Dynamics AX Inventory Valuation – Concept

Following table shows an overview of the different valuation methods in Dynamics AX:

Inventory models controlling the valuation methods in Dynamics AX

Inventory model	Explanation
FIFO First In First Out	Item issues refer to the oldest item receipt still on Stock
LIFO Last In First Out	Item issues refer to the newest item receipt on stock that is available when closing inventory
LIFO date	Like LIFO, limiting the assignment of issues to receipts before the particular issue
Weighted average	The cost price of item issues is the average cost price of the inventory quantity when closing inventory
Weighted average date	Like “Weighted average”, calculating the average cost price for the particular issue date
Standard cost	The cost price of item issues and receipts is equal to the active standard cost price of the item

Here to show an example of the cost price calculation for the different valuation methods. Basis of the example are three receipt transactions showing different cost prices and an issue transaction in between:

Date	Transaction	Quantity	Cost amount
June 1	Receipt	10	100
June 2	Receipt	10	200
June 3	Issue	10	(to be calculated)
June 4	Receipt	10	300

After inventory closing, the cost amount of the issue shows following figure depending on the valuation method:

Model	Amount	Explanation
FIFO	100	From receipt on June 1
LIFO	300	From receipt on June 4
LIFO date	200	From receipt on June 2
Weighted average	200	Average of all receipts
Weighted average date	150	From receipt on June 1 and June 2