Ratio Items allow us to easily sell a single product in multiple different denominations, at differing price points, whilst maintaining the inventory level of that product all in one place.
Ratio Items (type “R”), are sold based on a pre-determined fraction of a Parent Stock Item. The parent is a “normal” Stock Item – this is the item that we purchase. The Ratio (Child) Item allows us to easily sell a portion or fraction of the Parent Item. The Ratio (Child) Item itself is never purchased.
A Ratio Item can be priced manually, or preferably, calculated based on a markup relative to the Sell Price of its parent.
When should I use a Ratio Item?
A good example to help understand the use case for a Ratio Item is in bulk landscaping supplies.
We purchase our fictitious “Premium Ultra Growth Soil” by the cubic metre (or by the tonne), and we sell it at the following price points:
- PUGS 1 Metre: $100
- PUGS Half Metre: $60
- PUGS Quarter Metre: $40
In this scenario, the PUGS 1 Metre would be setup as the Parent Item. This is the product that holds our On Hand inventory levels, and that we purchase from our supplier (remember, we can still purchase it in a different Unit of Measure using our “Factor” setting).
The PUGS Half Metre and the PUGS Quarter Metre will be Ratio Child Items. These are setup with their own pre-defined pricing levels, making it easy for the operator at Point of Sale to sell at the correct price. Each time the product is sold, the inventory level is updated on the Parent Item.
Definition of Ratio Child Items
- Ratio Child Item: An Item that is allocated to a specified Stock Item (its “parent”) and has a ratio defined that represents the number of Child units that make up one Parent unit (e.g. 50 individual metres of chain per one roll of chain)
- Manufactured Ratio Child Item: An Item that is allocated to a specified Stock Item (its “parent”), and that is manufactured or built from raw materials, and has a Bill of Materials associated with it
Setting up a Ratio Item
This short guide will give you an overview of how to create and maintain a Ratio Item.
Step 1. Set up the Parent Item
Navigate to Administration | Edit Stock Items
First, set up your parent item. Normally the parent item will be purchased in whole units, in this example, we have purchased a roll of rope, the roll is 100m long and we will be selling it both by the roll and by the metre.
This will be a normal Stock Item (type “S”) with a preferred supplier, cost price, retail price, etc. The Sub-Type must be set to Ratio Parent – if this has not been set, the parent item will not be available to be attributed to the Ratio Child Item.
Step 2. Setup the Ratio Child Item(s)
Navigate to Administration | Edit Stock Items
Create a new Stock Item and set the type to Ratio Child. If your Item already exists, you can convert it to a Ratio Item by changing the Item Type on the Detail tab. The quantity on hand for this item must be zero before this change can be made.
Setting up the Ratio Item details
Example one – Rope sold per metre:
Navigate to Edit Item Detail | Detail tab
In the Parent Item edit box, enter the stock code or use the Lookup button to assign the parent item.
Number of units in Parent: Enter the ratio value of how many units of the ratio item can be sold from 1 of the parent item. In this example, the Rope Per Metre will be 100, as there are 100 metres of rope per roll.
% Markup on Parent Sell: If you choose to use % Markup on Sell, the percentage value you enter here will be used to recalculate each of the sell price levels any time the parent sell prices are updated. Leave blank if you wish to manually enter pricing for this Item.
Learn More
You can read our full range of Knowledge Base articles on the Client Portal – or call the Foresiight team to book in a training session with one of our consultants.