Manufacturing

A BOM lists the components that make a finished good, with quantity per, waste factor, and expected yield. Multi-level BOMs roll through subassemblies. Costing rolls material, labor, and overhead into a unit cost you can actually price from.

Production orders plan a quantity of a finished good against a BOM and routing. Creating an order commits (reserves) its materials so sales availability shrinks immediately — planning ahead of purchasing is normal; MRP drafts the gap.

Issuing materials converts that commitment into a stock issue. Completing the order receives finished goods at actual vs. estimated cost and posts variances to the general ledger.

Consume lot- or serial-tracked components and produce lot- or serial-tracked finished goods on the same order. Genealogy follows which input lots went into which output, which is what a recall or an auditor actually asks.

Work centers collect labor and machine time. Overhead absorbs into production cost instead of disappearing into a monthly journal you hope is right. This is job-shop costing and dispatch — not a shop-floor MES.

Material requirements planning nets independent demand (sales and production) against on-hand, reservations, and open purchase orders, then drafts POs for the remainder. You review and submit those POs in procurement; MRP does not silently spend money.

Component issue, WIP, finished-good receipt, and cost variance are accounting events. If the warehouse moved, the books already know.