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How to calculate WIP and Variance in case of Combined Orders?

We are working on a scenario where we create combined production order using MILL_OC. Here, we do consumption on combined order and do Goods Receipt on Individual Orders.

At month end, some individual orders have been fully delivered and have status "DLV" and some individual orders have been partially delivered having status "PDLV". Due to this situation, we cannot mark combined orders as "TECO" and hence cannot settle combined order to individual orders.

In this situation, system calculates WIP for Orders with PDLV status and calculate variance at orders with status "DLV" resulting into very high variances since consumption cost is still on combined order and has not been settled to individual orders.

Any suggestions will be helpful.

Thanks & Regards

Sagar Garg

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1 Answer

  • Nov 28, 2016 at 10:48 PM

    Dear Sagar,

    Sorry for the late response. I have discussed this with a costing expert (which I am not).
    In his opinion, the system "is right" to consider this still as WIP - as long as the individual orders are still only partially delivered.

    He pointed me to the documentation of the combined order, and especially at the chapter " order combination and controlling (CO)".

    Most of our customers use the automatic goods receipt. In the case of constant quantity distribution during confirmation, all the original orders will then get the status "DLV" at the same time. (He also mentioned something on a result analysis key which I did not fully understand).

    In urgent cases, you can always set the combined orders to "TECO". As a result, the cost will be settled and distributed to the original orders. You should still be able to confirm the operation of the combined order and post goods issue.

    Finally, you may want to check out the WIP-batch-functionality, You could temporarily post a WIP-batch on inventory. (You can define the WIP-batch as "valuated"). As a result, the cost is transferred from the order to the WIP-batch. You would have to make sure to consume the WIP-batch again in another operation. We have not tried this out, but this should work conceptually.

    Hope this helps your for your analysis of possible options.

    Best regards,

    Stefan Weisenberger

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