Oracle Inventory Functional Questions and Answers

[Sadia Amjad]

With Oracle Inventory Management you can improve inventory visibility, reduce inventory levels and control inventory operations. All of your material in each line of business and stage of the inventory lifecycle can be tracked in a single system. Increased transparency will reduce the need for local buffer stocks, and inventory will be located where it previously wasn’t known to exist.

Oracle Inventory Management is part of the Oracle Value Chain Execution solution and integrates seamlessly with other Supply Chain Management applications, including Oracle Warehouse Management, Oracle Mobile Supply Chain Applications, Oracle Order Management, Oracle Purchasing, Oracle Discrete Manufacturing, Oracle Process Manufacturing, and Oracle Cost Management.

An inventory organization is a facility where you store and transact items. Before you can use Oracle Inventory, you must define one or more inventory organizations. Inventory organizations represent distinct entities in your enterprise and can be one of the following:

• A physical entity such as a manufacturing facility, warehouse, or distribution centre.
  
• A logical entity such as an item master organization, which you use to define items.
  
• An inventory organization can have its own location, ledger, costing method, workday calendar, and items
  
• An inventory organization can share one or more of these characteristics with other organizations.
  

1. What is an item?

An item is a part or services where you can Purchase, Sell, Plan, Manufacture, Stock, Distribute and Prototype.
Items can also be containers for items as well as components you build into other items.
2. Explain Item Master Organization?
An item master organization is a logical entity where you define the item. After you define an item in the item master, you can assign it to any number of other organizations.
3. Define Inventory Organization?
It is a facility which will enable you to store and transact the items. It can be a manufacturing unit, ware house, distribution center etc.
4. What is a subinventory?
Subinventiries are unique physical or logical separations of material inventory. These can be raw material, finished goods or defective material subinventory. You must define at least one subinventory. Subinventories are of two types: storage and receiving
Storage subinventories are intermediate or final put away locations for material. Material that resides in a storage subinventory appears in on hand quantity, and is tracked by the system. The system can book orders against, and use manufacturing processes on material that resides in a storage subinventory. You must define at least one storage subinventory for your implementation.
Receiving type subinventory is only used for receiving items. Items in this subinventories cannot be on-hand or reserved
5. In which table does the subinventory related information for an item is stored?
MTL_ITEM_SUB_INVENTORIES
6. What is a stock locator?
Locators are structures within subinventories. Locators are the third level in the enterprise structuring scheme of Oracle Inventory. Locators may represent rows, racks, or bins in warehouses. You can transact items into and out of locators. You can restrict the life of locators, establish capacity of a specific locator in weight or units, as well as specify dimensions which define a locator’s capacity by volume.
7. What are the Key flex fields in oracle Inventory?
Oracle Inventory provides the following flexfields:
System Items, Item Catalogs, Item Categories, Stock Locators, Account Alias and Sales Order
8. What are the basic steps involved in defining an item?
Create an item in the item master form
Copy the template from the tools menu to assign specific attributes to the item and save it.
Assign the item to a category from tools menu and save your work
Select organization assignment from tools menu and assign the item to different inventory organizations by ticking the checkbox next to the inventory organizations.
9. What are item attributes?
Item attributes are the collection of information about an item. These are used to store specific characteristics of an item, such as item status, unit of measure, revision control, etc. these can be controlled at either the master or the organization level. These attributes are stored in a table named MTL_ITEM_ATTRIBUTES
10. What is the use of item template?
An Item template is a set of attributes that enable the user to quickly create an Item. You can use the existing templates are you can create your custom template.
11. What is an item category and category set?
A category is a logical classification of items that have similar characteristics.
A category set is a distinct grouping scheme and consists of multiple categories. An item can belong to any number of category sets. We can assign item to one category within each category set. The categories can be retrieved from the table ‘MTL_CATEGORIES_B‘ and item category set from ‘MTL_CATEGORY_SETS_B’.
12. Explain unit of measure (UOM) and UOM class?
The unit of measure (UOM) helps us count the number of items involved in a transaction or the number of items that are stored in a subinventory or a locator.
UOM classes let you group different UMO’s into one category. Eg, quantity could be a UOM class under which each, dozen, lot etc are separate UOM’s.
13. Explain shipping method?
Shipping methods are the way you ship material. When you create a shipping method, you must enable it before you can use it in a shipping network. If you disable a shipping method, it cannot be used in a shipping network.
14. Describe Interorganization Shipping Networks
