Oracle Inventory Interview Questions

1. Oracle Inventory Setup required?

Answer: Following setup required
1. All 7 key flex-fields: System Items, Item Category, Item Catalog, Stock Locators, Account Alias, Sales
Order, Service Item.
2. Inventory Organizations Parameter
3. Subinventories
4. Unit of Measure and UOM Classes and UOM Conversion
5. Item Categories and Item Attribute Controls
6. Item Statuses
7. Intercompany Relationship
8. Shipping Network
9. Cost Types
10. Profile Options
11. Inventory Accounting Periods

2. What do you mean by Required with defaults steps?

Answer: Required with defaults steps means setup functionality comes with pre-seeded values in the
database. However, you can review the default values and decide whether to make changes those values
to suit your business requirement.

3. Which are the Required with defaults steps in inventory setup?

Answer: There is no setup steps with Required with defaults steps in Inventory Module.

4. There is no Inventory Stock Locator in your inventory organization. Do you still require to configure the
Stock Locator key flex field?
Answer: You dont need to configure the Stock Locator flex field in a specific way, but you must still want
to compile the Stock Locator flex field because all inventory transactions and on hand inquiries and
reports require a frozen flex field definition.

5. What is the use of Picking Rule?

Answer: When you carry out the release sales order in order execution module from Order Management,
it submits the request to oracle inventory module to pick the material from subinventory based on the
item picking priority setup in the inventory picking rule and generate the pick list for sales order.

6. Can you apply material overhead in Average Costing Organization?

Answer: Yes, we can apply the material overhead in the Average Costing organization.

7. What is transaction action?

Answer: Transaction Action is predefined method of changing the quantity or location or cost of an item.
It is used from Material Transaction form.

8. How many inventory transaction actions are available?

Answer: There are six predefined transaction actions available: 1. Subinventory Transfer 2. Issue from
stores 3. Receipt into stores 4. Direct organization transfer 5. Inter-organization Transfer

9. Can you do inventory transaction in prior period?

Answer: Yes, you can able to do the inventory transaction in prior period: 1. Inventory Accounting Period
is open and 2.INV: Transaction Date Validation profile option is either set to Warning: to display warning
when transaction date is from past period or Allow: to allow transaction in any past open period.

10. Can you change the inventory Item Name or Customer Item Name, after it gets saved?
Answer: Yes, you can change the inventory item, after you saved it, if profile option INV: Updatable Item
is set to Yes. Similarly, if profile option INV: Updatable Customer Item is set as Yes the you change the
customer item name.

11. What is move order?

Answer: Move Orders is a request for the movement of material transfer within a single organization. They
allow the movement of material within warehouse or facility for the purpose of replenishment, shortage,
quality handling. Move orders can be generated either manually or automatically.
At a high level, Move Order process have two basic steps:
a) Creation of the Move Order
b) Move Order transfer transaction

12. Various ways to create a move order? Or How many ways a move order is created? Or Various way move
orders can be created?
Answer: Move Order can be created through flowing sources:
1. Move Order requisition
a) Manual move order creation
2. Replenishment move orders
b) Min-Max replenishment
c) Kanban replenishment
d) Replenishment counting

3. Pick Wave Move orders

e) Sale Order Pick Release

4. Component Pick Release Move Orders

f) WIP -Job Component Pick Release
5. API
g) Move Order API

Pick wave, replenishment move order, component pick release move orders are pre-approved.

13. What is move order process?

Answer: 1. Move Order creation through various sources (mentioned above)
2. Move Order approval 3. Move Order allocation 4. Print Pick slip 5. Move Order transfer/Transact Move
Order

14. How to auto approve move order? Or setup for move order approval at inventory parameter level?
Answer: There move order approval process is governed by two parameters
1. Move Order Timeout Period
2. Move Order Timeout Action

The Move Order Timeout Period field specifies the number of days the Move Order waits for approval. If it is
set to 0 or blank, then it does not wait for approval and take action as specified in move order timeout action
field.
For example, if the Timeout Period has been set to 10 days. The first time the move order is created a
notification is sent to the approver (Planner). If the approver does not take any action, then there will be a wait
time of 10 days after which he will receive a second notification. Then after a second Timeout Period the move
order is automatically accepted or rejected depending on the value in the Move Order Timeout Action field
15. Which transactions are supported by Move Order?
Answer: Two transactions are supported by move order
1. Subinventory Transfer (Move Order Transfer)
2. Account issue (Move Order Issue)

16. What is the function of profile option INV: Fill & Kill Move Order?
Answer: This profile option enables you to close a partially allocated and transacted replenishment move
order line.
Available values are:
No- Does not allow cancelling of replenishment move order lines.
Yes- Allows cancelling of move order lines.

17. How Serial number uniqueness and serial number generation works?
Answer: Serial generation is based on the parameters defined in organization parameter.

Serial Uniqueness
Within Inventory Items:
Once you assign a serial number to a particular item you cannot assign the same serial number to the same
item regardless of the organization. For example, if you assign serial number SN100 to item A, you cannot
assign same serial number SN100 to item A in any organization. This also includes CTO items derived from base
model A. However, you could receive item B with serial number SN100 in any organization.

