What is mean-value estimation in SAP MM-IM - Inventory Management?

SAP Term: mean-value estimation

• Component: MM-IM

• Component Name: Inventory Management

• Description: An extrapolation procedure used in inventory sampling. In the mean-value estimation procedure, a mean value is formed for each stratum from the inventory adjustment postings. The estimate for the stratum is obtained by multiplying this mean value by the number of stratum elements. The sum of the estimated values for each stratum and the values of the inventory adjustment postings of the complete-count area yield the estimated value for the entire stock population.

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• Key Concepts: 
  Mean-value estimation is a method used in SAP Inventory Management (MM-IM) to calculate the value of inventory items. It is based on the average cost of the item over a certain period of time. This method is used to determine the value of inventory items when there is no exact cost available. 
  
  How to use it: 
  In SAP Inventory Management, mean-value estimation is used to calculate the value of inventory items when there is no exact cost available. To use this method, you must first determine the average cost of the item over a certain period of time. This can be done by calculating the total cost of all purchases and dividing it by the total number of items purchased. Once you have determined the average cost, you can then use this value to calculate the value of each item in your inventory. 
  
  Tips & Tricks: 
  When using mean-value estimation, it is important to ensure that you are using an accurate and up-to-date average cost for each item in your inventory. This will help ensure that your calculations are accurate and that you are not over or undervaluing your inventory items. Additionally, it is important to keep track of any changes in costs over time so that you can adjust your calculations accordingly. 
  
  Related Information: 
  Mean-value estimation is just one of many methods used in SAP Inventory Management to calculate the value of inventory items. Other methods include FIFO (First In First Out), LIFO (Last In First Out), and Weighted Average Costing. Each method has its own advantages and disadvantages, so it is important to research each one before deciding which one is best for your business needs.