Weighted average is an inventory model based on the weighted average principle, where issues from inventory are valued at the average value of the items that are received into inventory in the inventory closing period, plus any on-hand inventory from the previous period. When you run an inventory closing, all receipts are settled against a virtual issue, which holds the total received quantity and value. This virtual issue has a corresponding virtual receipt from which the issues are settled. In this way, all issues get the same average cost. The virtual issue and receipt can be seen as a virtual transfer, called the "weighted average inventory closing transfer".

If there is only one receipt, all issues can be settled from it and the virtual transfer will not be created.

When using weighted average, you can choose to mark inventory transactions so that a specific item receipt is settled against a specific issue, instead of using the weighted average rule.

We recommend a monthly inventory closing when you use the weighted average inventory model.

For more information including examples of the Weighted average inventory model, see About weighted average.