Within Organizations:
In this control, the same serial number cannot exist twice within the same organization for any items. For
example, if you assign SN100 to item A, you will not be able to receive item B with the serial number SN100 in
the same organization. However, you could receive item B with the serial number SN100 in any other
organization.

Across Organizations:
In addition to the restrictions Within Organizations, you cannot assign the same serial number to any other
item regardless of the organization. For example, if you assign SN100 to item A you will not be able to receive
item B with the serial number SN100 in any organization. If you assign Across Organization uniqueness to any
organization, it restricts the serial generation in all other organizations. If one organization dictates Across
Organizations, all other organizations must do so.

Serial Generation

At Organization Level:
Define the starting prefix and serial number information for items using the information you enter in
organization parameters.

At item level:
Define the starting serial number prefix and the starting serial number when you define the item

Prefix Prefix used with the serial numbers.

Starting Serial Number: Starting serial number to be used for serial number generation.
Allocate Serial Number: 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

Example
Case 1: In organization parameters Serial Generation=At Item Level and Uniqueness='Within inventory model
and items'
1. INVENTORY> Items> Organization items Query the item and go to Inventory tab
2. Define Serial Prefix= Item-MFG and Starting Number= 0001 for ABC and XYZ item in MFG organization
3. Define Serial Prefix= Item-SER and Starting Number= 0001 for ABC and XYZ item in SER organization
4. Select MFG organization
5. INVENTORY> On-hand Availability> Generate Serial Number
6. Run Serial Generation program for ABC with quantity=5
7. Run Serial Generation program for XYZ with quantity=5
8. Serial number Item-MFG0001 to Item-MFG0005 will be assigned to ABC
9. Serial number Item-MFG0001 to Item-MFG0005 will be assigned to XYZ
10. Select SER organization
11. INVENTORY> On-hand Availability> Generate Serial Number
12. Run Serial Generation program for ABC with quantity=5
13. Run Serial Generation program for XYZ with quantity=5
14. Serial number Item-SER0001 to Item-SER0005 will be assigned to ABC
15. Serial number Item-SER0001 to Item-SER0005 will be assigned to XYZ

Case 2: In organization parameters Serial Generation='At organization level' and Uniqueness='Within inventory
model and items'.

1. INVENTORY> Setups> Organizations> Parameters

2. Define Prefix= MFG and Starting Serial Number Parameter= 0001 in MFG organization parameters
3. Define Prefix= SER and Starting Serial Number Parameter= 0001 in SER organization parameters
4. Select MFG organization
5. INVENTORY> On-hand Availability> Generate Serial Number
6. Run Serial Generation program for ABC with quantity=5
7. Run Serial Generation program for XYZ with quantity=5
8. Serial number MFG0001 to MFG0005 will be assigned to ABC
9. Serial number MFG0006 to MFG0010 will be assigned to XYZ
10. Select SER organization
11. INVENTORY> On-hand Availability> Generate Serial Number
12. Run Serial Generation program for ABC with quantity=5
13. Run Serial Generation program for XYZ with quantity=5
14. Serial number SER0001 to SER0005 will be assigned to ABC
15. Serial number SER0006 to SER0010 will be assigned to XYZ

18. What do the serial status numbers mean?

Answer: When one reviews the serial number table (MTL_SERIAL_NUMBERS) the column 'CURRENT_STATUS'
indicates the status of a serial number. The column is populated with a number.
For example, 3 means reside in stores. This means that the serial number has an associated on hand quantity
and should be available to transact.
Here is a list of common serial number statuses and ids:
Status Codes (ID and Description)
---------------------
1 Defined but not used
3 Resides in stores
4 Issued out of stores
5 Resides in intransit
6 Pending status
7 Resides in receiving
8 Resides in WIP

19. What is a mark id?

Answer: The serial number table (MTL_SERIAL_NUMBERS) holds a list of existing serial numbers in the Oracle
Applications. When a serial number is being used by a transaction, mark ids are often populated until the
transactions are complete.
The mark ids act as a lock on the serial number and are meant to only be temporary until the transaction
processes. The mark id columns are GROUP_MARK_ID, LINE_MARK_ID, LOT_LINE_MARK_ID. When the mark
ids are populated, other transactions cannot use the serials.

20. What is the difference between serial generation 'At Receipt' vs. 'At Sales Order Issue'?

Answer:

At Inventory Receipt:
Create and assign serial numbers when you receive the item. Thereafter, for any material transaction, you
must provide a serial number for each unit.

At sales order issue

Create and assign serial numbers when you issue (ship) the item against a sales order. If you select this option,
serial numbers are required at ship confirm. If you receive an item on an RMA (return material
authorization), you must specify the same serial numbers you created at sales order issue. All other
material transactions for this item bypass serial number information.

No control
Serial number control not established for this item. All material transactions involving this item bypass serial
number information.

Predefined
Assign predefined serial numbers when you receive the item. Thereafter, for any material transaction, you
must provide a serial number for each unit.
21. How to enter serial number descriptions (or Descriptive Flexfields / DFF)?
Answer:
You can enter descriptions for serial numbers using descriptive flexfields. There are two that would be helpful:
Serial Attributes or Serial numbers.
Serial attributes appear in the on hand > serial number screen in the Serial Info tab with the column name of
Attributes.

