Explanation

Reference:
https://docs.microsoft.com/en-us/dynamics365/supply-chain/production-control/default-order-settings Topic5, Trey Research Case study 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.
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Background
Trey Research is a multinational manufacturer of health and dietary supplements based in Seattle, Washington.
The company is experiencing a rapid expansion not only in its supplements but as a lifestyle brand that also sells apparel. The supplements and apparel businesses operate independently but manufacture and operate in the same legal entity.
Current environment
Current environment. Technology
Trey Research is migrating from an outdated, on-premises version of Dynamics AX to Dynamics 365 Supply Chain Management. The company wants to retain a lot of its current data structures and processes but adopt new efficiencies when the benefit is obvious. The company uses a third-party e-commerce site that is custom developed by an internal developer.
Current environment. Items
Product numbering
All items are numbered by using a smart numbering format: [Product SKU+Size+Color+Style]. For reporting, items are queried for sales and inventory reports by using the first six digits of the item number or until the first dash is encountered.
* A t-shirt could be 01001-S-Red for item 1001 in a size small with the color red.
* A single energy drink could be 02001-12oz or 02001-20oz for the different sizes that product 02001 is sold in.
Product attributes
* All clothing shares the same set of product attributes.
* Supplements may share the same Product SKU but can have different attributes for the different size, color, or style variations of the product.
* Product attributes that are unnecessary for an item should be excluded from the item.
Pricing
* All items always have a default price. This price will not expire.
* An item will have four different prices created for it every month, one for each customer tier, as detailed later in this section. The pricing expires at the end of the month. If no special pricing is created, the default item price will be used.
* The monthly sales price in which the additional price breaks are determined is based on the estimated cost of the manufactured items.
* Customers are categorized into four pricing tiers (A, B, C, and D) based on sales volume over the past 12 months.
* Customers can negotiate special pricing for items in 30-day, 60-day, and 90-day increments. Quantity restrictions may be placed, depending on the item discount and promotion.
* Promotional pricing is not used today. Pricing is restricted to monthly prices and customer-specific contract pricing.
Cost
Items use a FIFO costing model today in their current Dynamics AX 2009 environment; however, using the FIFO costing method has created problems.
Current environment. Warehouse and inventory
* Warehouse requirements are simplistic. There is only one site. The site has two warehouses.
* Trey Research needs to make sure that any energy drinks and nutritional supplements are manufactured and packaged with the highest standards. Trey Research automatically inspects products when all products are reported as finished. All products are inspected again when the items are picked.
* Energy drinks require independent tests to check for dents in packaging, carbonation levels, and fill level.
* Nutritional supplements require separate tests for packaging, expiration date, product seal, and product labeling.
* Government compliancy and consistency testing are handled outside of the Enterprise Resource Planning (ERP) system.
* Resalable products are placed on one of two racks in the warehouse.
Requirements
Requirements. Technology
* Trey Research will integrate all pricing and discount capabilities to its e-commerce website.
Requirements. Items
* Reporting on products should be streamlined as much as possible.
* The item numbering does not have to equate to the actual item number.
* The future costing methods adopted must be commonly accepted for manufacturers.
* Inventory costing should be done after a full inventory valuation is complete. It should take into consideration the direct materials, direct labor, and overhead that goes into an item.
* Any costing method used needs the ability to track cost records about an item, cost categories, and calculation formulas for indirect costs.
* The profitability for nutritional supplements manufacturing processes needs to be expressed in terms of the cost categories for routing operations and the calculation formulas for manufacturing overheads.
* If a vendor can no longer deliver the raw materials for the energy drinks due to supply chain issues, the costs for using an alternative vendor to source the raw materials should be used to determine the impact on profits.
* 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.
Requirements. Pricing
* Trey Research plans to do promotional pricing. Certain products will receive special pricing during the hours of extreme sporting events that Trey Research sponsors. Before or after the event, normal pricing will resume.
Requirements. White labeling
* Trey Research wants to start white labeling its products under the brands of major nutritional retail store brands. These products would only be sold to specific customers.
* Trey Research will provide and maintain a 'Compare to' price for customers to use to compare the white-labeled products. This Compare to price will also be the default item price for the customer if the customer accidentally lets a contract price expire.
* The configuration of these restrictions must be applied automatically when creating new products for those customers.
Requirements. Warehouse and inventory
* If products in the warehouse must be blocked from transactions for a specific reason, such as a health and safety review, warehouse users should be able to block the products quickly from the ERP system.
* All product quality tests should be processed in a uniform and consistent manner.
* Creation of any quality processes for products inbound to the warehouse, from the production line, or outbound from the warehouse to consumers should be automatically created to facilitate execution.
* Testing requirements:
Requirement 1: 100 percent of all nutritional supplements and 50 percent of all energy drinks must be tested when production orders are completed. After a product is in testing, 100 percent of all tests must be completed.
Requirement 2: 75 percent of all nutritional supplements and energy drinks should be tested against their required tests during an outbound process.
Damaged products must be placed in one of four bins (based on product type) during the inspection process.
You must define quarantine zones to optimize product visibility throughout the testing process.

Explanation
References:
https://docs.microsoft.com/en-us/dynamics365/unified-operations/supply-chain/inventory/inventory-journals