'Centralized' vs 'By Location' Inventory valuation

[wong_cy]

Hi,

I'm comparing two methods to calculate cost price :

1. centralized cost price
2. manage cost price by locations

in centralized method :

1. one same item will have the same cost price within the company.
2. Purchasing items from suppliers will trigger the cost price calculation, and the result will be the cost price applied to that particular item, where ever it is within the company.
3. Transfer stock between locations within the company doesn't trigger cost price calculation.
4. Good in Transit will be using the centralized cost price.

in by location method :

1. Different locations within the company can have different cost prices for the same item.
2. Purchasing items from suppliers will trigger the cost price calculation, and the result will be the cost price applied only to the location in which the items were received.
3. Transfer stock between locations within the company will trigger cost price calculation for the destination location.
4. Good in transit will be using the cost price from the source location.

My questions are :

1. Are these two methods valid according to the standards?
2. What are the risks and benefits of each/ method?

My background is I.T / non-accounting. So this might not be a valid question. If it is indeed invalid, please correct me.
I will appreciate any thought given to this.

Thank you.