This is similar to the serial entry screens that label the field attributes as well. The Serial numbers descriptive
flexfields is visible upon placing the cursor in the descriptive flexfields field usually labeled with two brackets
like [] also called mug-handles.
To maintain descriptive flexfields for serial numbers:
Navigate to Inventory > Setup > Flexfield > Descriptive > Segments

22. What are the various inventory controls?

Answer: There are 4 inventory controls
1. Serial Control 2. Lot Control 3. Locator Control 4. Revision Control

23. What are inventory planning methods?

Answer: There are 5 inventory planning methods.
1. Min Max Planning 2. Kanban Replenishment 3. Subinventory Replenishment Planning 4. Reorder
Point Planning. 5. Periodic Replenishment Planning (PAR)

24. Describe Min Max Planning?

Answer: In Min Max Planning, the items are planned depending on the user defined Minimum and
Maximum quantity. The items are replenished to the Maximum level once it falls below the Minimum Level. It
is generally applied to low cost items which do not require strict monitoring.
When the inventory level for an item (on-hand quantities plus quantities on order) goes down below the
minimum quantity prescribed by you, Oracle Inventory module suggests a new purchase requisition,
internal requisition, move order, or a manufacturing job to bring the balance back up to the maximum
quantity mentioned by you.
Min Max planning can be done at 1. Organization level or 2. Subinventory Level.
This creates Purchase requisitions or internal requisitions for buy items and WIP unreleased jobs for
make items for the suggested replenishment quantities. You can then turn these requisitions into
purchase orders or internal orders and the unreleased jobs into released jobs for the required items.
When min-max plan is at the organization level, you can optionally include open sales orders and work in
process component requirements as demand in the min-max planning calculation.
The type of order created depends on the item setup, Source Type

If the source type is selected as Supplier then PR will get generated for Buy item, if source type is selected as
Inventory then select the Org from which we have to get the item, in this case IR will get generated. If the
source type is Subinventory then select the sun inventory from which item to be replenished, this will create
a Move Order and if the item is Make then WIP Job will get created in unreleased status.

25. Item is a Make item and having min max quantity defined, can it generate the WIP Job if Min Max is run at
subinventory level?
Answer: Subinventory level planning cannot generate jobs for WIP and does not consider WIP jobs as supply or
WIP components as demand.
If the Min Max planning is run for organization level, then only WIP job will get created.

26. Explain the Min Max Planning Method with example?

Answer: Navigate to Navigate to the Inventory Super User responsibility: Items > Organization Items
You need to set Inventory Planning Method as Min-Max and make it as Buy item. You can set reorder level for the
item in Min-Max Quantity. Here Item is configured in M1 organization and source is mentioned as S1.
Submit Request for Min Max Report - Min-max planning report

Here you set parameter Restock as Yes to interface request for the items. Submit request.
Click on View Output

Here request has interfaced in for the item with reorder quantity 988335.
Reorder Order Quantity = Maximum Quantity - Total Available (On Hand Quantity)
988335 = 100000 11665
Once data has interfaced you need to import data in Purchasing module and create requisitions.
Navigate to Purchasing Responsibility and submit request Requisition Import

Here source of the item is Inventory from the S1 Organization so it creating Internal Requisitions.
Requisitions > Requisitions Summery
Click Find button

Reorder Quantity is 988335 and item order quantity has set with maximum amount as 500000. So you can see the
request is divided into 2 separate requisitions one with 500000 quantities and other with 488335 to fulfil the
inventory stock.

27. Explain the Min Max Planning at Sub inventory level?

Answer: Create a "MIN MAX" item and apply Purchase Item template
Navigate to General Planning tab, here specify the planning method as Min Max Planning. you can specify the
Min Max quantities and Min Max Order Quantities but when planning at subinventory level this will get
overridden by the values at subinventory level.

Now go to Subinventory Window and Query for "Stores" subinventory

Click on Item/Subinventory Button.

Here First in Planning tab enter Item and specify min max quantities. Also Tick Min max planning check Box.

Now go to next tab "Order Modifiers". Specify a Minimum and Maximum Order Quantities.

Now navigate to next Tab "Sourcing". Here mention sourcing subinventory

Note: Other methods of Sourcing are Suppliers and Inventory. If you choose "Supplier" system will create a
Purchase requisition and if you choose "Inventory" system will create an internal requisition.

After that if you want, you can optionally specify the lead times.

Now run "Min-max planning report". You can choose the parameters as shown in below screenshots. Restock
Option should be Yes.
View report Output.

You can see the values shown in report are from subinventory level and not from master item level.
Reorder quantity is 1000.
If something fails, you can run "Requisition Import Exception Report" to find out the errors.

Now Navigate to Transact Move order transact move order.

28. What is Subinventory Replenishment Planning?
Answer: Even if you are not maintaining perpetual on-hand balances in non-tracked subinventories, for
example-you can use the replenishment counting system to plan your inventories. This may be ideal for
replenishing free stock items that you store on the production floor, or office supplies kept in departmental
cabinets. Oracle Inventory even provides an open interface for loading replenishment count data collected
electronically, such as with a hand held bar code reader.

Note: In order to create a replenishment count, subinventory-item assignment should be done.

