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
