5/21/2019 Stock Management

System
Chapter 2

Setting Up CNET ERP Stock

Management System

Semahegn Abebe
CNET SOFTWARE TECHNOLOGIES PLC
Table of Content
1 SETTING UP STOCK MANAGEMENT SYSTEM .................................................................................................. 3
1.1 MAINTAINING STORE .........................................................................................................................................3
1.2 MAINTAINING GSL............................................................................................................................................7
1.3 BEGINNING ......................................................................................................................................................7
1.3.1 Beginning cost..........................................................................................................................................7
1.3.2 Beginning quantity ...................................................................................................................................9
1.4 VOUCHER SETTING RELEVANT TO STOCK SYSTEM ...................................................................................................10
1.4.1 Lifetime and Store Settings ....................................................................................................................11
1.4.2 Store Map ..............................................................................................................................................12
1.5 CONFIGURATION PROPERTIES ............................................................................................................................13
1.6 ABC ANALYSIS RANGE .....................................................................................................................................16
2 STOCK SYSTEM TECHNOLOGIES. .................................................................................................................. 18
2.1 LABEL PRINTER ...............................................................................................................................................18
2.2 MOBILE COUNTING DEVICE ...............................................................................................................................19
2.3 INDUSTRIAL SCALE ...........................................................................................................................................20
2.4 WEIGHT BRIDGE .............................................................................................................................................21
3 STOCK MANAGEMENT SYSTEM VOUCHERS ................................................................................................. 21
4 STOCK ITEM LIFETIME MANAGEMENT ......................................................................................................... 31
4.1 ADVANTAGES OF AUTOMATED ARTICLE/PRODUCT LIFETIME MANAGEMENT ..............................................................32
4.2 SHELF SETUP OF PERISHABLE ITEMS ....................................................................................................................32
4.3 TECHNIQUES FOR TRACING PERISHABLE GOODS ....................................................................................................33
4.3.1 Recording Beginning Stock of Articles with Lifetime ..............................................................................33
4.3.2 Transact Articles with Lifetime...............................................................................................................33
4.3.3 Monitor Balance and Life .......................................................................................................................34
5 INVENTORY COSTING .................................................................................................................................. 34
5.1 INVENTORY COSTING METHODS.........................................................................................................................35
5.2 WEIGHTED AVERAGE INVENTORY COSTING ..........................................................................................................37
1 Setting up stock management system
1.1 Maintaining Store

For the system to recognize and process store, it must be registered and maintained in to the system. CNET
ERP is a multi-store system and system administrators can insert multiple store in to the system but the no
of store to be recognized by the system depends on the type of licenses the client purchases. In order to
maintain a store, the user has to select System Setting  Company Setting  Organization Unit  Store
option from the Enterprise Management Console (EMC) in order to maintain store as shown on the following
screenshot:

As you can see as the Store option is selected the list of previously maintained stores will be displayed in the
grid to the right of the menu items.

If the user wants to maintain a new store, he/she needs to click the New command button from the top
section of the window. This time the system displays the store maintenance window as shown on the
following screenshot:
New – This command button is used to initiate registration of a new store. When the user clicks this button
all the controls will be made ready to accept new store record.

Save – This command button is used to save the store under maintenance.

Close – This command button is used to close the store maintenance window.

Description – This field refers to the name of the store such as main store, satellite store, head office store,
etc.

Parent – This is any organization unit i.e. department, branch or another store that is responsible for or
contains the store under maintenance. When the user clicks the drop down arrow, the system displays the
list of previously maintained stores and other organization units as shown on the following screenshot:
Specialization – This field is responsible to tell the specific purpose the store under maintenance is dedicated
for. It is responsible to tell whether the store under maintenance is main store, branch outlet or sales outlet.
When the user clicks the drop down arrow, the system displays the list of preregistered specialization options
as shown on the following screenshot:
Abbreviation – This is the short form of the store.

Responsible Person – This field tells the person in charge of the store under maintenance. This is usually the
storekeeper. When the user clicks the drop down arrow, the system displays the list of employees for the
user to select one as shown on the following screenshot:

Remark – This is any textual additional information about the store under maintenance.

If you want to edit previously registered store record, you can double click the specific store record and Save
the modified record as shown on the following screenshot:
1.2 Maintaining GSL

As discussed in previous section, GSL elements are building blocks for any transactions in the CNET ERP. In
the case of CNET ERP Stock system, article, organization and person are major players in most of the
transactions. Organization and person are mostly used as supplying, receiving or issuing agents to the articles.
Whereas articles are mandatory components that are being mobilized through different kinds of transactions.

In fact, all article types in the CNET ERP are not transacted through the inventory system. Most commonly,
item, product, and semi-finished product are transacted through the inventory system. Thus, the maintenance
of articles of the listed type is one of the main tasks when deploying the CNET ERP Inventory System. For
the detail procedure of maintaining, you can refer to article maintenance section of the CNET ERP GSL
Elements document.

1.3 Beginning

For a stock system to function properly, the system need to know the current standing position of the stock
before processing balances or value for future transaction. These beginning balance used as a base line for
stock balance and stock valuation calculation. Once a beginning is inserted in to the system, one can only
alter the balance using transactions to deduct or add quantity or value to the stock. Mostly beginning
balances are determined at the beginning or ending of a financial period. The ending balance of period 1 will
be the beginning balance for period 2.

These balances are divided in to two, balances in terms of quantity and balance in terms of cost.

