In a company, defective or worn-out spare parts in storage are to be refurbished. A material with condition-based valuation is used for this. You also need to understand the effects of the refurbishment on the stock value. For this reason, you require the following knowledge:
Refurbishment of Spare Parts: Process
Refurbishment is carried out for a material. Equipment is not usually refurbished. However, if required, you can add equipment to a refurbishment order by linking the equipment with a material. This linking can be done either automatically (for example, with a goods movement) or manually. The link is always created using the serialization method.
Refurbishment Order
When a refurbishment order is created, the following planned goods movements of parts to be refurbished are generated in the background:
Automatic creation of material to be provided (from condition) as the order component.
Automatic creation of material to be delivered (to condition) as the material receipt element.
The goods issue (GI) of the material to be provided (from condition) is made as a planned material withdrawal using movement type 261 with reference to the order number.
The GR can be posted either by using the usual MM transactions or by using transaction IW8W in the Confirmation area of plant maintenance (PM).
The GR of the material to be delivered (condition after refurbishment) is made as a planned GR by using the movement type 101 with reference to the order number.
If the valuation types (partial stocks) have a valuation with a standard price, the final change of the stock value of the whole material takes place at this time. For example, one C3 part with the standard price is removed from stock, while one C2 part with the standard price is added. This leads to a new floating average price (FLA) at the material level. The effective expenditure of the order is not taken into account for this constellation. It is posted to a price difference account for the order settlement.
Effect of Refurbishment on Stock Value of Material
If the movement types (partial stocks) have a valuation with an FLA, then the overall stock value of the material rises by the effective expenditure of the order after settlement. In turn, the rise in the overall material value leads to a rise in the FLA at the overall material level, depending on the expenditure of the order, and not on the valuation price of the partial stock.
In the figure, the effective expenditure is made up of a working time of five hours at a total of $250 + material $100 for the residual value of the defective part.