BOM - Routing

Cost Elements : Matl, MOH, Resource, Overhead and Outside Processing.

Material Cost : Purchase price of an item.
MOH : Freight Charges, Loading / unloading charges, Stacking charges.
Resource : Anything of value, except material and cash used to manufacture, schedule or cost the
product. Resources include Machine, machine operators, assemblers, labour hired from a supplier,
tools, physical space, etc
Overhead :
1) Resource Overhead : PF, Gratuity, Conveyance, paid holidays, subsidised food, medical, cost of
maintaining the resources.
2) Department Overhead : In-Process material carriers, sweepers, head workers, Air Compressors,
Air Conditioners.
3) Other Overheads : Traveling expenses, Postages, Telephone Bills, Insurance, Brokarage,
Working Capital Interest.
OSP : Expense incurred due to outside processing of an assembly / item.
SUB-ELEMENTS :
Material Sub-Elements : Classify the item as Plastic, Steel or Aluminum. Determine the basis type
( allocation charge method) and assign an appropriate amount. ( Preferable one sub-element for
material account)
MOH Sub-Elements : Purchasing, duty, matl. Handling, freight.
Resource Sub_Elements : Each resource is a SE. They can be charged at standard costs and may
generate variance.
OH SE : They are usually production OH. They are applied in the routing. Based on no. of units or lot
moved through operation or based on Resource units or value charged in operation.
OSP : Service provided by the suppliers. Each OSP is a SE. Charged at actual or standard costs. May
generate variances.
Activities : An action or task you perform that uses a resource or incurs cost. Associate product costs to
activities. Define activities and assign them to any sub-element. we can also assign costs to your
activities and build your item costs based on activities. This is called activity based costing.
Basis Type :
Item : Fixed amount per item
Lot : Fixed lot charge to items or operations. Cost per item = Fixed cost / standard lot size ( MTL and
MOH SE). For routing : Fixed cost / Standard Lot size moved thro operation associated with resource,
OSP or OH SE.
Resource Value : Associated only with OH SE. Resource value earned in the operation = OH rate.
OH amount = OH rate * Value
Resource Units : Associated only with OH SE. Resource units earned in the operation = OH Rate.
OH amount = OH rate * Value.
Optionally use Resource units and resource value to earn MOH when you complete units from a job or
rep. Schedule.
Total Value : Used only with MOH.

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Activity : Used with Matl and MOH only. MOH calculation is based on activity.
Activity occurrences = No of items = Activity rate
Standard Operations : (N) Routings Standard Operations.
CP , AC and backflush can be ON
Usage rate : Time taken to complete one assembly.
Scheduling = Yes. Offset = 50% means that this resource will be used only when the operation is half
completed.
Primary Routing : A list of operations most frequently performed to complete the operation. One primary
and many alternate routings can exist. One operation can repeat with diff. seq. number. Primary routing
must be defined first and later all alternate routings. ( Define the alternate routing name under setupalternates and mention that alternate name in the Alternate name field of the primary routing. All
operations thus defined belong to the alternate routing)
Copying Routings :
(N) Routings Routings Choose Item A02. Tools Copy routing Choose Item A01 and copy.
It can be copied across organisations.
Assign Common routings : Tools Assign common routing. The routings can not be made common
across organizations. Changes in original will reflect in the referenced routings also.
Assembly cost roll up : Aftet defining the bills and routings, the expected cost of production can be
found by rolling up. (N) Bills Bills . Tools Rollup Costs under a cost type.
Alternate bills : First define the alternate name tag. And mention that in the alternate field of the primary
bill. Create it as a normal bill.
Bill Revision : (N) Bills Bills PB Revision button. You cannot define a revision for an alternate bill.
Bill Copy : (N) Bills Bills Choose an item. Tools Copy from . Bills can be copied across organisations
also. Bills of same item type can only be copied. It is a single level copy. Every level has to be copied
separately. All components must also be assigned to destination organization. While coping across org,
the supply SI and locators are not copied.
Common Bills : Two items of same bill type can share common bills and routings. We can not reference
a bill, if that bill also reference another bill. ( Nested reference is not possible). A manu bill must refence
only a manu bill. The alternate name has to match in both the bills. If referenced across org, the
referenced bill can only be viewed and not altered from here. (N) Bills Bills Tools Assign Common
Bill.
Use common bills to assemble ATO models in other organizations. Normally create common bills in
IMO and reference them in individual organisations.
If op. seq 25 for 486 processor of the bill is not selected, its corresponding routing op. seq. step 25 will
not be charged.
We can inherit the op. seq. from their parent option class or model if BOM : Inherit option class
operation seq no. = Yes. All items below the parent will have a op. seq. of 1 meaning that it inherited its
parent op. seq.
ATO items can be catalogued with descriptive elements concatenated with hypen separation.
Scheduled ship date is offsetted by the lead time [ Fixed lead time = quantity X variable lead time ] and
the expected release date for all ATO model items is assigned to sales orders. Auto create configuration
items with release offset days = 10, will create configuration items for sales orders whose work orders

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must be released within 10 days. ATO item numbering can be in one of three ways 1) Seq. no. 2) Order
no / line no 3) Model no with seq no.
The model and option class will appear in the configured item as phantom components, only for
consuming forecast and for consuming master schedules.
If option dependent is set to NO, that routing will be included for scheduling and costing even though
the bill component is not opted. A single level cost roll up for the configured item is performed to
establish accurate costs. All components cost, their routing costs plus material OH are summed up. The
manu and cum. Lead time is also calculated for the options choosen.
Fixed resource cost in two ways :
Method
Res. Type

UOM

Resource
unit cost

Res. Rate /
amount in
routing
Amount = 15

Fixed Resource cost = Res.

Unit cost in res. X Res.
Amount in routing
1 X 15 = 15

Fixed charge on the Currency

USD
1
routing
Fixed Charge for the Labour
Hour
20
Rate = 1
20 X 1 = 20
resource
Since currency cannot be scheduled in a OSP operation, enter another uncosted resource in the
operation for scheduling.
Configuration of bills :

1) Define model and option class bills for Order Entry, MRP, WIP and Costing.
2) Forecast demand for Model & Option Class ( Explode forecast through planning bill, model and /
or option class.
3) Master schedule ATO Models and Options.
4) Enter sales order for ATO Models and options.
5) Check ATP for component availability.
6) Auto Create configured items. ( Bills & Routings).
7) Auto Create final assembly orders ( Discrete jobs). Reserve WIP job to Sales Order.
8) Complete final assembly and convert WIP res. To Inv. Res.
9) Pick Release all configured sales orders for which WIP jobs are completed.
10) De-activate auto generated configuration items whose orders are x days old.

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