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• Describe production types that are defined for any item, at the
released product level.
• Explain the difference between a formula item and planning item.
• Define formula lines and versions.
• Explain the use of a formula and a route in multisite production
scenarios.
• Explain the features and structural elements of a formula.
• Define a formula level with an example of a formula at multiple
levels.
• Define a formula at multiple sites.
• Define formula line types.
• Describe the formula features in formula lines.
• Describe different access methods to create and maintain a formula.
• Define different version control methods that are available in
formula management.
• Describe how to copy a formula from other formula versions.
• Modify a formula version by changing the yield percentage or
formula size.
• Define the steps to edit a formula using the formula designer.
• Create a formula version using scalable and percentage controlled
options in the formula lines.
• Describe how to use a plan group to substitute items in formula lines.
• Setup step consumption and its use in batch order processing and in a
formula calculation.
Introduction
This module describes the general concepts of formula management in Microsoft
Dynamics® AX 2012, and defines formula features and elements. It also shows
how to access the Formula form from different forms and different version
controls that are available in formula management. Additionally, this module
explains how to create the formula version and how to attach co-products and by-
products to the formula version.
General Concepts
This lesson describes the production types available in the released products in
each individual legal entity of Microsoft Dynamics AX 2012. It also explains the
difference between the formula item and planning item.
• Formula
• Bill of Material (BOM)
• Planning Item
• Co- product
• By- product
• None
Formula
Planning Item
The planning item identifies the item as a transient item. Items with this
production type, are not realized into inventory during batch order processing.
This enables the allocation of the total cost of the formula across the co-products
in the formula.
Co-Product
For formula items this production type is used for identifying a product as the
secondary output in a manufacturing process, where the formula item is the
primary output. For planning items the co-product is the primary output. Co
represents a value and are either used in subsequent processes or can be sold with
a profit.
By-Product
This production type identifies the item as secondary output to the production
process and is, compared to the co-products, not regarded as usable in subsequent
production processes or sellable.
Sometimes companies even spend money to dispose of the by-products and the
cost incurred for the disposal can be accounted for to the respective batch order.
Therefore, the by-product involves configuring the cost burden associated with
the formula.
None
Production type 'None' identifies the item as procured from external suppliers and
not manufactured. This is the default production type that is used when releasing
a product to a legal entity.
Co- and by-products can be assigned to the formula version. A formula item or a
planning item can be assigned to many formula versions. Each formula version
will then represent different definitions of the formula regarding all the data
incorporated in the formula and formula version. For example, formula lines, co-
and by-products, cost definitions, batch order sizes and so on. Approved Formula
versions can be activated and a formula item can be assigned to more than one
activated formula version as long as the different versions do not overlap in their
defined from and to validity dates.
When a transaction is created for a formula item, for example a batch order, the
system will search for an applicable active formula version within the validity
date range, batch order size range and Site defined on the formula version.
You can create and configure a general formula for all sites and a specific
formula or route for an individual site. In the multisite production environment,
this feature ensures that an appropriate formula is created, produced and stored at
the same site.
• Formula features
• Formula levels
• Formula lines
• Formula line types
Features Description
Graphical The formula designer lets you choose to work with the
formula formula structure in a graphical format, that shows the
formula and route versions available for the selected
item.
Quantity The From Formula Size field (on the formula version)
dependent can be used for controlling which formula version is to
formula be used in a production. For example, if less than 500 kg
of a formula item is ordered, Version 1 is used; when
more than 500 kg is ordered, Version 2 with a formula
size of 1000 is used.
Date dependent The "From date" and "To date" on the formula version
Formula can be used to control the version based on the validity
period. For example, if the "From date" is five days
before the current date and the "To date" is 10 days after
the current date, Version 1 is used; usage of Version 2
starts after 10 days from the current date and ends after
20 days from the current date. For example, if the batch
order is created 10 days before the current date Version 1
will be used; if it created 10 days after the current date,
then Version 2 will be used.