1.3.1 Beginning cost

This section is used to maintain article beginning cost. Beginning cost tells the system the monitory value of
a stock at the time of the system beginning period. There are two ways of registering beginning balance into
the system

1. At the time of article maintenance and through the inventory counting.

2. Mass import from excel using data importing tool on the EMC

The system groups the Beginning and Stock values under Stock Balance tab and the Sock Level under Stock
Level tab as shown on the following screenshot:
This section is used to maintain the item beginning cost on the given period and the stock balance in each of
the registered stores. When the user selects the New button, the system displays the beginning balance
maintenance window as shown on the following screenshot:
Period – this is the period for which the beginning cost is maintained. When the user clicks the down drop
arrow, the system displays preregistered period values as shown on the following screenshot:

Cost – this is the beginning cost value for the selected period.

Is Provisional - This field tells whether the given beginning cost is actual or subject to change. This value will
stay true only until the next closing period.

Remark – This is any additional textual description about the beginning cost.

1.3.2 Beginning quantity

Beginning quantity tell the system the count balance of the stock position at the beginning of system
beginning period. Determining of the stock beginning quantity is usually made through stock count during
inventory closing. Inventory closing will be discussed in the Inventory Closing section of this course while
below sections show how the beginning will be maintained through article maintenance.

After maintaining the stock balance, the quantity at each store should be maintained. The list of stores will
be displayed on the right pane and the user can double click each store and maintain the stock balance as
shown on the following screenshot:
Store – this is the reference to the store to which the stock balance is going to be maintained.

Period – This is the period for which the stock balance is maintained.

Beginning – This is the beginning stock balance (stock quantity) on the given period.

Batch – This is the batch number of the item under maintenance.

Remark – this is any textual description of the stock balance entry.

Note: It is an accounting rule that if an item has a count value of more than 0 it should have a beginning cost
value of more than 0 and vice versa.

1.4 Voucher Setting relevant to stock system

There are three groups of settings in relation with vouchers – lifetime, store and store map setting. In the
following section all of the setting categories will be discussed.
 1.4.1 Lifetime and Store Settings

Sn. Property Description Value Options

Serial

1. Enable Serial This is used to tell the system whether to enable the user to use the True/False
Number Or serial number while preparing the given voucher or not.
Lifespan
Remark: Even if an article is a serialized one the voucher setting can
override it. This can happen when preparing a proforma that includes serial
articles.

 NewInsert
2. Serial Input Type This setting is used to tell the system whether serial number is going
 Selection
to be inserted or be selected from available options.
This setting is used to suggest the user which batch to transact first during  FIFO
3. Serial Movement
voucher preparation.  LIFO
Suggestion  None
This property is used to tell the system whether to automatically compute
4. Use Automatic the production and expiry dates automatically or not. By default the
True/False
Lifespan system takes the current date as the production date and computes and
sets the expiry date by adding the lifetime value on the current date.

Store Settings
This setting tells whether destination store is a required field during
5. Enable transactions or not.
True/False
Destination Store
This setting tells whether source store is a required field during
6. Enable Source transactions or not.
True/False
Store
This is to tell the system whether the given voucher is a store moving
7. Is Store Moving voucher or not.
True/False
Voucher

8. Mandatory This property is used whether to make the destination store True/False
Destination Store selection is mandatory or not.
Sn. Property Description Value Options

9. Mandatory This property is used whether to make the source store selection is True/False
Source Store mandatory or not.
 NotApplicable
10. Stock Balance This property is used to tell the system which stores will be
 AllStoreBalance
View Option displayed along with their balance as shown in the following
 EnableStore
screenshot:

This setting tells whether to use the default stores configured under
11. Use Mapped ModulesVoucherStore Map automatically or not.
True/False
Store

1.4.2 Store Map

This setting is used to tell the system which stores should appear on the source and destination store controls
when voucher of the given type is prepared. As the user click the ModulesVoucherStore Map option of
the Enterprise Management Console, the system displays the store mapping interface as shown on the
following screenshot:
 The list of all registered stores will be displayed on the left panel and in the middle there are buttons that
can be used to add stores to the source list or destination list. The user should click the Destination or Source
tab to add stores into them.

Remark:

1. To set the Source stores, the user should click the Source tab, select the sore and click the add button
in the middle.
2. To remove the item from the list, you should select the store from the right list and click the remove
button from the middle bar.

1.5 Configuration Properties

Currently the CNET ERP Stock Management System has two categories of system level settings – Closing
Settings & Inventory Settings. In the following table settings under both categories will be described:

Sn. Property Description Value Options

Closing Setting
Sn. Property Description Value Options

1. Closing Frequency This property tells the frequency of  Every_Shift – closing will be done after each
inventory closing. shift.
 Every_Day – closing is done at the end of a
business day.
 Every_Period – closing is done at the end of
each period
 Every_Quarter – Closing is done at the end of
each quarter
 Every_Fiscal_Year – closing is done at the end
of a fiscal year.

2. Closing Period This setting tells the period When the user clicks inside the input box of
definition that is designed to be Closing Period, the system displays the list of
used for inventory closing. available periods as shown on the following
screenshot:

3. Enforce Closing This setting is used to tell the True/False

system whether closing is
mandatory or not. If it is
mandatory, the system will not
allow the user to move to the next
shift, day, period, quarter or year
without doing the closing activity

Notifications
Sn. Property Description Value Options

1. Enable Dead This setting is used whether to True/False

Stock Notification check dead stocks during login and
provide notification or not. Dead
stock criteria is captured in Dead
Stock duration in days.

2. Enable Expiry This setting is used whether to True/False

Date Notification check expiry date of goods at the
time of system login and provide
notification or not.

3. Enable Minimum This setting is used whether to True/False

Level Notification check minimum stock level status
at the time of login and provide
notification or not.

4. Dead Stock This setting is used to tell the Integer value

Duration in days system the minimum number of
days an article is not transacted to
be considered as dead stock.

