Excess Planning in SNP Optimisation

[Former Member]

Hi SNP Optimizer studds,

There are 24 products produced on 4 resources. During SNP optimization, optimizer is throwing production plan in excess of demand.

This happens for some of the products (6 products out of 24).

There is no safety stock/ target stock maintained against these products

There is no product storage cost maintained for these products

It is clear that this is happening because there is no storage cost and there is excess capacity available.

The question is how does it decide which of the products should be planned in excess (why not all 24 products in excess)

If we maintain storage cost against these 6 products optimizer plans excess production on some other products.

We can solve this by maintaining storage cost against all the products but we want to know basis of choosing products for excess production.

Any clues?

[Former Member]

Hi Nitin,

SNP Optimizer works on cost optimization basis. It tries to minimize the overall cost including storage cost, production cost, transportation cost etc while respecting the capacities, Lotsizes/Rounding Values.

System will try to fulfill the demand by minimal production/procurement if cost is involved in these activities. Let us consider a case in which the requirement/demand is 80 units and a capacity of 200 units is available while a min lot size of 100 units is defined. Here system will try to fulfill the demand of the product (provided Delay /No Delivery penalties are defined). Because of the Min. Lot size constraint it will create a planned order for 100 units only if there is no storage cost defined or it is very low as compared to the delay penalties while it may not create any order if the storage cost is comparative and there is not future demand in planning horizon.

As SNP Optimizer works on Cost Optimization and if Discrete optimization is opted then system calculates several solutions with different overall costs. So it is possible that two solutions with same cost have different results. And if certain activity does not invlove any cost then system may propose excess quantities if all other constraints are not violated.

Coming to your specific question:

System might have generated several solutions with excess planned orders for several other products as well. At the end of schduled time it finds the most cost effective solution out of the iterations and that is the reason you have got excess planned orders for 6 materials.

If everything else is the same i mean product priority, all other costs then you may get a excess plan for some other products if executed again...

Hope this clarifies your doubt...

Regards,

Manjit.

[Former Member]

Hi Manjit,

Hope you are same Manjit who was earlier with ITC infotech. How are you doing?

We are running SNP linear optimiser. Unlike Discrete optimiser which you were using at ITC, the linear optimiser finishes solution well before the scheduled time of 20 minutes. It calculates one unique solution.

Please help.

Nitin

[Former Member]

Hi Nitin,

You are right I was working with ITC.

The only difference between a linear and discrete optimizer is that the former does not consider the lot sizes apart from that the behavior of the Optimizer is almost the same. As already explained, system can create excess orders for any product randomly if everything else(costs/penalties) remains the same. In linear Optimizer, System returns only the first solution without considering the time specified by you.

The scheduled time is only considered by the discrete optimizer and it does not include the read and write time.

Here Optimizer calculates the first Least cost solution so system can randomly create orders for any activity which does not add on the overall cost. If you take another run you may find excess orders for some other products.

Please let me know your requirement, so that i can suggest appropriate solution.

Regards,

Manjit

[Former Member]

Hi

The problem is optimizer is planning for certain materials more than requirement. I am not able to find reason why only certain products are planned in excess on same resources.

Nitin

[Former Member]

Hi

This excess production should not result in unfulfillment of any other demand. You can define some storage cost to avoid the same behavior. Also if you have limited capacity(<=demand), then you can even consider assigning priority to the products, which will help you to fulfill the high priority demand first and then for lower priority(if capacity permits). But this will have no affect on priority for excess production.

So this is nothing but a cost modelling issue.

Hope i was able to answer your query...

Regards,

Manjit