Planning items
Planning items are products that are not stocked in inventory. Instead, planning items used as a container to house the production of multiple co-products that are produced together.
The planning item is used to identify:
- The formula that is used for production.
- The materials that are consumed in the manufacturing process
- The route times that are needed for the manufacturing of co-products.
A planning item formula always has more than one co-product. Costs are allocated to the co-products that are produced. The batch order is created in the planning item number, and the outputs of the batch order are the co-products, not the planning item.
Example 1
In the manufacturing of cut metal parts, a single sheet of metal can produce multiple cut pieces with one manufacturing process. In this process, a sheet of metal is placed on a laser cutter and a program is run to manufacture the parts. The output of the process is multiple individual piece parts that can all be considered co-products.
A planning item can be used to plan, schedule, consume materials, and release production for a single order and have the output be many individual pieces. The formula is associated with the planning item to identify the individual components that are needed along with the co-products that are considered output in the process.
Example 2
In plastic molding manufacturing, a plastic powder is heated under pressure in a mold or dye to create various shapes of molded plastic materials. The mold can make one or many different molded parts depending on the design of the mold dye. In some of these processes, a single dye can manufacture three or four different individual plastic parts.
These parts can never be manufactured independently of each other because the entire dye must be used to make even one of the parts. For the operators who are running the machine, it is important for them to know the dye number and the raw material plastic part number to use for creating the molded parts. When the parts are removed from the dye, they are trimmed, and then the trimmed pieces are scrapped. These plastic trimmings are a by-product of the process because it is inherent to the process and is not useable in later production.
For this example, the mold will be created as a planning item and the individual piece parts that the dye makes will be created as co-products. The formula with the raw plastic will be created against the mold part and the molded plastic piece co-products will be added to that formula with each co-product having the cost allocation created manually. The formula will be shown as allowing co-product variation when a part cannot be used, and must be inventoried as regrind (a process where discrepant parts are reground into raw plastic for reuse in the process). The plastic trimmings by-product will also be added to the formula with a 4 percent burden rate.
Formula item
A formula item is a primary output of a formula and realized into inventory during the report as finished process in batch order processing. For formula items, production cost is allocated the formula item but can also be allocated across the formula item and the co-products and by-products that are assigned to the formula.
Planning item
Planning items are not realized into inventory during the Report as finished action in batch order processing. A planning item acts as a placeholder to create a formula that produces only co-products without a primary formula item. Production cost cannot be allocated to a planning item. The costs are allocated to the co-products that are assigned to the formula.