Inventory Settings

1. ABC Analysis This setting is used to tell the  PercentBased – percent is used for ABC analysis
Valuation system whether to use percent or valuation
value option while preparing ABC  ValueBased - value is used for ABC analysis
Analysis report. valuation

2. Enable Stock This setting tells the system True/False

Balance Service whether stock balance calculation
is enabled or not. If enabled the
system calculates the stock
Sn. Property Description Value Options
balance based on the stock
balance calculation rule i.e. real-
time or scheduled.

3. Show CS Number True/False

4. Stock Balance This setting tells the type of stock  Real-time – Stock balance is calculated at each
Calculation balance calculation option i.e. to transaction.
whether to calculate after each  Scheduled – stock balance is calculated at
stock affecting transaction or scheduled times
based on some schedule.

5. Stock Balance This is the time of a day at which Time of day in a format hh:mm:ss
Service Starts the stock balance calculation is
going to be started.

6. Update Stock This is the schedule with which  Daily – stock balance is computed and recorded
Balance Items balance records are going to be every day.
updated.  Weekly– stock balance is computed and
recorded every week.
 Monthly – stock balance is computed and
recorded every month.
 Yearly– stock balance is computed and
recorded every year.
 All

1.6 ABC Analysis Range

This setting is used to set the A, B, and C categories range that will be used to identify stock items in each
category. To maintain the ranges the user needs to select GSL  Miscellaneous  ABC Analysis Range tab
of the Back Office Client as shown on the following screenshot:
To edit the ranges, the user should double click the item from the list and make the modifications as shown on
the following screenshot:
Description – It is the stock category

Min – Minimum percentage

Max – Maximum percentage

Remark – It is any additional note about the range under maintenance.

2 Stock System Technologies.

2.1 Label Printer
Label printer is a printer used to print a label sticker that will be attached on
stock items for easily identifying and tracking the items more efficiently.

There are two types of label printer namely, direct thermal and thermal
transfer printers

Direct Thermal Printers - Direct thermal (DT) printers are much like
thermal transfer printers, but do not require an ink ribbon. Instead, labels
that pass through this type of printer have a special layer of chemicals
beneath the label surface that are heat-activated to create printed images.

Without the need for a printing ribbon, the cost per label tends to be lower,
but the labels themselves may be more expensive because of the special
chemicals that are added to the construction.

DT labels are not meant for long-term use, especially if there is UV light
exposure.

DT labels are primarily chosen for affordability and/or the ease in setting
up the printer with only one media supply to monitor.

Labels printed with DT printers usually are not as vibrant and sharp as those
produced with TT print. If they are, it is likely you are using too much heat
which can affect line definition and barcode scanner readability.
Some DT printers have the capability to switch back and forth between
direct thermal and thermal transfer printing.

Thermal Transfer printer- Thermal transfer (TT) types of label printers

are the industry’s choice for high-quality, long-lasting labels.

TT printers can range from low cost, entry-level desktop models such as the
Zebra GK420t or the TTP-245C_Series to industrial-grade, continuous
printing systems. The latter are used in professional, high volume settings.

Thermal transfer printers utilize ink ribbons made of wax, resin, or a blend
of wax and resin. It’s important to match the label material with the right
ribbon to get the best print quality and durability so all of TT printers come
with ribbon recommendations.

TT printers use lower heat settings than most other variable print
technologies. This allows for the widest choice of facestock & adhesive
options including paper, plastic, polyester, etc. With more variety in label
materials, you will also find more solutions for tough label applications,
including chemical resistance, oil resistance, cold and hot temperatures,
outdoor exposure, long-distance scanning… the list goes on and on…

2.2 Mobile Counting device

This mobile counting device is consists of two components namely the
smart mobile device and the counting software app.
The smart mobile device: should at least be equipped with the following
specification to host inventory counting app.
 Smart phone device that runs android operating system with android 8

or above.
 The smart phone should have an auto focus back camera with min

8MP resolution.
 Minimum of 2GB RAM, 64 GB Storage.

Counting software app: As a part of CNET enterprise mobility, mobile

stock counting is available with special license to activate this feature.
This app will enable to accommodate list of article database lookup,
define counting store and period. With these data as a reference, the
app will enable the user to scan a barcode and manually insert the count
value in to the app and save the record.
For items which do not have a barcode label, the app will provide a
manually type the item code with a lookup list as a search assistance and
then manually insert the count value.
After the count is completed, the software has multiple feature to send
the count data to the central stock system database for further analysis.

2.3 Industrial scale

These scales are similar to that of price computing scale except the
capacity and application. Industrial scales are large in size and capacity
were as price computing scales are smaller in size and capacity. Industrial
scales are a floor standing scales were as price computing scales are
desktop scales. Both can be applied for the same purpose except the size
and capacity.
Industrial scales are used to measure article with a weight value during
store transaction. Digital industrial scales also provides an interface with
PC for direct data capturing to avoid errors when manually inserted.
Most of the digital scales has a serial interface with low level serial data
stream which is received and interpreted by the CNET ERP device
management class to be used as a weight value for transaction quantity.
For instance, when a sack of macaroni received in the store, the user can
open the goods receiving voucher and put the sacks of macaroni on to
the digital scale, the system automatically populate the scale reading
directly from the scale in to the voucher quantity field for the receiving
transaction. In this example, the macaroni received quantity is
determined by the scale reading automatically which avoid human error
with fast response.
These scales ranges from 5kg up to 200kg.
 2.4 Weight Bridge

Also called truck scale (US), weighbridge (non-US) is a large set of scales,
usually mounted permanently on a concrete foundation that is used to
weigh entire road vehicles and their contents. By weighing the vehicle
both empty and when loaded, the load carried by the vehicle can be
calculated.

