Floor Stock items
Floor stock is defined as materials that are widely and frequently used while having
a relatively low cost per unit. In most cases, it is ensured that this supply is always
accessible on the production floor. It does not need to be taken from a shelf in the warehouse
and can be drawn without requisitions.
These items can be purchased only, and are assigned in the bill of material for Job Shop, Assembly, Repetitive Manufacturing or Subcontracting. The logistics and financial administrative processes are kept as minimum as possible. When a floor stock item is transferred to a shop floor warehouse, instead of increasing this warehouse inventory, costs are booked instead. The orders in production don’t keep track of what is consumed. The floor stock costs are not included in the standard cost calculation. Surcharges must be used to include the floor stock costs into the product standard cost calculation.