This parameter is used to decide the way in which the stock value is posted when adjustments are carried out while the stock level is insufficient with regard to the quantities that are affected by these adjustments.

This parameter can take three values:

No: The value of the adjustment affecting the stock is total, irrespective of the quantities remaining in stock.

The average cost is therefore calculated in the following way: ((Remaining quantity * Former average cost) - Variance) / Remaining quantity if the variance is negative or ((Remaining quantity * Former average cost) + Variance) / Remaining quantity if the variance is positive.

Site absorption basis: When the stock is insufficient with respect to the adjustment, the value affecting the stock is calculated based on the quantities remaining in stock. The not integrated part is totalled as a non absorbed variance. The value of the parameter is weighted by the value of the MAXABSPER stock parameter (Maximum percentage for over-absorption). The non-absorbed part is totalled in the product/site record and it appears in detail in the stock journal (STOJOU and STOCSTREG tables).

The calculation for the part integrated with the stock is therefore: ((Adjustment amount / Qty to be adjusted)* Qty in stock).

The part not absorbed in stock is therefore the difference between the initial amount to be adjusted and the part absorbed by the stocks.

If the value of the linked parameter is greater than zero, then the part absorbed by the stock will be greater according to this over-absorption percentage.

The calculation for the part integrated with the stock is therefore: ((Adjustment amount /Qty to be adjusted) * Qty in stock) + ((Adjustment amount /Qty to be adjusted)* Qty in stock) + (average cost * Qty in stock))*MAXABSPER/100.

When an adjustment leads to a decrease in price (adjustment with a negative amount), the formula used is the following:

((Adjustment amount /Qty to be adjusted) * Qty in stock) - ((Adjustment amount /Qty to be adjusted)* qty in stock) + (average cost * Qty in stock))*MAXABSPER/100.

The average cost is recalculated as follows: (Part integrated into stock + (average cost * Qty in stock))/Qty in stock.

Site/lot absorption basis: When the parameter is set to this value, its functioning is similar to the previous case if the stock involved in the adjustment corresponds to the lot issued in the original movement. This parameter must be used if the products managed in stock are managed by lot. It is used more precisely to target the part of the stocks that must be impacted by an adjustment.

For instance, let us consider product A with a zero initial stock:

          A receipt of 100 units of lot LOT1.

          A receipt of 50 units of lot LOT2.

          An issue of 70 units of LOT1.

          An issue of 30 units of LOT2.

          50 units of product A remains in stock made up of 30 units of LOT1 and 20 units of LOT2.

          If a first additional invoice is received, for the first receipt, then the adjustment will only concern the part of the stock that is LOT1.

         If a second additional invoice is received, for the second receipt, then the adjustment will only concern the part of the stock that is LOT2.

         In the same situation, if the parameter has been set to No or to Site absorption basis, the two additional invoices will be affect successively on the part remaining in stock.

The calculation for the part integrated with the stock is therefore: ((Adjustment amount / Qty to be adjusted)* Qty in stock for the lot).

The part not absorbed in stock is therefore the difference between the initial amount to be adjusted and the part absorbed by the stocks.

If the value of the linked parameter is greater than zero, then the part absorbed by the stock will be greater according to this over-absorption percentage.

The calculation for the part integrated with the stock is therefore: ((Adjustment amount /Qty to be adjusted) * Qty in stock for the lot) + ((Adjustment amount /Qty to be adjusted)* qty in stock for the lot) + (average cost * Qty in stock for the lot))*MAXABSPER/100.

The average cost is recalculated as follows: (Part integrated into stock + (average cost * Qty in stock))/Qty in stock.

Level of localization/Global variable

This parameter is defined at the level Site. It belongs to Chapter STO (Inventory) and the Group VAL (Valuation), The following parameters are also associated with this chapter and group :

No global variable is associated with it.

Functions concerned

The functions triggering price adjustments are concerned by this parameter (Production Cost Price calculation, Purchase invoices/Credit notes, Additional invoices...).