Truck scales can be surface mounted with a ramp leading up a short

distance and the weighing equipment underneath or they can be pit
mounted with the weighing equipment and platform in a pit so that the
weighing surface is level with the road. They are typically built from steel
or concrete and by nature are extremely robust.

In earlier versions the bridge is installed over a rectangular pit that

contains levers that ultimately connect to a balance mechanism. The most
complex portion of this type is the arrangement of levers underneath the
weighbridge since the response of the scale must be independent of the
distribution of the load.

Modern devices use multiple load cells that connect to an electronic

equipment to totalize the sensor inputs. In either type of semi-permanent
scale, the weight readings are typically recorded in a nearby hut or office.

Many weighbridges are now linked to a PC which runs truck scale software
capable of printing tickets and providing reporting features.

They are used in industries that manufacture or move bulk items, such as
in mines or quarries, garbage dumps / recycling centers, bulk liquid and
powder movement, household goods, and electrical equipment.

3 Stock management system vouchers

In CNET ERP stock balance is computed from transactions that affects the movement of stocks with beginning
consideration. Stock balance is calculated for each item, in each store, and at a specified point of time. Stock
 balance of a specified item in a specific store at a given point of time = beginning + sum of quantities of
receiving documents – sum of quantity of issuing documents. This can be presented in a detail transaction
format called bin card showing the beginning, list of receiving documents details and list of issuing documents
details. Stock balance can also be shown in a summarized format indicated in the above formula. Once a
beginning is set, deduction and addition actions are carried out with transactions that affects stock movement
in a positive or negative manner.

Sn. Voucher Description

1. Cash Goods Receiving This voucher is used to receive goods from a third party supplier that are
Voucher purchased with cash. This type of receiving is mostly used for small and
Code: 194 perishable items with minimum shelf life. This type of receiving is not
Abbreviation: CGR recommended for intermediary and big sized companies as it is not industry
best practice.
Possible References  Purchase Order Voucher
 Cash Sales Invoice
2. Credit Goods receiving This voucher is used to receive goods from a third party supplier that are
Voucher purchased with credit. This is the most common form of receiving used in
Code: 127 most companies for a post-paid or pre-paid trading where the supplier
Abbreviation: CRGR hands over the goods to the receiving store before claiming payment to
finance by presenting proof of goods receipt by the company store.
Possible References  Purchase Order Voucher
 Credit Sales Voucher
3. Imported Goods Receiving This voucher is used to receive goods that are imported from abroad. Goods
Voucher imported from abroad has a different processing method in order to
Code: 126 determine the cost and taxation purposes.
Abbreviation: IMGR
Possible References  Purchase Order Voucher
4. Shortage Goods Receiving This voucher is used to maintain goods that are expected to be received
Voucher from the supplier but are not received fully or partially as the supplier
Code: 192 deliver the items/products. This voucher helps record shortages in
Abbreviation: SGR procurement processes and claim insurance for recovery.
Possible References  Purchase Order Voucher
Sn. Voucher Description
5. Damaged Goods Receiving It is a document that is going to be prepared at times received goods are
Voucher fully or partially damaged. It contains the items, quantities and agreed
Code: 191 prices of the damaged items. This voucher moves the items to the main
Abbreviation: DGR damage store. This voucher helps record damages in procurement
processes and claim insurance for recovery.
Possible References  Purchase Order Voucher
6. Replacement goods This voucher is used to receive replacement goods from the supplier as a
receiving voucher result of supplier replacement request. This voucher helps record separately
Code: 307 the direct purchase receiving and the replacement receiving.
Abbreviation: RGR
Possible References  Purchase Order Voucher
 Replacement Request Voucher
7. Consignment goods This voucher is used to receive consignment goods from the supplier. This
receiving voucher voucher doesn’t change the ownership of the goods. Items in this voucher
Code: 125 must be received in credit goods receiving voucher for ownership transfer
and process payment as a result. This type of receiving is made when the
Abbreviation: COGR
goods original owner gives the goods to a retailer in a “pay me when sold”
condition. The retailer should keep track of the sales of these items and
make payment to the supplier by transferring the title did.
This transaction is very safe for the retailer because it can hold goods
without prior investment but it can cause a negative stock and if not
properly managed, it can cause accounting discrepancies.
Possible References 
8. Internal Good receiving This voucher is used to receive goods at the lower levels of stores such as
voucher branch back store or sales outlet stores directly from the supplier. It can also
Code: 314 be used to receive goods transferred within the company remote store if
Abbreviation: IGR the stores are not connected centrally.
Possible References  Internal Store Request Voucher
 Purchase Order Voucher
Sn. Voucher Description
9. Replacement request This voucher is used to request for replacement of goods found to be
voucher defective due to supplier’s fault which was previously received from the
Code: 308 same supplier. Up on getting a goods replaced by the supplier, replacement
Abbreviation: RRQ goods receiving must be issued by refereeing this voucher.
Possible References  Purchase Order Voucher
 Shortage Goods Receiving Voucher
 Damaged Goods Receiving Voucher
10. Suppliers Goods Return It is a document that contains list of items to be returned to the supplier
Voucher due to some kind of defect or any misunderstanding between a company
Code: 130 and its supplier. This document is used if goods are already received by the
Abbreviation: SUR company.
Possible References  Credit sales invoice
 Cash Sales invoice
 Consignment goods receiving voucher
11. Store Request Voucher This document is prepared as a formal document showing a demand or
Code: 115 interest by a branch, sales outlets, factory floor or department wants
Abbreviation: SRQ articles from the upper store level of the organization to refill or consume
goods. This document will be used as reference to issue or transfer the
requested goods to the requester body. Depending on company procedure
this requests should be approved before executing next steps.
Possible References  Internal Store Request Voucher
 Cash/Credit Sales Invoice
 Store Order Voucher
12. Internal Store Request This document is prepared as a formal document showing a demand for
Voucher goods by a sales outlet, factory floor or department from the branch back
Code: 116 store. This document will be used as reference to issue or transfer the
Abbreviation: ISRQ requested goods to the requester body. Depending on company procedure
this requests should be approved before executing next steps.
Possible References  Cash/Credit Sales Invoice
13. Store Order Voucher
Sn. Voucher Description
Code: 117 This voucher is prepared to authorize the store clerk for the issuance or
Abbreviation: SOV transfer of items or products. This document mostly follows the store
request by internal party. This document may or may not be used
depending on the organization procedure. This document can be by passed
by simply preparing the issue or transfer document performing the effect in
a short cut.
Possible References  Internal Store Request Voucher
 Cash/Credit Sales Invoice
14. Store Issue Voucher It is a document that is used to transfer item/product vertically from a main
Code: 118 store to branch stores with a context of cost and consumption. In most cases

