How do you set up floor stock in Microsoft Dynamics 365 for Finance and Operations?

Floor stock is defined as items that are used in large quantities and have a low per unit cost. In many cases, we literally make sure this stock is always available on the manufacturing floor and does not have to be picked from a warehouse shelf.

The key driver in this scenario is that we want an absolute minimum of transactions for floor stock as the cost of doing transactions can easily become higher then the cost of the item itself.

What are the unique requirements for the behavior of floor stock items in Microsoft Dynamics 365 for Finance and Operations (D365FO)? (it will be the same for AX versions any ERP system)

• No MRP requirement calculations for these items are desired so no generated MRP Purchase orders are expected.
• Replenishment is visual. Could be a Kanban two bin system.
• Should not print on production order picklists.
• Floor stock items should show on the BOM.
• This means that the items will be contributing their cost when we do a BOM cost roll
• Their cost should show identical in estimated and actual, they should be backflushed

It turns out that the almost perfect fit for floor stock behavior is a “stocked” service item. The “stocked” checkbox in the Item model group has to be checked to allow a service item in the BOM. (NOTE: no “stocked” checkbox existed in versions before AX2012). But it certainly does not mean we “stock’ this service item, quite the opposite. The system has no idea of the on-hand of our floor stock items.