When determining the lowest value by range of coverage, the system checks whether the price for a material should be devaluated because it has a high range of coverage.

A material's range of coverage is calculated as follows:

Average stock and average consumption are calculated as follows:

• You can calculate average consumption in two ways:

• Weighted average based on past consumption
• Weighted average of forecast values determined in the last forecast

• You can set all restrictions and weighting factors from the initial screen.

When calculating average stock and average consumption, note the following:

• When determining the stock level, you can specify a period under review. The system only includes the posting periods within this period in the calculation.

• When determining consumption using historical values, you can specify a period under review. The system only includes the past months within this period in the calculation.

• When determining consumption using forecast values, you can specify a period under review. The system only includes the months within this period in the calculation.

• If there is no recorded consumption, the range of coverage is set to:

• Maximum, if there is stock
• Zero, if there is no stock

• If no forecast data is available for a material when determining consumption based on forecast values, the system sets the range of coverage to zero. The devaluation percentage is also zero.
• If the options for consumption determination using historical values and forecast values do not meet your requirements, you can use customer exit EXIT_SAPLNIWE_004 to link in your own consumption determination procedure.

In the case of materials subject to split valuation, the system calculates the range of coverage at valuation header record level, rather than separately for each valuation type.

You can specify a percentage discount for devaluating materials depending on the company code or valuation area and the material type. Depending on the range of coverage, you do this in Customizing for Valuation and Account Assignment or from the initial screen.

For example, if a range of coverage of four months is determined for a material of type ROH, the percentage discount is 7%. If the range of coverage is not specified, the system looks for the next range of coverage smaller than that required, thus for a material of type ROH with a range of coverage of 11 months, the devaluation percentage for the eight month range of coverage is used (15%). Entries without a material type apply to materials for which no specific devaluation percentages are defined.

It can be that a material must not be devaluated, despite having a large range of coverage. For example, if the stock of a material was received for the most part during the settled period or if the material master record was created only recently. You can configure the system so that devaluation cannot happen in such instances.

When determining the lowest value based on the range of coverage, the base price is the price from which the devaluation calculated is to be deducted. The following prices can be used as the base price:

• Current material price
• Material price from the previous month or year
• Current standard price
• Standard price from the previous month or year
• Current moving average price
• Moving average price from the previous month or year
• Tax price 1, 2, or 3
• Commercial price 1, 2, or 3

When you determine the lowest value based on the range of coverage, you specify the base price.

The lowest price is calculated as follows:

The system generates a list of materials with their devaluation percentages and lowest prices.

You can have the system update the results of lowest value determination in one (or more) of the physical inventory price fields in the material master record.

You can generate a batch input session, which changes the material valuation prices to the lowest prices determined when it runs, or you can change the material valuation prices directly.

You can update valuation alternatives directly from the program.