Abbreviation: SIV this voucher is used to indicate that items contained are costed or converted
as input cost for production or consumed as expense.
Possible References  Store Request Voucher
15. Store Transfer Voucher It is a document that is used to transfer item/product from the main store to
any other store without the context of cost. It mostly tells that items are
Code: 119
moved from store x to store y without being consumed or converted to cost.
Abbreviation: STV
This vouchers are commonly used on the upper level of stores and usually
used to move commodities from main store to lower stores or between two
main stores or between two lower stores. This document has a dual effect on
the two stores involved in the transaction, deduct from the source store and
add to the destination store.
Possible References  Store Request Voucher
16. Store Return Voucher It is a document that is used to return item/product vertically from branch

Code: 120 stores to the main store. This voucher is almost the same as the store transfer
voucher but in a different direction which is from outlets or branch store to
Abbreviation: STR
the main store for different reasons. It is also used to move items with-out
cost consideration. This document has a dual effect on the two stores
involved in the transaction, deduct from the source store and add to the
destination store.
Possible References  Store return transit voucher
Sn. Voucher Description
17. Internal Store Request This voucher is the same voucher as store request voucher but the different is
Voucher that the place of application. Store request is used to request items from the

Code: main store but internal store request is used by a low level stores such as
sales floor and kitchen or bakery to request stock items from branch back
Abbreviation: store. If this request is not entertained by the branch back store due to goods
availability, a store request voucher will be issued by the branch back store to
the main store using store request voucher. The reason why need two
vouchers for store request is that in multiply hierarchal store model the
request should be made by different users assigned in different places that
needs procedural and record isolation.
Possible References 
18. Internal Store transfer It is a document that is used to transfer stock items among stores within a
voucher branch such as Sales Floor, Kitchen/Bakery, Branch Damage Store and

Code: 313 Branch Store. It contains the list of items, quantities, source and destination
stores information. This voucher is used in hierarchical store model to
Abbreviation: ISTV transfer goods from the back stores to sales outlets/kitchen/bakery or from
branch damage store to back store/sales outlets/kitchen/bakery. It can also be
used to transfer goods among sales outlets. Thus, this voucher is used at a
branch level. This voucher can be prepared in response to internal store
request voucher or as damaged goods are recovered and need arises to return
them back to the back store, sales outlet, kitchen or bakery departments.
Possible References  Internal Store Request Voucher
 Internal Damage Return Voucher
19. Internal Store Issue It is a document that is used to issue goods from any of the branch stores to
Voucher kitchen or bakery with a cost or expense context. This voucher can also be

Code: 128 used to issue goods from branch stores to consumer departments for internal
consumption This voucher, like most other vouchers, contains the list of
Abbreviation: ISI
items, quantities, source and destination stores information. This voucher is
often replaced by internal store transfer vouchers as the transfer is made
among different stores within the branch. This voucher can be used in all
cases store models except the single branch single store model.
Possible References  Internal Store Request Voucher
Sn. Voucher Description
20. Internal Store Return It is a document that is used to return item/product from sales floor or
Voucher kitchen/bakery to a branch back store. It contains the list of items, quantities,

Code: 312 source and destination stores information. This voucher is used in the case of

Abbreviation: IRV hierarchical store model, where the branch level back store exists.

Possible References  Internal Store transfer voucher

 Internal Good Receiving Voucher
21. Internal damage store This voucher is used to move goods from branch back store, sales outlets,
return voucher kitchen or bakery to the floor damage store or branch damage store. The
315 items transferred to the damage stores will be collected and transferred to
IDSR the main damage store or in some cases they can be fixed and transferred
back to the store they came from using the internal recovery voucher.
Possible References  Internal Store transfer voucher
22. Positive Stock Adjustment It is a voucher that contains list of items/products, quantity and amount to
Voucher which positive stock quantity adjustment is required for goods found to be

Code: 121 less on the system but more on the physical count. It is used after inventory

Abbreviation: PSA count for resolving quantity discrepancies that comes due to different reasons
such as transaction errors by using wrong code or picking the wrong product
during transaction.
Possible References 
23. Negative Stock Adjustment It is a voucher that contains list of items/products, quantity and amount to
Voucher which negative stock quantity adjustment is required for goods found to be

Code: 306 more on the system but less on the physical count. It is used after inventory

Abbreviation: NSA count for resolving quantity discrepancies that comes when goods are lost,
misplaced or stolen.

