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Former Member
Sep 16, 2013 at 06:45 AM

Recyclable material purchase cycle

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At one of our client the cost of material procured from vendor is determined after the material is utilized in production and the wastage percentage is determined.

e.g. a recyclable material is procured from vendor with the commitment that the allowed rejection is 3%. Suppose the consignment cost is 100 $ / kg. After the recycling process, if the materials rejection is within 3% than the vendor is paid in full however if the rejection exceeds than the allowed percentage suppose 5 % than the vendor will be paid 98$ after deducting 2$ for extra 2% rejection.

Now:

  • We have to track the vendor batch
  • We have to enter the material in the system to issue it to production.
  • We have to issue the purchse order after the material is consumed with the settled price.

Can anybody elaborate how to incorporate this in our purchasing/production cycle?