Kit Items are normally identified by a unique item number or descriptive element such as a product line, etc.
The Assembly Level field – which defines whether an item is treated as a Kit can also be displayed in the Inventory Lookups used during Order Entry
Kit items are handled in a unique manner by the inventory control system. When a sales order line is entered into the system for the Kitted part (the top level kit item), the system will reserve the components for the kit based on the total quantity of the kit part that is being ordered. The system will then allocate the component items (the actual items that are included in the kit) to the order line only when ALL components are available for the item to be shipped. In other words, it will allocate based on the number of whole kits that can be shipped out to the customer. This allows the kit components to be sold individually when there are not enough components to complete the order line for the kit part (if a kit order for qty 5 is entered and the lowest component qty available is 4, the system will only allocate the 4 - so the other components can be sold individually).
The kitting option allows you flexibility when handling scarce components. If the component part can be used to build the top level item, and the other components are available, the system automatically allocates the kit components so that they can be shipped to the customer that is waiting for the kit. If all components of the kit are not available, the components are reserved, but they are not allocated to the order, so that the components can be sold individually as the component part.
Kitting and kit processing are described in more detail in the documentation for the Shop Floor System.