Replenishment Counting Tracked Subinventories

In some situations, you may want to do your own planning and use Oracle Inventory
to create your internal requisitions. you provide the system with one of the following pieces of information (in
addition to the item and subinventory)
Order quantity. You specify the quantity that is to be ordered.
Order maximum quantity. Oracle Inventory orders the min-max maximum quantity.
You can manually enter this information in the Replenishment Counts window or through an external interface,
using the replenishment interface tables

Replenishment Counting Non-Tracked Subinventories

Planning and replenishment of non-quantity-tracked subinventories is different because Oracle Inventory
cannot use perpetual system quantities. As you issue items from a subinventory without formal issuing
procedures, it is necessary to take inventory of non-tracked subinventories to record item usage and
determine reorder necessity.

Planning Levels
You can only use the replenishment counting system at the subinventory level. To use
replenishment counting, you must set up item-subinventory relationships using the Item Subinventories or
Subinventory Items windows.

Process:
Define Subinventory- Item relationship, Enter the Min-Max quantity and Order Quantity.
Now, create a replenishment count and select the sub inventory.

Select Lines Button and enter items or press default items. Enter the Order Quantity.

Now, Save the transaction and go to main window. Then press Process and Report button. This will create a
PR based on MAX Quantity. Request Item replenishment count report is run in background.

Then run the Requisition Import request to import the PR.

29. What is Periodic Automatic Replenishment (PAR) and what is the process?
Answer: Periodic Automated Replenishment (PAR) Level Counting enables facilities such as hospitals that do
not store perpetual inventory to conduct locator level replenishment. PAR level counting enables you to
perform locator level stock counting in non-quantity tracked subinventories.

Process:
Create a PAR enable Expense Subinventory.

Assign items to the subinventory and specify the PAR level at locator.
Specify the source subinventory from which we need to replenish the item.

Now, open replenishment count window and select the new count name.
Select Default Items or Lines button to select the items for replenishment.
Select Order Quantity or PAR quantity as Count Type. Save transaction.

Press progress and report to check the replenishment quantity.

Request PAR Replenishment Count Worksheet will get triggered and move order for PAR/Order Quantity will
get generated in pre-approved state.

Then transact that move order.

30. What is reorder point planning? How to use it?

Answer: Reorder point planning uses demand forecasts to decide when to order a new quantity to avoid dipping
into safety stock. Reorder point planning suggests a new order for an item when the available quantityon
hand quantity plus planned receiptsdrops below the items safety stock level plus forecast demand for the
item during its replenishment lead time. The suggested order quantity is an economic order quantity that
minimizes the total cost of ordering and carrying inventory.
You perform reorder point planning at the organization level. It is basically used for costlier items.

You place an item under reorder point planning by specifying the inventory planning method (located in the
General Planning attribute group in the Items window) as Reorder point planning when you define the item.

You can also specify the items processing, preprocessing, and post processing lead times, order cost, and
carrying cost percent in this form. Likewise, item safety stock levels may only be made at the organization level.

Oracle Inventory only calculates safety stock levels for nonMRP safety stock planned items. If you specified a
safety stock percent when defining the item, this value is used as a default when calculating safety stock as a
percentage of forecast demand.

Reorder Point = Safety Stock + forecast demand during lead time

Order lead time is the total of the item's processing, preprocessing, and post-processing lead times.

Economic order quantity (EOQ) is a fixed order quantity calculated to minimize the combined costs of acquiring
and carrying inventory. The formula for EOQ is:

EOQ = square root of: [(2 X annual demand X order cost) / (Carrying cost percent X unit cost)]

Oracle Inventory calculates annual demand as the current demand rate annualized by multiplying the current
period demand forecast by the number of periods per year (12 or 13).

Safety Stock Calculation:

Safety stock is a quantity of stock you plan to remain in inventory to protect against fluctuations in demand or
supply. It is also held to account for huge variation in lead times.
Safety stock requirements are generally specified at an item level. By having an adequate amount of safety
stock on hand, a company can meet a sales demand which exceeds the demand they forecasted without
altering their production plan. Too much safety stock can result in high holding costs of inventory. For any
Organization it is very important to have an accurate Safety Stock Levels.
This document explains how Safety Stock will be calculated in the Oracle Inventory Module using Non-MRP
method.
Safety Stock is a base level of inventory from which Oracle inventory performs planning. This ensures that the
safety stock quantity remains in inventory to cover any fluctuations in demand. In calculating safety stock,
account is taken of such factors as service level, expected fluctuations of demand and likely variations in lead
time. Safety stock definition in such environments can be project specific. Oracle Inventory allows entering the
safety stock at Project Level.
These safety Stock Levels will be used in the Oracle Inventory Re-Order Point Planning, Oracle MRP and Oracle
ASCP.
Process:
Create item and select inventory planning method as Reorder point and safety stock method as Non Mrp
planned
There are 2 Safety stock methods 1. MRP Planned 2. Non MRP Planned

MRP Planned Percentage

For an item defined with MRP planned percentage, safety stock is dynamically calculated during the planning
process.
Non MRP Planned (Inventory Methods)
For an item defined with Non-MRP Planned, the following methods are available within Oracle Inventory for
calculating safety stock
1. User-defined quantity -- Use a fixed safety stock quantity that user define.
2. User-defined percentage -- Calculate safety stock based on the user specified Percentage.
3. Mean absolute deviation (MAD) -- Calculate safety stock as the mean absolute deviation (MAD).
1. User-Defined Quantity Method:
In this method, User can enter the desired Safety stock quantities and the date for which each quantity is
effective. They can also update safety stock quantities that you previously entered or system calculated.