24. Delivery Voucher It is a document is used to transport list of items or products, quantities that
Code: 131 are purchased by the customer. It serves as a confirmation that the customer

Abbreviation: DOV has received the required items or products. This document can refer the cash
or credit sales invoices.
Possible References  Cash Sales Invoice
 Credit Sales Invoice
Sn. Voucher Description
25. Dispatch Voucher This voucher is used to distribute goods from the main store to other branch
Code: 132 outlets. It contains the list of items needed to be dispatched, the quantity, and

Abbreviation: DIV the price. This voucher is used as goods that are received at the main store
are going to be distributed to the branch back store in the case of hierarchical
stores or sales outlets in the case of parallel stores model.
Possible References  Imported Goods Receiving Voucher
 Goods Receiving Voucher
26. Goods Disposal Voucher It is a document that contains list of items/products to write-off from the
company stock. This document affects the stock balance and cost. This
Code: 129
document must follow due process as it may require check and balance by
Abbreviation: GDV
auditors or tax authorities. Goods that are transferred to the damage store can
either be maintained and returned back to the main store or if the goods are
no more usable it will be disposed after an approval from the management
body. Goods disposal voucher can refer to damage return voucher that was
used to receive the goods to the damage store.
Possible References  Disposal request voucher
27. Weight Bridge Voucher This voucher is created as weight bridge device is in use and is used to

Code: 240 monitor stock quantity through the weight value captured from the weight
bridge voucher. For example a track want to load or unload goods and the
Abbreviation: WBV
system wants to monitor this activity by first weighing the empty track and
take subsequent weight measurements as goods are loaded on to the track by
calculation the difference in weight value to determine or cross check the
quantity of the goods being transacted.
Possible References  Store order voucher
 Cash/Credit Sales Invoice
28. Gate pass voucher This document contain a list of goods prepared by the organization to
Code: 133 authorise the security guards at the gate to let go the customer or to let the

Abbreviation: GPV issued or purchased items pass through the gate. It contains the list of items
purchased or issued to the customer or the requesting outlet.
Possible References  Cash Sales Invoice
 Credit Sales Invoice
 Delivery Voucher
Sn. Voucher Description
 Store Transfer Voucher
 Local goods transit vouchers
29. System cost Adjustment This is a system generated voucher that is used to adjust cost during negative
Voucher stock balance on a stock ledger.

Code: 231
Abbreviation: SCA
Possible References 
30. Item consumptions This voucher is used to maintain goods internally consumed such us
Voucher stationery, spare part, etc… at different departments of the organization. It is

Code: 134 followed by store request or store order voucher. This voucher is used to

Abbreviation: ICV monitor and record cost consumption incurred by internal departments.

Possible References  Store Order Voucher

 Store Request Voucher
31. Damage Transfer Voucher This voucher is used to transfer damaged goods between two damage
Code: 309 stores such as from branch damage store or transportation store into the
Abbreviation: DTV main damage store.
Possible References  Internal Damage Return Voucher
 Damage Transit Voucher
32. Damage return Voucher This voucher is used to return damaged goods from upper active store to
Code: 310 the damage quarantine store such as from the main store to the main
Abbreviation: DRV damage store. This voucher can refer to one or more internal damage
return vouchers or to one or more store return vouchers.
Possible References  Internal Damage Store Return Voucher
 Damage Return Transit Voucher
 Transit Receiving Voucher
 Store Transfer Voucher
33. Local goods transit This voucher is used to transfer goods from the main store into a
vouchers transportation vehicle. The transportation vehicle is considered as a store.
Code: 333
Abbreviation: LGTV
Sn. Voucher Description
Possible References  Store Request Voucher
 Store Order Voucher
34. Inter-store transit voucher This voucher is used to transfer goods from a branch store to a
Code: transportation vehicle. This voucher is usually used as goods are transported
Abbreviation: from one branch back store to another branch back store.
Possible References  Internal Store Request Voucher
35. Transit receiving voucher This voucher is used to receive goods from the transportation vehicle. It is
Code: 336 issued by branch back stores.
Abbreviation: TRV
Possible References  Local goods transit vouchers
 Inter-store transit voucher
36. Store return transit voucher This voucher is used to return goods from branch back store to the
Code: transportation vehicle. The returned goods transported this way will be
Abbreviation: received by the main store using the store return voucher. The store return
voucher can refer to the store return transit voucher.
Possible References  Transit Receiving Voucher
 Internal Store Return Voucher
37. Damage return transit This voucher is used to load damaged goods from the branch back store to
voucher transportation vehicle. The damaged goods transported this way will be
Code: 266 received by the main damage store using the damage return voucher. The
Abbreviation: DRT damage return voucher can refer to the damage return transit voucher.
Possible References  Transit receiving voucher
38. Disposal request voucher This voucher is used to request disposal from the main damage store. It is
Code: 283 used for enforcing proper managerial approvals before any item is disposed
Abbreviation: DRQ from the main damage store. In smaller organizations where there is no
disposal procedures can be handled with the disposal voucher itself.
Possible References  Disposal request voucher
39. Supplier return request This voucher is used to request return. It is prepared by the main store and
voucher
is addressed to the supplier.
Code: 335
Abbreviation: SRRQ
Sn. Voucher Description
Possible References  Store Return Voucher
40. Damage Recovery Voucher This voucher is used to move goods from the main damage store to the
main store after maintenance or management decision.
Code:
Abbreviation:
Possible References  Damage Return Voucher
41. Internal Damage Recovery This voucher is used to move goods from the branch damage stores to the
sales outlets or main stores based on from the stores they are previously
Voucher
moved to the damage store.
Code:
Abbreviation:
Possible References  Internal Damage Return Voucher
42. Stock reserve voucher 1 This is a reserve voucher for the Stock Management module targeted for any
future expansion of the system.
43. Stock reserve voucher 2 This is a reserve voucher for the Stock Management module targeted for any
future expansion of the system.
44. Stock reserve voucher 3 This is a reserve voucher for the Stock Management module targeted for any
future expansion of the system.
45. Stock reserve voucher 4 This is a reserve voucher for the Stock Management module targeted for any
future expansion of the system.