Total cost This allocates the total cost of production across the co-
allocation products and the formula item. For the planning item the
entire cost is allocated across the co-products. When
selecting this parameter it is mandatory that the co-
products with the cost allocation are entered before the
formula is approved and activated.
Use for Use for calculation flag to determine which formula size
calculation to use if there are percent controlled items to calculate
quantity on Formula line.
Formula Levels
The formula can consist of many levels, depending on the type of product being
produced. Meaning, any given ingredient in a formula can also contain a formula
of its own.
Complex formula items can have several sub formulas. The number of levels, or
sub formulas a formula has, depends on how the item is managed. Generally, an
ingredient needs its own level in the formula if, at a particular stage, the item
needs to be tracked, stored or sold.
Site 1 and Site 2 are primarily production units and they receive the sales demand
from Site 3 and Site 4.
Site 3 and Site 4 act only as the sales and distribution division. The sales orders
received in these sites are redirected to Site 1 or Site 2 for production and supply,
according to the availability of resources at the respective sites. However, sites
contain warehouses to store the finished formula items in the inventory.
• Item
• Phantom
• Pegged supply
• Vendor
Formula Form
In the Formula form, you will not be able to add lines to the formula before the
formula is a part of a Formula version which is done by associating a formula
item to the formula in the Version section of the Formula form.
You can prevent removal of approval for the approved formula by selecting the
check box Block removal of approval in Inventory and warehouse
management parameter.
You can also prevent changes in formula lines by selecting the Block editing
check box in Inventory and warehouse management parameters
The following are the features in formula lines that are specific to process
manufacturing. These are explained in detail throughout separate lessons in this
module.
• Percentage controlled
• Scalable
• Plan group
• Step consumption
There is no limit to the number of formula versions that can be created for a
released product. A released product can have several active formula versions, as
long as different dates, sites or formula size are defined for each version.
• The lower section displays the formula lines for the formula
associated to the selected formula version in the upper section. In
this section, you can create and edit formula lines.
Formula Versions
A formula version is the link or reference between a formula item and the main
formula. With formula versions, a formula item or planning item can be
associated with many different formulas.
For example, Contoso Chemicals Espana, upon anticipation of big demand for
Cefazolin Sodium Sterile in the global market, decides to start production in their
recently constructed new site. Therefore, a new formula version of Cefazolin
Sodium Sterile, though identical to the main version, is created specific to the
site, and is approved and activated.
In the graphic, version control of item number 300006 shows the following:
Companies can use these options to automatically control which formula version
to use for batch production.
A company can have multiple formula versions identical in quantity and dates
but different in site. If you do not specify the site, the formula version is valid for
all the sites.
You can use Microsoft Dynamics AX 2012 to assign the same formula to
multiple items. This is useful when the company produces items that use the
same ingredients but have different item numbers.
For example, Item A has two versions: one active and one inactive at site 2. The
Active check box in the Formula line form is selected for version 1 and is clear
for Version 2.
On Site 1 item B only has Version 1 and it uses formula number 28, for example.
The formula 28 appears on both Item A (Version 1) and Item B (Version 1). This
is the same formula assigned to multiple items at one site.
Inventory and warehouse management > Common > Formula > New button
To add a new formula, create the item of production type formula, click
Engineer, and select Lines. To create the new formula in the Formula lines
form, click Create Formula. When a new formula is created, it appears in the
top section of the Formula line form. In addition to the formula number and
name, the upper section of the form displays:
Inventory and warehouse management > Common > Formula > Co-
products button > Estimate cost
6. Click the Site and select the appropriate site from the drop-down
menu, to which the formula version belongs. Note that if the Site
field is left blank, the version will be available for all sites.
7. Click OK.
8. Enter the Formula size in the Formula size field.
9. In the From date field, enter the date from which the formula
version is valid.
10. In the To date field, enter the date up to which the formula version is
valid.
11. In the From Formula size field, enter the minimum quantity that is
valid for this formula version.
