conversion factors

Hi ​@drickel,

Inventory Conversion Factor

• This factor defines the relationship between the purchase unit and the inventory unit. If you store in a unit (inventory unit) and purchase this part with a different unit (purchase unit), this factor shows the relationship between them.
• Formula:
  Purchasing Unit = Inventory Unit × Purchasing Conversion Factor
  For example, if you buy in boxes of 4 pieces, and have the inventory stock in pieces, then the conversion factor would be 4.
• It ensures that when you receive goods in a purchase unit (e.g., box), the system correctly converts them into inventory units (e.g., pieces) for stock control.

Price Conversion Factor

• This is used when the price unit differs from the inventory unit.
• For instance, if the supplier quotes a price per box, but your inventory tracks pieces, the price conversion factor adjusts the cost per inventory unit.
• Example: If a box contains 4 pieces and costs $100, the price per piece becomes $25 after applying the conversion factor.

Similar logic applies when selling in different units than inventory units, and this is configured in Sales Part window.

I hope this is clear. If not, please let me know.

Regards,

Pilar

​@drickel I always need to refer to my notes on conversion factors if I want to get them right the first time.

Supplementing what ​@Pilar Franco provided above:

Inventory Conversion Factor

• This is the conversion factor used to convert the purchase quantity expressed in purchase unit of measure (UoM) to quantity expressed in inventory UoM.
• The conversion formula is as follows:

How many Inventory units comprise (1) Purchase unit?

Example:

The part is purchased in kilogram [kg] and stored in gram [g]. To convert the purchased quantity of 2 [kg] into inventory quantity [g], use inventory conversion factor 1000, i.e., 2 [kg purchased] * 1000 [Inv. Conv. factor] = 2000 [g Inventory].

When modifying the unit of measure (e.g., Purch UoM), the conversion factor will automatically display as found in IFS/Application Services, in the Conversion tab of the Unit Relationships window or page, when the units of measure belong to the same base unit. Otherwise the conversion factor will be set to blank or zero forcing you to enter a correct value.

Price Conversion Factor

• The conversion factor used to convert the purchase quantity expressed in price unit of measure (UoM) to the quantity expressed in purchase UoM.
• The conversion formula is as follows:

How many Purchase units comprise (1) Price unit?

Example:

The part is priced in gram [g] and purchased in kilogram [kg]. To convert the priced quantity of 2000 [g] into purchase quantity [kg], use price conversion factor 0.001, i.e., 2 kg purchased = (2000g priced * 0.001)

Thank you.  How does the price conversion factor relate to the standard cost?  For example, if we issue a purchase order for 1 box with 4 parts for $100 and we set an inv conv factor of 4, with the Supplier for Purchase Price of $100, I can see that the receipt will show 4 parts at $25 each.  I believe the standard cost should be the unit cost of $25.  Do we need to put a price conversion factor in too? 

Hi ​@drickel,

Price conversion factor is not related directly to standard cost. This is only used if the price you buy (or sell the part) is not the price per inventory unit (price per piece), but price per other unit (price per box, for example). By using this price conversion factor, system is capable to fetch the price per unit in inventory, which will be the purchase unitary cost in that purchase order.

I’m not expert in cost handling but I think that, if you configure your inventory part with a Valuation Method of Standard Cost, the unit cost set there will be used by the system, that will take this cost in the inventory transaction and then in the aggregated inventory value. In that case, purchase unitary price will not be considered for the cost value in inventory transaction.

Regards,

Pilar