The four reserve vouchers listed above can be renamed, configured and used for any stock transactions that
cannot be addressed with the standard predefined vouchers. The standard voucher can also be renamed to fit
specific business requirement. During voucher renaming, only the custom name is editable while the standard
name and the voucher code remains non-editable.

4 Stock Item Lifetime Management

Perishable inventory demands attention. Specific inventory-tracking methods help with the job of managing
and accounting for perishable inventory. Perishable refers to items that have an expiration date, such as food,
medicine, industrial chemicals, etc that will go bad if not consumed in a certain amount of time. Single-period
inventory control and first-in-first-out, or FIFO, inventory valuation is commonly used to deal with perishable
goods.
Perishable inventory is one of the trickiest types of inventory to manage. Because perishable items go out of
date, there is only a short window of time that a business can purchase, stock, and sell merchandise before it
loses its value. Therefore, perishable inventory control is of the utmost importance for a business’s bottom
line.

4.1 Advantages of Automated Article/Product Lifetime Management

When a company successfully implements an inventory management system for its perishable goods, they will
benefit from:

Minimize wastage: Having a system that notify which batch to transact first will minimize the risk of storing
articles beyond their lifetime.

Increased Revenue: Knowing what to purchase and when, which allows for optimal profitability of the
inventory- the turn around on perishable items should happen as quickly as possible.

Improved Cash Flow: Having a handle on the inventory means the cash flow will increase as you only order
what you need.

Customer Satisfaction: managing inventory means understanding the supply and demand of the market- if a
business company stock items that are popular with its customer base, they will continue to purchase them
from its store.

Fewer Recalls: Keeping tabs on the perishable goods allows a business company to hear of recalls right away.

4.2 Shelf Setup of Perishable Items

As mentioned above, items that arrive first in the store are sold and shipped first. Items in the stock should be
arranged to facilitate FIFO activities. While doing that it is good to consider the following items arrangement
guidelines:

1. Date products as they enter the warehouse (for FIFO) or locate product expiration date (FEFO)
2. Place items with soonest dates in the front
3. Load new items with the latest dates in the back
4. Sell items in the front first
5. Constantly rotate stock on shelves in this manner
4.3 Techniques for Tracing Perishable Goods

Regardless of which approach a company uses, its perishable inventory management should incorporate
product batch numbers, traceability, recalls, and obsolescence, all of which can be used to ensure the sale of
inventory before its expiration date. When integrated with (or included as part of) a stock management system,
inventory management systems provide high levels of visibility over stock that’s nearing the end of its useful
life. This, in turn, helps companies fine-tune their perishable inventory management processes.

By using accurate sales numbers, putting someone in charge of the perishable inventory tracking processing,
and doing regular inventory cycle counts, small businesses can save money on spoilage and unsold products.
Business managers who know that the 1000 kg oranges that arrived on Friday afternoon either have to be used
or sold within the next week can either give the oranges a more prominent place on the retail floor (for a
grocery) or offer a promotion for 25% off.

4.3.1 Recording Beginning Stock of Articles with Lifetime

Recording Beginning Stock of Articles with Lifetime is a little bit different from a regular item stock. In the
case of regular item stock, all items with the same code will be added up together to determine the beginning
balance. Whereas; in the case of perishable items, articles with the same code will be further categorized by
their batch number and expiring date to assign the counted beginning balance along with the batch number.
The following screenshot shows how to record beginning balance for stock articles with lifetime:

TBR

4.3.2 Transact Articles with Lifetime

If an article is serialized, the system prompts batch number and expiring date as the article is added to the line
item collection grid for transaction during voucher preparation. The system allows the user either to insert an
already registered batch number and expiring date or it allows the user to enter a new batch number and
expiring date. When the user creates a new batch number and expiry date, the system will consider the current
transaction as the beginning balance for the specific batch. On the other hand, if the batch already exists, the
stock quantity will be incremented or decremented by the current transaction quantity. By default, the system
suggests batches closer to their expiring date first. As article of a specific batch is out of balance, that batch
will not be available for selection in any transaction. The following screenshot shows how the batch number
and expiry dates are maintained:

The following screenshot shows the interface that is used to select batch for the article being transacted:
TBR

The following screenshot shows the interface for creating a new batch for article being transacted:

4.3.3 Monitor Balance and Life

The CNET stock management module manages stocks using the batch approach. It generates the articles
according to their expiry date as shown on the following screenshot:

5 Inventory Costing
Inventory costing, also called inventory cost accounting, is when companies assign costs to products. These
costs also include incidental fees such as storage, administration and market fluctuation. Generally accepted
accounting principles (GAAP) use standardized accounting rules to ensure companies do not overstate these
costs.

Inventory costing is a part of inventory control technique. Proper inventory control within a supply chain helps
reduce the total inventory costs and assists in determining how much product a company should carry. All this
information helps companies decide the needed margins to assign to each product or product type.

In accounting, the difference in cost of goods sold (COGS) and inventory values are represented by where the
accountant records them. Companies value inventory at its cost to them and as a part of their current assets.
COGS represents the inventory costs of goods sold to customers.

Accountants record the ending inventory balance as a current asset on the balance sheet. When inventory
increases, the assets on the balance sheet increase. When inventory decreases, the assets on the balance sheet
also decrease. Accountants also record the change in inventory as a part of the COGS on the income statement.

