Inventory kits for purchase invoices

@lubos nventory kits are not visible for purchase invoice , they should be available for purchase invoices also so that it will be easy to enter inventory.

inventory kits are usually not purchased.
an inventory kit is just for the easiness to sell a bunch of inventory items together.
for example, you buy bread and cheese and sell it as a sandwich. but you do not buy sandwich and sell as sandwich.

you can only purchase an inventory item and not an inventory kit.

it can be a usefull , for example a set of shoes of size 6 to 10 is purchased as a kit and also sold as a kit

then why not define it as an inventory item rather than as an inventory kit?

but sometimes single size is also sold like only size 6 and 7 is sold

you said it is bought as kit and sold as kit.

if you are selling them separately, you will have to stock them separately as separate inventory items.

when sold as a kit, sell it as a kit.

if you are buying as kit and selling separately, you will have to use production orders and that will be a tougher task when you are dealing with shoes.

Ability to purchase inventory kit cannot be added. This is because when you purchase inventory kit, Manager wouldn’t know in what proportion to allocate the cost across individual inventory items defined in the kit.

You simply need to purchase individual inventory items so Manager knows purchase price of each individual item. Manager cannot guess that for you.

I was wondering about this too. Am I right in thinking another option would be to create an inventory item for the kit, and others for each of the components of the kit, and then use a production order to split the purchased kit into its components for resale, when necessary?

Yes, that would be the approach.

Thanks @Tut. I’ve just tried it out, and I see there isn’t an option to add line items for the finished items. I have a case where I’m purchasing a kit from a supplier that bundles together several different items at a lower cost than they would be separately. However, I would like to split the kit and sell the items individually. So the process I was imagining would be to create a single production order which uses the purchased kit as the only item in the bill of materials, but have several different items under Finished item.

So, my work-around is to create a new production order for each of the items that comes out of the kit, and to use one of the kit as the bill of materials in the first instance, and zero for all the others until the kit is depleted. From my quick test this seems to work, but obviously it involves many more steps than just creating a single production order. It might also be more prone to error, as I imagine it would be easier to forget an item from the kit than if it was all done in one order.

Do you have any suggestions for improving my method?

Is there a good reason there is no option to add line items to the Finished item section, or do you think it would be worth suggesting to @lubos?

The more I think about my work-around above, the less I like it. In effect by using zero of the kits in my subsequent production orders I’m conjuring up inventory items from nothing, with no cost, and the full cost of the kit is associated with the first finished item I make.

So, an improvement, I think, would just be to use fractions of the kit to make the finished items. This has the added benefit of making it clear that there are items left over (because the quantities in stock will not be whole numbers), and being able to sell partial kits.

Any suggestions for alternative methods, further improvements, or flaws in my method?

Yes, I didn’t mention that. That is a feature that has been requested and is in the ideas category already: Production Orders - Enhancements. I thought you were just breaking down bulk purchases, such as buying by the barrel and selling by the liter.

I don’t understand quite what you are doing as a workaround. If you purchase a bundle with 3 components and create 3 production orders, are you listing 1/3 of a unit of the bundle as the input on all three production orders?

I think a simpler method is to enter the three output items directly on your purchase invoice. You can order them however you want. For example, create a purchase order (which has no financial or inventory impact) for 10 bolt/nut/washer combinations. When they arrive, raise a purchase invoice for 10 bolts, 10 nuts, and 10 washers. Divide their costs however you think makes sense. (The cost division will be as sensible as what would occur with a production order.) Leave the bundle entirely out of your inventory management process. The fact is, that’s no different than buying a single 200 liter barrel of a product but treating it as 200 1-liter units. Really, it is just a question of how your purchases are packaged.

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Ah, great! Thanks, that’s good to know.

Thanks for your suggestion. It probably would be a little simpler. It bothers me, though, that what shows on my purchase invoice would not match the supplier’s invoice exactly. Is that an irrational concern? Does the fact that you’re suggesting it imply that it wouldn’t be an issue for any audits?

