Price Limiter and Not Distributed value calculation logic

With Material Ledger Actual Costing Run finished, sometimes we could see “Not Distributed” value happens on some materials.

One big reason for the “Not Distributed” value is the Price Limiter logic.

So, in this Blog, I would like to introduce the calculation logic for the “Not Distributed” value value which is caused by Price Limiter.

First, we need to understand what Price Limiter is.

There is good explanation in below KBA:

2956924 – Not Distributed price difference in App Material Price Analysis

What is Price Limiter?

Price Limiter is a statistical quantity information in case of price difference postings without actual quantity movement. The price limiter quantity, for example, is updated in case of invoice receipts or order settlement.
The system will consider the Price Limiter quantity and by default, in case the Price Limiter value is bigger than cumulative inventory, system will only distribute the portion of cumulative inventory part of difference.

There is also one example in the attachment of the KBA (described only with text).

I would like to explain this logic again with below small example:

We could see we only have 2 lines of price difference.

One is from the order settlement, and the other is from the Debit/Credit posting.

I made this Debit/Credit posting just to simulate the invoice postings or settlement postings which from previous period and with big price limiter quantity.

Although this posting doesn’t change the actual quantity for the material, I intended to make the base quantity as 100. So this 100 quantity will be considered as Price Limiter.

The basic calculation formula for the difference which should be distributed is:

Distributed Difference(D) = Total Price Difference(A) x Cumulative Inventory Quantity(B) / Total Price Limiter Quantity(C)

So, the Not Distributed difference should be:

Not Distributed Difference(E) = A – D

In this case,

A = -439 + 500 = 61

B = 50

C = 40(Price Limiter for Order Settlement) + 100 (Price Limiter I created with Debit/Credit posting) = 140

è

D = 61 x 50 / 140 = 21.79

E = 61 – 21.79 = 39.21

Hope this will help you to understand the calculation logic.

Here you may ask why we introduce this Price Limiter calculation logic.

In the real business, the invoice comes later than the GR and sometimes it will be posted to the next period.

The invoice posting will not bring real quantity change, but it will bring the big price difference and also the Price Limiter quantity.

For some customers, they don’t want to have this kind of lagged behind price difference to affect the material price for current period. Here, the Price Limiter logic works.

Of course, if you don’t mind this impact and you don’t want to have the “Not Distributed” value, you can consider turning off this logic.

The solution is also explained in the KBA:

2956924 – Not Distributed price difference in App Material Price Analysis

In the parameter setting for Settlement step of Actual Costing Run, you could tick the flag “No Stock Coverage Check” to disable the Price Limiter Logic.