Costs at In-Transit Warehouses

When you use the Transfer Control module, a transfer between warehouses is accomplished through an in-transit warehouse:

1.   When the item is placed on the truck at warehouse A, it is transferred to an "in-transit" warehouse.

2.   When the truck arrives at warehouse B, the inventory is transferred from "in-transit" to B's inventory.

Since two transfers have taken place in the system, there is a potential for two transfer price variances.  To account for in-transit inventory correctly, the item's cost at the in-transit warehouse should be defined as equal to either the cost at the sending warehouse or the cost at the receiving warehouse.  The in-transit cost should equal the cost at whichever warehouse retains ownership of the in-transit inventory.  The ownership of in-transit inventory is specified via the free-on-board code.

For example, if Warehouse A retains ownership of an item while it is in-transit, the item's cost on the Warehouse Balance File for the in-transit warehouse should equal it's Warehouse Balance File cost for Warehouse A.  Thus, any difference in the cost between warehouse A and Warehouse B will be recorded at the time when the actual transfer of ownership takes place.

A similar situation arises when Warehouse A and Warehouse B belong to different company/locations.  The in-transit warehouse should belong to the same company/location as the warehouse that retains ownership of the in-transit inventory.  Thus, any intercompany transactions will be recorded when the actual transfer of ownership takes place.