Yes, that’s what I’m thinking. Though it doesn’t have to be an even split. This would be where I decide how to allocate the costs (as I understand it).

Thinking around these methods has brought me to an example that I’m not sure how to handle:

I buy a bicycle from a supplier and add it to my inventory. One of my customers wants to buy this bicycle from me, but she doesn’t like the handlebars and the saddle on the bike. Instead she’d like me to fit others that I also have in my inventory. I do the swap, and keep the handlebars and saddle that came on the bike and add them to my inventory, giving her a discount on the new ones as compensation.

Obviously in this scenario it would be impractical to list the bicycle as a series of components on the purchase invoice, and I wouldn’t necessarily know when I’m purchasing it that I will later be removing parts. In the above scenario I have only removed two components, but it is entirely possible that I would buy a complete bicycle and sell off all the components individually.

I hope I’m not straying off topic here, but this example does feel conceptually the same as one with a simpler kit of two or three items (which is what I’m faced with at present). As far as I can see, having the ability to add line items to the Finished item section of a production order would solve the problem in both situations, so hopefully I just need to be patient!

No, but probably not worth worrying about.

No. But audits focus on accuracy of monetary transactions. The fact your customer invoiced you for 10 bolt/nut/washer combinations and you recorded receipt of three separate components is fully justifiable. Remember, an auditor will begin with your purchase invoice, then ask for documentation to support the costs and quantities you recorded. Your customer’s sales invoice documents the cost. A comment in a Notes field on the purchase invoice can adequately explain the different units of measure. An auditor would not have any problem with you recording purchase of 24 widgets just because they were all shipped in one carton, as long as you have a coherent explanation.

Your bicycle example raises several points. The first question I have is why you would ever give the customer a discount for the privilege of customizing her bike? :wink: My local bike shop would charge me for the new parts and the labor to install them, then keep the original parts to sell to someone else.

Seriously, though, if you are carrying the replacement parts as inventory items, you do need to account for their usage. That is where a production order can be used. See Now, of course, you are faced with what to do with the parts you remove. You can add them to inventory as an upwards adjustment using a journal entry. Or, like most bike shops, you could toss them under the workbench and use them the next time you want to customize a bike for free. :smiley: Given that most bikes come with lower grade components than the typical bike shop stocks for separate sale, you might not want the leftover parts added to your inventory. Maybe you donate them to a local bikes-for-kids charity.

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Thanks. I’m very new to this, so your assurances are helpful.

Ha! Sorry, what I meant was that I might give a discount on the new parts if I keep the old ones to sell to someone else, not a discount on the whole bike.

Thanks, I had seen that guide and am happy with that part of the process. My concern was more about how to get the parts I’ve removed into my inventory. I don’t know much about journal entries yet, so I will look into that and your suggestion there.

This is true, but where I am there is such a huge disparity of wealth, and one man’s trash is another man’s treasure, or something like that. If it can be used, someone here will want it. But your point is well taken.

It seems that maybe we share more than just a love of Manager… :mountain_biking_man: :wink:

@GrahamvdR - A more transparent way would be to show all inventory movements on the Sales Invoice.

In the above example the discounts have been allocated to the “Restocked” items but you could equally show the discounts as reduced prices for the “Racer” items, but the “Restocked” items will still require a negative quantity.

By using a pooled general inventory item “xxxx- Restocked” saves you from having numerous similar type inventory items with only a quantity of 1. Also, the Average Cost for these “Restocked” items will always be 0.00 as you never actually purchased them from a Supplier.

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Ah! Thanks @Brucanna. That looks like it’ll work perfectly for the example of the bicycle upgrades. I like it!

I suppose it could work for the two- or three-item kits as well, though I probably wouldn’t want the customer to see that their items came from kits. So for that hopefully the ability to add line items to Finished items in production orders will come soon.