Inventory valuation on Closing

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Posted on by Community Member Microsoft Employee

I have selected the Include physical value box in the Item model group and my inventory model is weighted average cost.

As per my understanding in Weighted Average calculation (as in https://technet.microsoft.com/en-us/library/gg242469.aspx ) , only financially updated receipts will be considered for calculating the cost of items deducted during the inventory closing period.

But when I closed my inventory, even transactions, which are updated only physically , are also taken into account while calculating the average cost for valuing the deductions.

Can anyone explain me why this is happening.

Thanks in Advance

Jomy George

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Supply Chain

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GuyUK 28,343 on at

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RE: Inventory valuation on Closing

Hi Jomy,

I couldn't find a CU8, so I tested again in CU9, with your setup and example. I cannot reproduce the problem you see:

I also looked for any relevant hotfixes that might be in CU9, but I couldn't see any.

If you've no modifications in this area, I would think about asking MS Support to take a look. What you're seeing looks wrong to me.
Community Member Microsoft Employee on at

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RE: Inventory valuation on Closing

For that particular transaction, I checked Inventory Transactions > Inventory > Settlement, surprisingly the transaction is not settled.

But an adjustment entry for 12.50 is passed on closing

also please see storage dimension and item model group

We have not defined any tracking dimensions

Thank You Terry

Jomy George
GuyUK 28,343 on at

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RE: Inventory valuation on Closing

I've an R3 CU8 to hand that I can test this in. Can I get screenshots of the Item's Item model group setup, and the Storage and Tracking dimension group setup?

And did you check if the received PO Line's inventory transaction is really settled?
Community Member Microsoft Employee on at

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RE: Inventory valuation on Closing

We are having AX 2012 R3 CU8 not CU9
Community Member Microsoft Employee on at

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RE: Inventory valuation on Closing

Sorry for making the confusion,

I did the transactions exactly in the order as I said. You can identify it from the PO numbers. The previous screenshot was sorted in a wrong way.

We are having AX 2012 R3 CU9

Thank You

Jomy George
GuyUK 28,343 on at

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RE: Inventory valuation on Closing

I'll try another test later, doing the physically updated PO line before the sales order, but what I see there looks wrong!

On the PO Line which is only physically updated, is the related inventory transaction Settled ('Settlement' area of the 'Update' tab on the inventory transaction form)?

Oh, and what version of AX 2012 and CU do you have?
Community Member Microsoft Employee on at

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RE: Inventory valuation on Closing

Thanks a lot for spending your time for me.

But please see the results I am getting from my system.

10 quantity for which the status is "received" is also settled while inventory closing.

Can you identify what went wrong in my side.

Thanks in Advance

Jomy George
GuyUK 28,343 on at

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RE: Inventory valuation on Closing

Hi Jomy,

I did a quick test.

I invoiced an Item on a PO at $10.
I invoiced the Item on a PO at $15.
I sold one (running average cost of $12.50 is used)
I product receipted the Item on a PO at $20 (running average cost of the 2 in inventory becomes $16.25).
I ran inventory close.
The sales order's inventory transaction becomes Settled, but no adjustment is made. The cost of the sale remains $12.50.

The item's inventory model is 'Weighted average' and 'Include physical value' is ticked. This was on the AX 2012 R3 CU9 demo VM. I've no reason to think it is any different in previous versions of AX 2012.

Can you create a new item in a test environment and run a scenario? I tend to use a new item to keep the data clean. I also use a different date for each transaction (by changing my session date) so that it's clearer to me what is going on.
Community Member Microsoft Employee on at

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RE: Inventory valuation on Closing

Can you please explain little more.

I made two financially updated purchases and then i made a financially updated sales. After this i made a physically updated purchase.

I closed after the above transactions.

AX calculated weighted average considering both financially and physically updated transactions and passed adjustment entry for the cost of sales.

This is contradicting with technet.microsoft.com/.../gg242469.aspx

Thanks in Advance

Jomy George
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GuyUK 28,343 on at

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RE: Inventory valuation on Closing

Hi Jomy,

As I understand, the running average cost (which is used during the period for valuing deductions) will include the cost of physically updated transactions.

But during inventory close, AX will only settle financially updated deductions. And it will only use financially updated receipts to do that.