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Published in History & Culture

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Published in History & Culture

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The moving average price in SAP MM is very easy to calculate

When I utilised SAP MM to make an order, I had reservations about computing the moving average price. Most of the time, we are unaware of the prior PO price and quantity, or the price computation went incorrect, and therefore we are unable to obtain the accurate MAP for any commodity.

I had doubts about calculating the moving average price in SAP MM whenever I used it to create an order. Most of the time, we are not aware of the previous PO price and quantity, or the calculation of the price went wrong, and hence we fail to get the exact result of MAP for any material. It is very simple and can be calculated in just a minute. It is a simple formula. We just have to keep in mind the price and the quantity of the previous and current PO. That's all. Here we go.

Moving average price SAP MM

Moving average price SAP MM
The moving average price in SAP MM is easy to calculate | Image credit to SAP blogs

The moving average price itself says the price variation after every purchase order is placed. The price of the order can be taken from three different sources. The first one is from the Purchase info record, the second, the vendor price, and the third, the outline agreement. This is also called the source of supply, as we can get to know who can supply the materials.

How do I figure out the price as a purchase officer? You can take an example with the previous PO and the current PO. When I created the first order for the particular vendor, at that time, the price was considered $10 and the order was placed for qty 20, hence the total = 200.

The moving average price for my upcoming order would therefore be

Previous Price + Total GR Price (current)/Previous qty + Total GR Qty (current)

Eg: previous price ($10) current price ($11) and previous & current qty (20) and the current total GR price ($220) It comes to around $10.47

If you have any other thoughts or procedures better than this, please mention them in the comments. I will add to this article as well.

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