Approval Options and Tolerances (Oracle Inventory Help)


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Approval Options and Tolerances

Approval Tolerances

Oracle Inventory supports two types of cycle count approval tolerances. For each type, you can specify a positive and a negative limit. When a particular cycle count entry results in an adjustment that exceeds any one of these limits, you have a cycle count adjustment that exceeds approval tolerances. Based on the approval option you choose when you define your cycle count, this adjustment is either posted automatically or held for approval.

Quantity Variance Tolerance

The quantity variance tolerance is a user-defined limit for the difference between the actual cycle count quantity and the system tracked on-hand quantity. You express positive and negative quantity variance tolerances as percentages of the system on-hand quantity.

You enter these percentages when you define your:

cycle count header, see: Defining and Maintaining a Cycle Count

cycle count classes, see: Defining Cycle Count Classes

cycle count items, see: Defining Cycle Count Items

Inventory uses any percentages you define at the cycle count item level first. If you do not have any defined for an item, it uses the tolerances defined for that item's cycle count class. If you do not have any defined for the class, it uses the tolerances at the cycle count header level. If you have no tolerances defined for the header, Inventory assumes that there is no limit to the approval tolerance.

Adjustment Value Tolerance

The adjustment value tolerance is a user-defined limit for the total value of a cycle count adjustment. The adjustment value is calculated as:

You enter these tolerances when you define your cycle count header and cycle count classes. Inventory uses the values you define at the cycle count class level first. If you do not have any defined for an item's class, it uses the values at the cycle count header level. If you have no tolerances defined for the header, Inventory assumes that there is no limit to the approval tolerance.

Examples of Quantity Variance and Adjustment Value Tolerances

The following table shows possible values for quantity variance and adjustment value tolerances for an item in a cycle count:

Item Attributes Value

Item Standard Cost $10.00

Positive Quantity Variance Tolerance 5%

Negative Quantity Variance Tolerance 10%

Positive Adjustment Value Tolerance $200

Negative Adjustment Value Tolerance $250

Table 1 - 26. (Page 1 of 1)

The following table shows four different count scenarios for the same item and the tolerances that each different scenario violates:

Item Attributes	Value
Item Standard Cost	$10.00
Positive Quantity Variance Tolerance	5%
Negative Quantity Variance Tolerance	10%
Positive Adjustment Value Tolerance	$200
Negative Adjustment Value Tolerance	$250
Table 1 - 26. (Page 1 of 1)

System on-hand quantity Count Quantity Quantity Variance Adjustment Quantity Adjustment Value Tolerance Exceeded

100 106 +6% +6 +$60 Positive Quantity Variance

100 88 -12% -12 -$120 Negative Quantity Variance

100 122 +22% +22 +$220 Positive Quantity Variance and Positive Adjustment Value

100 73 -27% -27 -$270 Negative Quantity Variance and Negative Adjustment Value

Table 1 - 27. (Page 1 of 1)

System on-hand quantity	Count Quantity	Quantity Variance	Adjustment Quantity	Adjustment Value	Tolerance Exceeded
100	106	+6%	+6	+$60	Positive Quantity Variance
100	88	-12%	-12	-$120	Negative Quantity Variance
100	122	+22%	+22	+$220	Positive Quantity Variance and Positive Adjustment Value
100	73	-27%	-27	-$270	Negative Quantity Variance and Negative Adjustment Value
Table 1 - 27. (Page 1 of 1)

Hit/Miss Tolerances

The hit/miss tolerance is similar to the quantity variance tolerance in that it is also a user-defined limit for the difference between the system tracked on-hand quantity and the actual cycle count quantity. You express positive and negative hit/miss tolerances as percentages of the system on-hand quantity. A count is considered a "hit" if it is within these tolerances, and a "miss" if it is outside them. The hit/miss tolerance is used to evaluate the accuracy of your cycle counting procedures rather that the actually accuracy of inventory.

You enter hit/miss tolerance percentages when you define your cycle count header and when you define your cycle count classes. Inventory uses the percentages you define at the cycle count class level first. If you do not have any defined for an item's class, it uses the tolerances at the cycle count header level. If you have no tolerances defined for the header, Inventory assumes that there is no limit to the hit/miss tolerance, and all variances are therefore "hits" regardless of the size.

Inventory uses these tolerances to generate the Cycle Count Hit/Miss Analysis report. See: Cycle Count Hit/Miss Analysis.

Measurement Errors

Negative and positive measurement errors are also user-defined limits for the difference between the cycle count quantity and the system tracked on-hand quantity. Inventory does not make any adjustments to an item whose cycle count quantity differs from the system tracked on-hand quantity by less than the measurement error. Because of this, measurement errors implicitly override any approval tolerances you specify.

You specify measurement errors when you define or update an item. Use measurement errors with extreme caution since they actually prevent cycle count adjustments from taking place. You would typically use this feature on an exception basis for items you cannot accurately count. For example, if you visually check the level of bolts in a bin to estimate the quantity, or you use their weight to approximate the quantity, you might want to allow for measurement errors. Therefore, if your system tracked on-hand quantity for the bolts in that bin is within an acceptable range, you do not perform a cycle count adjustment. See: Inventory Attribute Group.