About Bills of Material

Many companies repackage items or assemble items before selling them.

In Inventory Control, you use the I/C Assembly screen to assemble master items from component items (or subassemblies), as defined in a bill of material, or BOM.

You use the I/C Bills Of Material screen to add bills of material to Inventory Control.

A bill of material specifies:

• The number of units (build quantity) of a master item required for one assembly of a BOM.
• The component items and quantity of each item needed for the build quantity.
• Fixed and variable costs associated with assembling the master items.

When you assemble a bill of material, you take component items out of inventory, and create a supply of master items.

For more details, click the following links:

• Whether to Use Bills of Material or Kits
• Build Quantity
• Fixed and Variable Costs
• Negative Inventory Levels
• Multilevel Bills of Material
• Alternative Bills of Material
• Setting Up and Assembling Bills of Material

Whether to Use Bills of Material or Kits

Bills of material are designed for manufacturing items from other items (or subassemblies), and for tracking the assembled items in inventory. You can include fixed and variable costs with BOMs.

If you are simply grouping items together for sale—and have no manufacturing costs and no need to track assembled items—you can use kits, instead. Kits allow you to group items and sell them as a single item. Kits do not have build costs, and they are not treated as stock items. There are no stocked quantities of the kit—only of the components.

Example: You might package a particular computer, keyboard, and monitor for a special promotion, or put together a binder, pencil case, and felt pen set for a "back-to-school" sale.

Note: Before you can add a record for a kitting item or a BOM, you must add the master item record and all of the component item records.

For more information about kitting items, see About Kitting Items.

Build Quantity

The build quantity is the number of master items that one assembly of a bill of material produces. For the build-quantity unit of measure, you can use any of the units of measure specified in the master item record.

The build quantity is the number of master items that one assembly of a bill of material produces.

• You can use fractional build quantities if the Allow Fractional Quantities option is selected for Inventory Control on the I/C Options screen.

• For the build-quantity unit of measure, you can use any of the units of measure specified in the master item record.

  Example:

  Consider the following BOM:

  • Master item: Mixture A
  • Build quantity: 10 bottles
  • Components:
    • X1= 3 boxes
    • Y1 = 4 cans
    • Z1 = 7 lbs.

Fixed and Variable Costs

When you add a bill of material, you can specify fixed and variable costs associated with assembling the master item.

The fixed cost is the cost required to prepare to assemble a bill of material one or more times. The fixed cost is the same regardless of the number of times you assemble the build quantity of the master item.

The variable cost is the cost of assembling the build quantity once. When you assemble a bill of material, the program multiplies the variable cost by the number of assemblies (not the number of master items produced). The cost of labor for an assembly is an example of a variable cost.

• Example:

  One assembly of the above bill of material requires 3 boxes of X1, 4 cans of Y1, and 7 pounds of Z1 to make 10 bottles of Mixture A.

Negative Inventory Levels

If you allow negative inventory levels, you can process an assembly transaction for a master item, even if its component items are not in stock.

The costs of the components are transferred to the master item, and you can physically assemble the master item at a later time.

Multilevel Bills of Material

Inventory Control lets you set up multilevel BOMs for manufacturing or assembling items for sale. Multilevel BOMs include component BOMs that are subassemblies with their own component items, quantities, and fixed and variable costs.

Note: You cannot create multilevel BOMs that include master items or component items that are serialized or lotted.

Alternative Bills of Material

The components of a bill of material are fixed. You cannot use alternate items as components.

If you want to assemble a master item using alternate items as components, you must create a separate bill of material that includes the alternate items and uses a different BOM number.

When you assemble the master item, you specify the BOM number that includes the components you want to use.

Setting Up and Assembling Bills of Material

When setting up and assembling bills of material, keep the following rules in mind:

• Before you can set up a BOM, you must add item records for the master item and all component items of the BOM.

  Each item is tracked in Inventory Control, even if it is never separately bought or sold.

  Tip: You can create component bills of material on the fly while defining the master bill of material.

• You can create multilevel BOMs that have subassemblies. These are bills of material that include the master item from a separate bill of material as a component item.

  Important!

  • When assembling a multilevel BOM, you must assemble sufficient component items, or subassemblies, required to build the next level of master item.
  • Before you can post assembly transactions, master items and all the component items must be stocked at the same Inventory Control location.

  If the Allow Items At All Locations option is not selected for Inventory Control (on the I/C Options screen), you must allow each item to be stocked at each inventory location where it will be used.

• You assign a unique BOM number to each bill of material. BOM numbers can contain numbers and uppercase letters.

• Master items and component items can use any costing method except the user-specified costing method.
• To use fractional quantities for a master item, the Allow Fractional Quantities option must be selected for Inventory Control (on the Processing tab of the I/C Options screen).
• You cannot delete an item from inventory if it is a master item or a component of a BOM.