How Receiving and Inventory Adjustments Affect Cost Layers in Luminous

This guide explains how receiving inventory and other adjustments influence cost layers in Luminous. Cost layers are crucial for tracking inventory costs, and they are created and updated based on specific actions like receiving, transfer orders, and assembly orders.

Step 1: Receiving Inventory and Creating Cost Layers

Cost layers are automatically created when a receiving report is generated. Here's how to receive inventory:

1. 1. Create a Receiving Report
      
      • Navigate to the Receiving Report page.
      • Enter the necessary details, such as who is receiving the inventory (e.g., Josh) and the Purchase Order (PO) number (e.g., PO 269).
      • Select the warehouse where the inventory is being received (e.g., Warehouse Main).
   2. Update Locations
      
      • Bulk select the items and update all to the appropriate location (e.g., Location A1).
   3. Specify Quantities and Additional Costs
      
      • Enter the quantities being received (e.g., 20 units of each item).
      • Add additional costs (e.g., shipping costs of $5,000).
   4. Submit the Receiving Report
      
      • Once submitted, the inventory will be added to your total inventory, and a new cost layer will be created for the received items.

Step 2: Viewing Cost Layers for a SKU

1. 1. Search for the SKU
      
      • Navigate to the Inventory page and search for the specific SKU (e.g., "GB-Blue" for a golf bag).
   2. Access the Costs Tab
      
      • Click into the SKU to view its details.
      • Select the Costs Tab to see all historical cost layers associated with the SKU.
   3. Understand the Cost Layers
      
      • Review the following details for each cost layer:
        • Unit Cost: The cost per unit for that layer.
        • Total Cost: The total cost for the layer.
        • Initial Quantity: The quantity received in this layer.

Step 3: FIFO (First-In, First-Out) Logic

• • When inventory is deducted (e.g., due to sales or usage), it starts with the oldest cost layer (FIFO logic).
  • Inventory will be deducted from the first cost layer until it is depleted, and then the system will move on to the next cost layer.

Step 4: How Cost Layers are Affected by Other Actions

Cost layers can also be updated or created by:

1. Transfer Orders
   
   • When inventory is moved between warehouses, the cost layers transfer with it.
2. Assembly Orders
   
   • When raw components are combined to create a finished product:
     • The system takes the cost layers of the components.
     • A new cost layer is created for the finished product based on the combined costs.

Key Points to Remember

• Cost Layers are Created on Receipt: Every time inventory is received into Luminous, a new cost layer is generated.
• Actions Impacting Cost Layers: Transfer orders and assembly orders can transfer or create new cost layers.
• Tracking Costs: Use the Costs Tab for any SKU to view detailed cost history.
• FIFO Logic: Cost layers are depleted in the order they were created.

Understanding how cost layers work ensures accurate cost tracking across your inventory and allows you to maintain transparency in inventory adjustments.