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Multi-Output Production Orders in BC

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Posted on by Nitin Chauhan

Hi everyone,

I’m looking for some guidance on the best approach to handle a multi-output production scenario in Business Central, and I’d really appreciate your insights and experiences.

Scenario:

We have a production order that consumes multiple raw materials (RMs) and yields multiple output items. This includes one main finished good (FG) along with around 14 by-products—such as dust, shell, wastage, etc.

I’ve explored a few potential setups and would love to hear which one you think works best in terms of functionality, costing, and ease of use. Here are the three options I’m considering:

Option 1: Use a Family Item Setup
- Create a family item that includes the FG and all by-products.
- In the Released Production Order, select the family item.
- Enter the FG quantity and add all output items in the lines.
- After refreshing and scheduling, all RMs show up under the Components tab and in the Production Journal. Each line is posted individually.

Option 2: Single BOM with Routing Linked to Outputs
- Define a BOM that includes all RMs and FGs.
- Set up a Routing to connect specific process steps to the corresponding output (main FG or by-product).
- This provides a process-oriented structure and may align better with actual shop floor activities.

Option 3: Use Negative Quantities for By-Products in BOM
- Include by-products in the BOM with negative quantities.
- While this is simpler to configure, I’m concerned it could lead to complications in costing and inventory valuation.

Additional Notes:
- We’re allocating costs based on FIFO.
- Each output item has a specific percentage for cost allocation.

Would love to get your feedback on:
- Which of these options works best in practice?
- Any gotchas or tips to watch out for?
- Are there other approaches or best practices you'd recommend for this kind of setup?

Looking forward to your advice—thanks in advance!

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Dynamics 365 Business Central

Microsoft Dynamics NAV

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Khushbu Rajvi. 20,441 Super User 2025 Season 2 on at

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Option 2 (BOM + Routing Linked to Outputs) is the most robust and accurate approach for multi-output production in Business Central, especially when precise costing and process tracking are important. However, if you need something simpler and can work with fixed by-product yields, Option 1 (Family Item Setup) could also work. Option 3 (Negative Quantities in BOM) is the least recommended due to potential costing and inventory valuation issues.

If this helps: https://learn.microsoft.com/en-us/dynamics365/business-central/production-about-production-orders

Same que: https://community.dynamics.com/forums/thread/details/?threadid=3f0ab814-eb0b-f011-bae3-7c1e52027a5f

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Mansi Soni 8,909 Super User 2025 Season 2 on at

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Hello, As per my knowledge in Business Central, handling multi-output production effectively depends on maintaining accurate costing, tracking inventory correctly, and aligning with system capabilities. Based on Business Central's standard functionality, here’s how each option aligns:

Option 1: Family Item Setup (Best for structured multi-output tracking)
Using a Family Item allows you to define a single Released Production Order where both the main finished good (FG) and by-products are included in the output lines. This ensures proper tracking of material consumption while keeping all outputs linked. The Production Journal automatically reflects all RM consumption and output posting, making this the most standardized and scalable approach in Business Central.

Option 2: Single BOM with Routing Linked to Outputs (Best for process-based tracking)
This option aligns well if your by-products are generated at specific routing steps. You can define a BOM with all RMs and outputs while using Routing to specify where each output is produced. This method closely follows the shop floor process, but Business Central does not natively allow multiple output items at different routing steps within a single production order. It may require customization to track outputs correctly at different stages.

Option 3: Negative Quantities for By-Products in BOM (Not recommended due to costing complexities)
Adding by-products with negative quantities in the BOM is a workaround but not a best practice in Business Central. While it may work for simple cases, it can create costing and valuation challenges, as the system does not inherently allocate costs across multiple outputs. If used, manual cost adjustments might be required to ensure accurate cost distribution.

Recommended Approach:
For standard Business Central functionality, Option 1 (Family Item Setup) is the best fit. It ensures proper tracking of both main and by-product outputs, maintains inventory accuracy, and aligns with costing principles. If cost allocation is crucial and varies per output, you may need to manually adjust item charges or leverage cost shares in production orders.

Hope this answer will help you!

Regards,
Mansi Soni

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Jainam M. Kothari 15,639 Super User 2025 Season 2 on at

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Hello,

For handling a multi-output production scenario in Microsoft Dynamics 365 Business Central,

Single BOM with Routing Linked to Outputs is generally the best approach. It allows for precise process tracking and costing by defining a BOM that includes all raw materials and finished goods, and setting up a routing to connect specific process steps to the corresponding outputs.

While Family Item Setup offers simplicity, it may lack detailed process tracking.

Using Negative Quantities for By-Products in BOM is the simplest but could complicate costing and inventory valuation.

Accurate cost allocation and consulting with a Business Central expert are recommended for optimal setup.

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CU23041245-0 5 on at

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Hi,

can someone explain Option 2 a bit more? Like with an actual example how to setup up the BOM and the routing correctly?

I created a BOM, I added all the RM and the "additional finished good" in that BOM which I then linked to the main FG.

Afterwards I linked them via Routing Link, but the result in the Production journal is still posting an consumption:

Thanks upfront for the support.

KR

Patrick

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