Inventory

Part-1
1. What are different planning methods in Inventory
There are 5 different planning methods in oracle Inventory

Subinv Replenishment Planning

Min Max Planning

Re-order point planning

Kanban Planning

Periodic Automatic Replenishment

2. What are the setups for different planning method (Min-Max)

Setup the item in master org and assign the item to the org for which Min-Max planning is used

Attributes, Inv Planning method: Min-Max

Min-Max Qty should have been defined

Safety Stock method should be non MRP Planned

Determine what should be the status of the Requisitions created for the planning
Do this with profile option INV: Minmax Reorder Approval

IF Use ASL has been enabled, then Requisition will populate the supplier data from the ASL
setup which is assigned to the item
Sourcing rules can be defined for this
Then need to assign sourcing rule to the item

In Inventory responsibility, under Planning run the Min Max planning report with required
parameter
3. What is the concurrent program for the planning

Min Max planning report under planning menu in Inventory responsibility

4. What are the setups for expense item?

Should not be Inventory Item

No Stockable

No Transactable

No Costing, Inv Asset

5. How many key flexfields are there in Inventory?
Seven KFF are there in Inventory

Account Alias

Item

Item Category

Item Catalogues

Stock Locators

Sales Order

Service Items
6. What is the use of sales order KFF?

This is used during material transaction when source is Sales Order

Segments are Sales order Number.Sales Order Type.Sales Order Source

7. How we can have the item key flexfield with 2 segments, is it possible, if yes then how, if
no then why?

This can be modified using Flexfield>Key> Segments

Query the System Items, then you can modify the existing structure, or you can add a new one.

8.

9.

How will you inactivate the Inventory locations

By giving Inactive date in the Location form
What all setups you have done in inventory organization implementation
Location
Calendar
Organization
Parameter
Cost Group
Subinventory
Stock Locator
Receiving Options
Shipping Networks
Intercompany Transaction flows
Cost Subelements

Part - 2
1.

What are the valuation accounts used in Inventory

Material

An asset account that tracks material cost. For average costing, this account

holds your inventory and intransit values. Once you perform transactions, you cannot change
this account.

Material Overhead An asset account that tracks material overhead cost.

Resource

An asset account that tracks resource cost.

Overhead

An asset account that tracks resource and outside processing overheads.

Outside processing An asset account that tracks outside processing cost.

Expense

The expense account used when tracking a non-asset item

Other Accounts

Sales

The profit and loss (income statement) account that tracks the default

revenue account.

Cost of Goods Sold The profit and loss (income statement) account that tracks the
default cost of goods sold account.

Purchase Price Variance

The variance account used to record differences between

purchase order price and standard cost. This account is not used with the average cost method.

Inventory A/P Accrual

The liability account that represents all inventory purchase

order receipts not matched in Accounts Payable, such as the uninvoiced receipts account.

Invoice Price Variance

The variance account used to record differences between

purchase order price and invoice price. This account is used by Accounts Payable to record
invoice price variance.

Encumbrance

An expense account used to recognize the reservation of funds

when a purchase order is approved.

Average Cost Variance

Under average costing with negative quantity balances,

this account represents the inventory valuation error caused by issuing your inventory before
your receipts.

2.

What is ABC Analysis and why it is being used

ABC Analysis is an Inventory categorization method to categorize items into 3 different
classes A being the most valuable and C being the least valuable ones.

Using this Analysis, it will be easy to monitor and keep on track of the valuable items like
frequently doing cycle counts on A class items, etc.

3.

What are the process of cycle count

Create a cycle count header with required data

Assign the items to be counted

Then run the required cycle count report

Using the report do the cycle counts

Then go and Approve the cycle count

4.

What is the different in MO Issue and MO Transfer

MO Issue will move out the stock from inventory against an account

MO transfer will move the stock from one subinventory to other

5.

What is the Picking rule in Inventory

Picking Rule is used to determine the list of items for sales order/ shipping based on the
revision, Lot, Subinventory and Locator.

6.

Assign the required Picking Rule to the item in Order Management tab.
What are the criteria in Cycle count
Depending on the requirement, we can trigger cycle count.
We can define regular cycle count of high values items.
If back ordered or pick denied, we can trigger cycle count for those items.

