Rejected quantities in Production

[Former Member]

Hello everyone--

I am confused about the functionality of the "reject" setting in Receipt From Production. It would seem that a rejected quantity is not going to be added to stock, but in fact, the system seems to treat it exactly like a completed quantity and adds it into the warehouse inventory.

We are trying to account for wasted quantities during a processing operation. For example, I send 1,000 pounds of material to be plated, but only 950 pounds of the finished item are returned. However, my plating costs are the same as if the full quantity was complete. If I enter a Receipt from Production for 950 pounds completed, the processing cost is not correct. If I enter 950 pounds completed and 50 pounds rejected, the processing cost is right, but 950 + 50 pounds are added to inventory. Does anyone have any explanations or suggestions?

Thanks to all.

Marcia

[jitin_chawla]

Hi,

Please check Note No. : [1226711|https://websmp130.sap-ag.de/sap(bD1odSZjPTAwMQ==)/bc/bsp/spn/sapnotes/index2.htm?numm=1226711] regarding the issue mentioned by you.

Regards,

Jitin

SAP Business One Product Support

[Former Member]

Jitin--

Thank you for your reply. However, this note does not really deal with my situation. It suggests changing the warehouse on the row with the rejected quantity, so as to add this quantity to a "reject" warehouse. While this may be useful in some cases, it does not fit my scenario. We are sending the components to an outside processing company. This company sends back the finished products, but very often sends back less than they received. We should never add this wastage into our inventory, in any warehouse. The cost should go to WIP Variance, or add to the actual cost of the items that are received. Is there any way that Business One can accomodate this requirement?

Marcia

[jitin_chawla]

Hi,

You can have a check at the following option after putting the rejected quantity in different warehouse

Booking as a Inventory decrease/increase through a Goods Issue

Check if this is going to help.

Regards,

Jitin

SAP Business One Forum Team

[Former Member]

It's not a good solution, but it might be workable. I still think that the concept of "reject" is that the item is not going into inventory in any form.

[former_member204969]

There are three basic methods to manage wasting during production:

1. Making a receipt from production to a reject warehouse and later make a goods issue against an appropriate account.

2. Issue for production with the real quantity of used components and making receipt from production for the good finished product. (The cost of wasting components will remain in the variance account.)

3. Filling the production order only after knowing the quantities of good product and used components. Then the cost of the product can contain the cost of the all used components.

The choice is depend on the production process and the intention of managing the cost.

[Former Member]

Thanks for your reply Istvan.

1. This is the same as Jitin's suggestion. I think it's pretty cumbersome, but we may try it.

2. This would work if there were no other costs. However, we are using non-inventory, backflush items in the BOM to account for processing costs and freight - they don't calculate correctly unless the entire quantity is completed.

3. There is a gap of several days to weeks for production time. We need to issue the components so they are not available for other uses, and we need to have the correct WIP amounts during that time. So we can't wait until the finished items are received to start entering the production documents. Also, we have to issue the quantity of components that really are removed from inventory.

I'll have to play with these ideas.

Marcia

[former_member204969]

You can try mixing the second and the third: make a production order and issue for production for the physical components, and modify the backflush lines when you know the actual values, before the receipt for production.

[Former Member]

Yes, we were planning to do that in any case. But it still doesn't come out right if you don't complete/reject the full quantity of the finished item.

[former_member204969]

There are two things.

1. To register the component delivery to the outer partner can be done by using the Issue for Production transactions.

2. When you get the finished product, you cam modify the production order:

- modify the planned quantity of the product to the good finished product

- modify the planned quantity of the non-inventory components according to their use

Then your product cost (for the good product) will contain all the issued components and all the used non-inventory cost. It can be acceptable that the finished product carries all cost.

If you want to book the wasting to a different account, you can use 1. or 2. method.

[Former Member]

Thanks for your input. I think I know what we have to do. I only wish that B1 had more flexibility in this area.