Setup Required
Item should be defined with safety stock option as Non MRP Planned
Item should not be a unit effectively Control enabled.

Steps Involved
Navigate to Inventory Responsibility > Planning > Safety Stocks. Then Click New

Here, User has to enter the item number, Effective date and Quantity and then save the record. If the
Organization is enabled for Project Reference, Then Project and Task reference can be entered for the safety
stock.

Calculation Logic
In this method, there is no calculation logic involved as user is entering the safety stock quantities in the form.

2. User-Defined Percentage Method (UDP)

In this Method, Safety Stock will be calculated based on a user-defined percentage of a demand in specified
forecast. Reload Safety Stock concurrent program has to be used to calculate the same.

Setup Required
Item should be defined with safety stock option as Non MRP Planned.

Forecast Set and Forecast has to be defined for the Item with appropriate Bucket Type.

Steps Involved
Forecast entries have to be created either by entering manually or by generating the forecast.
Reload Safety Stock Program has to be run by specifying the method as User-defined Percentage, Forecast
Name, and Safety Stock Percentage (user defined percentage based on the business need) along with the
Starting Date.
(Navigation: Inventory Responsibility > Planning > Safety Stock Update)
This Program will generate the Safety Stock using the Forecast and user defined percentage.

Calculation Logic UDP Method

In this method, Safety Stock will be calculated as below
If the Forecast Bucket Type is Daily (Day),
Safety Stock = (Safety Stock Percentage x Sum of Forecast)
If the Forecast Bucket Type is Weekly,
Safety Stock = (Safety Stock Percentage Sum of Forecast Demand Quantities of Bucket Type weekly) / (No of
Working days in the Week * 100)
If the Forecast Bucket Type is Period
Safety Stock = (Safety Stock Percentage Sum of Forecast Demand Quantities of Bucket Type Period) / (No of
Working days in the Period * 100)

Sample Calculations
In this example, Safety Stock calculation for an item with forecast Bucket type set to Days will be dealt. Let us
assume that user defined percentage for safety stock calculation is 98%.

Reload Safety Stock Program will be submitted as below to calculate the Safety Stock for the item.

Safety Stock = (Safety Stock Percentage x Sum of Forecast Demand Quantities of Bucket type Day) / 100
User Defined Percentage = Safety Stock Percentage = 98%

a) On 19th Aug 2010, Forecast Quantity is 100

Safety Stock = (Safety Stock Percentage/100) (Forecast Demand Quantity).
= (98/100) x 100 = 98.

b) On 20th Aug 2010, Forecast Quantity is 115

Safety Stock = (Safety Stock Percentage/100) (Forecast Demand Quantity).
= (98/100) x 115 = 112.7

Following Screen shot shows the Safety Stock Quantity Details, after running the program Reload Safety Stock
(Navigation: Inventory > Planning > Safety stock)

Mean Absolute Deviation Method (MAD):

In this Method, Safety Stock will be calculated based on Mean Absolute Deviation (MAD) of the demand
quantity. This is based on the user entered Service Level. Service Level percentage is the desired level of
customer service in satisfying the product demand immediately out of available inventory. The higher this
value is; the more safety stock quantity should be carried to provide protection against irregularities or
uncertainties in the demand or the supply of an item.

Example: A 90% service level means that on an average you can fill an order immediately 90% of the time.

Setup Required
Item should be defined with safety stock option as Non MRP Planned.

Forecast Set and Forecast has to be defined for the Item with appropriate Bucket Type.

Statistical Forecast rule has to be defined.

Statistical Forecast has to be generated using Generate Forecast Program based on the Statistical Forecast
rule.

Steps Involved
Forecast MAD has to be generated. To get Forecast MAD Quantity, Generate Forecast Program has to be run
based on a Statistical Forecast rule.
This Program will trigger the programs Summarize demand histories and Compile item forecast. Summarize
demand histories program will summarize the demand history based on the Transaction History.

This will populate the data into the Table: MTL_DEMAND_HISTORIES. Compile item forecast Program will
calculate the Original Forecast Quantity and Forecast MAD Quantity based on the demand history. (Note: It can
also be generated using interface).

Reload Safety Stock Program has to be run by specifying the method as Mean Average Deviation, Forecast
Name, and Service Level Percentage along with the Starting Date.

(Navigation: Inventory Responsibility > Planning > Safety Stock Update)

This Program will generate the Safety Stock using the Forecast and Service Level percentage.

Calculation Logic MAD Method

In this Method, Safety Stock will be calculated as below

If the Forecast Bucket Type is Daily (Day),
Safety Stock = Sum of forecasts MAD quantities of Bucket Type Days * Service Factor
If the Forecast Bucket Type is Weekly,
Safety Stock = (Sum of forecasts MAD quantities of Bucket Type Weekly * Service Factor)) / (No of Working days
in the week)
If the Forecast Bucket Type is Period,
Safety Stock = (Sum of forecasts MAD quantities of Bucket Type period * Service Factor) / (No of Working days
in the Period)
Service Factor is calculated as Z x 1.25 . Here, Z is the appropriate value from a table of standard normal
distribution corresponding to the service level.
Sample Calculations

Example-1 (Bucket Type: Periods)

In this example, Safety Stock calculation for an item with forecast Bucket type set to Period using MAD
method will be dealt. Let us assume that service level for safety stock calculation is 90%.
After creating a Forecast Set and Forecast with Bucket type as Periods, Statistical Forecast has to be generated.
Also for the item, It is been ensured that it has sufficient Transaction History to generate the forecast. To
Generate the Statistical Forecast, Generate Forecast Program has been submitted by specifying a Statistical
forecast rule.

