In a normal business scenario, allocation plays an important role as it is a key part of any business process. An allocation is the process of shifting overhead costs to cost objects, using a rational basis of allotment. Allocations are most commonly used to assign costs to produced goods, which then appear in the financial statements of a business in either the cost of goods sold or the inventory asset. If financial statements are not to be distributed outside of an entity, then there is less need to use allocations.
An allocation is a critical element of the whole Sales cycle and distribution cycle.
There are some advantages and disadvantages of the allocation system as well but if managed properly then it always gives better results.
A proper allocation methodology brings a business into compliance with the applicable accounting framework. By doing so, the firm’s financial statements can now be audited, and the external auditor can give them a favorable opinion. This opinion is needed when an organization needs audited financial statements to obtain funding from investors.
If used improperly, cost allocations can cause incorrect management decisions. For example, assigning overhead costs to a product can make it appear to have an excessively low profit, which could lead to a decision to terminate a product that is still generating a reasonable contribution margin.
In some business scenarios, there might be a situation where we want to manage allocated quantities on the orders. If quantity is not sufficient enough then after an allocation is done we want to show insufficient quantity in the shortage field so that the system can understand this much amount of quantity in shortage.
So in Sage X3 we have one parameter in the Stock module with the help of which we can show the shortage quantity after allocation is done.
So in this blog we will show you the process which can help you to show shortage quantity after allocation is done.
Steps to follow:
First we need to navigate to All -> Setup -> General Parameters and open the ‘MIS’ group (i.e. Miscellaneous) of the ‘Inventory’ chapter. Kindly refer below screenshot for the same.
After opening the ‘MIS’ group of ‘Inventory’ chapter, just change parameter GENSHT (i.e. Generate shortages) to either ‘Yes’ or ‘No’. Kindly refer below screenshot for the same.
So this parameter can be set to either folder wise or legislation wise or company wise or site wise whichever way is preferred we can set the same.
The parameter has only two values, ‘Yes’ and ‘No’. Below is the use of the same. This parameter to define if the allocations that have failed will generate shortages for the missing quantities. A shortage quantity is therefore used to display the impossibility to service a document at a given moment. This is used to establish an unavailability and to later process these shortages.
No – If an allocation fails, no shortage will be generated.
Yes – If an allocation fails, the quantity that could not be allocated will be displayed in the form of a shortage quantity.
By the help of the above blog, we can show shortage quantity after allocation is done.
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