

In reality, if you need 1,000 of whatever product, the manufacturing process is rarely going to yield exactly 1,000 of it, even if you feed into the first operation the exact quantities of raw materials system calculated as gross requirements. The process may produce 980 or 1,020, but is hardly ever going to be exactly 1,000. If you didn’t take scrap into account, or you took incorrect scrap into account, your actual output from the process might be much more unpredictable, with huge variances. Variances are always a problem, only they don’t have to be that big a problem in all scenarios.

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Scrap the crap

Scrap happens. So does sh*t. In my last blog post about scrap I gave a crappy explanation of how forward calculation of fixed scrap works. So instead of disgracing myself by leaving the incorrect explanation there, I’ve just corrected it, and posted this lame excuse here. Anyone who is interested in how it really works, please accept my sincere apology for not testing my hypothesis thoroughly before posting it here. I’ve now tested it thoroughly, corrected it accordingly, and there you go.

Today is April the 1st. The April Fool’s Day. I hoped to be posting a prank here today, but it seems I’ve posted a prank few days ago. Sorry.

Cut the (s)crap

[I had to edit this post on April 01, 2008. And no, it’s not April Fool’s Prank] 

Have you ever wondered how manufacturing scrap works? Or what it really is? It’s an interesting topic, and yet a very confusing one. It has caused so many headaches to the project team I worked on recently, because nobody really understood it. So, what is manufacturing scrap?

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