Defining Inventory Organization

Navigate to the Inventory Super User responsibility.

Setup  Organizations  Organizations
Define the following organizations as per the requirement of business
 Business Group
 Legal entity
 Operating Unit
 Organization

External organizations (for example, tax offices, insurance carriers, disability

organizations, benefit carriers, or recruitment agencies)
Internal organizations (for example, departments, sections or cost centers)

Select New

Creating an Organization
1. Enter a name for your organization in the Name field. A check is performed
to see if organizations with the same name already exist.
All Oracle applications you install share the information entered in the
Organization window. Therefore organization names must be unique within a
business group, and business group names must be unique across your
applications network.
2. Optionally, select an organization type in the Type field.
Organization types do not classify your organization; you use them for
reporting purposes only. The type may identify the function an organization
performs, such as Administration or Service, or the level of each organization
in your enterprise, such as Division, Department or Cost Center.
3. Enter a start date in the From field. This should be early enough to include
any historical information you need to enter.
4. Enter a location, if one exists. You can also enter an internal address to add
more details such as floor or office number.
5. Enter internal or external in the Internal or External field. You cannot assign
people to an external organization.
Examples of external organizations that may require entry are disability
organizations, benefits carriers, insurance carriers, organizations that
employees name as beneficiaries of certain employee benefits, and
organizations that are recipients of third party payments from employees' pay.
6. Then save your work.
Organization Classification
As we are defining an Inventory Organization, we will choose the classification
name as Inventory Organization.
Then mark the enabled checkbox and then save your work.

Then go to Others

Select Accounting Information

Here, we need to attach the Ledger, Legal Entity and Operating Unit.
Enter the details and select Ok, again in next window Ok.
This will ask for a confirmation, select Yes.
Then again from the Others button, select Inventory Information.
This will pop up the Organization Parameters window.

Organization Parameters
You can define and update default inventory and costing parameters for your
current organization in the following areas:
1. Inventory Parameters
2. Costing Information
3. Other Account Parameters
4. Revision, Lot, Serial, LPN Parameters
5. ATP, Pick, Item–Sourcing Parameters
6. Defining Inter–Organization Information
7. Defining Warehouse Parameters

Inventory Parameters
1. Enter an organization code for which you want to set up the organization
parameter.
2. Select an Item Master organization. Oracle Inventory only defines items
in the Item Master organization of the organization from which you enter the
Items window.
3. Select a workday calendar. This is required when Oracle Master
Scheduling/MRP and Oracle Supply Chain Planning is installed.
4. Optionally, select a demand class. Demand classes segregate scheduled
demand and production into groups, allowing you to track and consume those
groups independently. Oracle Master Scheduling/MRP and Oracle Supply
Chain Planning uses this demand class during forecast consumption, and
shipment and production relief.
5. In the Move Order Timeout Period field, enter the number of days a move
order requisition can wait for approval.
The workflow approval process sends a notification to the item planner when
a move order requisition requires approval. After the first timeout period, if the
recipient has not approved or rejected the order, a reminder notice is sent.
After the second timeout period, the order is automatically approved or
rejected, depending on whether you select Approve automatically or Reject
automatically in the Move Order Timeout Action field. If you want to bypass
the move order approval process and automatically approve move order
requisitions, enter 0 days in the Move Order Timeout Period field and select
Approve automatically in the Move Order Timeout Action field.
6. Select a move order timeout action
 Approve automatically: After the second timeout period, move order
requisitions are automatically approved. Select this option and set the Move
Order Timeout Period to 0 if you want to bypass the move order approval
process and automatically approve move order requisitions.
Reject automatically: After the second timeout period, move order requisitions
are automatically rejected.
7. Select a locator control option:
None: Inventory transactions within this organization do not require locator
information.
Prespecified only: Inventory transactions within this organization require a
valid, predefined locator for each item.
Dynamic entry allowed: Inventory transactions within this organization require
a locator for each item. You can choose a valid, predefined locator, or define a
locator dynamically at the time of transaction.
Determined at subinventory level: Inventory transactions use locator control
information that you define at the subinventory level.
 Indicate whether to allow negative balances. Determines whether
inventory transactions can drive the inventory balance of an item negative.
Attention: If insufficient quantity on hand exists in a supply subinventory to
satisfy backflush demand, Oracle Work in Process forces the supply
subinventory balance negative, ignoring this option setting.
 Auto delete allocation at Move Order cancellation
 Indicate whether this organization is an Oracle Warehouse
Managementenabled organization. You can use WMS features such as
LPNs, task management, warehouse execution rules and cost
groups in this organization. Locator control must be enabled in order to
enable WMS. Once this has been enabled and transactions have been
entered in this organization, this box cannot be unchecked.
 Indicate whether this organization is enabled for Quality inspection.
 Indicate whether this organization is an Oracle Enterprise Asset
Management enabled Organization.
 Enter a total load weight and unit of measure for this organization.
 Enter a total volume and unit of measure for this organization.
8. Select a Default On-hand Material Status tracking option. This step is
optional.
9. Indicate whether locator aliases must be unique across the organization

