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0

Logic of MC44

Dec 06, 2016 at 02:08 AM

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Hi experts.

I have a problem with the logic of MC44.

According to other posts, inventory turnover is supposed to be calculated with the logic below.

"COGS / average stock" (based on quantity, average stock is calculated by toal of the stock of each day of period / the number of the days of period)

However, when I try to verify the validity , it seems like the quantity of stock transfer is included in the numerator of the logic.

So I think the formula of MC44 above must not be perfectly precise.

[Example]

Period of inventory turnover:2016/10/01~2016/12/5 (66days)

11/5 received:5

12/5 sold:2 stock transfer:1

When the numerator of the inventory turnover formula doesn't contain the qty of stock transfer, it is to be calculated as below

sold 2 / average stock (2.318)

≒0.86

average stock = 11/1~11/4(4days): stock 0

11/5~12/4(30days):stock 5

12/5 (1day) :stock 3

⇒(4*0+30*5+1*3)/ 66 days

≒2.318

However when I run MC44, the consequence is 1.29

Probably the logic may be below

sold 2 + transfer1 / average stock(2.318)

≒1.29

Is my recognition right ?

I would like to know the correct logic because I think the numerator of the inventory turnover formula must be generally COGS.

Best regards.

Takeshi

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2 Answers

Best Answer
Jürgen L Dec 06, 2016 at 12:18 PM
0

It looks like you searched the Internet, found explanations in Wikipedia and even in SCN archive as you are mentioning COGS.

But inventory turnover and inventory turnover might be different things based on the point of view.

MC44 however is a figure from the Logistics Information System, there is nothing about COGS in the formula that is used in the calculation, the formula is shown and explained in http://help.sap.com/saphelp_erp60_sp/helpdata/en/c1/376872449a11d188fe0000e8322f96/content.htm

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TAKESHI ISAYA Dec 06, 2016 at 01:06 PM
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Hi, Jürgen.

Thank you for your reply.

I finally understand the formula.

As you speculated, I searched for inventory turnover formula on the web.

However it appeared that none of that match the result of running MC44.

Now I know the inventory turnover calculated in MC44 is different from the one of those things.

I deeply appreciate your help.

Best regards.

Takeshi

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