Stores Preferences
Preferences can be set on the Stores module to enable the most appropriate pricing details of Stock Items to be held.
There are two Stock models to choose from:
A pop up window will open that will allow the Stores model to be set.
Standard Stores
If using the Standard Stores model, any price changes to an individual Stock Item will be applied to all instances of that Stock Item held, regardless of the original cost.
When Stock Items are issued from within an organisation, the Standard Stores model will simply multiply the quantity issued by the current (latest) issue price.
However, this Stores model is for the most part too simple for the accounting methods in practice in large organisations. Therefore, it may be more appropriate to select the FIFO model.
FIFO (First in First Out)
If using the FIFO (First in First Out) model, Stock will be held in batches with allocated batch numbers for each order for a given Stock Item. Over time, different costs may have been paid for each batch, the FIFO model will allow this to be recorded on a batch-by-batch basis. When Stock Items are issued, the model dictates that the oldest Items are used first and charged at the price stored against the batch.
For example, 10 units of a Stock Item are ordered at a cost of £250. The price per unit for batch 1 is £25. An additional order for 10 units is placed at a cost of £300. The cost per unit for batch 2 is £30.
If you then need to issue 13 items of stock, the 10 items of batch 1 will be issued before any items from batch 2. So the first 10 items are calculated according to the price of batch 1 and the remaining 3 are calculated based on the price of batch 2.
The cost of the 13 issued items would be 10 items multiplied by £25, plus 3 items multiplied by the cost of batch 2, £30:
(10*£25) + (3*£30) = £340
Note: Due to Stock batches being created automatically when receiving Stock Items, the FIFO method works best when used in conjunction with the Purchase Orders module. Once the FIFO model has been turned on, the system cannot revert to Standard Stores. The following will be displayed in place of the radio buttons shown above "Stores Model cannot be changed once Batches have been created using the First In First Out model".