Inventory cost groups
Inventory cost groups are collections of one or more primary locations that are included together for cost purposes.
The following rules apply to inventory cost groups:
- If an inventory group is defined for a primary location, all costing for the primary location and cost items in that group is done at the group level.
- If the primary location is not associated with an inventory group, the costing is done at the item level.
- If an item is not included as a cost item in the group, the costing for that item is done at the item level.
- If you change the currency at the inventory group level, the currency of the associated cost items and inventory items also are changed.
- A primary location can be included in only one cost group. When a primary location is associated with a cost group, you cannot associate it with any other cost group.
- You can add individual or multiple locations to the cost group.
- Inventory locations cannot be removed from the cost group. You can, however, remove cost items or delete the cost group.
Inventory cost items
Cost items are associated with inventory groups and represent the specifications or types of items and the valuation method. Cost items contain the inventory batch records that are associated with the selected primary locations and their related specifications.
The cost item unit price is based on the valuation method. For example, if the valuation method is FIFO, then the unit price reflects the first batch. If the unit price changes, the unit price of the inventory items that are managed by the cost item is also updated. Similarly, if you change the currency or quantity of the inventory cost item, the values of the associated inventory items and batches are changed as well.