Let us apply the Formula to calculate the Safety Stock.

Formula:
Safety Stock = { (Sum of forecasts MAD quantities of Bucket Type period * Service Factor) / (No of Working days
in the Period) }
Service Factor = 1.25 * Safety Factor
= 1.25* 1.28 (For Service Level 90%, Safety Factor is 1.28, Reference: Appendix A)
= 1.6
Here, Sum of forecasts MAD quantities of Bucket Type Period = Forecast MAD Quantity * No of days in the
Period

Total no of Days in the Period = 28

Total no of Working Days in the Period = 20
Safety Stock = (Sum of forecasts MAD quantities of Bucket Type period * service factor) / (No of working days
in the Period)
= (28 x 719708.12 x 1.6)/20 = 1612146.19

Following Screen shot shows the Safety Stock Quantity Details, after running the program Reload Safety Stock
(Navigation: Inventory > Planning > Safety stock)
Reorder Point Process
1. Create Item and enter values in the list price and general planning tab. Enter lead times also.

2. Assign the item to other child organizations.

3. Now create forecast set. Planning > Forecast > Set
When you open the form for the first time, you will get the error as,
Now, to remove the error, add Material Planner responsibility and open Material planner > setup >
parameter
Change any parameter, then save and again revert the parameter to the original.
4. Now enter the forecast set and make the forecast entries.

5. Populate the safety stock with any of the method. Planning > Safety Stock > New
6. Reload the safety stock, Tools > Reload.

7. Run the Reorder Point Planning request with parameters.

8. For requisition to be created, run Requisition Import.

31. Difference between Min Max Planning and Reorder Point Planning?
Answer:
Min Max Planning Reorder Point Planning
Work on Inventory Organization and Subinventory Work on Inventory Organization Level
Level
Order quantity is to achieve Max Order Quantity Order Quantity is EOQ and calculated as EOQ =
square root of: [(2 X annual demand X order cost) /
(Carrying cost percent X unit cost)]

Forecast demands are not used Forecast demands are required

Used for low cost items Used for costlier items
Safety Stock will not be considered Safety stock will be considered
Order quantity is derived when item quantity goes Order quantity is derived when the On-hand
below min quantity Quantity + Expected receipt quantity goes below the
safety stock quantity to satisfy forecast demand.

32. What are the steps used in physical inventory?

Answer: In order to carry out Physical Inventory in system, following steps are involved,
1. Physical Inventory setup to define tolerances, subinventories etc.
2. Physical Inventory snapshot
3. Tag generation
4. Tag count entry
5. Approve Physical Inventory
6. Post Physical Inventory adjustments

33. While approving physical inventory, approver is getting a message You are trying to perform Physical
Inventory Adjustment for material that has reservations", why?
Answer: This is an intended functionality. Inventory cannot be adjusted so that these adjustments take
quantity from reservations. Users need to un reserve the demand and perform adjustment. The System does
not know which Reservations are genuine.

34. What are the interface tables in Inventory Module?

Answer: Interface tables in Inventory Module are:
mtl_system_items_interface
mtl_item_revisions_interface
mtl_item_categories_interface
mtl_transaction_interface
mtl_transaction_lots_interface
mtl_serial_numbers_interface
rcv_headers_interface
rcv_transactions_interface
35. Name important tables in Inventory Module?
Answer: Few important tables in Inventory Modules are:
mtl_system_items
mtl_item_revisions
mtl_item_categories
mtl_transactions
mtl_transaction_lots
mtl_serial_numbers
rcv_headers
rcv_transactions

36. What is the minimum steps necessary to successfully define an Organization in Oracle Inventory?
Answer: Minimum setup steps to define Inventory Org.
1. Define your set of books (GL function)
2. Define Set of Books (SOB), Legal Entity, Operating unit
3. Define the Key Flex Fields: System Items, Item Categories, Item Catalog Group, Stock Locators, Account
Alias and Sales Order
4. Define locations
5. Define a workday calendar
6. Assign and enable the appropriate Organization classifications to each organization defined
7. Define Inventory Organization parameters: Inventory information- Org code, Item Master Org,
calendar, costing Org and method, and Account information
8. The Receiving and Customer/Supplier information are optional
9. Define the Unit of Measure classes, Units of Measure and then Unit of Measure conversions
10. Define subinventories that represent the physical or logical locations for items within an organization
11. Define locators
12. Define Item Attribute Control
13. Define Item Category Set
14. Define Default Category Set
15. Define Catalog Group
16. Define Item Templates
17. Define Material Status
18. Define Shipping Networks
19. Define Freight Carriers
20. Define Organization Access
21. Define Inter-Company Relations for inter-company functionality
22. Define Picking Rules, ATP Rules
23. Define Profile Options

