Production control D365 F&O Formula, Formula version, Co

and by product

1) Formula A formula defines the materials, ingredients, and outcomes of a specific process in
process manufacturing. Together with the corresponding route, the formula defines the whole
process in process manufacturing. Formulas are used to plan and produce products in process
manufacturing.

A formula consists of the ingredients and quantities that are required to produce a specific
quantity of a formula item.

2) Formula Lines A formula consists of one or more formula lines that identify the ingredients or
items that make up the formula. A formula line can contain Bill of materials (BOM) items,
formula items, catch-weight items, purchased items, co-products, or by-products. Because
many items are used in multiple products, an item can be used in more than one formula.

3) Formula versions.

When creating a new formula, you must first create a formula version before adding the formula
line items and their specific characteristics. Every formula must have at least one version.
The Approved button on a formula version becomes available only after a version record has
been successfully saved.

Each formula version record is associated with one or many co-products and by-products that
can be produced as you produce the finished product. Many products can be made from the
same ingredients in different batch sizes, in multiples, or by using different yields. You can
create as many versions of a formula as you require.

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 Production control D365 F&O Formula, Formula version, Co
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4) Co Product

Coproducts are items that are produced along with a formula item or other co-products. These
products are inherent to the manufacturing process and occur every time the other item is
manufactured. Coproducts have inventory value and are stored in inventory for use in a
subsequent production operation or sold for a profit.

These co-products are specified in the formula with a quantity that is created for each batch size
of the formula item or planning item. A cost allocation can be specified manually at the co-
product item level or by using a total-cost allocation method where the costs are allocated
proportionally based on quantities of the formula item and the quantities of the other co-
products.

Example

 In production of Petrol Diesel and kerosine is a co product buttermilk from butter

production.
 In production of Gasoline Methane is a co product

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 Production control D365 F&O Formula, Formula version, Co
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5) By product

By-products are materials of value that are produced as a residual of, or incidental to, the
production process. By-products can be recycled, sold as is, or used for other purposes. You
can set up by-products to contribute costs, burden, to the overall production process.

Example

 bran and germ from flour milling.

 buttermilk from butter production.
 distillers grains from ethanol production.
 fly ash and bottom ash from coal combustion.
 glycerol from soap or biodiesel production.
 lanolin from wool processing.
 lees from wine fermentation.
 bagasse and molasses from sugar production.

Although co-products are usually planned, desirable outputs from the manufacturing
process, they can also be used as ingredients in other production processes. By-
products are materials of value that are produced as a residual of, or incidental to, the
production process.

An item can only be as formula, Co product or By product when the production type is
set to one of those.

Navigation: - Product Information management > Products > released products

1. Select the item and open it

2. Go to Engineer Fast Tab of the item
3. Under production type select as per requirement.

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 Production control D365 F&O Formula, Formula version, Co
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To understand some terminologies, refer previous article.

Process to create a Formula

Navigation: - Product Information management > Bill of materials and Formula >
Formula

1) Click on New to create a formula

2) Fill the required fields such as Name, Site and item group.

3) We need to create a Formula version first and to do that go to header and in Formula version
Fast tab click on Add to create a version and fill the details as required

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 Production control D365 F&O Formula, Formula version, Co
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Yield Enter the yield for the formula line item, which must be a value that is larger than 0 (zero).
The yield value is used to calculate the estimated output quantity for the formula item.

You can specify a yield on the formula versions, which applies a yield factor to all
formula lines when a batch order is created for the formula item. The yield is calculated
as the (actual output / theoretical output) * 100%.

Quantity-dependent formula versions

The From formula size field (on the formula version) can be used for controlling which
formula version is to 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.

Formula size

The formula version uses a base formula size as the Per quantity field on the formula
lines. Updating this field updates all the Per quantity fields on the formula lines.

Formula multiples

The formula version uses multiples to determine the batch order size that is allowed for
production through master planning or manual batch order. The formula size on the
version must meet the multiple requirement.

Bulk item The identifier of a bulk (or parent) formula item. A bulk item is the source of the
primary ingredient that is used in the production of the packed (child) item. In order for the bulk
item to be selected for a formula version of a packed item, a Bulk Item conversion record must
first exist.

Co-product variations Select to allow for variations in co-products or by-products before you
report a batch order as finished. You can add new co-products or by-products, and you can over-
report the good quantities of any that are already included.

Total cost allocation If selected, the formula will be dynamically calculated based on the
quantity reported as finished for a co-product item using dollarized weighting. This option is
only available for co-products.

Use for calculation If selected, the formula line is used in formula calculations, which determine
the cost price and sales prices for the formula based on profit settings. Formula calculations give
the estimated prices on all formula levels. Therefore, the contribution of a single item or

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 Production control D365 F&O Formula, Formula version, Co
and by product

operation to the price of the formula level can be determined. This is added to the contribution of
all items and operations on a specific level. The calculations also provide an overview of
summarized costs for cost groups. This provides the contribution of a cost group on a particular
formula level.

Example to make it understand better

If you want to create planned orders for an item always with a single and regular Qty

Qty 100
Then setup shown in above screenshot will work

If you want to create planned orders for an item with different Qty.

