SQL Function takes more than 2 hours to return a table..

-- CUR_WAREHOUSE
SELECT WHSCODE -- @WAREHOUSE
FROM OWHS
WHERE ((WHSCODE >= @F_WAREHOUSE AND WHSCODE <= @T_WAREHOUSE)
OR (@F_WAREHOUSE = '' AND @T_WAREHOUSE = ''))
ORDER BY WHSCODE

-- CUR_ITEMGROUP
SELECT ITMSGRPCOD -- @ITEMGROUP
FROM OITB
WHERE ((ITMSGRPCOD = @F_ITEMGROUP AND ITMSGRPCOD <= @T_ITEMGROUP)
OR (@F_ITEMGROUP = ''AND @T_ITEMGROUP = ''))
ORDER BY ITMSGRPCOD

SELECT w.WHSCODE, T6.ITEMCODE, T0.ItmsGrpCod,
(CONVERT(NUMERIC(16,4), T6.INQTY)), -- @INQTY
(CONVERT(NUMERIC(16,4), T6.OUTQTY)), -- @OUTQTY
(CONVERT(NUMERIC(16,4), T6.TRANSVALUE)), -- @CALCPRICE
T6.TRANSTYPE -- @TRANSTYPE
FROM OINM T6
INNER JOIN OWHS w
ON w.WHSCODE = T6.WAREHOUSE
INNER JOIN OITM T0
ON T0.[ItemCode] = T6.ITEMCODE
AND T0.ItmsGrpCod = @ITEMGROUP
WHERE (w.WHSCODE >= @F_WAREHOUSE AND w.WHSCODE <= @T_WAREHOUSE)
OR (@F_WAREHOUSE = '' AND @T_WAREHOUSE = '')

ChrisM@Work (2/5/2013)

No less than four levels of nested queries! Good Lord, no wonder it takes so long. Examining the code, none of it, even the few queries, look as if they've been written by an experienced SQL developer and there are mistakes - compare these two cursor definitions:

-- CUR_WAREHOUSE  
SELECT WHSCODE -- @WAREHOUSE
FROM OWHS 
WHERE ((WHSCODE >= @F_WAREHOUSE AND WHSCODE <= @T_WAREHOUSE) 
	OR (@F_WAREHOUSE = '' AND @T_WAREHOUSE = '')) 
ORDER BY WHSCODE

-- CUR_ITEMGROUP 
SELECT ITMSGRPCOD -- @ITEMGROUP 
FROM OITB 
WHERE ((ITMSGRPCOD = @F_ITEMGROUP AND ITMSGRPCOD <= @T_ITEMGROUP) 
	OR (@F_ITEMGROUP = ''AND @T_ITEMGROUP = '')) 
ORDER BY ITMSGRPCOD

The second definition is supposed to have a range in the WHERE clause.

I'd suggest that if this function generates correct results, then it's by accident, not by design. However, it shouldn't be too tough to convert it to a proper set-based function. The four nested cursors can be combined something like this:

SELECT w.WHSCODE, T6.ITEMCODE, T0.ItmsGrpCod,
	(CONVERT(NUMERIC(16,4), T6.INQTY)), -- @INQTY
	(CONVERT(NUMERIC(16,4), T6.OUTQTY)), -- @OUTQTY 
	(CONVERT(NUMERIC(16,4), T6.TRANSVALUE)), -- @CALCPRICE 
	T6.TRANSTYPE -- @TRANSTYPE
FROM OINM T6
INNER JOIN OWHS w
	ON w.WHSCODE = T6.WAREHOUSE	
INNER JOIN OITM T0 
	ON T0.[ItemCode] = T6.ITEMCODE 
	AND T0.ItmsGrpCod = @ITEMGROUP
WHERE (w.WHSCODE >= @F_WAREHOUSE AND w.WHSCODE <= @T_WAREHOUSE) 
	OR (@F_WAREHOUSE = '' AND @T_WAREHOUSE = '')

The arithmetic appears to be fairly simple, I can't see any reason why it can't be done in the output.
This is just the first phase. The output of this first chunk of the function is used to drive a second bank of nested cursors which perform more calculations.
This looks like a VB programmer's first attempt at TSQL coding. Get a professional in to write it properly.

--try joining instead of nesting loops

SELECT
OWHS.WHSCODE
,OITB.ITMSGRPCOD
FROM
OWHS
INNER JOIN
OITB
ON OWHS.WHSCODE = OITB.WHSCODE
WHERE
1=1
AND
((OWHS.WHSCODE >= @F_WAREHOUSE
OWHS.AND WHSCODE <= @T_WAREHOUSE)
OR (@F_WAREHOUSE = '' AND @T_WAREHOUSE = ''))
AND
((OITB.ITMSGRPCOD = @F_ITEMGROUP
AND OITB.ITMSGRPCOD <= @T_ITEMGROUP)
OR (@F_ITEMGROUP = '' AND @T_ITEMGROUP = ''))
ORDER BY
OWHS.WHSCODE
,OITB.ITMSGRPCOD

--OR

SELECT
WHSCODE
,ITMSGRPCOD
FROM
(
SELECT
OWHS.WHSCODE
FROM
OWHS
WHERE
((OWHS.WHSCODE >= @F_WAREHOUSE
OWHS.AND WHSCODE <= @T_WAREHOUSE)
OR (@F_WAREHOUSE = '' AND @T_WAREHOUSE = ''))
) AS OWHS
INNER JOIN
(
SELECT
OITB.ITMSGRPCOD
FROM
OITB
WHERE
((OITB.ITMSGRPCOD = @F_ITEMGROUP
AND OITB.ITMSGRPCOD <= @T_ITEMGROUP)
OR (@F_ITEMGROUP = '' AND @T_ITEMGROUP = ''))
) AS OITB
ON OWHS.WHSCODE = OITB.WHSCODE
ORDER BY
OWHS.WHSCODE
,OITB.ITMSGRPCOD