6.

What are the diff in Lot and Serial

Lot control is to control a whole batch of items. for example in drug industry we have batch

number which

can be controlled using lot where we can track the complete batch using

specific data.
Serial control is to monitor and track every single qty of an item like electronic devices where
we track by

serial number.

6.

What are the material status in a subinventory

7.

What is Physical Inventory

Part - 3
1. What is move order in OM
Move orders generated as part of Pick Wave are the ones from Sales order
2. How a MO is diff from Subinv transfer
Ans: MO generally are the request of movement of items in one organization. It may be of from 3
sources, MO requisition, Replenish MO, Pick Wave MO. MO can be MO Issue which will issue the
item from the location and MO transfer which ll transfer the item to another location.
3. What is nettable in Subinventory setup
This will detrrmine whether to consider the onhands of the subinventory as available for planning
tasks.
4. What are the status attributes in Item and how many of them
We can define different status for an item combination these attributes as per the business need
Following are the attributes
BOM Enabled
Build in WIP
Customer order enabled
Internal Order enabled
Invoicable
Purchasable
Stockable
Transactable
5. What is the use of status attribute
We can define different status for an item combination these attributes as per the business need
6. Why master org is required
So that we can have an item maintained at master level with common attributes and then we can use
the same item across multiple organization instead of defining it again and again.
7. Inventory Master org is mandatory?
Yes. If you will not create any specific master org, then system will consider the same inv org as its
master org.
8. What are the Lot control setups
Lot control can be setup at item attributes at organization level.
Either No Control or Full Control
9. How lot number generates
You can generate new Lot numbers during transactions
10. What is serial controlled and what are the setups
Serial control can be setup at item attributes at organization level.

11. How serial numbers are generated

Serial control can be setup at item attributes at organization level.
No Control, At Receipt, At Sales Order issue, Predefined
12. What is the predefined locator in Subinventory and how it works in business
We can setup locator control in 4 diff ways for each subinventory
None: There will not be any locator information required during any transaction
Prespecified: System will ask you to select locator combinations which already been defined in the
subinventory during the transaction
Dynamic Entry: Either you can select any locator during transaction or you can create a new
combination
Item Level: This will take the locator which has been defined at item attribute level
13. What are the transaction managers
Transaction manager is the inetrface managers which carry out all transaction once submitted by the
users
14. Can we change the item name after it created?
Ans: Yes we can change the name in master level.

Part -4
1. How WMS is helpful compared to Inventory
Ans: Warehouse Management (WMS) enables companies to maximize their utilization of labor,
space and equipment investments by coordinating and optimizing resource usage and material
flows. Specifically designed to support the needs of distribution, manufacturing, asset-intensive, and
service businesses, Oracle WMS provides a single-platform across your entire global supply chain.
2. What functionality in inventory uses the calendar
3. What is the diff in inv and wms from accounting perspective
4. What is the use of WMS Rules Workbench
Ans: The Rules workbench enables you to assign strategies, rules and cost group values directly to
any number of objects in an assignment matrix
5. Why strategy used
Ans: After you define your rules, you must set up a strategy and then associate the applicable rules.
After you assign rules to a strategy, the rules engine can execute the strategies on any objects to
which the strategy applies. The rules engine executes each subsequent rule in your strategy until an
allocation is completely filled.
6. How many types of bar codes are there
Ans: Mainly 2 types Linear (1 dimensional) and Matrix (2D)

Part - 5
1. What is an item?
An item is a part or services where you can Purchase, Sell, Plan,
Manufacture, Stock, Distribute and Prototype.
Items can also be containers for items as well as components you build into
other items.
2. Explain Item Master Organization?
An item master organization is a logical entity where you define the item. After
you define an item in the item master, you can assign it to any number of other
organizations.
3. Define Inventory Organization?
It is a facility which will enable you to store and transact the items. It can be a
manufacturing unit, ware house, distribution center etc.
4. What is a subinventory?
Subinventiries are unique physical or logical separations of material inventory.
These can be raw material, finished goods or defective material subinventory.
You must define at least one subinventory. Subinventories are of two types:
storage and receiving
Storage subinventories are intermediate or final put away locations for
material. Material that resides in a storage subinventory appears in on hand
quantity, and is tracked by the system. The system can book orders against,
and use manufacturing processes on material that resides in a storage
subinventory. You must define at least one storage subinventory for your
implementation.
Receiving type subinventory is only used for receiving items. Items in this
subinventories cannot be on-hand or reserved
5. In which table does the subinventory related information for an item is