Costing Information
1. Costing Organization

2. Costing Method

3. Transfer to GL Indicate whether all transactions are posted in detail to the

general ledger.
Caution: Transferring detail transaction distributions to the general ledger
increases general ledger posting times due to the number of records created.
4. Reverse Encumbrance Indicate whether to reverse encumbrance entry
upon receipt in inventory.
You normally select this option if you use encumbrances with Oracle
Purchasing.
5. Optionally, enter a Cost Cutoff Date
If you leave this field blank, all available transactions will be costed,as usual. If
you enter a date, all transactions prior to this date will be costed. All
transactions on or later than this date will not be costed.
For inter–organization transfers, a standard costing, receiving organization will
not cost a receipt if the sending organization did not already cost the
transaction.
The default time is the first instant of the date. You can optionally choose
another time.
The standard cost update process can be performed on the cost cutoff date.
You can restart cost processing by changing the cutoff date to blank, or a
future date.
6. Default Material Sub element
For standard costing, select a material sub–element that this organization
uses as a default when you define item costs. For average costing, the default
material sub–element you select can be used for cost collection when Project
Cost Collection Enabled is set.
7. Material Over head Sub element
Optionally, select a Default Material Overhead Sub–Element from the list of
values. During the Supply Chain Rollup process, when costs are merged from
another organization, markup and shipping costs will use this value.
The supply chain cost rollup will complete successfully, regardless of whether
this field is populated. If the Cost Rollup identifies an organization with a
default material overhead sub–element not set up, a corresponding warning
message will be printed in the log file.
8. Default Cost Group
Indicate the default cost group for the organization. This will default into the
Default Cost Group field for each subinventory. If the WMS cost group rules
engine fails to find a cost group, this cost group will be used.
9. Valuation Accounts
You choose a default valuation account when you define organization
parameters. Under standard costing, these accounts are defaulted when you
define subinventories and can be overridden. Under average costing, these
accounts (except for Expense) are used for subinventory transactions and
cannot be updated. For a detailed discussion of cost
elements.
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
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.
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.
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.
Encumbrance: An expense account used to recognize the reservation of
funds when a purchase order is approved.
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.
Project Clearance Account: When performing miscellaneous issues to
capital projects, the project clearance account is used to post the distributions.
Deferred COGS Account: This account is used by the Sales Order Issue
transaction type to deferred COGS until AR recognizes revenue.
Cost Variance Account: Under average costing with negative quantity
balances, this account represents the inventory valuation error caused by
issuing your inventory before your receipts.
Landed Cost Management (LCM) variance account: This account is used
by the new Landed Cost Management module.
Note: For standard costing, only the Purchase Price Variance, Inventory A/P
Accrual, Invoice Price Variance, Expense, Sales and Cost of Goods Sold
accounts are required. The other accounts are used as defaults to speed your
set up.
Note: For average costing, only the Material, Average Cost Variance,
Inventory A/P Accrual, Invoice Price Variance, Expense, Sales and Cost of
Goods Sold accounts are required. The other accounts are used as defaults
or are not required.