Qty1 -1250 Liter

Qty2- 2000 Liter

In that case we need to create separate formula version

Setup should be like this in formula version

Also, we need to define maximum order Qty and standard order Qty for that item in item
coverage

*Different requirement require different setup do not consider that it will work in all
scenario*

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 Production control D365 F&O Formula, Formula version, Co
and by product
4) Again go back to Line view and under Formula lines Click New and add ingredients in
Formula.

5) After Adding all the Ingredients and setting the value click on save
6) In order to add a Co & By product go to header view and under Formula version click Co
Product

7) Click on New to add Co or By product details

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In the Co-products form, add a line for the by-product. The Production type must be By-
product.
In the By-product cost allocation field, select Recycled. For the Recycled, it should have
Standard cost model. Recycling will cost another 1 $ of the production order so it will increase
the overall cost of the production. In our case we will not Recycle it, we will keep it as is.
In the Co-products form, add a line for the co-product. The Production type must be Co-
product.

We have nothing that will absorb the cost of the production, that is why we will keep Co-
product cost allocation as None.

Cost allocation for co-products

When you set up a co-product in the Co-products form in Inventory and warehouse
management, you specify the type of cost allocation to use to allocate costs to the batch order
for each co-product. Cost allocation does not apply to by-products. You can select from the
following types of cost allocation:

 None ─ No cost allocation is applicable for the co-product item.

 Manual ─ Use a cost allocation percentage. The percentage is specified in the
corresponding Cost allocation percent field.
 TCA ─ Cost allocation calculations are dynamic based on the quantity that is
reported as finished by using dollarized weighting. The percentages are estimated
automatically, or you can use the Estimate cost form to check the suggested cost
allocation.

Burden for by-products

When you set up a by-product in the Co-products form in Inventory and warehouse
management, you specify the type of burden that is associated with the by-product. Burden
does not apply to co-products. You can select from the following types of burden:

 None ─ Always used for co-products.

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 Percent ─ Cost of disposing of the by-product is a percentage of the total
production cost.
 Per series ─ Burden amount is applied to the cost of the batch order, regardless
of the quantity reported as finished. The burden amount is scaled up and down
depending on the ratio of the batch order quantity and per series for the by-product
on the formula.
 Per quantity ─ Burden is applied to the cost of the batch based on the quantity
reported as finished. In this case, the burden amount is scaled up and down
depending on the ratio of the report as finished quantity of the by-product in the
batch order and the per series for the by-product on the formula.

8) Click on Save and go back to the formula line view

Version control

As with BOMs, formula version control supports the phasing out of old ingredients so
that new ingredients can start to be produced or bought and to enable the selection of
alternative versions, depending on the specific production or planning needs.

Graphical formula

The formula designer lets you choose to work with the formula structure in a graphical
format, which shows the formula versions that are available for the selected item along
with the co-products and by-products for that formula.

Use for calculation

The Use for calculation option determines which formula size to use if there are percent-
controlled items to calculate quantity on the formula line.

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Plan group

Plan groups help substitute items based on a priority. Items that are associated with the group
are interchangeable based on the priority definition.

Step consumption

Step consumption eliminates the requirement that you must enter a quantity on the Formula
line tab for an ingredient. Instead, Step consumption is configured so that it has a From
series value and a Quantity value. The information from the Step consumption per series

record that satisfies the quantity on the batch order is selected. Step consumption is useful
when the consumption rate isn't linear with respect to the batch order size and only increases
the requirement when a specific quantity threshold is met. To enable this feature for a new
formula, under the Consumption calculation group, change the formula setting for the
applicable ingredient from Standard to Step. You specify this consumption method on
the Setup tab of the Formula line page.

Scalable lines

The Scalable feature is available only if all the item components in the formula are set
to Variable consumption. The feature isn't available if item components are set to Fixed
consumption or Step consumption. When the Scalable feature is used, if you change an
ingredient in a formula, the quantity of the other ingredients that you select is adjusted. The size
of the formula is also adjusted. Likewise, if you change the formula size, the quantity of all
scalable ingredients is changed. This feature is intended specifically for formula creation and
maintenance. It doesn't indicate whether the quantity of an ingredient will be scaled up or down
on a batch order.

Shelf Life

You can select ingredients that are used to update the shelf life information for finished items. If
you select an ingredient that is a shelf life item, the Inherit shelf life dates to end item check
box is available in the Formula line form. If the formula version contains co-products that are
configured as shelf life items, the Inherit shelf life dates to co-product check box is available
in the Formula line form.

You can select all the shelf life ingredients based on which the earliest shelf life dates (the best-
before date and the expiration date) are calculated and updated for the finished items.

After you define the formula ingredients based on the shelf life ingredients, you can create batch
orders and process the finished items and any related co-products. After you run the report as
finished process, the calculated earliest shelf life dates (the best-before date and the expiration
date) are updated in the inventory batches for the finished item and any related co-products.

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9) Approve and Activate the Formula version and Approve Formula

10) Assign Formula to a Finished Product

Navigation > Product information management > released product

11) Select the product and go to Engineer from Action Pane

12) Click on New drop down and choose the option add the Formula to the item.

It can also be done by using designer function.

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13) Need to add calculation groups into items

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