Allocate Inventory in Sales Order

When entering an item into a sales order-

is it enough to commit quantity in general or is it as important to allocate and lock in the committed quantity from a specific warehouse bin?

By allocating, you are making sure that the quantity cannot be grabbed by another order. This comes into place especially in an environment where an order can be put on hold for delivery a week or two later. Without allocation, an order for the same item that can be shipped in the next day or two will grab the quantity, possibly leaving a shortage to fill the other order when the release date comes up.

You may counter that allocation doesn’t matter because you don’t allow a sale if quantity is not available. However, without locking the bin location, especially if the item may be found in multiple bins- there is no easy audit to determine what goes wrong when the computer indicates there is stock on hand but the order cannot be filled.

Furthermore, some businesses do permit items to be sold even when there is zero or negative available and will hold the order until the item has been restocked. With order allocation, the items are locked in for specific orders and orders entered when stock is not available will have to wait. The downside is that you may be protecting an order that has a customer requested hold date for a few weeks.

Order allocation is not a standard feature in most accounting
software systems and may require customization.


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