Issue of demands remaining unfulfilled despite of stock in SNP optimizer

[Former Member]

Hello everyone,

We are facing one peculiar issue of demands remaining unfulfilled despite of stock lying at the depots.

Following is the scenario which is causing demands to remain unfulfilled:

We have very high ND Penalty maintained at these depots and it is 1000 times safety stock penalty. Storage cost at these depots are minimal compared to NDP and SSPen.

Now, at the start of planning horizon, there is opening stock lying at the depot and there is equal demand on every day. But even with stock this demand is not satisfied. The reason being that there is no STR happening to depot from plant because of capacity constraint, so optimizer has to incur ND Penalty in any case. So, optimizer is trying to satisfy the demand that comes on later dates, so that it can save on safety stock penalty cost.

e.g. There is stock in hand of 700, every day demand of 100 and no STR happening in buckets 1-14. Safety days' supply is 7 days. In this case, optimizer is satisfying demand of bucket 8-14 with stock 700, so that it can save safety stock penalty for buckets 1-7.

Our requirement is that stock should be consumed immediately to fulfill demand starting from bucket 1. Is there any way we can give higher priority to demand over safety stock requirement so that above scenario does not occur?

Note: we are using cost-based prioritization.

[Former Member]

Hello all,

Is there any way where with current ND Penalty & Safety stock penalty (NDP=1000*SSPEN), the safety stock is left unsatisfied and demand is satisfied in initial buckets?

[Former Member]

Hi Abhijeet,

Would like to know how were u able to resolve this issue.

Thanks

[Former Member]

Hi Abhijit,

As your ND is very high, so optimizer will give more priority to demand fulfilment than Safety stock.

I think, in this case optimizer is not considering the 1st week demand.

Can you please check few things

1. In optimizer log can you see ND cost for 1st week.

2. ET_Promo log check the bucket horizon in the last column, it should be zero.

3. Is there any delay penalty cost incurred.

Please check these things and let me know.

regards

Kishor

[Former Member]

Hi Kishor,

Thanks for your response.

Optimizer is considering the demands of first week and I can see the Non-deliver penalty against those buckets in optimizer log.

We have not maintained any delay cost in product master.

As mentioned, this behavior is as per the costs maintained only. The optimizer is trying to satisfy the demands of later buckets because with the stock in hand it can satisfy safety stock requirement. Stock in hand is just enough to meet demand of a few buckets and it has to incur ND Penalty. So, it satisfies demands of later buckets to save safety stock penalty.

Is there any way to give priority to demand over safety stock so that even with current penalty costs (NDP = 1000*SSPEN) demands of initial buckets are satisfied?

[Former Member]

Hi Abhijeet,

There is a concept of Demand Prioritizations in SNP Optimiser.

1) You can do sales order prioritization here

2) You can also create  SNP Priority Profile and do it as required

3) You can put High Penalty costs, for the safety stock cannot be  more than product specific Stock Upper Bound.

4) You do Sales Order based Prioritisations also.

Regards

Harsh

[Former Member]

Hi Harsh,

Thanks for your response.

We have used cost-based prioritization and we are not reflecting sales order back in APO.

This is actually not issue of relative Non-delivery penalty cost and safety stock penalty costs, as ND Penalty is already 1000 times higher.

The issue is resulting as the stock in hand is not enough to satisfy demand for all days, so optimizer has to bear Non-delivery costs anyways. So, it will leave demand in initial few buckets unsatisfied and hold stock so it won't incur safety stock penalty as it has stock in hand to meet safety stock requirement in those buckets.

Here requirement is that demand of initial buckets be satisfied, but with current setting that's not possible as it will result in higher cost. So, is there any setting to give lower priority to safety stock?

[Former Member]

Is there anyway demands of the initial buckets are satisfied first and then safety stock is satisfied?