An order quantity is the amount of goods that an order requests be shipped to the store.
2. Explain what should be recorded in a physical count of inventory?
When conducting a physical inventory the classification, location and number in stock of a good should be recorded.
3. Tell me can forecasting help in controlling inventory?
Yes, through the use of forecasts inventory levels can be set to meet the demands while keeping levels as low as possible.
4. Tell me what are important steps in procurement life cycle?
Procurement Process starts with gathering requirements, then creating a purchase requisition and then we create a formal document that has to be sent to vendor i.e. purchase order. After this goods will be supplied by vendor and goods receipt is done along with invoice verification. Then vendor is paid for supplied goods and services.
Lead time is the period of time from which a order for goods is placed until it is received by the store. Lead time is an important consideration for determining when orders should be placed.
Demand is the quantity that customers are willing to buy. Demand can be found through forecasting and is needed to find the EOQ level.
7. What types of forecasting can I do?
There are two types of forecasting qualitative and quantitative. Qualitative uses personal opinions to determine forecasts. Quantitative uses numerical data and statistical modeling to determine forecasts.
Forecasting is the process of estimating the future demand of a product.
9. What are batches and how are they searched?
A batch is a collection of similar items from your stock that have the same characteristics. For example, all food items produced on a particular day belong to one batch.
Batches are searched using the standard facility (match code, key F4) based on the batch names or other properties that distinguish them from others.
10. What makes a good forecasting model?
A good forecast model will have reasonable costs. the accuracy of its forecasts will allow good decision making. The model will have ample data available for its use and a relevant time span. The model finally will have a low interference level.
11. What are the various functions /features in Purchasing?
The purchasing view consists of RFQ / Quotation, Purchase Requisition (PR), Purchase Order (PO), Master Data that has several fields like info record, source list, conditions, vendors etc. and finally Outline Agreements.
12. Tell us what is a RFQ and how it is different from quotation?
RFQ is request for quotation and it is a form of invitation that is sent to vendors to submit quotation indicating pricing and their terms and conditions while quotation is a reply by a vendor in response to request for quotation.
13. When should reorders be placed?
Times for reordering goods vary dependent on the control system you use and its lead time. In fixed order quantities reorders should be placed when the safety stock is reached. In fixed period systems the reordering is done at set time periods. In just in time systems reordering is based on matching the demand with supply. For just in time a close watch on inventory levels is needed so that reorders are placed before goods are out of stock.
14. Tell us what are transactions that will cause change in stock?
Goods receipt and goods issue will cause change in stock as goods receipt will increase warehouse stock and goods issue will decrease warehouse stock.
15. If inventory controls are followed, what can I expect?
By following your inventory policy you should be able to realize important advantages in inventory control. The first is reduced costs for inventories, along with reduced amounts of inventory. Theft and shrinkage should also be reduced if inventory policy is followed. The final benefit will be increased profits for the store.
Materials with some common attributes are grouped together and they are assigned to a material type. This will differentiate materials and allow organization to manage different materials in systematic manner in accordance to company's requirement.
17. What are the different kinds of special stocks available?
Special stocks available are consignment stocks (from vendor), subcontracting stocks (to sun-contractor), project stocks, pipeline materials, sales order stocks, stock transfer and third party.
18. Suppose If I get a discount will it effect the EOQ model?
Yes, a discount will cause the basic EOQ model to fail. To use a discount in determine a EOQ you must use the EOQ model with quantity discounts.
19. What is material and vendor data available at all organizational levels?
Yes, material and vendor data is available at all levels as it is normally created for company and it is valid for the levels below company.
20. Explain how stock is being transferred from one plant to another plant?
Stock within plants is transferred with the help of stock transport order. One plant order the goods internally from another plant(receiving plant/issuing plant) with the help of stock transport order.
21. What is release procedure?
Release procedure means approval of documents like purchase orders and purchase requisition manually by the criteria defined in the configuration.
The EOQ formula is the square root of 2 times demand times order completion cost divided by carrying cost. The mathematical formula is square root of 2DS/C.
23. When should a physical inventory be taken?
A inventory should be taken at least once a year. If items are perishable, seasonal or highly demanded a inventory should be taken more often.
24. Tell me what do you mean by consignment stock?
In Consignment, material is available at our store premises, however it still belongs to the vendor(seller)/Owner of the material. If you utilize the material from consignment stocks, then you have to pay to the vendor.
25. Does the model always work?
No, the model only works for those cases that meet its assumptions.
26. How do you create a pricing procedure?
The steps involved in creating a pricing procedure are:
1. Create condition tables
2. Create access sequence according to the various condition tables
3. Create condition types
4. Assign access sequence to condition type
5. Create the pricing procedure
6. List down all the condition types in order so as to suit the business and pricing requirements.
No, release is done only at header level in a combined way for all line items in case of purchase order.
28. What is the difference between a contract and scheduling agreement?
While a scheduling agreement is for consignment, subcontracting and stock transfer, a contract is for Standard items and can be limited to a certain quantity or value.
A contract can be created centrally with different pricing conditions for every plant whereas a scheduling agreement needs to be created at that particular plant location. In a contract, only time-dependant conditions can be created whereas in a scheduling agreement, you can have time-dependant or time-independent conditions subject to the customizations in the document type.
29. Can a computer help in forecasting future demand?
Yes, In the market today there are many computer software packages that can compute forecasted demand for goods held in inventory.
30. Explain the importance of EOQ?
The EOQ level is the point at which stocking costs are at their lowest point for a given item.
Source list include list of possible sources of supply for a material over a given framework of time. A particular material can be ordered from different vendors in different time intervals. This information can be maintained in a source list.
32. What makes EOQ work for inventory control?
The EOQ works if its four assumptions match the case it is used on. The assumptions are: A. Annual demand, carrying costs and ordering costs can be estimated. B. Inventory level is divided by 2, no safety stock, goods used uniformly and are gone by next order. C. Stock-out, customer responsiveness and other costs not considered. D. No quantity discounts.
EOQ stands for Economic Order Quantity.
34. How is shelf-life managed in SAP? Explain the full-cycle?
In SAP, there are basically two types of shelf-life:
1. Total Shelf Life - In case the total shelf life is maintained, then it's mandatory to enter the minimum shelf life also. During the process of Goods Receipt (GR), the user will have to enter the manufactured date of the item so that the expiry date is automatically calculated by the system.
2. Minimum Shelf Life - The date of minimum durability of the item are specified by using date markings like 'use-by' or 'best-before'. During the process of Goods Receipt (GR), the user will have to enter the date of GR so that the system can check if the material is usable according to the requirements in material master. If the minimum remaining shelf life condition is not satisfied, then the system will not accept the goods receipt.
35. Explain what is invoice verification?
Once goods are procured from vendor and placed in company's premises through goods receipt then we need to pay to vendor for acquired goods and services. The amount to be paid along with details of material is provided by vendor in form of document that is known as invoice. Before paying to vendor we need to verify the invoice. This process of verifying invoice and paying to vendor is known as invoice verification.
