The following are key concepts that you should familiarize yourself with before digging into the remainder of the help topics. These concepts will provide helpful.
Inventory Data Fields
An assembly is a grouping of items in your inventory that make up a new inventory item. The primary workflow here supports a configuration or BOM model in which you are able to recognize the use of inventory items in the production of a new item. The default cost of an assembly is made up of the cost of the items that are part of the assembly. When you tell mInventory that you have "built" the assembly you have the option of overriding the default cost. This allows you to account for work or other costs that may have been involved in the production process.
Updating Inventory Counts
As you can see from the data fields above, mInventory maintains several inventory levels for you. These levels are automatically updated based on things you do with an item (buy, sell, adjust, build). You can’t just edit these levels directly. mInventory supports the following workflows to update inventory levels.
"Purchase Orders" - Use this workflow when you purchase inventory items from a vendor. This can be a wholesale/retail model or you could be purchasing raw materials that you transform into products using the Assemblies workflow described below.
"Manufacturing" - Use this workflow when your company manufactures products and you simply want to record how many of each item you made. In this workflow, you create items for each of your manufactured products and then acknowledge a production run to update item quantities/costs.
"Assembly Builds" - Use this workflow when an item in your inventory is made up of the combination of other inventory items. The Inventory Items screen has a table at the bottom that allows you to identify the components of an assembly. Companies that purchase products and transform them into other products typically use this workflow.
"Manual Adjustments" - Adjustments are changes that are made to inventory levels because of some issue with a particular item. These can be due to theft, damage, unexpected receipts or some other reason. These are not frequently used and are not meant as a way to receive stock into inventory.
Inventory Costing (LIFO/FIFO/Last Cost/Average Cost)
There are a handful of generally accepted methods to value inventory. These are:
FIFO Costing – This is the First-In, First-Out inventory method. In this model the first item that was received into inventory is the first item that is sold. This is typically used for perishable goods that have a limited shelf life. The actual cost if each item is recorded and used when calculating inventory cost or cost of goods sold.
LIFO Costing – This is the Last-In, First-Out inventory method. In this model it really doesn’t matter which order the items are received and sold. A good example here is a bin of screws at a hardware store. They are all the same and typically the bin of screws is refilled by adding new screws on top of existing. The actual cost if each item is recorded and used when calculating inventory cost or cost of goods sold.
Average Cost – This model can be used with both FIFO and LIFO tracking but inventory cost is handled differently. For each item, an average cost is calculated based on historic purchases. When an item is valued or sold, this average cost is used.
Last Cost – Similar to average cost, but the last purchase price of the inventory item is used instead.
mInventory supports Last Cost and Average Cost methods of inventory cost accounting. We recommend that you use Average Cost as it better represents the true cost of an item. You can configure whether the program uses Average Cost or Last Cost in the preferences screen.
You can quickly get a view of what has taken place with respect to an inventory item by reviewing the history tab on the inventory item screen. Here you will see an historic view of all purchases, sales, adjustments, builds, etc… This comes in handy if you are troubleshooting inventory levels.
Once you begin purchasing and selling an inventory item you are prohibited from making certain changes to the item. This is to protect the integrity of the data and ensure that the item is treated consistently. This lock is around the components. You cannot add, delete or change components on an item that has been purchased, built, adjusted or sold. If you find that you need to do this, you should duplicate the item and make the changes on the new item. Make sure that you give this new item a new item number to differentiate it from the original.