Unit conversion
If a product’s buying, selling, standard pack, or counting unit is different than the stocking unit, a unit conversion can be applied to convert the stocking unit into a buying, selling, standard pack, or counting unit. When a product is sold, bought, or counted, prices and costs are calculated according to the unit conversion.
Unit conversions can be set up as product-specific or non-specific. The conversion factor is applied to the stocking unit or standard pack to convert it to the unit in which you want to buy, count, or sell products. The conversion factor is calculated according to the parameters that you specify when you set up the unit of measure (UOM) record. It is then applied during transaction entry to calculate the prices or costs that are based on the UOM.
A ratio is the quotient of two numbers. The conversion is more accurate when the ratio between the quantities of the unit you are converting to and the stocking unit is low. The higher the ratio, the larger the error in the conversion due to rounding. For units in multiples of the stocking unit, the conversion factor is greater than 1. For units smaller than the stocking unit, the conversion factor is a fraction less than 1. The conversion is more accurate when the ratio between the unit and the SKU is close. An acceptable error range occurs when the ratio is less than 470:1.
Example 1
The stocking unit for an item is each and the buying unit is box of 12. You can sell the item by the stocking unit or by the buying unit. In Product Extended Unit Conversion Setup record, the unit conversion type is multiple and the number of stocking units in the unit is 12. The calculated conversion factor is 12.
Example 2
The stocking unit for an item is spool that contains 90 feet. The selling UOM is feet. Because there are 90 units in a stocking unit, you must set up a UOM smaller than the stocking unit. In Product Extended Unit Conversion Setup, the unit conversion type is fraction and the number of units in a stocking unit is 90. The calculated conversion factor to convert the stocking unit to a selling unit is 1/90, or .01111.
Example 3
A piece of ceramic tile measures 4.25 by 4.25 inches. Although the tile is usually sold in either a case or half case, individual tiles are also sold, so the stocking unit for this product is one tile. The most common selling unit is square foot because walls and floors are usually measured by the square foot.
In Product Extended Unit Conversion Setup, the unit conversion type is multiple because there is more than one tile in a square foot. The number of stocking units in a square foot is 7.97232 tiles. This is calculated by dividing the number of square inches in a square foot (144) by the number of square inches in a tile (18.0625). The calculated conversion factor is also 7.97232.
Example 4
Italian floor tile comes in 13 by 13 inch tiles. The selling unit is square foot, but the stocking unit is each. Because the stocking unit is larger than a square foot, so the unit conversion is less than one.
In Product Extended Unit Conversion Setup, the unit conversion type is fraction because there is more than one tile in a square foot. The number of square feet in a tile is calculated by dividing the number of square inches in the tile (13 x 13 = 169 square inches) by the number of inches in a square foot (144 square inches). This is calculated to be 169/144 = 1.17361111. The calculated unit conversion factor is 1/1.17361 or .85207.
Example 5
This example involves defining several units of measure for one product. The product is 2" x 4" x 8’ lumber. The lumber is stocked in thousand board feet (MBF) and sold in MBF, lineal feet (LF), or by the piece (each), relative to the MBF. The item is purchased in MBF. A board foot is equal to 144 cubic inches of lumber, so a piece of lumber measuring 2 inches by 4 inches by 8 feet would be 5.33333. This is calculated by multiplying 2 x 4 x 96, which equals 768 cubic inches, and dividing by 144, which equals 5.33333.
When you set up the Product Extended Unit Conversion Setup record for each, you would set the conversion up as a fraction because you are dealing with units that are less than the stocking unit. There are 5.33333 board feet in one each. The number of units in a stocking unit (MBF) is calculated by the system as 1000 divided by 5.33333, or 187.5. The calculated conversion factor is .0053333.
If you set up the Product Extended Unit Conversion Setup record for lineal feet, an conversion error occurs because the number of units in a stocking unit is greater than the 470:1 ratio. There are 1500 LF in one stocking unit, resulting in a 1500:1 ratio. The conversion error is 4.975 board feet or a .5% error. A conversion factor of .00067 equals 1,492.53731 LF in a stocking unit.
To more accurately calculate the unit conversion, you can reduce the ratio between the UOM and the stocking unit. For example, you could set up the Product Extended Unit Conversion Setup record with 1000 stocking units in one unit, and the calculated conversion factor is 1000. You can purchase in MBF and let the system convert each MBF receipt to board feet as the stocking unit.