15. Click Ctrl+N to create a line, select the co-product from drop-down
menu.
16. Enter the quantity in the Quantity field.
17. Select the TCA cost allocation method for the co-product.
NOTE: There are three types of cost allocation: None, TCA, Manual. For more
explanation refer to the chapter titled 'Batch Orders'.
18. If the cost allocation is TCA, then click Estimate cost in the header.
19. Click Allocate cost percentages to assign the calculated values of
cost percentage to the co-products.
20. Select the by-product and enter the burden amount.
NOTE: There are four types of burden: None, Percent, Per series, and Per
quantity. For more explanation refer to the chapter titled "Batch Orders."
Scenario
The Sales and Marketing Department of Contoso Foods United Kingdom (UK)
has identified the market demand for Chicken Legs, with the LABEL 1101. As
the Product Designer, you are asked to create a formula version with the
following details.
Challenge Yourself
1. Create a formula with description 'For packing chicken legs' and add
ingredients in the formula lines.
2. Add the co-products and cost allocation for the co-product.
3. Approve and activate the formula.
1. Create the formula by selecting the formula item from the Released
products form.
2. Create formula lines to enter the ingredients with quantities and
relevant unit of measurement.
3. Add the co-products and cost allocation for the co-product.
4. Approve and activate the formula.
Step by Step
When you copy the formula, you must specify the item formula or production
order number from which to copy.
To delete formula lines in the formula designer, use one of the two following
methods.
Scalable: Selection of this option indicates that the item is allowed to change if
the formula size changed. This does not apply to catch weight items. Scalable is
also an indicator that allows the batch size to change if the ingredient quantity is
changed. This applies only if the consumption of the ingredient is a variable that
is defined in the Setup tab. Other improvements in this scalable option include
the following:
C 1187 20
C 1188 20
C 1189 40
C 1190 20
The Quantity field in the Formula line form is calculated automatically based
on percentage. He approves and activates the formula.
Scenario
You, the newly joined recruit in the Design department of Contoso Chemicals
Espana, have been asked to create a formula with percentage control for the
process of weather proof exterior emulsion - color mineral blue, Formula item
number WEE B1190. The raw materials are as follows:
Formula Number - FOR-003A, Formula size - 7500 Lt., From formula size -
5001, Enable 'Use for Calculation flag'.
C 1195 20
C 1197 25
C 1198 30
Kana-4050 25
Challenge Yourself
The Priority field is the item substitution priority used by the plan group. You
must specify the priority for each substitute item in the formula line. Items with
the highest priority are considered for estimation in master planning. If the
demand for the item with the higher priority is not covered, Microsoft Dynamics
AX 2012 will examine the item with the next priority within the plan group and
planned orders are generated. In formula calculation, Microsoft Dynamics AX
2012 estimates based on the item for which the quantity is entered in the formula
lines. Formula calculation considers the item for which the quantity is specified
and ignores the priority definition for the plan group in the formula lines. Also,
item substitution is not possible for the batch orders created already
Inventory and warehouse management > Setup > Formula > Plan group
He uses plan group to apply these priority ratings in the formula lines of the
formula item AD COMP BULK. Subsequently, Eduardo, the production planner,
performs master planning to see Microsoft Dynamics AX create planned
purchase orders for ARTICAINE HCL.
Scenario
Formula number For-0025, formula name ' Formula for Kana - 1058'
Challenge Yourself
Step by Step
When Step is selected in the Formula field in the formula line, the following
changes occur in the formula lines:
• The Quantity field is disabled, and any value entered in this field is
cleared.
• The Qty Per series field is disabled.
• Consumption can only be constant.
• Percent controlled and scalable cannot be selected.
• Constant and variable scrap is added after the Step Consumption
calculation is performed.
• The Multiples field is disabled.
NOTE: Each subsequent record should have a greater From series value than
that of the previous record .This signifies that the From series of the first record
and the From series of the second record will be the range for the batch size and
the quantity entered will be the consumption for a batch order.
