Product Budget Report overview

Product > Reports > IC Reports > ICRIB

Function acronym: ICRIB

Use this report to forecast and measure the results of your actual performance in relation to your budgeted average inventory levels. You can use the report to determine your inventory's strengths and weaknesses. The report provides a basis for future decision making.

Forecasting inventory requirements represents one of the most important factors of your business. Effectively planning inventory levels cannot be done in a haphazard, unrealistic manner. Objectives and the means to achieve those objectives are detailed in a budget analysis. Budgets express targets or goals that managers attempt to accomplish. Actual results are an expression of their accomplishment. A comparison of the budgeted and actual results is a basis for evaluating performance.

You can include these types of products on the report, based on the report parameters that you specify:

  • Products with a Status of Stock and Do Not Reorder in Product Warehouse Product Setup.
  • Products with a Status of Active, Superseded, and Prebuilt Kit in Product Setup.

The formulas that are used differ with the order method that is specified on the Product Warehouse Product Setup-Ordering for each product. If the Order Method is Min/Max, this formula is used:

  • [(Maximum minus Minimum divided by 2) + Safety Allowance] * Unit Cost

For example, for product LX-35, Product Warehouse Product Setup-Ordering reveals the following:

Maximum: 300

Minimum: 100

Safety Allowance: 50

Unit Cost: $3.00

[(300 minus 100 divided by 2) + 50] * $3.00 = $450.00

(100 + 50) x $3.00 = $450.00

The average investment needed for product LX-35 is $450.00.

For all other order methods, the formula is:

[(Line Point minus Order Point plus Order Quantity divided by 2) + Safety Allowance] * Unit Cost

The average inventory you should carry is half the difference between line point and order point, plus half the normal replenishment quantity, plus the full safety allowance. This number is multiplied by the unit cost selected in Product Warehouse Product Setup-Ordering to arrive at the average investment. The unit Cost selected in Product Warehouse Product Setup-Ordering may be Average, Standard, Replacement, Last, or FIFO.

For example, for product LX-42, Product Warehouse Product Setup-Ordering reveals the following:

Line Point: 400

Order Point: 300

Order Quantity: 600

Safety Allowance: 100

Cost: $4.00

[(400-300+600 divided by 2) + 100] * $4.00 = $1,800

(350 + 100) x $4.00 = $1,800.00

The average investment needed for product LX-42 is $1,800.00

In both formulas, assumptions are made that the cost and various controls remain constant and that the product line point, order point, order quantity, safety allowance, and so on are properly calculated. If either of the two formulas is applied to all your active stocked products, you can arrive at the total inventory that is required to provide excellent customer service and profitable turnover rates. This total average inventory figure is compared to the actual inventory average on hand.

If a product is a special costing product, the Product Setup conversion factor is applied, and the actual figure reflects the net cost of the product. For example, product 1-001's Special Price/Cost is Hundred in Product Setup. There are 5 feet per stocking unit and the stocking unit is each. The cost in Product Warehouse Product Setup is $511.71054 per hundred and 49 stocking units are available. The Product Budget Report will show: 

Product  Description  Pcat  Cl  Unit  Cost    Net Avail   Actual
1-001    Caster, Gen  PC3    6    each  511.71054  49.00  1253.69
(a) 5.1171054/100 = 5.11710
(b) 49 * 5 = 245
(c) 245 * 5.11710 = 1253.69
(a) The cost of each stocking unit is calculated by dividing the IC Setup Warehouse Products Costs cost by 100. This is the cost per foot.
(b) The number of feet is calculated by multiplying the number of units available by the number of feet in each stocking unit.
(c) The cost per foot is multiplied by the number of feet available to arrive at the actual figure.

Factors that affect the actual inventory average on hand are dead stock, seasonal products, new product lines, and so on. A total dead stock value is included on the Product Budget Report for you to review. The dead stock amounts are also included in the report totals.

A thorough analysis of your budget totals versus actual totals may reveal products with ordering controls that have been overridden. Dead stock may be incorrectly classified due to overridden fields. Product variances may be due to a new product line. Other variances may require investigation to identify their cause.

To run the Product Budget Report, Yes must be selected for the Allow User to View Costs setting on your SA Operator Setup record.