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For ERP LN feature pack upgrade, what method of install are you using?
Installation Wizard into existing VRC
35%
Installation Wizard into new VRC
42%
Manual into existing VRC
3%
Manual into new VRC
19%
Total votes: 31

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  #1  
Old 18th August 2005, 19:01
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Francesco Francesco is offline
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Strange WIP calculation in Baan IV (or is it just me?)

I am more of a techie than a functional guy, but in building a data warehouse, I am forced to look at some of Baan's reporting methodology.

So here is something that strikes me as odd. Allow me to explain by example:

Production Order ABC consists of the assembly of 100 units of item 123.

At the start of the order, the WIP value is the sum of all BOM items of 123, which adds up to $ 400.00 per unit. Total WIP at this point is $ 40,000.00. So far so good.

Now at some point, somebody somewhere decides that the box in which this item is supposed to ship, is not really required. Each box is listed on the BOM for $1.50. Also, we use 102 units of component 456 instead of 100, etc. etc.
The actual cost per manufactured item drops to $398.00.
After 99 units are produced, Baan uses the following "logic" to calculate the value of WIP inventory:

The value of your components is 100 * the cost price of the items you actually used = 100 * 398 = $39,800.00

The value of delivered manufactured items is 99 * the cost price of the manufactured item = 99 * 400 = $39,600.00

Therefore, the remaining inventory is worth $39,800 - $39,600 = $200.00

So I have all components left to build one more item which is valued at $400. the components themselves add up to $398.

Yet Baan insists that I have only $200 in WIP !!??

Wouldn't this be considered f..... flawed?
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  #2  
Old 18th August 2005, 22:03
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vahdani vahdani is offline
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Welcome in the Twilight Zone !!

even after manufacturing all 100 pieces you still have a theoretical work in prigress of 100 * 398 - 100 * 400 = - $200. Does this mean that the shop floor owes this to the company? (Dah da, dah dah. Dah da, dah dah.,...)

Moral of the story: Don't drop items from BOM or recalculate Cost Price when you do!
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Old 18th August 2005, 22:27
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That's exactly what I'm seeing...negative WIP

I talked to somebody from Finance and apparently they spend quite a bit of time each month to straighten it out.

I don't know how feasible it is to roll cost price every time.
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  #4  
Old 25th August 2005, 05:44
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Well, I'm more of a functional guy, and so far I found BaanERP calculation of WIP to be quite accurate. And I have to be honest, you're not providing enough data from your case explanation for any diagnose to be accurate. Let's start with one thing. You said,
"At the start of the order, the WIP value is the sum of all BOM items of 123, which adds up to $ 400.00 per unit. Total WIP at this point is $ 40,000.00"
Well, actually at the start of production order, the WIP contribution of the particular order is 0. Only after you start issuing materials to production floor will your WIP contribution go up. I assume you mean to say that you've issued every single materials of the production order early on in its progress (which means you'd also have issued the box at the beginning of production order)? And the sum of costs of all those materials come up at a round number of $40,000? Sounds unlikely
Francesco, if you could post a more thorough explanation of the case, then I might be able to help a bit more. Don't worry if the explanation will sound complicated, nothing is simple in accounting anyway

Rgds,
Paul
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