This chapter contains the following topics:
| • | Inventory Control is designed for use by retailers, wholesalers, and manufacturers. It includes those features most asked for by thousands of users whose experiences with previous inventory control modules have helped refine Inventory Control to its current mature level. |
| • | Supports multiple companies and multiple cost centers |
| • | Provides for multiple warehouses |
| • | Supports multiple costing methods - average, standard, LIFO, and FIFO, as well as serial (real costs) for serialized items using average cost |
| • | Permits use of multiple balance sheet inventory accounts |
| • | Allows you to maintain item data and print item lists |
| • | Allows you to maintain inventory status and print status reports |
| • | Allows you to maintain and print price codes and commission codes |
| • | Supports alternate selling units |
| • | Provides special pricing by category, sub-category, and location, supports sale and contract pricing, and generates group price changes |
| • | Allows you to enter, change, delete and post inventory transactions and to print an edit list and a transaction journal for receivings, sales, credit memos, transfers and adjustments |
| • | Tracks inventory by unique serial number or lot number |
| • | Has inquiry into all currently available and previously sold serial numbers and shows oldest unsold serial number |
| • | Prints the serial loan report, the flooring report, and the serialized item report by item, by vendor, and by customer |
| • | Has inquiry into lot numbered inventory, including a history of transactions processed for a lot number |
Prints the lot numbers report by item, by vendor, and by customer, and allows purging of lot number information
| • | Allows high-speed entry of physical inventory counts, and automatic generation of inventory adjustments |
| • | Supports input from hand-held terminals for receivings and physical counts |
| • | Prints the Price List, Inventory Valuation Report, Purchasing Advice Report, Inventory Usage Report, Physical Count Worksheet, ABC Analysis Report, and Inventory Turnover Report |
| • | Supports kits. A kit is an item that is assembled from other inventory items, using a work order. |
| • | Provides kit and work order reports, including Where Used Report, Kit Price/Cost Report, and Incomplete Work Orders |
| • | Allows reports to be stored on disk to save computer time, then printed later at your convenience |
| • | Allows use of multiple printers |
| • | Includes password protection |
| • | May be used either independently or integrated with General Ledger, Order Entry, Accounts Receivable, Point of Sale, Sales Analysis, Purchase Order, and/or Job Cost |
| • | Has Help (highlights of functions) built into the software |
If on-hand quantities of component-items are not to be reduced, you may enter receiving transactions, using Inventory, to establish on-hand quantities for kit-items.
If on-hand quantities of component-items are to be reduced, use Work orders to enter and issue immediate work orders for assembly of the kit-items. Refer to the Work Orders chapter.
To understand how to use Inventory Control, you should understand some key concepts and words that are used in this module that relate to Inventory Control.
Inventory consists of goods purchased and held for resale to customers. It can also include items that will be used internally in the business, on jobs, or in the manufacturing process.
Inventory is quite simply the collective total of all merchandise on-hand for sale to customers in the ordinary course of business.
The control of inventory includes being able to regulate or know what goes into inventory and what goes out of inventory. This includes knowing the value of what is in inventory at any time. Inventory control is often abbreviated as I/C or IC.
An item is a clearly identifiable product, material, or commodity that can be stocked, sold, or used. Inventory Control maintains data of inventory items. Each item is identified by a unique number and a description. Other information maintained for an item includes cost, price, product category, quantity on hand and reorder level.
Perpetual inventory is an inventory system that shows each change in the amount on-hand as it occurs. It is called perpetual because you perpetually (or continually) know the amount of each inventory item on hand.
Accounting is the collection, categorization and presentation of financial records.
General Ledger is the area of accounting where the records from other areas of accounting are brought together for classification and summarization, thereby creating a picture of the overall condition of the company’s finances.
As used here, general means pertaining to many areas. Ledger means a book where accounting records are kept. (This term evolved from pre-computer times when accounting records were kept exclusively by hand in large books called ledgers.) General Ledger is often abbreviated G/L or GL.
A general ledger account is a specific category under which all financial activity of a certain kind is classified. For example, you might have a general ledger account called telephone expenses, under which you categorize your telephone bills.
General ledger account is often abbreviated G/L account. Accountants are experts at defining the various G/L accounts (financial activity categories) needed by a business. Part of this definition process involves assigning an account number to each G/L account.
Independent businesses usually use a 3 or 4 digit account number. For example, you may have a G/L account called 100 Cash in the bank, and one called 200 Sales of Product A, and one called 210 Sales of Product B. Typically, an independent business will have a hundred or more G/L accounts. In accounting modules, each time any financial activity occurs in any area of accounting, the dollar amount of the activity is recorded under the appropriate G/L account numbers.
