Before buying and selling items, you must set up information and policies that the program uses in item transactions. All this item-specific information is entered and maintained in one central place: the item card. When you create document lines for a specific item, the relevant information from the item card is entered in most of the fields on the lines and the line amount is calculated according to the quantity you enter.

Create Item Master in Dynamics 365 Business Central:

Click on Sales –> Items

System will open the Item List page.

When you set up a new item on an item card, there are fields that must always be filled in, fields that can be filled in as needed, and fields in which you cannot enter anything because they are maintained by the program.


Click on new button and create new item master.

Item Tab:

On Item Tab, We can enter below details.

No. –> This field can be auto updated by the system or user also can manually enter the Item Number.

Description –> Enter Item’s name

Blocked –> We can enable this field, if we want to block this item, if we enable this field, then system will not allow use this item code in ant transaction level.

Type –> Select Inventory. There are 3 options available Inventory, Service and Non-Inventory.

Base Unit of Measure –> Select Base Unit of Measure

Item Category –> Select Item category, we can define multiple categories like, RM, FG, PM etc..

Service Item Group –> Select code if this item is used in the Service Order, it will help to create Service Item automatically after posting the Sales Invoice.

Automatic Ext. Text –> Enable this field, if you are using Automatic Ext. text functionality. we Item’s long name or comments in the Extended text option available on item’s ribbon tab and if we enable this field, then system will update that comments/ long name of item in the Sales / Purchase document.

Common Item no. –> This field is used in case of Intercompany transaction.

Purchasing Code –> Select Purchasing Code. it is used in case of Drop Ship or Special order functionalities.

Inventory Tab:

On inventory tab, we can enter the details, like Shelf No., Net Weight, Gross Weight and Unit Voulume.

Over-receipt code –> It is used, if we want to receive qty. more than Purchase Order. we can define over reeipt percentage in the setup.

Costs & Posting Tab:

We need to fill below details on the Costs & Posting tab:

Costing Method –> Select Costing method. There are 5 methods, FIFI, LIFO, Specific, Average and Standard. Select the way that the item’s cost flow is managed. The most common method is FIFO, which means First-in First-out. With this method, the items that were purchased first are always sold first. The FIFO costing method values the inventory decrease by using the value of the first inventory increase. The costing method determines how costs are calculated and how inventory is valued. Other options are LIFO, specific, average, and standard.

Indirect Cost % –> Enter a percentage that corresponds to the indirect costs (freight and warehouse handling, for example) associated with the purchase of the item.

Gen. Prod Posting Group –> Unless you use an item category code, you must look up from this field and select a posting group from the predefined posting groups. When you post transactions that involve this item, the program uses this code in combination with a general business posting group code in the General Posting Setup page to determine the income statement account to post to.

Inventory Posting Group –> Unless you use an item category code, you must look up from this field and select a
posting group from the predefined posting groups. Inventory posting groups specify the type of inventory and are then combined with location codes in the Inventory Posting Setup page. Each combination is then mapped to the inventory accounts, WIP account, and other variance accounts that relate to inventory in the chart of accounts

GST Group Code –> Select GST group code. It will flow in the purchase and sales documents and on the basis of that system calculates GST.

GST Credit –> Select Availment or No-Availment. it indicates whether you want to take credit or not for calculated GST Values on the document.

HSN/SAC Code –> Select HSN Code for the item.

Prices & Sales Tab:

Enter unit price of the Item in the Unit Price field.

Select Price/Profit Calculation type –> Select one of the profit calculation options:

Profit = Price – Cost: If you have fixed unit prices, select this option. Profit is calculated as the difference between the
unit price and the unit cost.

Price = Cost + Profit: If you price your resources according to a certain profit margin, select this option. Price is calculated by adding the profit to the unit cost. Profit is calculated from the unit price with the profit percentage you enter.

No Relationship: Select this feature if you do not want to use the automatic profit calculation features.

Sales Unit of Measure –> This field contains the unit of measure code the program must use when you sell the
item. It is automatically filled in when you fill in the Base Unit of Measure field. Change this field only if you
sell the item in units that differ from the code in the Base Unit of Measure field.

Sales Blocked –> Enable this field if you want to block sales transaction for this item.

Replenishment Tab:

On Replenishment tab, we can do production related setup.

