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Stock Holding Items

This is a special item generally used in pubs. Its main purpose is for stock control. In most environments, when you transfer an item from one location to another, you will be transferring the same item, for example one television from store A to store B. Therefore, the stock of the item in the first location is decremented and the stock of the item in the second location is incremented by the same amount. However, when you are transferring items from the bottle shop in a pub to the bar and that item is to be used in a recipe, the item generally needs to be translated to a stock holding item. The concept of a stock holding item is best explained with an example.

In the bar we sell a recipe called a SCOTCH AND DRY. Its main ingredient is a nip of scotch. However, we can only buy bottles of scotch, for example JOHNNY WALKER 700MLand TEACHERS 1125ML which are kept in the bottle shop. If we always used the same brand and size of scotch we could set up this one item in the bar and use it as an ingredient in the SCOTCH AND DRY recipe. However, if we can use whatever brand or size that is at hand, we have to have a stock holding item. This allows different size bottles to be translated to a single item. The stock holding item may be kept in millilitres (MLS). If we transfer a 700ML bottle to it, its stock on hand is increased by 700. If we transfer an 1125ML bottle to it, its stock on hand will be increased by 1125. When we sell a SCOTCH AND DRY, we decrease its stock on hand by 30 (one nip).

A stock holding item itself is set up like other items but the supplier is set as 'UNK' (unknown) and there is no order code. 'No cost record needs to be entered as you can't actually buy the item'. You then tell the system which items can be transferred into this one. The system automatically works out the expected cost of the item based on the average of the costs of the items which can be transferred into it.

IMPORTANT. Items are given a Unit Of Measure, usually EACH. However, when you transfer stock from one item to another, they must have compatible units of measure. For example, 700ML, 1125ML, MLS and NIP are all compatible because they are all combinations of millilitres. However, EACH is not compatible because it is not a combination of millilitres. If you plan on transferring stock into a stock holding item, you must ensure that they have compatible units of measure. The unit of measure is only used to work out the ratio of stock being transferred. For example, if you transfer one bottle of JOHNNY WALKER 700ML, the system will know that this is equivalent to 700 millilitres. The stock on hand of the JOHNNY WALKER 700ML will decrease by one and the stock on hand of the stock holding unit will increase by 700.

How Do Sales, Stock And COGS Work On Stock Holding Items?

Generally a stock holding item is not sold directly, although it can be if you want. If you do sell it, the sales will be recorded against the item and its stock will be decremented, just like a normal item.

Because the item is not sold directly, there is no cost of goods sold, but the item can contribute to the cost of goods sold of recipe items. The recipe will use the average cost or last invoice cost of the stock holding item. These costs are recorded against the stock holding item when other items are transferred into it. Continuing with the scotch example, If you transferred a 700ML bottle with an average cost of $25.00 then it would end up as an average cost of $0.0357 against the stock holding item.

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