Commonly Used Terms

Allocation is the process of assigning product items from the inventory to shipping orders and then fulfilling the shipping orders from appropriate fulfilment sites such as drop-ship vendors, virtual sites, warehouses, or a retail store.

In cost accounting, distribution of costs using calculations may be unrelated to physical observations or direct or repeatable cause-and-effect relationships. Because of allocations' arbitrary nature, costs based on causal cost assignments are more relevant for management decision-making. In order management, allocation of available inventory to customer and production orders.