stored?
MTL_SECONDARY_INVENTORIES
MTL_ITEM_SUB_INVENTORIES
6. What is a stock locator?
Locators are structures within subinventories. Locators are the third level in
the enterprise structuring scheme of Oracle Inventory. Locators may represent
rows, racks, or bins in warehouses. You can transact items into and out of
locators. You can restrict the life of locators, establish capacity of a specific
locator in weight or units, as well as specify dimensions which define a
locators capacity by volume.
7. What are the Key flex fields in oracle Inventory?
Oracle Inventory provides the following flexfields:
System Items, Item Catalogs, Item Categories, Stock Locators, Account Alias
and Sales Order
8. What are the basic steps involved in defining an item?
Create an item in the item master form
Copy the template from the tools menu to assign specific attributes to the item
and save it.
Assign the item to a category from tools menu and save your work
Select organization assignment from tools menu and assign the item to
different inventory organizations by ticking the checkbox next to the inventory
organizations.
9. What are item attributes?
Item attributes are the collection of information about an item. These are used
to store specific characteristics of an item, such as item status, unit of
measure, revision control, etc. these can be controlled at either the master or
the organization level. These attributes are stored in a table named
MTL_ITEM_ATTRIBUTES

10. What is the use of item template?

An Item template is a set of attributes that enable the user to quickly create an
Item. You can use the existing templates are you can create your custom
template.
11. What is an item category and category set?
A category is a logical classification of items that have similar characteristics.
A category set is a distinct grouping scheme and consists of multiple
categories. An item can belong to any number of category sets. We can
assign item to one category within each category set. The categories can be
retrieved from the table MTL_CATEGORIES_B and item category set from
MTL_CATEGORY_SETS_B.
12. Explain unit of measure (UOM) and UOM class?
The unit of measure (UOM) helps us count the number of items involved in a
transaction or the number of items that are stored in a subinventory or a
locator.
UOM classes let you group different UMOs into one category. Eg,
quantitycould be a UOM class under which each, dozen, lot etc are separate
UOMs.
13. Explain shipping method?
Shipping methods are the way you ship material. When you create a shipping
method, you must enable it before you can use it in a shipping network. If you
disable a shipping method, it cannot be used in a shipping network.
14. Describe Interorganization Shipping Networks
An inter-organization shipping network describes the relationships and
accounting information between a shipping organization and a destination
organization. You must define a shipping network between two organizations
before you can transfer material between organizations. When you set up a
shipping network you must select a transfer type:Intransit or Direct.
Intransit: Oracle Inventory moves material to an intermediary state before it

reaches the destination organization. After the material arrives at the

destination organization, you will need a receipt transaction to retrieve it. If
intransit is selected, you can define:
Shipping Methods, GL Accounts to use in transit, Material ownership during
transfer, Planning lead times and Transfer Charges
Direct: Oracle Inventory moves the material directly to the destination
organization. However, for both transfer types, you can determine default
receipt routing and whether internal orders are required to transfer material
15. In which tables are the transactional details are stored?
MTL_MATERIAL_TRANSACTIONS
MTL_TRANSACTIONS_INTERFACE
MTL_MATERIAL_TRANSACTIONS_TEMP
MTL_TRANSACTION_ACCOUNTS
16. What is revision control in Oracle Inventory?
A revision is a particular version of an item, bill of material, or routing. Revision
control is normally enabled for identifying a modified item. Item can be placed
under revision control by checking the box `Revision control` in Inventory tab
while defining new item or for existing item. Base table for Item Revision is
MTL_ITEM_REVISIONS.
17. What is Picking Order of Subinventory or Locator? Where will you
define the order?
The value indicates the priority with which we pick items from subinventory or
Locator, relative to another subinventory or locator, where a given item
resides. A picking order of 1 means that order entry functions pick items from
the subinventory or locator before others with a higher number (such as 2,3
and so on).
The subinventory order is defined in the subinventory definition and the locator
order is defined in the locator definition. The default order for both the
subinventory and the locator are defined in the organization.

