Practice - Create an Inventory Organization

Distribution
R12 Oracle Purchasing Fundamentals

Ownership
The Job Title [list@YourCompany.com?Subject=LABxxxxx] is responsible for ensuring that
this document is necessary and that it reflects actual practice.

Copyright © Oracle Corporation, 2001. All rights reserved.

Practice - Create an Inventory Organization LAB02BBY

Effective 05/11/02 Page 1 of 7 Rev 1
Practice - Create an Inventory Organization
Overview
As a part of initial Purchasing setup, in this practice you will create an inventory organization to
be used in later practices.

Assumptions
• Replace XX with your terminal number or initials.

• You must have access to an Oracle Application Vision database or comparable training
or test instance at your site on which to complete this practice.

• Logon to the system using the XXUSER you created earlier.

Tasks
Create an Inventory Organization

Responsibility = Purchasing, Vision Operations

In the Organizations window create a plant XXManufacturing that is an Inventory Organization

in Vision Operations.

Assign the Organization to an Existing Item Master

In the Additional Organization Information window give your new Inventory Organization a
code of XXM and assign it to Vision Operations. Be sure to set up appropriate GL accounts for
both Costing Information and Other Accounts.

Specify Receiving Information

In the Additional Organization Information window, enter appropriate Receiving Information for
your Inventory Organization.

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Solution - Create an Inventory Organization
Create an Inventory Organization

Responsibility = Purchasing, Vision Operations

1. Navigate to the Organizations window:

• (N) Setup > Organizations > Organizations

2. (B) New
− Name = XXManufacturing
− Type = Plant
− Enter a date in the From field early enough for any historical information that you
need to enter. (The default is the current date.)
− To Date = Leave Blank
− Location = XXManufacturing

3. Save

Note: Multiple inventory organizations can share the same physical location if the
Inventory Organization field associated with the Location was left blank (as in the prior
exercise!).

4. For the Name field in the Organization Classifications region, use the list of values to select
Inventory Organization.

5. Select the Enabled check box (use the mouse or the space bar).

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6. Save

7. (B) Others

8. In the Additional Organization Information window, select Accounting Information.

9. OK, then click in the Accounting Information field.

− Primary Ledger = Vision Operations
− Legal Entity = Vision Operations
− Operating Unit = Vision Operations.

10. OK

11. OK

12. (B) Yes to save changes.

13. Close the Organization Parameters window but do NOT close the Organization window.

Assign the Organization to an Existing Item Master

14. Re-open the Organization Parameters window:

• (B) Others

15. In the Additional Organization Information window, select Inventory Information.

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16. (T) Inventory Parameters
− Organization Code = XXM
− Item Master Organization = Vision Operations
− Calendar = Vision01
− Demand Class = West US

17. (T) Costing Information

Account Type Account

Material 01-000-1410-0000-000
Outside Processing 01-000-1450-0000-000
Material Overhead 01-000-1420-0000-000
Overhead 01-000-1430-0000-000
Resource Leave field blank
Expense Leave field blank

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18. (T) Other Accounts

Account Type Account

Purchase Price Variance 01-540-5210-0000-000
Invoice Price Variance 01-540-5220-0000-000
Inventory AP Accrual 01-000-2215-0000-000
Sales 01-540-4160-0000-000
Cost of Goods Sold 01-540-5200-0000-000
Deferred COGS Account 01-540-5200-0000-000

19. (I) Save

(Enter 1 for Starting Serial Number and click OK when the pop-up note concerning
Organizational Costing Methods appears.)

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 Note: A huge difference between a Location and an Inventory Organization is that
Inventory Organizations determine a lot of accounting that gets sent to the General Ledger!
For Purchasing, we are mainly concerned about Purchase Price Variance, Invoice Price
Variance and Inventory AP Accrual accounts.

20. Close the Organization Parameters window but do NOT close the Organization window.

Specify Receiving Information

21. Re-open the Organization Parameters window:

• (B) Others

22. In the Additional Organization Information window, select Receiving Information.

− Days Early = 5
− Days Late = 5
− Receipt Days Exceed-Action = Warning
− Tolerance = 5%
− Over Receipt Action = Warning
− Receipt Routing = Standard
− Allow Unordered Receipts = Checked
− Allow Express Transactions = Checked
− Allow Cascade Transactions = Checked
− Next Receipt Number = 1000
− Receiving Inventory Account = 01-000-1410-0000-000
− Clearing Account = 01-000-2929-0000-000

23. (B) Save and exit window.

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