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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Classification ABC - C...
Microsoft Dynamics AX (Archived)

Classification ABC - Carrying Cost

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Posted on by Marissel Enríquez 70

Hello everyone!

I had these 2 questions please. When I want to get a report of ABC Classification - Carrying Cost they ask me to put the % of internal interest, so what is exactly % of internal interest? What number am I suppose ti put in there?

Also, when I get the report of the ABC classification according to the selected category, in the last column appears (next to "Calculate") the "Import" column. The numbers that appear there, what did they mean exactly? (I think it could be how much it costs to maintain the inventory in a specific time) How Dynamics AX shows this results? Based on what? (I mean, how does Dynamics AX calculate that amount?)

Hope your answers soon please,

Sincerely

Marissel Enríquez T.

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  • Suggested answer
    PasanM Profile Picture
    PasanM 175 on at
    RE: Classification ABC - Carrying Cost

    Hi, I spent some time to figure out how Carrying cost is calculated in ABC calculation and just posting the details below for anyone who might be looking for this calculation in the future.

    pastedimage1603409412648v1.png

    Item Purchased Today Carrying time (days) Cost per Unit ($) Total Quantity Total cost ($) Interest rate p/a Interest p/a Carrying cost % of Total Carrying cost
    IH001 22/10/2020 1/11/2020 10 20 100 2000 3% 60 1.64 1.67%
    IH002 1/09/2020 1/11/2020 61 75 100 7500 3% 225 37.60 38.20%
    IH003 22/10/2020 1/11/2020 10 200 50 10000 3% 300 8.22 8.35%
    IH004 1/10/2020 1/11/2020 31 100 200 20000 3% 600 50.96 51.77%
    98.42
    • Carrying cost = (Interest per annum / 365 * Carrying time in days)
    • % of Total carrying cost = (Carrying cost / Total carrying cost * 100)

    Sample ABC calculation

    ABC ABC % Items
    A 20% IH004
    B 40% IH002
    C 40% IH003, IH001

    A = which item(s) contribute to 20% of the carrying cost

  • Suggested answer
    Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Classification ABC - Carrying Cost

    Hi Marissel,

    I have the same question with you, that is how AX calculate the carrying cost of an item, is there a formula? Have you got the question solved?

    Hope your reply soon,

    Sincerely

    Yughurt

  • Marissel Enríquez Profile Picture
    Marissel Enríquez 70 on at
    Re: Classification ABC - Carrying Cost

    Thanks for the explanation!

    I've got the idea. So basically DAX calculates automatically the amount ("how much does it cost to maintain your inventory"), as a parameter, isn't it right? But what are the elements that this parameter consider? As I was investigating, I read that those elements are the number of transactions in inventory and the % of interest rate. But what is the formula, (do you have to multiplicate those numbers) you have to use in order to get the amount that appears next to the classification of each product?

    Hope your answers soon,

    Sincerely

    Marissel Enríquez

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    Re: Classification ABC - Carrying Cost

    Hi Marissel,

    The column is calculated as ABC Model parameter. E.g.: If you choose the Value model, the DAX should sum the Cost Amount column of the Transactions on Item form.

    Kind regards,

    Murilo Oliveira

  • Marissel Enríquez Profile Picture
    Marissel Enríquez 70 on at
    Re: Classification ABC - Carrying Cost

    Thank you for the answer!

    There's one thing I still have not clear, that is the amount that appears in the "Import" column (the last one), how does Dynamics AX calculates this amount (based on what)? I mean, is there any formula or a way to verify that the numbers are correct?

    Hope your answers soon,

    Sincerely

    Marissel Enríquez

  • Verified answer
    Community Member Profile Picture
    Community Member Microsoft Employee on at
    Re: Classification ABC - Carrying Cost

    Hello Marissel.

    You are on the right track.

    A internal Interest rate is a expresion used to calculate the cost of maintaining your inventory levels within a given period. Usually you would use the interest rate you'd get in your bank by depositing the money there instead of investing them in on-hand stock.

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