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FIFO is the recommended Inventory part Valuation Method for our organizational users by the Finance Department. However, we noticed that some of the part creators in IFS in the past have incorrectly created parts with Standard Cost with ‘Cost Per Part’  at Cost Level. There are already transactions in IFS with this incorrect valuation method. (There are couple of Parts with ‘Cost Per Lot Batch’ at Cost level as well) . 

 

Now I need to change those parts’ Inventory valuation Method back to FIFO. What type of impact will it have if I change them directly in the Inventory Part window? (Plan is to have FIFO with ‘Cost Per Part’ for the majority of the parts and Weighted Average with ‘Cost Per Lot Batch’ for the rest) 

 

One of the special scenarios we use is that we receive via ‘Receive Inventory Part’ the project leftover quantities (since they were previously paid by the project) at zero cost which reduces the inventory unit cost overall. But when we issue the same parts I guess the unit cost is balanced. I hope this practice will not be impacted here.

Before changing the Inventory Valuation Method from “Standard Cost” to “First In First Out” you need to make sure that there is no current stock quantities of the part. Otherwise you will get an error message saying “Inventory must be empty before changing to First In First Out valuation method”. So if you have any current stock you can use “Issue Inventory Part” or “Count Inventory Part” to make the On Hand Qty = 0. Then you can safely change to FIFO. Finally re-receive the quantities back into stock using “Receive Inventory Part”. 

If you receive quantities with zero cost while using FIFO cost method, then the zero cost fifo stack records will be treated just like any other cost. So it will happen at a later point that there will be issue transactions with zero cost. It will not be “balanced”. 

Thank You @Leif Peterson, I was also thinking Issue, Count Out or Scrap the subject parts, change the Inventory valuation method and then receive them again. I guess scrap is not an option after reading your reply. 

Yes - for future issues of FIFO stock received at zero cost, it will happen at zero only. Thereby it will be balanced again in the future when all those parts will be issued to projects again. 

How about parts having weighted average with ‘cost per lot batch’ enabled? Those also can be received at zero cost, issued and received back when we have to change the inventory valuation method right? 

Yes, it will work the same way if you start off with Weighted Average per Lot/Batch. No problem.

@Leif Peterson one last question here. I noticed that for the parts ‘Cost per lot batch’ enabled along with ‘Standard Cost’, IFS allowed me to change the inventory valuation method directly to Weighted Average even though there were parts in inventory. They don’t need issuing and therefor later re receiving to inventory. 

 

Is this test result correct? 

Yes, it is correct. It’s only when you want to change to either FIFO or LIFO that you need to issue and re-receive. 

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