As warehouse replenishment purchase orders are received into your warehouse locations, the system posts the value of the received goods to inventory, and the unvouchered inventory account, and it creates inventory transaction records to record the receipt (and to provide accounts payable with transaction detail that can later be matched up with the appropriate vendor invoice).
As each item is received, the weighted average cost of the item is recalculated based on the current quantity on hand and the cost of the item in the warehouse locations in the current division, and the quantity and cost of the item being received. The previous cost, transaction cost, and the new average cost for each item are all recorded in the inventory transaction records created by the receiving program.
The receiving program normally also calls the inventory allocation program at the end of the receiving process. The Inventory Allocation program is used to allocate or assign the newly received items to any sales or shop order lines that are waiting for the product.
The allocation program goes thru the items that were just received, and it first checks the auto_allocate flag for each item in the Inventory Master file. If the auto_alllocate flag is set to N, the item is not allocated (i.e. it must be allocated manually). If the auto_allocate flag is set to Y or is blank, the system will attempt to allocate
The allocation for the item is based on the schedule dates of the order lines waiting for the item.
As each item is allocated to a sales or shop order, the system updates the allocated quantity in the item and it updates the allocated quantity and the status (if required) in the sales or shop order lines being allocated to. The system will also do a credit and a schedule date check on the sales orders that are being allocated to (this is done to make sure the customer is not over their credit limit when backordered product is available or to give you a chance to call the customer and see if they still want the product when the item is received after the schedule date for the order line.