Instead of showing a change in inventory as a COGS adjustment, accountants adjust some income statements
to show the calculation of COGS as:

Beginning Inventory + Net Purchases = Goods Available for Sale – Ending Inventory

Companies generally report inventory value at their paid cost. However, a manufacturer would report
inventory at the cost to produce the item, including the costs of raw materials, labor and overhead. Usually,
inventory is a significant, if not the largest, asset reported on a company’s balance sheet.

5.1 Inventory Costing Methods

The method companies use to cost their inventory directly guides the income and inventory value they report
on their financial statements. Each company chooses a systematic approach to calculating and reporting its
inventory turnover, and regulators expect them to stick to that method every year.

There are four main methods to compute COGS and ending inventory for a period.

 First In, First Out (FIFO): Companies sell the inventory first that they bought first.
 Last In, First Out (LIFO): Companies sell the inventory first that they bought last.
 Weighted Average Cost (WAC): Companies average the costs of inventory and how much they sell
over the period.
 Specific Identification: Not technically a cost-flow method but allowable under GAAP, this option
often uses serial numbers to differentiate products and their inventory cost specifically.
GAAP covers FIFO, WAC and Specific Identification. GAAP does not cover LIFO, but it is mentioned above
for comparison purposes.

To compare methods, consider the example of Jack’s Furniture and its bookcase sales. Regardless of which
cost flow assumption the company uses, the balance sheet for the period starts the same. This journal shows
the same beginning inventory, purchase and associated costs:

Beginning Inventory and Purchases

Purchases COGS Inventory Balance
Date Action Units Unit Total Units Unit Total Units Unit Total
Cost Cost Cost Cost Cost Cost
1-Nov Begin Inventory 50 100 5500
6-Nov Purchase 50 110 5500 50 110 5500

However, when a customer buys 60 units, the difference in these cost flow assumptions is clear. In FIFO, the
ending inventory cost ends up higher to reflect the increase in prices. As a comparison, in LIFO, the ending
inventory cost is lower as a reflection of the increasing prices of the bookcase. In the WAC example, the ending
inventory cost is in the middle of LIFO and FIFO, showing that the price changed.

FIFO
Purchases COGS Inventory Balance
Date Action Units Unit Total Units Unit Total Units Unit Total
Cost Cost Cost Cost Cost Cost
9-Nov Sale 50 100 5500
10 110 1100 40 110 4400

LIFO
Purchases COGS Inventory Balance
Date Action Units Unit Total Units Unit Total Units Unit Total
Cost Cost Cost Cost Cost Cost
9-Nov Sale 50 100 5500
10 100 1000 40 100 4000
 WAC
Purchases COGS Inventory Balance
Date Action Units Unit Total Units Unit Total Units Unit Total
Cost Cost Cost Cost Cost Cost
9-Nov Sale 60 105 6300 40 105 4200

If these transactions were the only ones in this period and the sales were $12,000, the income statement and
the balance sheet would look like the following:

LIFO
FIFO LIFO WAC
Income Statement Under Method
Sale 12000 12000 12000
COGS 6100 6500 6300
Gross Profit 5900 5500 5700
Balance Sheet Under Method
Inventory 4400 4000 4200

As noted, specific identification is not technically a cost flow assumption, but it is a technique for costing
inventory. In this case, the physical flow of inventory matches the method and is not reliant on timing for cost
determination. The use of serial numbers or identification tags accommodate the use of this method and the
identification of each item in inventory, capturing when the company bought the item and how much it paid.

5.2 Weighted Average Inventory Costing

The weighted average inventory costing method, also called the average cost inventory method, is one of the
GAAP-compliant approaches companies use to value their business stock. This method calculates the per-unit
cost using a weighted average for the cost of goods sold and the inventory.

The formula for the weighted average cost method is a per unit calculation. Divide the total cost of goods
available for sale by the units available for each inventory item.

WAC = COGS/Inventory(sold)

For example, Trax is a small business that purchases and sells snowboards. For November, the following
shows its purchases and sales:
 Date Activity Qty Unit Cost Total Cost Qty Balance
1-Nov 200 250 50000
3-Nov -100
4-Nov 200 265 53000
9-Nov -75
10-Nov 150 245 36750
15-Nov -200
22-Nov 300 225 67500
25-Nov -300
26-Nov 300 270 81000
27-Nov -300
30-Nov 400 240 96000
Ending Inventory 575

The ending inventory is the total units available minus the total units sold during the period. In this example,
the ending inventory = (200 + 200 + 150 + 300 + 300 + 400) – (100 + 75 + 200 + 300 + 300) = 1550 units
purchased – 975 units sold = 575 units remaining.

Calculate the weighted average cost for the snowboards by using the following chart that shows the number
of units purchased, the cost for each unit on the date purchased and the total cost paid for the purchase on that
day

Date Qty Unit Cost Total Cost

1-Nov 200 250 50000
4-Nov 200 265 53000
10-Nov 150 245 36750
22-Nov 300 225 67500
26-Nov 300 270 81000
30-Nov 400 240 96000
Ending Inventory 1,550 384,250

The weighted average unit cost based on the chart above for Trax in November was $384,250/1550 = $247.90
per unit.

The cost of goods sold (COGS) valuation is the number of units sold multiplied by the weighted average cost.
 COGS = 975x247.90 = 241,702.50

The ending inventory valuation is the 575 units remaining multiplied by the weighted average cost.

Inventory = 575x247.90 = 142,542.50

Together, the COGS and the inventory valuations add up to the actual total cost available for sale.

Actual Total Cost available for sale = 241,702.50 + 142,542.50 = 384,250