37. What is inventory Item?

Answer: Inventory Item is a part number or product code used to track goods or services. Inventory item
numbers represent physical goods that are purchased, built or assembled. Inventory item numbers may also be
created to represent services sold to customers. These numbers have attributes that describe or control how
the item is used.
Inventory items are created in an Item Master Organization and then assigned to child inventory organizations.
Attributes for items may be set at the master level, so the value is consistent across all organizations, or at the
organization level, so that the value may vary by organization.
38. What is an Inventory Organization?
Answer: Inventory Organization is an entity used to represent a manufacturing or distribution site. Inventory
organizations are where a user tracks on-hand balances, manufactures goods, and transacts the daily ins and
outs of material movement. An inventory organization is the lowest level entity for costing goods, planning
material requirements, and securing system access. Only a single address may be assigned to an Inventory
Organization. An inventory organization is assigned a Set of Books/ledger. Inventory Organizations are also
assigned to a Legal Entity Organization and an Operating Unit Organization.
A variation on the inventory organization is the master item organization. Generally, with Oracle Applications a
single inventory organization is created and designated at the master organization. Items are defined first in
the master organization, then enabled in other inventory organizations as necessary.

39. What is an Item Category?

Answer: Item Category is a code used for classifying or grouping items. Items are assigned to a category within
a category set for reporting and grouping. To see the grouping, a user would specify a category set and one or
more categories from that set.

40. What is a Category Set?

Answer: Item Category Set is a grouping of item categories. A category set is a user-defined entity for grouping
items by same category within the category set entity. Oracle inventory requires at least one category set be
defined and used. Product family, commodity, usage, or any other grouping and reporting requirements a user
may have generally define category sets for grouping items. Category sets may be defined at the master
organization level.

41. What is a Subinventory?

Answer: Subinventories are physical or logical locations for storing inventory/items. Subinventories are
generally defined to represent the main stores area as well as stocking points on the production floor.
Subinventories are flagged as to availability for planning (Nettable), reservations, and available to promise
checks, thereby determining the availability of the material stored in the subinventory. Subinventories are
assigned material asset account numbers. As goods move in and out of a subinventory a transaction posts to
the asset account.

42. What are the types of subinventories and how to distinguish them?
Answer: There are 2 types of subinventories 1. Asset Subinventory (Storage Subinventory) 2. Expense
Subinventory (Receiving subinventory)

Storage subinventories are intermediate or final put away locations for material. Material that resides in a
storage subinventory appears in on hand quantity, and is tracked by the system. The system can book orders
against, and use manufacturing processes on material that resides in a storage subinventory. You must define
at least one storage subinventory for your implementation.
Optionally, you can create receiving subinventories to track material in the receiving area. You use receiving
subinventories when you want to track the material as soon as it enters the warehouse before an operator
puts it away. Receiving subinventories enable managers to see where the material resides as soon as it enters
the warehouse. Material located in a receiving subinventory does not appear in on hand quantity, and the
system cannot reserve the material.
An operator can only specify a receiving subinventory if they are using a mobile device to receive the material.
Note: Operators cannot transfer material from a storage subinventory to a receiving subinventory.
Table: MTL_SECONDARY_INVENTORIES

43. What is a Workday Calendar?

Answer: The workday calendar indicates the manufacturing workdays for an inventory organization. The
calendar indicates holidays as well as work shifts, on/off days. Multiple calendars may be defined for an
organization to represent differences in workdays by department or group.

44. What is a Stock Locator?

Answer: A physical area within a stockroom/subinventory. The stock locator is a key flexfield that is often
defined as a multiple segment flexfield with the segments representing the physical layout of a stockroom. For
example, a stockroom may be laid out in rows of shelves with bins on the shelves, Such an implementation
would define a locator flexfield as a 3 segment flexfield with segments for row, shelf, and bin

45. Define the organization structure in R12?

Answer:

Business Group: A Business Group is the highest level in the organization hierarchy structure, usually
representing the consolidated enterprise, an operating company, or a major division. The business group
secures the employee information in all applications except for HR.
Set of Books (SOB)/Ledger: A General Ledger SOB, linked to the inventory organization, controls the financial
accounting of inventory transactions. A SOB is made up of a chart of accounts, a financial calendar, currency,
Accounting convention (4C). The general ledger secures transactions (journal entries, balances) by SOB

Legal Entity: A legal entity organization defines the tax and fiscal reporting level. The legal entity represents
the legal company.

Operating Unit: An operating unit organization defines the Purchasing, Order Entry, Accounts Payable and
Accounts Receivable level of operation. An operating unit may span multiple manufacturing facilities,
distribution points and sales offices, or it may be limited to a single site.

