What is base year in SAP MM - Materials Management?

SAP Term: base year

• Component: MM

• Component Name: Materials Management

• Description: The fiscal year in which data was first created for LIFO/FIFO valuation.

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• Key Concepts: 
  Base year in SAP Materials Management (MM) is the year used as a reference point for the calculation of price changes. It is used to compare the current prices of materials with the prices of the same materials in the base year. This helps to determine if there has been an increase or decrease in prices over time. 
  
  How to use it: 
  In SAP MM, the base year can be set up in the system by going to the “Define Base Year” transaction code. Once this is done, all materials will be compared to the base year when calculating price changes. 
  
  Tips & Tricks: 
  It is important to choose a base year that is relevant to your business. For example, if you are a company that deals with seasonal materials, it may be beneficial to choose a base year that corresponds with the peak season for those materials. 
  
  Related Information: 
  The base year can also be used in conjunction with other pricing strategies such as discounts and surcharges. This allows companies to adjust their pricing strategies based on changes in market conditions or customer demand.