18. What are the different inventory transactions?

A transaction is an item movement within, into or out of inventory. A
transaction changes the quantity and location of an item
The following are the different inventory transactions:
Receive an item into an organization from GL account number
Issue an item from an organization into a GL account number
Transfer items from one subinventory to other in the same organization.
Transfer of items between various inventory organizations
Reservation of items
19. Describe various inventory transaction types?
Miscellaneous transaction: This transaction is used to do adjustments in stock
due to damage, obsolescence, issuing items for R & D or issuing track able
expense items.
Subinventory transfer: This transaction is used to transfer goods from one
subinventory to another within the same inventory organization.
InterORG transfer: This transaction is used to transfer goods from one
inventory organization to another.
Receiving transaction: This transaction is used to move goods from receiving
dock to specified subinventory and locator.
Sales issue: This transaction is used to move goods from pick subinventory to
staged subinventory.
WIP issue: This transaction is used to issue materials against production
orders
20. What is the difference between a subinventory transfer and a move
order?
Both these transactions are used for the movement of items from one
subinventory to the other. The difference is that move order generates a pick
slip and a subinventory transfer doesnt.
Move order requires approval. Also, move orders create allocations. So you

can place hold on the material with the intention of picking it up a little later. In
subinventory transfer, there is no reservation / allocation.
21. What are the Components used in Customizing a Transaction?
The following are the three components used in a transaction
Transaction Source Type
Transaction Action
Transaction Type
A Transaction Source Type and a Transaction Action come together to form a
Transaction Type.
22. What is a Transaction source type?
A Transaction Source Type is defined as an entity against which Oracle
Inventory charges a transaction. The following transaction source types come
seeded with Oracle Inventory:
Purchase Order
Account Alias
Move Order
Internal Order
Standard Cost Update
Internal Requisition
Sales Order
Cycle Count
Periodic Cost Update
Physical Inventory
Account
RMA (Return Material Authorization)
Inventory
Job or Schedule
23. What is a transaction type?
A transaction type is a combination of a transaction source type and a
transaction action. It is used to classify a particular transaction for reporting

and querying purposes. Ex:

Sales order issue (txn type) + issue from stores (txn action) = sales order (txn
source type)
Move order transfer (txn type) + subinventory transfer (txn action) = move
order (txn source type)
24. Name any four purposes where miscellaneous transaction can be
used?
Cycle count adjustment, Physical inventory adjustment, adjusting inventory
quantity within an inventory organization and decrementing on-hand balances
from a subinvemtory
25. Explain inventory control?
Inventory Control is the process by which inventory is measured and regulated
according to predetermined norms such as economic lot size for order or
production, safety stock, minimum level, maximum level, order level etc.
26. What are the objectives of inventory control?
To meet unforeseen future demand due to variation in forecast figures and
actual figures.
To average out demand fluctuations due to seasonal or cyclic variations.
To meet the customer requirement timely, effectively, efficiently, smoothly and
satisfactorily.
To smoothen the production process.
To facilitate intermittent production of several products on the same facility.
To gain economy of production or purchase in lots.
To reduce loss due to changes in prices of inventory items.
To meet the time lag for transportation of goods.
To meet the technological constraints of production/process.
27. What are the factors that affect inventory control?
Type of product
Type of manufacture

