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Hi everyone,
I’m working on a requirement where the business always wants to value inventory using Standard Cost, but their physical inventory handling method (like FIFO or Non-FIFO) may change over time.
In their current ERP system, this is possible because:
All financial postings are always based on Standard Cost, and
The physical flow logic (FIFO, LIFO, etc.) can be changed anytime, without impacting valuation.
However, in Dynamics 365 Finance and Operations, I’ve noticed:
Once you assign an Item Model Group, it controls both financial valuation and physical flow.
D365 doesn’t allow changing the model group if there are existing transactions.
This makes it difficult to mimic the same flexibility they currently have.
Example:
Item: ITEM-1001
Current setup: Model group = Non-FIFO, valuation = Standard cost
After a few months, business wants to change only the physical handling to FIFO — but still keep financial valuation as Standard cost
Is there any standard way or recommended approach in D365 F&O to achieve this?
Or perhaps a setup that allows physical flow (FIFO/FEFO) to be handled through WMS or location directives, while keeping financial valuation fixed to Standard Cost?
Would appreciate any suggestions, experiences, or best practices for this kind of scenario.
Thanks in advance!
— Hitesh
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