FIFO

Serial Numbers Conundrum

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A blog reader has asked me for help about an allegedly strange behavior of items with serial number tracking. They had a customer who had serial number tracking switched on for an item with FIFO costing method. Whenever they posted a sales transaction, they chose the serial number manually. Then they noticed a puzzling behavior.

No matter the specification of the serial number on the sales lines, Microsoft Dynamics NAV seemed to be closing the item entries according to FIFO method. This effectively allowed a serial number to be sold twice (or more). They called for help.

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Inventory method UFO :-)

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Sorry for this series of totally irrelevant posts, by now you must be thinking that I am either out of ideas, or totally uninterested about the future of this blog. Neither is true, I am actually spending practically all of my time preparing for ten hours of content I have to deliver at a conference next week, and about which I hope I will post a blog in its own right.

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Not-so-elementary costing: The Change

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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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Elementary costing 3: FIFO, LIFO, UFO…

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Due to fluctuations in market prices, purchase cost of goods may vary from one purchase to another. Also, you rarely just purchase goods and immediately sell them in the same quantity. What you usually do is that you purchase the goods, then let them sit in the inventory for a while, then you may sell five different purchases all at once, or you may sell goods from one purchase to five different customers.

All of these situations have different effects on your inventory value, because something else must be taken into account: cost flow. Regardless of the inventory valuation method you chose, whenever you take an item from the inventory, how do you know its cost? Without knowing its cost, you can’t know the cost of goods sold, so you better know your cost. Don’t tell me you stick the purchase price to each item, so that you can know exactly how much it cost whenever you are about to sell it, because accountants won’t subscribe to the idea.

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