Revision, Lot, Serial, LPN Parameters

Enter a starting revision to be the default for each new item.

Lot Number
1. Select an option for lot number uniqueness.
Across items: Enforce unique lot numbers for items across all organizations.
None: Unique lot numbers are not required.
2. Select an option for lot number generation.
User–defined: Enter user–defined lot numbers when you receive items.
At organization level: Define the starting prefix and lot number information for
items using the values you enter in the Prefix, Zero Pad Suffix, and Total
Length fields. When you receive items, this information is used to
automatically generate lot numbers for your items.
At item level: Define the starting lot number prefix and the starting lot number
when you define the item. This information is used to generate a lot number
for the item when it is received.
3. Indicate whether to add zeroes to right–justify the numeric portion of lot
numbers (Zero Pad Suffix).
4. Optionally, select an alphanumeric lot number prefix to use for system–
generated lot numbers when generation is at the organization level.
5. Optionally, define the maximum length for lot numbers. If you use Oracle
Work in Process and you set the WIP parameter to default the lot number
based on inventory rules, then WIP validates the length of the lot number
against the length you define in this field.
Serial Number
1. Select an option for serial number uniqueness.
Within inventory items: Enforce unique serial numbers for inventory items.
Within organization: Enforce unique serial numbers within the current
organization.
Across organizations: Enforce unique serial numbers throughout all
organizations.
2. Select an option for serial number generation.
At organization level: Define the starting prefix and serial number information
for items using the information you enter in the following fields of this window.
At item level: Define the starting serial number prefix and the starting serial
number when you define the item.
3. Optionally, select an alphanumeric serial number prefix to use for system–
generated serial numbers when generation is at the organization level.
4. Optionally, enter a starting serial number to use for system–generated
serial numbers.
If serial number generation is at the organization level you must enter a
starting serial number.
5. Indicate whether the system will suggest serial numbers as part of the
move order line allocating process. If you do not select this option, you must
manually enter the serial numbers in order to transact the move order.

ATP, Pick, Item–Sourcing Parameters

Select a default ATP rule.
ATP rules define the options used to calculate the available to promise
quantity of an item. If you are using Oracle Order
Management, the default is the ATP rule for the Master organization.
Picking Defaults
Select a default picking rule.
Picking rules define the priority that order management functions use to pick
items.
Notes: This rule will not be employed in a WMS enabled organization. The
WMS picking rules will be used.
Enter a default subinventory picking order.
This value indicates the priority with which you pick items from a subinventory,
relative to another subinventory, in which a given item resides. The value you
enter here displays as the default when you define a subinventory.
Enter a default locator picking order.
This value indicates the priority with which you pick items from a locator,
relative to another locator, where a given item resides. The value you enter
here displays as the default when you define a locator.
Check the Pick Confirmation Required box if you want your pickers to
manually pick confirm. If you do not check the box, pick confirmation will occur
automatically.
Item-Sourcing Default
Select a source type for item replenishment.
Inventory: Replenish items internally from another subinventory in the same
organization or another organization.
Supplier: Replenish items externally, from a supplier you specify in Oracle
Purchasing.
None: No default source for item replenishment.
Select the organization used to replenish items.
You must enter a value in this field if you selected Inventory in the Type field.
Select the subinventory used to replenish items.
You must enter a value in this field if you selected your current organization in
the Organization field. You cannot enter a value in this field if you selected
Supplier in the Type field.

Inter–Organization Information

Select an Inter–Organization Transfer Charge option.

None: Do not add transfer charges to a material transfer between
organizations.
Predefined percent: Automatically add a predefined percent of the transaction
value when you perform the inter–organization transfer.
Requested value: Enter the discrete value to add when you perform the inter–
organization transfer.
Requested percent: Enter the discrete percentage of the transfer value to add
when you perform the inter–organization transfer.
Inter–organization cost accounts
Enter default inter–organization cost accounts. These accounts are defaulted
when you set up shipping information in the
Inter–Organization Shipping Networks window