A cost center is a distinct area within your company for which sales and/or expenses (and sometimes costs) can be calculated separately from the total sales and expenses of the whole company.
In the Passport Business Solutions software, the main G/L account number is from 4 to 8 digits long. If you choose to use cost centers (they are optional in PBS software), you get a sub-account (up to 8 digits) added onto the G/L account number.
For example, your office supplies G/L account is numbered 4200, and you want to track office supply expenses independently for each of your three major departments (Dept. A, Dept. B, and Dept. C). Rather than use a different main account number for each department (such as 4201, 4202 and 4203), you could append -001, -002 and -003 to the 4200 main account number as follows:
4200-001 Office supplies, Dept. A
4200-002 Office supplies, Dept. B
4200-003 Office supplies, Dept. C
Then, whenever you’re allocating office supply expenses to G/L accounts, you would use the above 7-digit numbers.
Cost centers also apply to sales. A typical use for tracking sales by cost center is for a company that has several sales offices. By making each sales office a cost center, you can separately track the sales performance of each office.
The information you enter into your computer is stored on your disk. In order for computer programs to be able to locate specific pieces of data (within large masses of data) and to be able to process it logically, data must be organized in some predictable way.
PBS software organizes your data for you automatically as it stores it on your disk.
There are four terms you should understand about the way the data is organized:
A character is any letter, number, or other symbol you can type on your computer keyboard.
A field (sometimes called a data field) is one or more characters representing a single piece of data. For example, a name, a date, or a dollar amount are all fields. In SQL a field is often referred to as a column.
A record is a group of one or more related fields. For example, the fields representing a customer’s name, address, and account balance might be grouped together into a record called the customer record. A record in a data file is often referred to as an entry. In SQL a record is often referred to as s row.
A data file is a group of one or more related records. A data file is often referred to simply as a file. In SQL it is referred to as a table.
Items in Inventory Control is stored in a data file or an SQL table. It is normally made up of many records, each of which contains the description, prices, etc., for one item.
Each file/table is kept separate from the other data on the disk.
There are other types of files in addition to data files. For example, programs are stored on the disk as program files. However, file in this User documentation means data file, unless specifically stated otherwise.
As used here, purge means to remove unnecessary items. For example, Inventory Control Serial numbers can be purged of sold serial number records. The serial number records for the item range and cut-off dates that you specify are deleted (purged).
Any other items’ serial number records, and those that fall outside of the cut-off dates specified for the purge, remain in Inventory Control Serial Numbers data.
Transactions
As used in accounting, transaction means a business event involving money and/or goods and/or services. For example, a transaction occurs each time you gas up your car -- you are paying money in exchange for gasoline (goods). Or another example: you give a television set (goods) to your neighbor in exchange for the use of his lake cottage (services).
Computer software deals primarily with business events that have already taken place. Therefore, in PBS, software transaction means the record of a completed business event involving money and/or goods and/or services.
The records of sales made and payments received are examples of transactions from the area of accounting called accounts receivable. The records of your purchases and the payments you make for such purchases are transactions from the accounting area called accounts payable.
The records of quantities of goods received and sold are transactions from the accounting area called inventory control.
To post means to take transactions from a temporary file and move them to a permanent file (where other transactions probably already exist). For example, in Accounts Receivable, sales are initially entered into a temporary transaction file. After sales have been entered and edited, they are posted to the more permanent A/R Open Items.
Often, during transaction posting, information in other data is also updated. For example, when sales are posted, the account balance and historical sales figures in Customers are also updated.
As used here, function means one or more programs that accomplish a specific task. Each selection on a menu for a Passport module is a function. When you select a function from a menu, one or more programs automatically execute, thereby allowing you to accomplish the task you selected.
When a set of accounting modules is integrated, any information generated in one area that is needed in another area is automatically supplied to that other area. You don’t have to enter it twice.
PBS software is fully integrated. When Inventory Control is used with other modules, data recorded in other modules can be transferred automatically to I/C and vice versa.
Inventory Control is integrated with these other modules:
| • | Accounts Receivable sales of goods can update I/C quantities. |
| • | General Ledger distributions are generated as items are put into or taken out of inventory. These can be automatically transferred to G/L if you use General Ledger. |
| • | Order Entry automatically updates item quantities in I/C for all orders processed. |
| • | Point of Sale provides counter sales, orders and layaways of I/C items and updates quantities sold during receipt or invoice posting. |
| • | Sales Analysis is automatically updated so that it can produce reports including sales by item, by product category, and by sales volume. |
| • | Job Cost accepts items that you wish to transfer from inventory to jobs or vice versa. |
| • | Purchase Order quantity on order will display in I/C. |
When the documentation refers to an alphanumeric entry, this means that the entry can be letters of the alphabet, numerals (numbers), special symbols (*, &, $, etc.) or any combination of all three kinds. In contrast, if an entry is specified as numeric, only numbers can be used.