Volume of production
28. Define ABC analysis?
ABC analysis determines the relative value of a group of inventory items
based on a user specified valuation criterion.
This technique divides inventory into three categories A, B & C based on their
annual consumption value.
It is also known as Selective Inventory Control Method (SIM)
29. What is consignment inventory?
Consignment Inventory is inventory that is in the possession of the customer,
but is still owned by the supplier. In other words, the supplier places some of
his inventory in his customers possession (in their store or warehouse) and
allows them to sell or consume directly from his stock. The customer
purchases the inventory only after he has resold or consumed it. The key
benefit to the customer should be obvious; he does not have to tie up his
capital in inventory. This does not mean that there are no inventory carrying
costs for the customer; he does still incur costs related to storing and
managing the inventory
30. What are the different planning methods available in Oracle?
Re-order point planning
Min-Max planning
Kanban cards
Subinventory replenishment planning
31. When should the material be ordered?
When on-hand quantity + supply demand is less than safety stock (safety
stock is nothing but minimum inventory level)
[On-hand quantity] + [supply] [demand] < [min inventory level]
32. Explain re-order point planning?
Reorder point planning uses demand forecasts to decide when to order a new

quantity to replenish inventory. Reorder point planning suggests a new order

for an item when the available quantity (on-hand quantity plus planned
receipts) drops below the items safety stock level plus forecast demand for
the item during its replenishment lead-time. The suggested order quantity is
an economic order quantity that minimizes the total cost of ordering and
carrying inventory. Oracle Inventory can automatically generate requisitions to
inform your purchasing department that a replenishment order is required to
supply your organization.
If the forecast is correct and the order arrives on time, the inventory level
should be right at the safety stock level at the time of receipt. In cases where
the desired safety stock level changes during the order lead time, Oracle
Inventory uses the largest safety stock quantity during the lead-time.
When an order is triggered, the EOQ is the size of the triggered order.
EOQ = square root of: [(2 X annual demand X order cost) / (carrying cost
percent X Unit cost)]
Oracle Inventory calculates annual demand as the current demand rate
annualized by multiplying the current period demand forecast by the number
of periods per year (12 or 13).
Reorder point planning can be performed at the organization level only.
33. Explain min-max planning technique?
Min-Max planning is a tool for planning inventory that looks at user-defined
minimum and maximum inventory levels. It does not consider lead times.
We can perform this technique at org level or subinventory level
34. Define cycle counting and explain its use in oracle inventory?
Cycle Counting is a process of periodic counting of individual item / all the
items throughout the course of the year to ensure the accuracy of inventory

quantities and values.

We can do the cycle counting at Organization / Sub Inventory Level.
Cycle count is used to:
To reconcile system on-hand balances with actual counts in inventory
Maintain control over the items that have higher value
35. When do you perform physical inventory and explain the steps
involved in it?
Physical inventory can be performed, whenever there is a need to verify the
accuracy of system on-hand quantities. This can be done for entire
organization or can be confined to a specific subinventory.
Steps to perform physical inventory:
Define physical inventory
Take a snapshot of system on-hand quantities
Generate physical inventory tags
Enter counts
Do physical inventory adjustments by approving or rejecting
Post adjustments
Purge physical inventory information
36. When can you see such scenario, item available to qty is 0 but
available to transact more than 0
If item is not reservable
If Subinventory Allow reservation is not allowed
If Item is lot controlled and lot is expired

Order Management
1. How can we create a normal order line and a return line in a single order

You can have category as MIXED in the order type and can assign one line type and one return line
type.

2. How to change price in sales order line after booking without using any modifier. Is it

possible, if Yes how?

OM: List Price Override Privilege, this profile option will help to do this requirement

3. Advanced Pricing
4. Configurator
5. What is Item validation org and how it is different from Item Master Org
6. Is it possible to do any transaction (receiving) transaction in Item master org?

Yes if Inv period is open

7. What steps you will do to check if picking did not happen for an order after pick release?

Pick Release rule

Onhand

Hold on order

8. What is system parameter and what is its significance?

We define a lot default parameters for any OU using System Parameters

9. What all setups required for an ATO order?

10. What all setups required for Back to Back order?
11. In an IR, the price of the item, from where it populates?

It populates the Frozen cost of the sourcing org

12. How can you change the price of the item in an IR?
13. How invoice get generated for IR?
14. What is the accounting entry happens for an IR invoice?
15. What is allocation means in sales order and in which step it happens?
16. What is the difference between allocation and reservation?
17. If an item is not allowed to enter in any sales order form, what is the setup behind this?
18. What is the difference between customer ordered and customer order enabled flag?
19. What are the drop shipment setups and explain the flow?
20. What are the tables involved in Drop Shipment
21. What is the difference between Pick Slip and Pack Slip?
22. What is Bill Of Lading?
23. If I want to have single invoice generated for all the lines of a sales order even if the lines

were shipped in different delivery, what can I do?

