Non Perpetual Inventory and Entering a Month-End Grade Allocation

For Recycling Plants or Scrap Yards handling bulk commingled material, cieTrade offers a non-perpetual inventory model to rack quantity (by weight) and costs. It uses a month-end "pre sales" average cost based on beginning inventory value, period purchases and adjustments for each grade. This average cost then defines the basis in which cost of goods sold is determined on any sales with the period.

Benefits

1. Mimics the organic disconnect between receiving materials, sorting and processing them, then selling out.
2. Allows for a negative sales position (i.e inventory balance) within the month, making it easier to ship materials.
3. Allows for intra-period price changes that would otherwise assign an inaccurate cost of goods using the perpetual inventory model.

Noticeable Differences to Other Inventory Models

• Inventory balances can go negative.
• Converting Jobs are not required to process materials and change them from one product to another.
• Outbound shipments will not have a packing list.
• COGS is assigned at the end of the month via "Grade Allocation".

How To

How to Create a Non-Perpetual Product/Grade

A product/grade's inventory model is set at the moment of creation. To create a non-perpetual product, navigate to the Products module and select "Bulk-Non Perpetual" as the Inventory Model. For more information on creating products, please see our helpfile here.

How to Ship Non-Perpetual Products/Grades

Selling non-perpetual products will look the same as bulk-perpetual or serial inventory, except you will not create a packing list on the shipping worksheet. The cost of goods will be assigned at the end of the month, once the grade has been properly allocated.

How to Perform a Grade Allocation

Grade allocations are performed at the end of the month once the inbound and outbound shipments (for the month) have concluded. In a nutshell, you're taking the weight of what came in (bought), and allocating it to the products that went out (sold).

NOTE:  The unit cost can be $0 to start because the system is not tracking any details from the current month (unless an allocation was already completed throughout the month).  Everything from the current open period is left over from the previous month's grade allocation.

1. Navigate to Inventory > Grade Allocation. 
2. (Optional) Select the Warehouse.
3. Under the Positions tab, you will (most likely) see both positive and negative balances. The positive records are inventory that has come in. The negatives are inventory that has been sold and has left your facility.  Again, these are from the previous month. 
4. Click on the Product you intend to allocate and a popup will appear. 
5. Select the product/grade you are allocating the selected grade to within the Grade To field.
6. Within the Weight field, enter the amount of weight you're allocating.
7. Once you're finished, click Apply.

You're done!  Please note: every grade you used within the month should be allocated in some form or another. At the point of allocation, both the inbound and outbound grades will be assigned an average cost of goods based on the inbound and outbound costs of that period.  

Related Reports

The Bulk Inventory Report works in conjunction with a Grade Allocation to provide you with additional information on how the end value and quantities are derived.  

If you have additional questions, please contact the Support Team via email to  support@cietrade.net