An example would be in ‘Animal feed’ manufacturing where 90% (or more) of the cost of the end item is composed of one main ingredient, ‘Corn Meal’.
This price will fluctuate on a periodic basis. In this narrative, we will discuss real-life implementations of commodity pricing as well as a step by step example of how to perform the task.Ĭommodity pricing refers to the ability to set the sales price for ‘commodity’ based end items, using the market replacement cost of the main ingredient commodity. This function is referred to as commodity pricing. Microsoft Dynamics AX has a function where the sales prices can be indexed directly to the commodity cost. Many businesses have ingredients or components which are volatile and account for a large percentage of the cost.
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