Commodity Items

The commodities you consume in production must be set up in Microsoft Dynamics NAV as items. Like any other item, both the quantity and value of a commodity item are maintained within the program.

There are certain settings that must be made if you wish to receive, cost, and pay for an item as a commodity.

Receiving

In order to receive multiple purchases of a commodity into the inventory as a single quantity by using commodity manifests, you must specify the unit in which the commodity is received in the Commodity Manifest UOM Code field on the Item Tracking FastTab. You can assign any unit that has been defined for the item in the Item Unit of Measure table.

Commodity items must be set up for lot tracking. In addition to the standard item tracking specification fields, you can specify a number series that will be used to assign a lot number to the commodity when it is received through a commodity manifest. Note that this is not the same number series that is used to assign lot numbers to the separate purchase quantities on the individual manifest lines. The lot number on a manifest line is based on the commodity settings that have been entered for the vendor that has been assigned to that line. If you use number series to assign lot numbers to a commodity, it is recommended that you use a separate series for the item and vendor commodity lot numbers, to better differentiate between the lots that were received from vendors and the combined lots that enter the inventory.

Costing and Payments

To instruct the program to cost the commodity by using cost factors that are entered specifically for the purpose of commodity costing, you must place a check mark in the Commodity Cost Item field on the Specifications FastTab. If you wish to cost the commodity in this manner, you must set the item up for standard costing. When the commodity is received into the inventory, its inventory value is initially calculated from the item's standard cost. At a later time, the value of the commodity will be adjusted according to cost factors, but this information is typically not available at the time of receipt.

A unit of weight must also be assigned to a commodity cost item. This allows the program to perform any necessary conversions between different units of measure when calculating commodity costs. For example, if cost factors are defined in pounds, and the commodity item has an assigned weight unit of ounces, the program can calculate costs for the item. The weight unit does not need to be the item's base unit of measure, and can be set up as an alternative unit in the Item Unit of Measure table.

The requirement that a commodity be lot tracked for receiving purposes is also essential for costing activities, particularly when a single receipt is comprised of multiple purchases. If the payment that is made to a vendor is based upon certain characteristics of the received commodity (such as quality control test results, for example), the assignment of unique lots to the item allows the program to calculate a separate cost for each purchase.

You can also specify a default payment class in the Commodity Payment Class field on the Specifications FastTab. When a purchase line is created for a commodity item, the item's default payment class is included on the line, although it can be changed by the user. The cost components that are assigned to the commodity class are used to calculate the cost of the item on the purchase line.