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Allocation of Manufacturing Components
Allocation is always a mystery to many people. Add the allocation process in manufacturing, and it gets real complex. Below is an excerpt from our Product Engineering for MS Dynamics GP that explains the manufacturing allocation processes available.
Allocation can occur automatically when the MO is released. An option in the Manufacturing Order Preference Defaults will cause this to happen. Check the box in the defaults window and whenever an MO is set to Released, any un-allocated components will be allocated automatically.
The Manufacturing Component Transaction Entry window has an Allocate transaction type. Using this transaction, components can be allocated for the manufacturing orders when desired. In quick turn manufacturing, allocating all of the components on release of the MO is a good practice. However, when production can take from several weeks to several months, allocating components that are not needed for several months can be problematic.
The allocation of bin based components requires that the components exist in inventory before the allocation is performed.
When components are not needed for several months, management would prefer not to tie up capital in parts that are just sitting and collecting dust. Scheduling the receipt of the needed components and then performing the allocation transaction to reserve them reduces the value of inventory yet still maintains reservations for stock.
Of course, the allocation or reservation of components can be ignored all together. It is not necessary to allocate components to use them in manufacturing. However, by skipping the allocation process, there is no visibility of the planned use of the components in the Item Quantities Maintenance window and users MUST use the Available to Promise to check on Free Forward amounts.