Explanation:

References:
https://docs.microsoft.com/en-us/dynamics365/unified-operations/supply-chain/sales-marketing/tasks/create- new-trade-agreement

Explanation

Topic 3, Adventure Works Cycles
This is a case study. Case studies are not timed separately. You can use as much exam time as you would like to complete each case. However, there may be additional case studies and sections on this exam. You must manage your time to ensure that you are able to complete all questions included on this exam in the time provided.
To answer the questions included in a case study, you will need to reference information that is provided in the case study. Case studies might contain exhibits and other resources that provide more information about the scenario that is described in the case study. Each question is independent of the other questions in this case study.
At the end of this case study, a review screen will appear. This screen allows you to review your answers and to make changes before you move to the next section of the exam. After you begin a new section, you cannot return to this section.
To start the case study
To display the first question in this case study, click the button. Use the buttons in the left pane to explore the content of the case study before you answer the questions. Clicking these buttons displays information such as business requirements, existing environment, and problem statements. If the case study has an All Information tab, note that the information displayed is identical to the information displayed on the subsequent tabs. When you are ready to answer a question, click the button to return to the question.
Background
Adventure Works Cycles builds stock and custom mountain bikes and is headquartered in San Diego. It has the following assembly and warehouse locations:
* Denver, Colorado, United States
* San Diego, California, United States
* Budapest, Hungary
Most manufacturing is outsourced, with each facility only assembling the bikes. Parts are stocked at all facilities and may be transferred between warehouses or legal entities. All of the parts are at standard cost.
Current environment. Organizational structure
The following diagram shows the structure of Adventure Works Cycles.
* Each of the physical locations in the United States (US) is a warehouse.
* Hungary assembles and distributes products to the rest of the European Union (EU).
* The EU legal entity is expected to add additional warehouse locations.
* All legal entities roll up to a financial consolidation company.

Current environment. Purchasing
* Higher quality tires that are used in new orders have become popular. Due to the volume of orders, the company wants to negotiate pricing with VendorC. The vendor agrees to a discounted price for 500 tires purchased within the next six months. Once the 500 tires have been purchased, the discount will be re-evaluated based on demand.
* Once a purchase is approved, for audit purposes it cannot be changed.
* Whenever possible, parts are purchased from vendors also within the EU. A purchase order was placed for a bike seat manufacturer in Italy.
* Parts for custom orders may not always be kept in stock and will need to be procured.
Current environment. Purchasing requisitions
The following flow chart depicts the purchase requisition process:

Requirements. Purchasing
* Items for purchase requisitions are governed by each country. Each of the country-specific products will be grouped together for selection.
* Purchase orders must follow the requisition process.
* All existing purchase orders for brakes must account for the change to VendorB.
Requirements. Inventory
* Standard costs are based on purchase fluctuations within a single month.
* Tires use floating zones due to limited warehouse space.
Requirements. Operations
Due to recent brake failures, Adventure Works Cycles plans to purchase brakes from VendorB instead of VendorA. Although the brakes from Vendor B will continue to use the same item number as the brakes from VendorA, the price is slightly higher from VendorB. Adventure Works Cycles will pay list price from VendorB. The order for VendorB needs approval and the usual approver for purchase requisitions is on vacation.
All brakes from VendorA that are in stock must be tested. The process for brake testing must be implemented for all inbound orders. Quality orders must be automatically created upon receipt of the first shipment against a purchase order only.
UserC needs to consolidate brake inventory after it has been cleared for sale.
Ordering of the new brakes order will incur an additional cost because it is a rush order.
Requirements. Custom orders
* Custom orders are placed for items that do not exist in the item master.
* Hungary does not process custom orders.
* The United States does process custom paint orders. Most custom paint colors are special order and require purchase requisitions.
* Quotes must be obtained from a minimum of two suppliers per company policy and compared for the shipping, costs, and other variables. Quotes will not be selected based on lowest price only.
Issues
* A special order for 26 high-end tires is received. This item is no longer in stock from the current vendor.
* Goods have been received in stock, but the matching invoice has not yet been received at the time of month close.
* UserA needs to set up pricing for the items purchased from VendorC and ensure that accounting validates the receipt and invoice against the agreement.
* UserB needs to send out a request for quotation (RFQ) for custom paint. The vendor will be selected based on pricing, volume discounts, and lead time.

Explanation:

Topic 8, Munson's Pickles and Preserves Farm
Background
Current Environment
Munson's Pickles and Preserves Farm is a distribution company that supplies pickles, preserves, pickling supplies, and accessory products to local farmers' markets as well as grocers. Munson's Pickles and Preserves Farm does not produce or provide canning services for any items.
Munson's Pickles and Preserves Farm has an accounting system that is disconnected from the warehousing system. This has caused issues with controlling and valuing inventory. With these core drivers, Munson's Pickles and Preserves Farm decides to implement Dynamics 365 Finance and Dynamics 365 Supply Chain Management.
Warehousing
* Munson's Pickles and Preserves Farm has a single warehouse that serves as the distribution center for all products.
* The warehouse has bulk locations as well as racking, but location names and numbers do not exist.
* Bulk locations are for storage of extra inventory that will not fit into the picking locations.
* The warehouse is temperature-controlled, with locations grouped into two zones: refrigerated and non- perishable.
* Inventory adjustments are made regularly due to lack of inventory controls.
Inventory Data
* Item numbers are inconsistent and were set up as "smart-numbering," such as 1-23-PKL and 44-24-PlCK.
* Cucumbers are not grown by Munson's Pickles and Preserves Farm and may be sourced from local farmers.
* Pickles come in bottle sizes of 8 oz. 16 oz. 32 oz. The bottles are packed in cases.
* Pickles may be spear, chip, or whole shapes within the bottles. This does not impact the cost of the pickles when they are the same flavor.
* Pickle flavors are sweet spicy, and dill. The flavors vary in price.
* Preserves come in multiple flavors, such as mango, strawberry, and grape. These are seasonal items only.
Due to the varying flavors and quantities, the preserves are owned by the vendor until they are sold. The mango preserves require refrigeration. The other preserves do not require refrigeration.
* Many items are sold as accessories or supplies for pickling.
* Some items within inventory have an expiration date, such as vinegar.
* Fast-moving items are identified by inventory turns per quarter. Sweet and spicy pickles are the most popular.
Purchasing and Sales
* Munson's Pickles and Preserves Farm has an online store that can be found at munsonspicklesandpreservesfarm.com.
* The online store is limited to a subset of products that are accessories only, such as bottles and jars.
* A new product line of kosher pickles is going to be distributed by Munson's Pickles and Preserves Farm.
* VendorA is the largest vendor that Munson's Pickles and Preserves Farm buys products from. Munson's Pickles and Preserves Farm's second largest vendor is VendorB.
Requirements
Warehousing
* The warehouse manager requires fast-moving items to be easily accessible to the order pickers in AisleA, with no more than one item per bin location in AisleA. Both sweet and spicy pickles have more inventory than will fit in AisleA, resulting in bulk location storage.
o Spicy pickles must have no less than half of a pallet in AisleA at any time.
o Sweet pickles must have enough inventory in AisleA prior to creating waves for warehouse work.
* Strawberry preserves are selling slowly this season. They are put away in higher bin locations because they are not considered fast-moving items.
Inventory & Data
* Item numbers must be set up to create a streamlined numbering system. Munson's Pickles and Preserves Farm requires that the old item number be stored in Dynamics 365 for cross reference purposes. Munson's Pickles and Preserves Farm has settled on 0000001 as the item format for pickles instead of 1-23-PKL PKL will be stored as an attribute.
* Item numbers for pickles must be consolidated where possible into a single item number, regardless of bottle size.
* Cucumbers must be sold at actual cost because they are a special order.
* Kosher pickles must be set up in the item master. The kosher pickles are the same size jars and flavors as the other pickles, except that they have a kosher designation and will be slightly more expensive.
* Vinegar and other perishable items must have date tracking for the manufacturer s batch number and expiration date of the product.
* A batch of mango preserves had to be thrown away because the warehouse workers put away the product into the non-perishable zone.
urchasing & Sales
* Cucumbers must be soutced from local vendors for special orders only.
* Munson's Pickles and Preserves Farm recently signed an exclusivity agreement with VendorA, and buyers must now only purchase from VendorA.
* VendorA recently purchased a competitor company, VendorB. VendorA wants to ensure that all agreements with VendorA also apply to VendorB while they work on merging the two companies into one.
* VendorC sells preserves to Munson's Pickles and Preserves Farm and requires the following:
o Shipment requirement: VendorC owns the product after shipment to Munson's Pickles and Preserves Farm until the time of sale.
o On-hand requirement: VendorC has access to view on-hand preserve inventory at Munson's Pickles and Preserves Farm warehouse.
Issues
* CustomerD reports that the vinegar they ordered had a week left before it expired when they received it.
This did not give CustomerD enough time to use the vinegar before they had to dispose of it CustomerD now requires that all vinegar has more than 30 days left before the expiration date.
* A customer calls and states that they ordered kosher pickles and received regular pickles. Inventory Control Clerk 2 reports that kosher and non-kosher pickles of the same variety are in the same warehouse location, contributing to the picking errors.
* A salesperson reports that the margin is incorrect on a customer's special order because the cucumber cost was for the most recent receipt of cucumbers, not the cucumbers received for the specific customer order.
* An internal audit revealed that large quantities of pickles were missing and written off as damaged on multiple occasions over the past year. No documentation or explanation of the write offs exist. There is no documentation of disposal, and no approval from management to substantiate that the pickles were not stolen.
* Jars of pickles are received as eaches. Case counts of pickle jars vary by size:
o 8 oz jars are 12 per case
o 16 oz jars are 6 per case
o The varied counts in each case create overhead in the warehouse.
* The receiving cletk in the warehouse wants to ensure that broken bottles of vinegar are moved to a damage location named locationA. Expired vinegar should be moved to a return-to-vendor location named LocationB.
All other vinegar should be put away and sold according to normal location directives.
* Operator 1 is picking a pallet of strawberry preserves from a location to the shipping dock. While picking up the pallet. Operator1 drops the pallet. Operator! must make sure that the strawberry preserves are not available for shipment until the damage is evaluated.
* Operator2 tries to print wave labels that contain item 0000001. The labels start to print and then jam. At the same time, the printer battery needs to be recharged and the labels need to be reprinted.

Apparel items will not be upgraded to the new costing method until after the go-live date due to resourcing and implementation limitations from the apparel team.
The inventory close process settles issue transactions to receipt transactions, based on the inventory valuation method that is selected in the item's item model group. As part of the settlement process, you can specify that the general ledger should be updated, so that it reflects the adjustments that have been made. However, until inventory close or recalculation has been run, issue transactions are posted at the calculated running average cost price.
After inventory close, you can no longer post in periods that are before the inventory closing date that you set, unless you reverse a completed inventory close process. For example, if inventory close is run for the period that ends on January 31, you can't post transactions that have a date that is earlier than January 31.
Reference: https://docs.microsoft.com/en-us/dynamics365/supply-chain/cost-management/backflush-costing
https://docs.microsoft.com/en-us/dynamics365/supply-chain/cost-management/bom-calculations