Inventory costing

Sterling™ Order Management System provides the capability to maintain inventory costs against specific products assuming that the costs are passed through Sterling Order Management System from financial or procurement systems.

Sterling Order Management System can also provide a method for determining the cost of returned items. By maintaining inventory costs, Sterling Order Management System can pass cost information to financial systems and act as a repository for "cost-centric" reporting.

Sterling Order Management System can be set up to maintain inventory costs on a node-by-node basis. For each node, Sterling Order Management System maintains records for all inventory receipts at the purchase order, item, and node level. Sterling Order Management System also maintains records for shipments out of the node.

Sterling Order Management System provides two inventory costing methods:

  • Inventory Costing Method 1 - Average Costing
  • Inventory Costing Method 2 - First In First Out (FIFO)

Inventory Value is the total monetary value of all on-hand inventory at a given location, based on per unit Average Cost of each item. It is updated whenever inventory is moved in to or out of an on-hand classification.

Sterling Order Management System calculates the new inventory value using the following formula:


Old Inventory Value + Change in Inventory Value Due to Transaction

where “Change in Inventory Value Due to Transaction”:

  1. Can be positive or negative (depending on whether the transaction represents a receipt or issue from on-hand inventory)
  2. Is calculated from transaction quantity * unit value of the transaction document

Sterling Order Management System provides integration into financial applications to vary ledger account determination by something such as product line or department. The Posting Classification attribute specified during Item definition is used to group items into appropriate Financial ledger groups. When translating a transaction from Sterling Order Management System into a series of financial postings, the classification value for the item in the transaction is carried in the interface.