Inventory Structures and Setup
Inventory Structures and Setup
This domain tests how Oracle Cloud Inventory models the enterprise: legal entity, business unit, inventory organization, subinventory, and locator. The exam expects you to know which level controls transactions and which level controls accounting.
Core rules
- An inventory organization is the facility where you receive, store, and ship material. It is defined within a business unit and legal entity context.
- Subinventories are physical or logical areas inside an inventory organization, such as Receiving, Storage, Quarantine, or Scrap. Their type affects whether they are nettable, included in ATP, or require locators.
- Locator control can be None, Prespecified, Dynamic, or Deterministic. Locators are optional at the subinventory level and mandatory when locator control is enabled.
- Organization parameters set default subinventories, default locators, negative inventory rules, and cost organization links.
Worked example
A company has one legal entity, one business unit, and two inventory organizations: WH1 and WH2. WH1 has a Receiving subinventory and a Storage subinventory with locator control set to Dynamic. A PO receipt defaults to Receiving; put away rules then move the material to Storage and require a locator at receipt. The reasoning: the inventory org owns the on-hand balance, the subinventory narrows the physical area, and the locator gives the bin-level position. Accounting follows the legal entity and cost organization, not the locator.
Traps
- Treating a subinventory as an inventory organization; subinventories do not have their own legal entity or cost method.
- Changing locator control after transactions exist, which can invalidate existing balances.
- Assuming negative inventory is always allowed; it is controlled by organization parameters and can be restricted by subinventory.
- Forgetting that an item must be assigned to the inventory organization before it can transact there.