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We have a facility that manufactures the items. Cost includes labor, setup, downtime, all kinds of manufacturing details, and overhead.
We have a facility that is purely distribution. Its cost structure is based on concept that an item is almost100% material cost.
In BPCS when you transfer an item, its cost structure transfers with it.Thus, any item that moves between these two facilities via simple inventory transfer now has its costs totally corrupted in the destination facility, guaranteed every time.
This is one reason why using inventory transfers across facilities, instead of DRP or some other approach, can be not in a company's best interests, when difference between the facilities includes how the costs are structured.
This is also why I said a company ought to have business rules that are enforced. It may be that getting your costs messed up is not something that management cares about, when balanced with the simplicity of doing inventory transfers as opposed to all the work to setup inter-facility activity that keeps costs accurate.
Dick, What happened to your inventory dollars at each facility after the transfer? Frederick C. Davy, CPIM, PMP
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