Replenishment System –> Select whether your standard way of supplying the item is to buy it (Purchase), produce it
(Prod. Order), or assemble it (Assembly).

Lead Time Calculation –> Enter a date formula in the Lead Time Calculation field to specify the time that is required to replenish this purchased item, such as 1W. The program uses this field in date calculations as follows: Order Date + Default Safety Lead Time + Lead Time Calculation = Planned Receipt Date

Vendor No. –> For purchased items, select a default supplier of the item. That vendor is then suggested when planning for the item

Vendor Item No. –> For purchased items, select the vendor’s own item identification (if different from yours).

Purchase Unit of Measure –> This field contains the unit of measure code that the program must use when
you purchase the item. It is automatically filled in when you fill in the Base Unit of Measure field. Change this field only if you purchase the item in units that differ from the code in the Base Unit of Measure field.

Purchasing Blocked –> Enable this field, if you want to block purchase transaction for this item.

Manufacturing Policy –> The available options are Make-to-Stock and Make to-Order. Select, for example, Make to-Order to have the program consider all BOM levels during planning.

Routing No. –> Look up and select a routing to govern the item’s manufacturing process. A specific routing must be set up and certified before it can be used for an item card.

Production BOM No. –> Look up and select a production BOM to govern the product structure of the item. A specific
production BOM must be set up and certified before it can be used for an item card.

Rounding Precision –> Enter the Rounding Precision for Quantity.

Flushing Method –> Select whether consumption of this item in production must be calculated and posted
manually, by selecting Manual, or automatically, by selecting one of the following:
· Forward – the program automatically calculates and posts consumption
when the production order is released.
· Backward – the program automatically calculates and posts consumption when the released production order is finished.

Scrap % –> Specify the percentage of the item that you expect to be scrapped in the production process. The
program uses this percentage when it calculates unit prices and net requirements.

Lot Size: Specify how many units of the item are usually produced in one production lot (but you can still create orders of a different quantity). The program uses this number to calculate the item’s standard cost and to distribute the fixed costs of manufacturing the lot

Assembly Policy –> Specify which default order flow is used to supply this assembly item

Planning Tab:

The Planning FastTab holds information that is used by the automatic materials requirement planning (MRP) system.

We need to fill below details in the Planning Tab.

Reordering Policy –> Select the planning method to be used by the MRP engine. Mandatory – if you use planning. Optional – If you do not use planning.

Reserve –> Select whether the program will allow reservation for this item. The option that you select here is carried to sales lines for the item and will override a reservation option on the sales header (carried from the customer card). However, if you select Optional in this field and you enter the item on a sales line where the sales header contains
Always, the sales line will be assigned the option Always.

Order Tracking Policy –> Select whether the program must create order tracking links between matching supply and demand. Available options are Tracking Only, Tracking & Action Msg., and None. Select Tracking Only to have the program create order-tracking entries in two circumstances:

Dynamically, when it creates any order that can be matched by an existing order directly

When it creates a supply order specifically for the demand.

Select None if the program does not have to create order-tracking entries at all.

Item Tracking Tab:

On item tracking tab, if we want define lot no. or serial no. for item, then here we can can select item tracking and number series for the lot or serial no. While receiving item, in the item tracking page we can define Lot no. or Serial no. for the item.

Warehouse Tab:

On Warehouse tab, if we are using warehouse module then we can define warehouse related setup.

Item Card Fact Box:

On Fact Box we can upload item’s photo and can attach related documents.

Item Master Ribbon

On the Item Master ribbon, we get the various features like, We can define Sales Price, Purchase Price, workflow etc..

Process –> In the Process tab, we have Item Journal and Item Reclassification Journal Option, by using this we can pass item related positive,negative entries and also we can move item one location to another by using item reclass journal.

Item Tab –> Here we can enter comments for the item, also we can attached document in the attachment.

By using Attributes we can define variant for the item.

Item Attributes

Adjust inventory

By using this feature, we can adjust the inventory, we can increase of decrease the qty location wise from this window. we just need to enter the qty, then system will post negative or positive adjustment.

Prices & Discounts –> In this tab we get options to define setup for Sales Price, Purchase Price, Sales Discounts and Purchase Discounts.

Request Approval –> By using this, we can send item for approval, if we have set up workflow for item master.

If you’re considering Microsoft Dynamics 365 Business Central, or just want more information, I’m happy to answer all your questions.