Understanding Inventory Inflation Adjustment for Argentina

In the JD Edwards EnterpriseOne Inventory Management system, one important factor to consider is the value that is assigned to the inventory.

Inventory valuation can be done in different ways, depending on the company's industry or market as well as the legal and fiscal requirements of the country in which it operates.

Inflation is also a significant factor when determining the value of the inventory.

In an inflationary environment, the results that are provided by valuation methods that are used to determine inventory valuation vary considerably. The differences in valuation that occur when using different methods are marked clearly by fluctuations in inflation levels.

This is the reason that, in a stable economy that is unaffected by inflationary changes, a valuation method such as the Weighted Average Price (WAP) does not indicate significant differences in the value of the stock if compared with another method such as the Price of Last Adjusted Purchase (PLAP).

The PLAP method is one of the most accepted methods because it calculates the stock value by using the price of the last item purchased. This method includes not only the price of the last purchase, but also the costs that are incurred in the purchasing process.

If this purchase does not take place within the valuation month, the system uses an index that reflects the fluctuation of the inflation to adjust it.

This guide explains in detail the process that should be followed to calculate the value of the stock using the PLAP method.