An inter-organization shipping network describes the relationships and accounting information between a shipping organization and a destination organization. You must define a shipping network between two organizations before you can transfer material between organizations. When you set up a shipping network you must select a transfer type: Intransit or Direct.
Intransit: Oracle Inventory moves material to an intermediary state before it reaches the destination organization. After the material arrives at the destination organization, you will need a receipt transaction to retrieve it. If intransit is selected, you can define:
Shipping Methods, GL Accounts to use in transit, Material ownership during transfer, Planning lead times and Transfer Charges
Direct: Oracle Inventory moves the material directly to the destination organization. However, for both      transfer types, you can determine default receipt routing and whether internal orders are required to transfer material
15. In which tables are the transactional details are stored?
MTL_MATERIAL_TRANSACTIONS
MTL_TRANSACTIONS_INTERFACE
MTL_MATERIAL_TRANSACTIONS_TEMP
MTL_TRANSACTION_ACCOUNTS
16. What is revision control in Oracle Inventory?
A revision is a particular version of an item, bill of material, or routing. Revision control is normally enabled for identifying a modified item. Item can be placed under revision control by checking the box `Revision control` in Inventory tab while defining new item or for existing item. Base table for Item Revision is MTL_ITEM_REVISIONS.
17. What is Picking Order of Subinventory or Locator? Where will you define the order?
The value indicates the priority with which we pick items from subinventory or Locator, relative to another subinventory or locator, where a given item resides. A picking order of 1 means that order entry functions pick items from the subinventory or locator before others with a higher number (such as 2,3 and so on).
The subinventory order is defined in the subinventory definition and the locator order is defined in the locator definition. The default order for both the subinventory and the locator are defined in the organization.
18. What are the different inventory transactions?
A transaction is an item movement within, into or out of inventory. A transaction changes the quantity and location of an item
The following are the different inventory transactions:
Receive an item into an organization from GL account number
Issue an item from an organization into a GL account number
Transfer items from one subinventory to other in the same organization.
Transfer of items between various inventory organizations
Reservation of items
19. Describe various inventory transaction types?
Miscellaneous transaction: This transaction is used to do adjustments in stock due to damage, obsolescence, issuing items for R & D or issuing track able expense items.
Subinventory transfer: This transaction is used to transfer goods from one subinventory to another within the same inventory organization.
InterORG transfer: This transaction is used to transfer goods from one inventory organization to another.
Receiving transaction: This transaction is used to move goods from receiving dock to specified subinventory and locator.
Sales issue: This transaction is used to move goods from pick subinventory to staged subinventory.
WIP issue: This transaction is used to issue materials against production orders
20. What is the difference between a subinventory transfer and a move order?
Both these transactions are used for the movement of items from one subinventory to the other. The difference is that move order generates a pick slip and a subinventory transfer doesn’t.
Move order requires ‘approval’. Also, move orders create allocations. So you can place hold on the material with the intention of picking it up a little later. In subinventory transfer, there is no reservation / allocation.
21. What are the Components used in Customizing a Transaction?
The following are the three components used in a transaction

• Transaction Source Type
  
• Transaction Action
  
• Transaction Type
  

A Transaction Source Type and a Transaction Action come together to form a Transaction Type.
22. What is a Transaction source type?
A Transaction Source Type is defined as an entity against which Oracle Inventory charges a transaction. The following transaction source types come seeded with Oracle Inventory:

• Purchase Order
  
• Account Alias
  
• Move Order
  
• Internal Order
  
• Standard Cost Update
  
• Internal Requisition
  
• Sales Order
  
• Cycle Count
  
• Periodic Cost Update
  
• Physical Inventory
  
• Account
  
• RMA (Return Material Authorization)
  
• Inventory
  
• Job or Schedule
  

23. What is a transaction type?
A transaction type is a combination of a transaction source type and a transaction action. It is used to classify a particular transaction for reporting and querying purposes. Ex:
Sales order issue (txn type) + issue from stores (txn action) = sales order (txn source type)
Move order transfer (txn type) + subinventory transfer (txn action) = move order (txn source type)
24. Name any four purposes where miscellaneous transaction can be used?
Cycle count adjustment, Physical inventory adjustment, adjusting inventory quantity within an inventory organization and decrementing on-hand balances from a subinvemtory
25. Explain inventory control?
Inventory Control is the process by which inventory is measured and regulated according to predetermined norms such as economic lot size for order or production, safety stock, minimum level, maximum level, order level etc.
26. What are the objectives of inventory control?