NOTE: Decimals cannot be entered for the catch weight products and the
Rounding-Up tab will be disabled.
Scenario
Emil explains to the assistant that the formula for the product Kana-1056
(product name Bis2 Propylene) contains the product Carbon 091, which will be
consumed non-linearly. For 1 liter to 999.99 liters of the final product, 3
kilograms of Carbon 091SR is needed, and for 1000 liters to 1999.99 liters of the
final product, 9 kilograms of Carbon 091SR is needed.
Emil plans to verify the relevant quantities of different formula sizes used in the
batch order. He will do this according to the step consumption set up in the
formula version, by starting a batch order and then verifying the step
consumption value in the pick list journal lines.
Challenge Yourself
Step by Step
6. Create a record, and in the From series enter 1, and enter 3 as the
quantity for the ingredient.
7. Press Down arrow to create another record, and in the From series
enter 1000, and enter 9 as the quantity for the ingredient that shows
in the figure. Each subsequent record should have a greater From
series value than that of previous record. This signifies that 3
kilograms of Carbon 091SR will be the consumption for the batch
order for 1 liter to 999.99 liters.
8. Press Down arrow to create another record, and in the From series
enter 2000, and enter 12 as the quantity for the ingredient that shows
in the figure. Each subsequent record should have a greater From
series value than that of previous record. This signifies that 9
kilograms of Carbon 091SR will be the consumption for the batch
order for 1000 liter to 1999.99 liters. Close Formula line form.
9. Click Approve to approve the formula version.
10. Click Activation to activate the formula version.
11. On the Navigation Pane, click Production control, go to Common,
click All Production orders.
12. Click Batch order button, Select the item Kana-1056 in the Item
number field, enter 1000 as the quantity and then click Create.
13. Select the batch order with Item number being Kana-1056 and click
Estimate, to estimate the batch order.
14. Click Production details button and then click Formula to verify
the proposed consumption of the ingredients.
3. Select the correct statement in the context of the formula with a site
( ) You can neither create a site-specific formula nor a general formula in
Microsoft Dynamics AX 2012
( ) You can create and configure a general formula for all sites and
specific formula and, or route for an individual site.
( ) You can only create a site-specific formula in Microsoft Dynamics
AX 2012
( ) Site is a mandatory field while creating the formula version
4. If the percent controlled is checked in the formula version, then which of the
following is true?
( ) All the ingredients marked as percent controlled do not have to add up
to 100 percent
( ) All the ingredients marked as percent controlled need to add up to 50
percent
( ) All the ingredients marked as percent controlled must add up to 100
percent
( ) Consumption quantities of ingredients marked as percent controlled,
cannot be changed at a future date
1.
2.
3.
Solutions
Test Your Knowledge
1. What are the production types available in Microsoft Dynamics AX 2012?
(Select all that apply)
(√) Formula
(√) BOM
(√) None
(√) Co-product
3. Select the correct statement in the context of the formula with a site
( ) You can neither create a site-specific formula nor a general formula in
Microsoft Dynamics AX 2012
(•) You can create and configure a general formula for all sites and
specific formula and, or route for an individual site.
( ) You can only create a site-specific formula in Microsoft Dynamics
AX 2012
( ) Site is a mandatory field while creating the formula version
4. If the percent controlled is checked in the formula version, then which of the
following is true?
( ) All the ingredients marked as percent controlled do not have to add up
to 100 percent
( ) All the ingredients marked as percent controlled need to add up to 50
percent
(•) All the ingredients marked as percent controlled must add up to 100
percent
( ) Consumption quantities of ingredients marked as percent controlled,
cannot be changed at a future date
5. When you select ‘Step’ against the formula field in the formula lines, which
of the following changes occur in the formula lines. (Select all that apply)
(√) Quantity field is disabled, any value entered in this field is cleared
(√) Consumption can only be constant
( ) Percent controlled and scalable can be selected
(√) Constant and variable scrap is added after step consumption
calculation is performed