The external replenishment process begins when the warehouse manager creates a requisition for the item in the Purchasing module. Commitments for these purchases are made against the Available Funds File (AFF), but commitments are not posted to the GL.

Requisitions from warehouse personnel are converted to purchase orders by the buyers. Purchase orders are also created in the Purchasing module. Purchase orders create encumbrances, which are posted to the GL during the nightly offline procedure.

The receipt of inventory items from an external vendor is recorded in the Purchasing module. To reflect the increase in inventory quantities, the NCAS debits the Inventory asset account and credits a Reserve for Inventory account. If the item is returned to the vendor, these entries are reversed (i.e., Reserve for Inventory is debited and the Inventory asset account is credited).

The vendors invoice for the purchase of inventory items is processed in the Accounts Payable module. The encumbrance that was posted as a result of the purchase order is reversed and a new encumbrance is created and posted for the amount of the invoice.

When the invoice is paid, the encumbrance created when the invoice is processed is reversed and the payment is expensed to the Purchases for Resale (53) account. If the invoice unit price differs from the PO unit price, the difference is posted to the Inventory asset account.