Costing

Overview

This module deals with the financial aspects of the supply chain, particularly relating to inventory. It deals with the way that inventory is valued and includes the valuation metrics that the Finance department produces and measures the supply chain against. It also looks at how Work in Progress (WIP) is valued based on the ERP system and also measures the scrap and yield losses from the manufacturing process.

An understanding of this by Supply Chain personnel significantly improves the relationship between Finance and Supply Chain, and gives a better understanding of the metrics involved.

Recommended For:

Supply chain and operational personnel; it would be an asset to the class to have at least one person who is responsible for costing as part of the class.

Time: 2 hours

Topics Covered

Valuation of Parts

  • FIFO
  • LIFO
  • Weighted Average
  • Exercises showing effect and differences of valuation methods

Valuation of Inventory

  • Inventory Returns
  • Days of Supply

Effect of Valuation in WIP

  • Measurement of WIP
  • Scrap and yield loss measurement against expected loss
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