Inventory Organization: Two flavors of inventory organizations are found in Oracle Applications. They are
defined the same, and both are assigned a set of books, a legal entity organization, an operating unit
organization, and a location.
1. An item master organization is used for item number maintenance and
validation. This master organization serves as a data repository storing items and item attributes, master
level categories and category sets, master level cross references, and numerous data defaults. On-hand
balances, inventory movements, and other on-going inventory activities are not performed in an item
master organization.
It is recommended that a single item master organization be defined, even in multiple organization,
multiple sets of books environments.
2. You can define one or more non-master inventory organizations. Like the item master inventory
organization, the non-master organizations are assigned a set of books, a legal entity organization
and an operating unit organization. The non-master inventory organization points to a master organization
and looks to the master organization for master level item attributes, master level categories, and other
master level controlled data.
Note that each organization has its own set of books/legal entity/operating unit relationship, so inventory
organizations with differing SOBs or operating units may share the same master organization.
These non-master inventory organizations are the execution level organizations. They hold on-hand
balances and transaction history. Here is where inventory users execute their daily activities, such as
receiving and issuing material, performing cycle counts, and viewing material availability and transaction
history. A single organization therefore generally represents a single manufacturing site or distribution
center.

Locations: A location code is an address. Each inventory organization must be assigned at least one location
code.

Subinventories: A subinventory is used as a holding point for on-hand inventory and generally represents a
stockroom, stocking area or cage used for storing material. Subinventories are defined within inventory
organizations. An inventory organization may have any number of subinventories, and an asset account is
assigned to each subinventory. Since the subinventory entity is logical, as there is not an address or
physical location description associated with it,
Stock Locators: Stock locators are an optional entity that may be used to represent physical locations within a
subinventory. You may choose to use stock locators for selected subinventories or selected items within
selected subinventories. If locators are used, subinventory and locator track on-hand balances. Therefore, if
locators are defined to represent a shelf within a stockroom, on-hand balances on the system would show the
item and quantity down to the physical location within the facility.
Oracle Inventory uses a key flexfield for stock locators. This presents a few limitations for its use. Only one
locator flexfield definition is allowed per install.

46. What is Material Status Control?

Answer: Material Status control restricts the movement and usage of portions of on-hand inventory. Using
material status control enables you to control whether you can pick or ship an internal order or sales order, or
issue material for a work order. You can also specify whether material needs to be quarantined until you
inspect it. In addition, you can determine whether products with a particular status can be reserved, included
in available to promise calculations, or netted in production planning.
You assign material statuses at four levels: subinventory, locator, lot, and serial, on hand
You assign subinventory and locator statuses in the subinventory and locator windows. The location status
applies to the material in the location and not the location itself. To assign a material status to a lot or serial,
you must first enable the item attributes Lot Status Enabled, and Serial Status enabled on the item in the Item
Master. You can also optionally assign a default lot or serial status to an item on the Item Master.
The lot or serial status remains the same through all inventory transactions including organization transfers. If
necessary, you can change the material status at receipt, or use the material workbench or mobile status
update page to modify the material status.
You can track material status at the Subinventory, Locator, Lot, or On-hand balance levels.
When you track material status at the on-hand level for an organization, the material status assigned at the
Subinventory, Locator, or Lot level will be used to default on-hand level material status and the on-hand
material will have a status associated with it. To enable the On-hand Material Status tracking option, run
the Activate On-hand Level Material Status Tracking concurrent request.

Cumulative Effective Status: A cumulative effective status is a combination of all disallowed transactions. When
you transact an item, system check all the material status at Subinventory, locator, lot, serials and if it is
disallowed at any level then the transaction fails.

Example: If the material status as Locator disallows WIP issue and Material status at Subinventory disallows
Sales Order issue, then neither of these transactions will be allowed to item residing in that locator.

To enable status control at transaction type, set the profile option INV: Material Status Support =Yes. If the
transaction type is not status controlled, then it is always allowed.
Define Material Status:
Navigation: Inventory > Setup > Transactions > Material Status
Attached Material Status Control at Subinventory, Locator, Lot and Serial level.
47. What is Item Status Control?
Answer: Item status is different from material status.
We use item status to provide default values for certain item attributes. When you change/update any value in
the item status control then it will automatically update the item attribute values to which it is applied.
Item status controls certain item attributes known as status attributes. The status attributes are
BOM Allowed
Built in WIP
Stock able
Transactable
Invoice Enabled
Customer Order Enabled
Internal Order Enabled
Purchasable
Process Execution Enabled
Recipe Enabled
You assign these item statuses to item template or assign it to item when you create the item.

Navigation: Inventory > Setup > Items > Status Code

48. Business Scenario: You have 12 Units of 10mm Roller Bearing (Oracle Item number 1000002) available in
your warehouse W1. 8 of those belong to Lot number 4444 while rest 4 units belong to lot number 8484.
Due to some business requirement, you have decided to restrict issuing the 1000002 item from lot number
8484 only?
Answer: Following steps need to be performed in order to establish the restriction for stock of Item 1000002
belong to lot number 8484.

Query the item 1000002 in the Material workbench form. Navigation: On-Hand, Availability -> On-Hand
Quantity in the Inventory Super user or similar responsibility

Drill down till lot number level in the left hand side tree structure select the items located at the lot
number 8484.

Click on the Tools -> Status Update menu and this will open the Status Update Details form. Note
that, it is important to drill down till lot number level in order to make the status field in the Lot
Status section enterable. Actually most of the fields initially remain as non-enterable but as you drill
down in the workbench tree, it will make the status fields enterable for locator/lot/serial etc. as
applicable.

Enter the lot status (select the one that restricts the issue transactions) and Reason.

Once you perform the above steps the stock of item 1000002 assigned to lot number 8484 cannot be issues
out of store and the following error will appear.

The Lot number is linked to a material status which does not allow this transaction.