Once the required Cross Reference record has been created, you can process an SKU conversion on the system in the following manner.
Select the SKU Conversion program from the menu, and verify that the cross reference record has been set up for the items you wish to process. If the cross reference record does not exist, create it in the program as described in the previous section.
Select the appropriate SKU Conversion record and press Enter. At this point the system will prompt you for the quantity of the Large UOM item you are converting. The system will then prompt you for the bin that the large unit of measure item is being pulled from.
Once you have selected the bin for the large unit of measure item, the system will prompt for the bin that the small unit of measure items will be put into. Once you have created and or have selected the lower unit of measure item bin, the system processes the transaction as follows.
• The system decreases the quantity of the large unit of measure item by the amount specified.
• The system increases the quantity of the small unit of measure item by the amount of the top level item processed multiplied by the ratio in the cross reference record (this would be 1 multiplied by 24 if you were converting a case part to an each part).
• The system calculates the cost of the lower unit of measure items by taking the large UOM item cost and dividing it by the ratio in the cross reference record. If the large UOM item was costed at 240 and 24 items were pulled from it, the small UOM items would show a cost of 10 each for the transaction.
• The system calculates a new average cost for the lower UOM item and it updates the inventory item in all locations which are in the current division with the new cost. The calculation method used is
• Take the total quantity on hand for the low UOM item multiplied by the average cost of the item to calculate the value on hand prior to the transaction. Add the quantity multiplied by the transaction cost from the SKU conversion. This is the new extended value on hand for the item. Divide the new extended value on hand by the total quantity in the current division and update the average cost of the item in all locations in the division with the result. This logic ensures that the cost of the item is normalized in all locations in the current division and that the inventory sub-ledger still is in agreement with the general ledger control account after the transaction is processed.