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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Difference between run...
Microsoft Dynamics AX (Archived)

Difference between running/weighted/moving average

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Posted on by Community Member

Hi 

I was a little bit confused while reading the cost white paper.

Weighted average is calculated by following formula:

Q = Quantity

P = Price

Weighted average = (Q1*P1 + Q2*P2 + Qn*Pn) / (Q1 + Q2 + Qn)

Before the inventory close, "This estimated cost price is also referred to as running average", base on the sample in the white paper, i found the Running average = Weighted averaged.

And i also found a inventory model "Moving average" in the item model group settings. i cannot find the formula for this one. 

I'm not sure what's the difference between these average definition

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  • Suggested answer
    dolee Profile Picture
    dolee 11,279 on at
    RE: Difference between running/weighted/moving average

    Hi Jianrui,

    "Moving average is a perpetual costing method. Moving average is based on the average principle, where the costs on inventory issues do not change when the purchase cost does. The difference is capitalized and is based on a proportional calculation. The amount that remains is expensed. "

    The following links contain good info on this topic:

    technet.microsoft.com/.../hh597235.aspx

    blogs.msdn.com/.../answers-to-common-questions-about-moving-average-costing-in-microsoft-dynamics-ax-2012.aspx

  • Verified answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 299,349 Super User 2025 Season 2 on at
    RE: Difference between running/weighted/moving average

    Hi Jianrui,

    In addition to Dominic's reply:

    I assume you are referring yourself to the inventory cost whitepaper based on AX2009. The moving average was introduced in AX2012. For this feature Microsoft released a whitepaper about the moving average which you can download here: www.microsoft.com/.../details.aspx

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