Topic: Problem with Auto-Update Detail Prices -> Most recent purchase price
|Posted on: Jul 12 2023 at 12:08:33 PM
|We are using the setting for Auto-Update Detail Prices -> Most recent purchase price. (received goods) under Item Detail Price/Cost.
I have noticed that although the price is updated correctly when an item is received the system does not change the default supplier to the line that was received. This is leading to outdated pricing being used on many items. Is this corrected behind the scenes when calculating build cost?
|Posted on: Jul 14 2023 at 08:39:38 AM
|But then we'd have to assume that every time you buy something from an alternate, non-default, supplier then that non-default supplier would always become the default? Surely that can't be assumed that for every order?
|Posted on: Jul 14 2023 at 12:15:56 PM
|But then when you switched back to the default supplier it would switch back upon receipt of those parts. If they are going to have an option to use the most recent received cost as the cost used in calculations it needs to actually use the most recently received cost. Right now it does not use the most recent cost if you change suppliers; it uses the most recent cost with the default supplier. None of this would matter if average costing was possible. But they have made it very clear that they are not going to implement average costing.
I only use the word "Default" because that is the nomenclature used within MiniMRP to describe what cost is used to calculate build cost and component cost.
Its optional anyway. If you want to manually control the costing you can still do that.
|Posted on: Jul 20 2023 at 09:09:48 AM
|I think we actually need two totally different costs.
#1 The cost of my current inventory. If I build something from my inventory then I'd need to know what did it cost to build.
#2 The cost based on default vendor. If my customer asks me what will it cost to build something next week then I'm probably going to have to buy more inventory and I'm more than likely going to buy that from my default vendor.
So #1 is for my own use so that I know what did it cost. #2 for when I'm giving quotes to customers for future work.
|Posted on: Jul 28 2023 at 04:52:59 AM
|The topic of costing keeps coming up.
It is a fact that what we have is not great - but they do not provide anything more.
It's a shame, but if you want to know your true assembly costs, or your average stock value, you need to look at a bigger system. It may still not update in the way described above, but would give the basics to help with financials.
(As others have said - using auto update is risky if you hold stock, you may end up changing the costs of all stock incorrectly based on a one-off purchase)
|Posted on: Jul 29 2023 at 02:10:43 PM
|I do want to say that this idea of average cost has not been written off completely. It is an interesting topic and we will look at it again later this year.
|Posted on: Jul 31 2023 at 10:46:40 AM
|If ever they do averaging I reckon it's a can of worms and lots of people will disagree about the way it's calculating.
Look at an example. You buy 5 items at $1 each. A week later you buy another 5 at $2 each. Another week later you buy 5 more at $3 each. We now have 15 items on the shelf purchased at different prices.
Total cost of inventory is $30 giving an average cost of $2 each
You then build 8 assemblies that consumes 8 of the parts. Do we say that's $2 per item? Total build cost $16?
True FIFO would disagree. The first five items you bought only cost $1 each plus three more @ $2 each. Total build cost $11 with an average per item of $1.37
But we're not talking about FIFO. The "Average" costing method is totally different to FIFO. As I mentioned above. The Average buy price was $2 so we consume 8 items and declare a build cost of $16. But then what do we do? We still have 7 items remaining on the shelf. Do we still think their average is $2 each or do we recalculate the average (2*2) + (5*3) = $19. Our average is now $2.71 If you run a stock valuation report or look up the build cost of an assembly it really should be using that $2.71 price and not the old average $2.
Whichever method is used minimrp will have to recalculate the average cost of components and the build cost of assemblies every time anything is bought or sold.
Some people will want true FIFO. Some will want lazy average (The value just stays at $2) and other will want true average (recalculate every time something moves)
and some will want LIFO. And some will likely want something totally different from anyone else and threads like this one will still be on the forum.
|Posted on: Jul 31 2023 at 01:06:54 PM
|I think this is true - BUT, at the moment we have nothing. If you use the auto update prices, that potentially introduces a much bigger issue for anyone keeping significant stock. Note. i am only talking about stock valuations being averaged.
When it comes to costing assemblies, i cost it based on what it would cost me now, i check it. Becuase to do anything else is pointless, i may have some parts in stock, but not others etc.
MikeAcc - You have written a good post describing the issues, but do you have a solution in mind or do you think it should be left alone? I am assuming that if averaging was done, it would offer a choice in costing methods, i can't see why that would add any complexity to anyone.
|Posted on: Aug 1 2023 at 07:05:07 AM
|No. I don't have a solution. Probably why they didn't do anything with it. It's probably more complex that you and I think it is and whatever they do will just open up more questions.
Your comment about anyone keeping significant stock. When I report my stock valuation to my accountant at the end of the year he does not want the cost. Average or otherwise. He wants the value. If I have a ton of memory chips on the shelf they are not worth what I paid. In some configurations the value (ie current cost) is 30% lower than this time 6 months ago.
If I want to impress shareholders or upper management then I will try to blag my way by saying the cost is the value. But if I run my own business then I want the value to be as low as possible so that I can write off the loss in value and reduce my tax.
I run my own business. I have no shareholders or management to impress. The most accurate "Value" of my stock is the last price I paid. So for me at least that last PO price is what I want to use for my stock valuation.
But of course some people do not want to accept that loss in the value of their inventory so want to use cost=value. In that case the Average would be good.
So for those people, and there's probably quite a few of them, it would be nice if minimrp also showed value based on average cost at the bottom of the stock valuation report as well as value based on most recent price.
But I don't know about showing build cost of assemblies. The problem here is that if you can build entirely using on hand stock then FIFO would be best. Average would be acceptable to many. But for people who do not hold significant stock the the most recent price is likely to be the nearest to what it'll cost to buy the materials.
and the whole purpose of an MRP program is to help you plan ahead to reduce the amount of stock you hold anyway so reduce your stock.
|Posted on: Aug 2 2023 at 07:15:04 AM
As said, for me, if you are using auto update - averaging on stock valuation (as an extra colounm or switch on or off) is a must.
I believe that assembly costs are a whole different matter - i am not sure on the value of knowing the average cost of an assembly, that does not tell you the future cost of an assembly.
Of course, in an ideal world we would see "Last Cost", "Standard Cost" and "Average Cost" for all components, stock and assemblies - and you choose which you would like to use, this would be FIFO perhaps. Or even better it would be "True" value, i.e. the actaul cost of each part in stock, which would then naturally lead to full stock tracability as well.
We are not going to get any of that.
An interesting question - how would you know the price you paid for the computer chips six months ago? How would you know the moving value of all you stock over the course if a year, that is what a simple running average would help with.
I would also disagree that the most accurate value of your stock is the last price, again, if you use auto update.
But we will see, it's all be talked about before.
|Posted on: Aug 2 2023 at 07:55:52 AM
|Yes. It's all been talked about. Talked to death.
What the minimrp guys are trying to, I think, is to "keep most users happy most of the time". You can't keep all users happy all of the time even in a big many $K costing package there's always be something.
As I said in my first post doing anything with this costing thing will be like opening a can of worms.
Maybe the easiest would be average cost in the stock valuation reports and leave the assembly costing for a while till a few more voices give some feedback. I don't think many people are asking for that.
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