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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Estimating a Productio...
Finance | Project Operations, Human Resources, ...
Answered

Estimating a Production Order

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Posted on by Cyrille16 85

Hi,

As per MS Learn: 

1. Receipts for main products, co-products, and by-products are generated when production orders or batch orders are estimated.

2. Estimation creates inventory transactions with receipt status On Order.

The only clear thing is that Estimation does not create any inventory transactions by default, so may it be a result of specific setup? If so, setup related to which area?

Could anyone explain what actually happens when you Estimate a production order, clearly and precisely, as there might be confusion around this topic.

Many thanks in advance!

BR,

Cyrille

  • Cyrille16 Profile Picture
    Cyrille16 85 on at
    RE: Estimating a Production Order

    Hi Dolores,

    By landed cost I meant Purchase price + freight/customs/etc,,, so total cost up to my dock door. Is this not same as the cost price (in Manage costs) ?

    Rgrds,

    Cyrille

  • Dolores Young Profile Picture
    Dolores Young on at
    RE: Estimating a Production Order

    Hello Cyrille,

    How are you handling the landed costs now?  Have you set them up in the costing sheet?

    Regards

    Dolores

  • Cyrille16 Profile Picture
    Cyrille16 85 on at
    RE: Estimating a Production Order

    Thank you, Adrian!

    I found this video helpful.

    So to sum up, Estimation logic is:

    Estimated cost amount uses cost price from the BOM line item setup of Manage cost, while

    Realized cost amount uses purchase price from the BOM line item setup of Purchase.

    To my understanding, for an estimation to be effective, it is essential that we consider transportation, handling, storage, etc, all those costs that are incurred after we purchase a product.

    So, in case we use FIFO to value inventory, and we have a cost variance (due to Landed cost being higher than Purchase price, and supposing, we do not manually update the Purchase price, which is not correct as this would erode the unit Purchase price..), any experience o n your side about how the system further handles the variance? 

    BR,

    Cyrille

  • Verified answer
    Adrian Serban Profile Picture
    Adrian Serban on at
    RE: Estimating a Production Order

    Hi Cyrille,

    It's difficult to detail every possible aspect of production order estimation. This depends mainly on the BOM, Route, Production control setup. Do you have a more concrete scenario? I suggest you to test your scenario and check the details as per below steps:

    docs.microsoft.com/.../estimate-production-order

    Below blog and video might give more insights:

    organicax.com/.../

    Thank you,

    Adrian Serban

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