Microsoft Dynamics AX 2012 R3 CU8 – Recycled By-Products in Production Orders

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Microsoft Dynamics AX 2012 R3 CU8 – Recycled By-Products in Production Orders


Overview

In Cumulative Update 8 for Microsoft Dynamics AX 2012 R3, functionality to reuse the same by-product that is in consumption has been added. This functionality is important for use in process manufacturing and allows an item that is used in consumption, to also be a by-product in the manufacturing process (specifically valuable for our AX for Plastics users in Extrusion and Injection Molding). 

Item Setup

In order to use this functionality, first the item that will be used as an input and output has to have certain criteria. The item model group has to be set as Standard cost and the production type has to be set as By-product. (The item can be set as a Co-product but then the production type has to be set as By-product.) The settings can be configured here:
Product information management > Common > Released products > Select item
General fast tab > Administration > Item Model Group = STD
 Engineer fast tab > Formula Planning > Production type = By-product

Formula Setup

Once those parameters have been set up, the item can be added to the input and output in the formula.
Inventory management > Common > Formula
Create the new formula and add your item like normal to the inputs by clicking on lines in the header and adding the item to the formula line screen.

Burden Setup

Next, to add the item as an output, go back to the formula screen and in the versions section select Co-products. Add the item as a By-product and change the Burden to Recycled. AX will then calculate then base its price calculation on just the units that are consumed. So if you put 20 units into the process and get 12 units out, then AX will calculate the cost on consuming 8 units.

Production Orders

Now the next time that a production order is run with this formula, the item will be an input and output in the process. This scenario will look like the following when it is run.
Item A + Item B > Run Production order > Item C + Item B
Where Item A is an input item, Item B is the By-Product that is in the input and output, and Item C is the created item.
If creating planning orders it is important to note that only on-hand inventory is considered. This means that the supply from the recycled By-product is not used for pegging until the batch outpost is posted.

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