Return order scrap increases physical inventory after packing slip

Here is the scenario I am having trouble with:

  1. I create a return order having a line with quantity 10.

  2. I then register the line with a disposition code which has a disposition action of Scrap.

  3. I generate a packing slip journal for the line which changes the line to Received status.

When looking at the On-hand inventory at this point, I note the Physical Inventory is increased by 10 and the physical reserved is also increased by 10 leaving physical available unchanged.

My problem at this point is the physical inventory is being increased by 10 until the return order is invoiced. During this time we cannot rely on the physical inventory quantity when doing stock counting. I understand it is reserved but we will not physically count it in the warehouse if it has been scrapped meaning our stock count will not match the physical quantity.

Is there a way to prevent scrapped return orders affecting the physical quantity when received but not yet invoiced?

Thank you for you help

You need to mark them as credit only disposition codes on the return order.

I would suggest you return them separately into a returns warehouse, possibly using the quarantine/quality process to control this as well.

Thank you Adam. The use of a specific ‘return’ warehouse was the missing link which works quite well from my initial tests.

I can now take off my helmet and repair the wall.

You could also consider adding the negative line to a sales order, ticking the scrap field and then direct invoicing it.