Automatic Error Correction by the System

There are three different automatic error correction strategies that can be used, according to the type of error. (See Control of Automatic Error Correction):

Reduction in the Actual BOM (Error: Value Exceeds Threshold for One-way Step):

In the actual BOM, actual quantities are managed for each procurement alternative. In the case of an unrealistic input quantity for a higher level (for example, through a large quantity of WIP), a procurement alternative can be incorrect for multilevel price determination (threshold value excess or negative price). In the first step, the BOM reduction uses the minimum from the actual and target consumption to attempt to calculate a multilevel material price. If this first reduction is not successful, all variances through input materials are completely ignored (zero BOM). Hence only the costs of this level are still included. The price differences of the input materials that are not distributed to higher levels appear next to the input materials in the line Not allocated.

Cutting Connections in a Cycle (Error: Value Exceeds Threshold or Negative Price for a Cycle):

If there is a cycle present, then in straightforward cases it is possible to cut all connections of this cycle in one step. This cycle is then ignored completely in the multilevel material price determination. The non-distributed price differences for all materials in this cycle appear in the line Not allocated. This procedure can be used by the system automatically if cycles lead to threshold values being exceeded or negative prices.

Successive Cutting of a Cycle (Error: Cycle Does Not Converge):

If a cycle does not converge, the system can cut the connections in succession. To do this, all connections in a cycle are examined, and the one with the lowest weighted quantity flow is cut first. If this is not successful, the connection with the next lowest weighted quantity flow is cut, and so on. The weighted quantity flow for each material is calculated according to the following formula:

If a material is consumed in a joint production process, only the portion of consumption corresponding to the apportionment structure is included as a quantity flow in the cycle.

The nondistributed price differences of all materials in this cycle appear in the line Not allocated.

Costing with an Alternative Price (Error: Negative Price, Cumulative Quantity is Zero):

For this, the system attempts to calculate a price according to the following strategy:

• Only the total receipts of a period are included, not the cumulated line.
• If this is not successful, the beginning inventory valuation is used providing the quantity here is greater than zero.
• If not, the moving average price of the previous period is used if it has the status Post Closing.
• If none of these options can supply a price, the standard price from the material master is used.

The message for the material records which price has been used.

The price differences are displayed next to the material in the line Not distributed.