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The Managing Inventory Map shows how inventory movements and the general ledger are updated to build finished goods inventory from raw material parts and perform warehouse transfers.
Create a Manufacturing Order
A manufacturing order allows you to build finished goods inventory from raw materials or more simply bundle multiple products for stocking as a single sales item as an alternative to kitting.
Allocate Raw Materials
Raw materials can be allocated from stock or purchased and received via purchase orders. When a product is allocated to a manufacturing order an outbound inventory movement is created that decreases the quantity available and debits the Work In Process GL account set in Accounting Settings and credits the inventory GL account set on the product.
When the finished good product is built an inbound inventory movement is created to reclassify the work in process inventory to finished good inventory and increase the quantity available for the finished good. In the general ledger a debit is made to Inventory GL account set on the product for entry of the finished good and a credit is made to the Work In Process GL account set in Accounting Settings.
Both Outbound and Inbound inventory movements are used to record warehouse transfers. Warehouse transfers do not have any impact on the general ledger and have no related accounting entries as a result. A warehouse transfer updates the inventory quantity available table for the correct location of a product in the warehouse.