11.2 How Transactions Change Inventory Levels
Key Takeaways
Adjust Inventory changes quantity and value without a purchase order. Order Items, Reallocate Items, and Review Negative Inventory do not do that job.
A sales order can commit quantity and reduce quantity available while quantity on hand stays the same. An estimate does not reserve quantity and does not reduce on hand.
A shipped item fulfillment decreases quantity on hand. An invoice created after that fulfillment does not remove the same units again.
A purchase item receipt increases quantity on hand. A purchase order increases quantity on order and leaves on hand unchanged.
A return item receipt with Restock checked puts quantity back on hand. The return authorization alone does not.
Several quantities, not one bucket
This objective asks how transactions from an estimate through an invoice and a return change inventory counts. NetSuite keeps quantity on hand, quantity available, quantity committed, quantity on order, and quantity back ordered. A transaction can change one of those and leave the others alone. Questions that say inventory levels are often testing that split. The walk-forward uses quantities only. Standard costing and cost variance are not on this objective, so none of these steps is a costing method.
Help's Inventory Workflow topic is a cycle of purchasing, receiving, selling, and fulfilling. Purchasing tells you what is coming. Receiving adds stock. Selling reserves available stock. Fulfilling removes stock. A customer return puts stock back only when the receipt restocks it. The counts below are for one ordinary inventory item, not for a kit parent and not for a drop-ship line.
A quantity walk for one scanner
Start with a warehouse scanner and no open orders. On hand is 24, committed is 0, on order is 0, and available is 24.
The estimate does not reserve stock
Enter an estimate, also called a quote, for 6 scanners. Help calls it a non-posting record. Estimates have no accounting impact until converted to an invoice or cash sale, and commitment is described on the sales order, not on the estimate. The quote does not reduce on hand and does not reserve the 6 units. On hand stays 24, committed stays 0, and available stays 24. The quantity effect begins when you convert the estimate.
The sales order commits and leaves on hand alone
Convert the quote to a sales order for 10 scanners at Available Qty. Help's example keeps 100 widgets on hand after committing 70, and available becomes 30, because available is on hand minus committed. The sale increases committed and decreases available. Selling more than you have increases back ordered quantity. Commitment is a promise, not a shipment.
Apply that pattern to the scanner. On hand stays 24, committed becomes 10, and available becomes 14.
Available Qty commits what can be promised and back orders the rest. Complete Qty waits until the whole line can be committed. Do Not Commit holds the line. Drop-ship and special-order lines are not committed from stock on hand. For an ordinary inventory item, the sales order reserves and does not reduce on hand. Help does not describe the estimate as a commitment.
The shipped fulfillment decreases on hand
Shipping the 10 scanners decreases on hand. Help says fulfilling items decreases quantity on hand. On hand becomes 14, those 10 leave committed, and available stays 14. You do not need a costing method to see which count moved.
If Pick, Pack, and Ship is enabled, read the status before you change on hand. A picked or packed fulfillment is non-posting. The shipped fulfillment is the one that decreases quantity on hand. Do not subtract the 10 at pick and again at ship.
The invoice bills the shipment
Invoicing the fulfilled order bills units that already left. Do not subtract another 10. With Advanced Shipping, saving the fulfillment updates inventory and billing is a second action. Without it, fulfill and bill are one save, so the inventory update happens once. Help lists invoices and cash sales among transactions that can affect inventory levels. In this walk-forward the fulfillment is the on-hand decrease.
The purchase order signals on order, and the receipt adds stock
A purchase order tells the vendor to send 12 scanners. Help says you track purchase orders so you know what to expect, and quantity on order is visible on the item. The purchase order does not add units to the shelf. On hand stays 14, and on order becomes 12.
The item receipt records that the vendor's goods were added to inventory and updates stock levels. On hand rises to 26, and on order falls to 0. The receipt is the increase. Order Items creates purchase orders for demand such as drop shipments. It is not an adjustment.
Adjust Inventory changes quantity and value without a purchase order
A count finds 4 scanners missing, with no receipt to enter. Help says Adjust Inventory changes quantity and value without a purchase order. Use it for a clerical error, theft, or miscount. A positive Adjust Qty By increases on hand, and a negative one decreases it. A negative 4 moves on hand from 26 to 22. Help calculates the removal on a negative line. That is not a costing-method lesson. Standard costing and cost variance stay outside this objective.
Do not substitute other screens for this job. Reallocate Items moves committed quantity among orders. It changes who is promised the stock. It does not change on hand the way an adjustment does. Review Negative Inventory helps you find quantities below zero. Finding the problem is not the adjustment. Order Items starts purchasing. The transaction that changes quantity and value without a purchase order is Adjust Inventory.
A return increases on hand only when the receipt restocks
A customer sends 3 scanners back. The return authorization sets up the later receipt and the customer credit or refund. It does not, by itself, put units on the shelf. The quantity switch is on the item receipt. Help says to check Restock to return the item to inventory, which increases the count. Clear Restock and the count does not increase. The write-off is an expense. This chapter stops at the count.
Restock the 3 scanners and on hand moves from 22 to 25. If Restock is clear, on hand stays 22. The quantity that returns to the shelf is the restocked receipt, not the authorization alone and not the credit document by itself. If Multi-Location Inventory is on, that receipt also needs a location, because the added units belong to a place.
Transaction effects
| Transaction | On-hand effect | On-order or committed effect |
|---|---|---|
| Estimate | None | None; it does not reserve quantity |
| Sales order that commits | None | Committed increases and available decreases |
| Shipped item fulfillment | Decreases by the fulfilled quantity | Commitment for those units is released as they ship |
| Invoice after that fulfillment | No second decrease | No new reservation |
| Purchase order | None | On order increases |
| Purchase item receipt | Increases by the received quantity | On order decreases for the quantity received |
| Inventory adjustment | Increases or decreases by Adjust Qty By | Does not require a purchase order |
| Return authorization | None until the receipt | None by itself |
| Return receipt with Restock | Increases by the restocked quantity | No purchase-order on-order change |
| Return receipt without Restock | None | None |
Retell the scanner counts
Estimate 6, and on hand stays 24. The sales order commits 10, on hand stays 24, and available falls to 14. Shipping 10 drops on hand to 14. The invoice of that shipment leaves on hand at 14. The purchase order for 12 leaves on hand at 14 and puts 12 on order. The receipt moves on hand to 26. A negative adjustment of 4 moves on hand to 22. Restocking a return of 3 moves on hand to 25.
Order Items, Reallocate Items, and Review Negative Inventory do not make that quantity and value change. A sales order reserves quantity. A purchase order puts quantity on order. The receipt, the shipped fulfillment, the adjustment, and the restocked return change the shelf count.
A warehouse count shows four fewer scanners than NetSuite, and there is no vendor shipment to receive. Which transaction changes quantity and value?
Order Items, because it creates the purchase orders that correct a shelf count.
Reallocate Items, because moving committed quantity among orders also changes on hand.
Adjust Inventory, because it changes quantity and value without a purchase order.
Review Negative Inventory, because finding a negative count posts the correction.
An inventory item has 24 on hand and nothing committed. A sales order commits 10. What are on hand and available after the order is saved, before fulfillment?
On hand 24 and available 14.
On hand 14 and available 14.
On hand 24 and available 24.
On hand 10 and available 24.
A customer returns three stocked scanners. Which action increases quantity on hand?
Saving the estimate that preceded the original sale.
Saving the return authorization and waiting to receive the goods.
Entering a purchase order for three units and leaving it unreceived.
Receiving the return and checking Restock.
Sections you finish are checked off in the contents.