• To meet unforeseen future demand due to variation in forecast figures and actual figures.
  
• To average out demand fluctuations due to seasonal or cyclic variations.
  
• To meet the customer requirement timely, effectively, efficiently, smoothly and satisfactorily.
  
• To smoothen the production process.
  
• To facilitate intermittent production of several products on the same facility.
  
• To gain economy of production or purchase in lots.
  
• To reduce loss due to changes in prices of inventory items.
  
• To meet the time lag for transportation of goods.
  
• To meet the technological constraints of production/process.
  

27. What are the factors that affect inventory control?

• Type of product
  
• Type of manufacture
  
• Volume of production
  

28. Define ABC analysis?
ABC analysis determines the relative value of a group of inventory items based on a user specified valuation criterion.
This technique divides inventory into three categories A, B & C based on their annual consumption value.
It is also known as Selective Inventory Control Method (SIM)
29. What is consignment inventory?
Consignment Inventory is inventory that is in the possession of the customer, but is still owned by the supplier. In other words, the supplier places some of his inventory in his customer’s possession (in their store or warehouse) and allows them to sell or consume directly from his stock. The customer purchases the inventory only after he has resold or consumed it. The key benefit to the customer should be obvious; he does not have to tie up his capital in inventory. This does not mean that there are no inventory carrying costs for the customer; he does still incur costs related to storing and managing the inventory
30. What are the different planning methods available in Oracle?

• Re-order point planning
  
• Min-Max planning
  
• Kanban cards
  
• Subinventory replenishment planning
  

31. When should the material be ordered?
When on-hand quantity + supply – demand is less than safety stock (safety stock is nothing but minimum inventory level)
[On-hand quantity] + [supply] – [demand] < [min inventory level]
32. Explain re-order point planning?
Reorder point planning uses demand forecasts to decide when to order a new quantity to replenish inventory. Reorder point planning suggests a new order for an item when the available quantity (on-hand quantity plus planned receipts) drops below the item’s safety stock level plus forecast demand for the item during its replenishment lead-time. The suggested order quantity is an economic order quantity that minimizes the total cost of ordering and carrying inventory. Oracle Inventory can automatically generate requisitions to inform your purchasing department that a replenishment order is required to supply your organization.
If the forecast is correct and the order arrives on time, the inventory level should be right at the safety stock level at the time of receipt. In cases where the desired safety stock level changes during the order lead time, Oracle Inventory uses the largest safety stock quantity during the lead-time.
When an order is triggered, the EOQ is the size of the triggered order.
EOQ = square root of: [(2 X annual demand X order cost) / (carrying cost percent X Unit cost)]
Oracle Inventory calculates annual demand as the current demand rate annualized by multiplying the current period demand forecast by the number of periods per year (12 or 13).
Reorder point planning can be performed at the organization level only.
33. Explain min-max planning technique?
Min-Max planning is a tool for planning inventory that looks at user-defined minimum and maximum inventory levels. It does not consider lead times.
We can perform this technique at org level or subinventory level
34. Define cycle counting and explain its use in oracle inventory?
Cycle Counting is a process of periodic counting of individual item / all the items throughout the course of the year to ensure the accuracy of inventory quantities and values.
We can do the cycle counting at Organization / Sub Inventory Level.
Cycle count is used to:
To reconcile system on-hand balances with actual counts in inventory
Maintain control over the items that have higher value
35. When do you perform physical inventory and explain the steps involved in it?
Physical inventory can be performed, whenever there is a need to verify the accuracy of system on-hand quantities. This can be done for entire organization or can be confined to a specific subinventory.
Steps to perform physical inventory:

• Define physical inventory
  
• Take a snapshot of system on-hand quantities
  
• Generate physical inventory tags
  
• Enter counts
  
• Do physical inventory adjustments by approving or rejecting
  
• Post adjustments
  
• Purge physical inventory information
  

[viggora]

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[viggora]

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