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Material Waste recorded as Scrap or Put in a warehouse to be sold

  • 22 June 2023
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I am having a difficult time recording production waste from a raw material input. In a BOM I have configured, it takes 3lbs of an item for a yield of 1.95lbs. I set this up in the BOM material line item indicating that 1.95lbs are required with a scrap factor of 0.538462 so that a total of 3lbs is removed from inventory. I set up a production reason code and in the Work Center and BOM I set scrap action to Write Off. The raw material is a lot tracked item, so I issue the material and I see 3lbs removed from inventory and go into WIP. When I perform the move transaction, the cost of 3lbs is moved into inventory when only 1.95lbs should be in inventory with 1.05lbs written off. I have also tried changing the settings to quarantine and set a scrap warehouse and location (set up in the order type and stock item (but I cannot get that to work wither. This is not the produced product that is waste...it is one of the input materials so I cannot specify a scrap amount on the move transaction as this would be quite cumbersome for the client to have to calculate based on various production run quantities. Lastly, this client eventually sells the waste as it has substantial value.

Any insight as to what I am doing wrong?

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Best answer by dgodsill97 22 June 2023, 13:58

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Laura02
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Hello @frankfiorentino81 ,

I noticed a similar prior post regarding production waste/by-products that may help you. Did you already see this post?

The answer suggests actions we can take when the waste items have value.

Laura ~ Klear Systems, Inc. Irvine, CA. ~ Please remember to "Mark Best Answer" to help those who are facing the same problem.~
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Using a byproduct is the best way to accomplish this. A byproduct would be a separate material line with a negative qty.  You should specify a warehouse and location for the byproduct to be received to.  The material line can be marked as backflush or you can manually enter the amount.

 

Here is an example MGWASTE is the material lost during production.  Note that a location is specified. I marked the location to exclude from available and MRP.  If this was regrind I might not want to exclude it.

Here is the transaction from doing a move - material backflush is optional.and I turned it off for this example and used Release Materials.

When released it creates an Inventory receipt.

  1. I did not apply any value to the waste and I used a different inventory item.
  2. I could have used the same inventory item and the value would the current cost or I could have used standard cost valuation for the waste and set a value.
  3. IF the byproduct has a cost, the production WIP totals are credit and the inventory account debited.

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