Work Order (WO)
A work order is the internal document that authorizes a shop to build a specific quantity of a specific item by a specific date. It names the bill of materials and routing to use, reserves the material, and collects the labor, machine time and scrap reported against the job.
A work order is both the authorization and the container for one production job. It names the item, the quantity, the due date, the bill of materials revision and the routing it will run on, and from the moment it exists every transaction on the floor points at it: material issued, labor reported, machine hours logged, quantities completed and quantities scrapped. That is why it is also the natural cost object; the cost of the job is simply the sum of what was posted against it.
A sales order records what a customer has agreed to buy and a purchase order records what the company has agreed to buy from a supplier. Both are commitments between two parties. A work order is internal and commits nobody outside the building: it instructs the shop to make something. A sales order for 500 units may generate one work order, five, or none at all if finished stock already covers it, and a work order can equally be raised to build inventory nobody has ordered yet.
The lifecycle runs from planned to closed. A planner or a planning run creates the order in a planned state, where dates and quantity can still be changed freely. Firming it fixes those. Releasing it is the step that matters: material is allocated or issued, the routing and paperwork go to the floor, and operators can report time against the operations. The order then sits in process while operations complete, moves to completed when the last operation reports and finished quantity is received into stock, and is finally closed, which stops further posting and freezes the cost.
The two common failures are both at the ends. Releasing an order before material and tooling are genuinely available puts a job on the floor that cannot run, and the shortage gets discovered by an operator rather than a planner. Leaving completed orders open indefinitely is worse for costing, because late labor and stray material issues keep landing on a job that finished weeks ago, and nobody can then separate a real overrun from a posting that belonged somewhere else.
Scrap and partial completion are ordinary rather than exceptional. An order for 200 that yields 194 good parts and 6 scrapped needs both numbers recorded, because the scrapped pieces carry the material and labor already spent on them. Shops also distinguish a production work order from a maintenance work order, which authorizes repair of an asset rather than manufacture of an item; the lifecycle is similar but the cost lands on equipment, not on a product.
Work order WO-4182 authorizes 200 pump housings due the 14th, against bill of materials revision C and a four-operation routing. Release issues 200 castings at 18 dollars each, or 3,600 dollars of material. Operators report 6 hours of setup and 26 hours of run time at a 45 dollar loaded labor rate, or 1,440 dollars, and 32 machine hours absorb overhead at 24 dollars per hour, or 768 dollars. The order completes 196 good and 4 scrapped and closes at 5,808 dollars, putting each good part at 29.63 dollars.
What is the difference between a work order and a sales order?
A sales order is an external commitment to sell something to a customer. A work order is an internal instruction to build something. One sales order can produce several work orders, a single work order, or none at all when finished stock already covers the demand, and work orders are also raised to build stock against a forecast rather than an order.
What is the difference between a work order and a purchase order?
A purchase order commits the company to buy goods or services from a supplier, so it leaves the building and creates a payable. A work order stays inside and authorizes the shop to make something with capacity and material it already owns. A part is either bought on a purchase order or made on a work order, not both.
What happens when a work order is released?
Releasing freezes the quantity and dates, allocates or issues the material against the job, and makes the routing available on the floor so operators can report time against each operation. Before release the order is just a plan that can be moved or resized. After release it consumes real inventory and real capacity, so releasing early creates shortages.
What are the typical work order statuses?
Planned, firm planned, released, in process, completed and closed. Planned and firm planned are planning states. Released puts the job on the floor. In process means operations are reporting. Completed means the final operation finished and good quantity went into stock. Closed stops all posting and locks the job's cost for reporting.
When should a work order be closed?
As soon as the last operation has reported, the good quantity has been received into stock and the scrap has been recorded. Closing promptly is what makes job cost trustworthy, because an open order keeps accepting late labor and stray material that belong to other work, which hides genuine overruns in noise nobody can unpick later.