Suppose you define valuation category R in Customizing as follows:

This means that these four valuation types are valid for valuation category R, but it does not mean that all four types necessarily apply in any given store.

Assume that Store 1 (an upscale fashion store) has valuation category R but uses only two of the valid valuation types: normal and promotion. Store 2 (a discount outlet) also has valuation category R, but uses only these valuation types: standard outlet price and damaged/factory seconds.

If a men’s suit is assigned valuation category R in its article master record, then the stock of that suit in Store 1 could only be valued at the normal or promotion rate. If a shipment is damaged or of poor quality, upscale Store 1 could not value it at the normal or promotion price. The store might choose to either return the shipment to the manufacturer, or ship it to outlet Store 2, where it could be valued as either damaged goods or factory seconds.