24. What to do if I want to create a same delivery for all the lines of an order even if they were

picked in different pick slip and delivery already created for few lines?

Any major issue you have faced in order management during

implementation from standard oracle process, not customization
1. Why we need to create different transaction types
Ans: Business might have different requirement like for some order they want to attach the workflow
Ship only, for some, Bill only. So they can have this in diff order types.

2. What are the reasons for Back Order

Ans:
The Pick release process includes 2 stpes

Pick Selection : This will find all the eligible orders which can be picked as per the release

criteria(pick release rule) used. If the order does not satisfy the criteria, the the shipping
transaction form will remain in the same status like, Next step as Pick Release.
Move Order Allocation: After the selection of orders, this will try to allocate the Move orders

created. If selection criteria met but due to any reason, allocation of move order could not happen,
the step will be back ordered.
Major reasons for back order are

Onhand not available

Any reservation against the available Qty

At the time of releasing source subinv and locators are Active or not

Inventory Periods

Item Status

Customer Ship To site status

If Lot controlled, check whether the Lot is Active or not also the expiration date is valid or not

Move order might be in Pending state

To check this, run the Shipping Exception report

3. What are the setups required for IR process
Ans: As this Internal requisition involves of moving an item from one location to other inside a
business
Below setups needs to be done

Item should be Inventory Item, Stockable, Transactable, Purchased, Purchasable,Internal

Ordered, Internal Orders Enabled, OE Transactable, Shippable

Item should be assigned in both source and destination organization

Shipping network should have been defined betwwen sourcing and to organization.

Transfer Type, if it is in transit then in destination reciving should be standard receipt and
receipt needs to be done manually. If it is direct then receiving should be done in destination
directly.

Internal Order required should be checked

Destination organization and Location needs to be created

As Internal SO will generate, so there should be a customer in the source OU with the

destination location in its ship to

Choose the Order type in the Purchasing Options of the PO responsibility of the destination

org. This order type ll be used in the Internal order

4. What is Drop Shipment and the setups
Ans: Drop Ship is business creates a PO to supplier for the standard customer demand order for
which supplier will directly ship the goods to the customer and bill to the business company. And
Business will logically receive the goods and close the standard SO and bill to the customer.
Setups:

Line source type should be External, this can be defaulted from Item or order type.

Sourcing rule to be defined

Drop Customer ship to site should have an internal location attached

Drop ship workflow should have been assigned to the line type

Ship to location should have associated with the purchasing receiving location

5. What is Back To Back order and the setups

Ans: In the case where the business does not want to maintain the stock of the item or currently they
dont have stock and they want to get that replenished by supplier also parallely want to track the flow
then the best option to go with back to back order flow. Mostly Wholesale business chains follow this
flow.
Setups

Define the item as Customer ordered, customer orderable, purchased, purchase order
enabled

Assemble to order check box should be checked

Item should be defined as Buy in Make/Buy flag in planning or sourcing rule needs to be
defined.

SO Line status should be Supply Eligible, PO Req Requested, PO Req Created, PO created, PO
received
6. What is ATP and how it is used
7. What are the Processing Constraints
8. When the header closes in a sales order
9. How to enable the Auto pick confirm
10. What is the difference between the COGS and deferred COGS
11. What are the HOLD sources
1. What is sourcing rule

2. What is release sequence rule

1. How to apply hold as soon as save the order

2. Is it possible to change the price of a line once after all modifier application the field is
grayed out
3. If there are 2 modifiers with same precedence which satisfies a qualifier then which
modifier will be applied and if different precedence then which modifier will be applied?
Ans: In both the cases, both the modifier will be applied on the SO. If the modifier terms satisfies the
order details then irrespective of precedence if it qualifies, all the modifiers will be applied by the
pricing rule engine.
4. Can an expense item received in RMA
5. What are the basic item attributes to use it in RMA and receiving