Dear krishna
Following are inventory calculation methods
1) Moving Average
SAP Business One valuates your inventories with the moving average price on an ongoing basis. This means a valuation takes place based on the corresponding quantities and prices for each goods receipt and issue, and the moving average price is updated accordingly.
The valuation price is calculated as the quantity multiplied by the average price. Assuming prices will increase over time, the items in stock will be overvalued. This gain is not as high as under the FIFO method, but greater than under the LIFO method.
2) FIFO
Under this valuation method, the system assumes that the items that entered the warehouse first will also exit first. This means goods issues are valuated with the prices that are valid for the first goods receipts. For example, if you purchase an item at three different prices on three different occasions, the system assumes that the first items you sell are from the first delivery. This means the prices from the first purchase order are used for the sale and calculation of the corresponding gross profit, until the quantity from the first purchase document is gone. At this point, the system uses the price for the items from the second purchase order.
Assuming prices will increase over time, the items in stock will be valuated using the higher prices from the later purchase documents.
3) LIFO
Under this valuation method, the system assumes that the items that were received last will exit the warehouse first. If you purchase an item at three different prices on three different occasions, the items that were purchased last will be sold first.
Assuming prices will increase over time for the three purchase documents, the quantity in stock will be valuated with the lower prices from the first purchase document. Therefore, the value of the inventory will be lower than under the FIFO method.
4) By Price List
You can use one of the price lists defined in the system to valuate the warehouse inventories. When you choose this method, the system displays an additional field that contains a list of the price lists defined in the system. Click the dropdown icon on the right of the field and choose the entry you require from the list provided.
The system then uses the prices defined for the items in the price list.
5) Last Evaluated Price
You can also perform the valuation based on the last evaluated prices. In this case, the system uses the last calculated costs for each item. If you run a valuation under the FIFO method, for example, and then run a valuation for the last calculated costs, the system will valuate the items using the last value that was determined for an item under the FIFO method.
To see the stock details, you can run MMBE / MB5B
thanks
G. Lakshmipathi
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