When you enter a line on a purchasing document and choose a line type, Purchasing automatically displays the default information that you define here for the line type.
Line types let you distinguish between quantity and amount based line items. You use quantity based line items when you know the quantity and price of the line you are ordering. For example, you might buy a dozen pens for $10. You use amount based line items when you are ordering a service. For example, you might order $5,000 of consulting services over the next year.
When you are entering amount based document lines in purchasing windows such as the Purchase Orders window, Purchasing skips the Item and Revision fields, and sets the price to 1. You simply provide the total amount of 5,000 as the quantity. Then, when you record your receipts, you can enter the amount you have received as a quantity. For example, if you have incurred $300 of a $500 charge, you record a quantity of 300.
You can create line types to reflect different characteristics for the items you purchase. For example, you may want to define one line type for items you order by quantity and unit price, another line type for services you order by hour, and yet another that indicates an outside processing operation used in Oracle Work In Process (WIP). You can create purchasing document lines and specify whether they are for goods, services, outside processing, or any other line type you define.
Outside processing line types are necessary when you are using WIP and want to enter purchasing documents for outside processing operations in WIP. When you choose an outside processing line type on a purchasing document line, you can enter only outside processing items and the destination type can be only Shop Floor.
Purchasing automatically provides you with a line type of Goods that is quantity based. If Work in Process is installed, Purchasing also provides you with an Outside Processing line type. You can set up your purchasing options to copy a default line type for lines you add to every requisition, purchase order, RFQ, or quotation document. You can override the default line type for each document line you create.
Overview of Outside Processing