An item’s price is what a customer would pay to buy that item from you. An item’s cost is how much you spent to acquire that item for your inventory. The difference between the two is the margin, or gross cost, that you make on a sale of that item.
Every item in I/C has two recorded costs: a replacement cost and an average cost.
Replacement cost: This is the most current cost of an item. It is what you would pay now to replace an item in inventory.
Average cost: The average of all costs paid for an item. This is recalculated each time items are added to your inventory, and in certain situations, when items are removed from your inventory.
A serialized item is a specific unit of merchandise with a unique serial number. Only one serial number is allowed for each serialized item received. Receivings of serialized items are made as for any item, with the addition of entering serial numbers when appropriate.
Serialized inventory allows you to capture and track detailed information on individual serial numbers
A lot-controlled item is an item whose quantities are tracked within unique lot numbers. Lot numbers are specified during the normal receiving process. On-hand quantities can be viewed by lot, and sales of full or partial lots are recorded and tracked by lot number.
A kit is an inventory item that is assembled from a set of other inventory items. The inventory items from which a kit is assembled are the kit’s components, and they may either be raw materials or previously assembled kits.
A work order is a request to assemble a kit. Work orders can be immediate, in which case the kit is immediately available for sale. Alternatively, a work order may be printed, issued, and the component items removed from inventory, but the kit is not available for sale until the work order is marked as complete.
Work orders adds functions for quick, one-step assembly. In addition, kit disassembly and component modifications are allowed. Serial numbers, lot numbers, and detailed component tracking are fully supported.
Multi-company refers to the capability to do accounting functions for multiple companies with the same set of software. Accounting functions can be done for more than one company on Passport modules by selecting the Multi-company option.
At any time while running a PBS module, you can press certain keys for Help.
Graphical Mode
Help is accessible from the graphical screens using the <Ctrl>+<F1> keys. The full chapter is available.
Character Mode
You can press the <F8> for Help. A brief explanation of the particular function you are using then appears on your screen.
There are two kinds of lookups: Data Lookup and Date Lookups.
Data Lookup
Look-ups refer to a list of available entries for a particular field. Many fields allow you to press a designated key <F8> to show all available data on file. For instance, when entering an invoice you may press this key at the Account number field to bring up a list of all G/L accounts on file. Selecting an entry from this list is often easier and faster than remembering the account number or stepping through all possible entries until the right one is reached.
Date Lookup
The date lookup provides a point and click window for finding and entering date fields.
In Graphical mode the date lookup is available via the <F4> key. In Character mode access the date lookup via the <F7> key.
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Note |
In character mode, depending on where you press <F8>, this function will return a Look-up window or context sensitive Help. If a Look-up window is returned, pressing <F8> a second time will display Help for the field if available. |
Spool is a computer word meaning Save Printer Output Off-Line. Spooling is a technique that allows a report to be printed on a printer at a later time. Instead of reports going directly to a printer, they are saved as a disk file (which is usually a lot faster). When a printer is available, all or some saved reports can be printed in one long run (for example, overnight).
Passwords are required to access PBS. A password is a unique code you assign to each individual using your Passport software. Each user must enter a valid password prior to being allowed to use a protected function.
This function provides the capacity to recover corrupted data. You can also use it to convert important data to a format that can be easily interfaced to common data base and word processing modules.
You can easily configure your PBS software to work with any of the most popular printers. Additionally, instructions are given to allow you to configure the software to use virtually any other printer.
Regarding inventory, weighted average measures the total cost of items in inventory that are available for sale divided by the total number of units available for sale. Typically this average is computed at the end of an accounting period.
Suppose you purchase five widgets at $10 apiece and five widgets at $20 apiece. You sell five units of product. The weighted average method is calculated as follows:
Total Cost of Goods for Sale at Cost (divided)
Total Number of Units Available for Sale =
Weighted Average Cost per Widget
Example:
Five widgets at $10 each = $50
Five widgets at $20 each = $100
Total number of widgets = 10
Weighted Average = $150 / 10 = $15
$15 is the weighted average cost of the 10 widgets
We have included the necessary functions and instructions to allow you to upgrade from earlier Classic versions.
See the PBS Administrative documentation for more information on upgrading.
