Running Optimization and the Storage Cost is changing for Stock On Hand

[Former Member]

Today is 05/20/2016 I have a Demand on 06/05 Stock on 05/20/2016 is 50000, Forecast on 06/04 is 50000/ and we have another Forecast on 06/08 of 10 / Now when I run the Optimizer without Shelf Life/ My storage cost for period of 05/20/2016 till 06/04/2016 is 500 in Optimizer Logs/ but when I run it with Shelf Life of (10 days) my Storage Cost is 69000 for period of 05/20/2016 to 06/04/2016/ why is the Storage Cost Different? assuming that the system some how calculating Higher Storage Cost for Expired Products, I see that the daily storage cost in the results from 05/20/2016 Till  06/04/2016. ?

Why is the Storage cost is Different from 05/20/2016 Till 06/04/2016, if we are assuming that the system is calculating Higher Penalty for Expired products/ from the period of 05/20/2016 to 05/30/2016 till the expired/ The storage cost should remain the same between with and without Shelf Life ? but I see during this period Also the storage cost got much Higher ? 

Thank you

[kenneth_snyder]

You answered your own question and I am sure SAP would tell you same thing.

Dispose of incurs a penalty costs that you define.

Did you test where the value is coming from?

Remember there is another setting in profile to use product or profile values.

Ken

[kenneth_snyder]

I don't understand the problem.  Did you test the different options to see what happens?  I don't see any error. It seems like you are asking why SAP configured the optimizer to consider shelf life the way it does.   We can't answer for SAP.   But SNP optimizer does consider shelf life and does calculate costs for the various options available to you.  It is best you play / test the system to figure out the logic.

Ken

[Former Member]

Thanks Kenneth,

Actually I asked SAP, and my question is simple ( 5 days my Shelf Life, and I have surplus with 330, and my Storage Cost is 0.010 and my procurement cost is 1.0 in product master,,

so when I run the Optimizer I see the Penalty Cost is more than 1 million, from where this one million and how its calculated ?

and I used hard constraint in Optimizer Profile, which dispose the expired products, and the optimizer also used some of these supply to cover some demands, after the 5 days of Shelf Life how, which is not correct ?

Alexander

[former_member244427]

Hello,

When you are running an optimizer with settings Dispose off expired product then the shelf life is a hard constrain, so it cannot use a expired supply. In that case it calculates the storage cost as the actual storage cost + the cost of disposal of the expired supply. Cost of disposal is the cost of procurement or production.

So if there is a stock which cannot be used in future it is going to be expired eventually, hence it has a higher storage cost than the one which can be used or has a demand which can be fulfilled by this stock.

Regards

Abhishek Rai

[Former Member]

Thanks a lot Rai,

sorry for late reply i was having some issue in accessing my account.

I still have some issue let say, I'm running the Optimizer with Considering the Shelf Life, I have Shortage on 05/21/2016 with 13790, and I entered manually supply with 14120 on 05/22/2016 which cover the 13790 and the remaining is 330.

I have used the Hard Constraint in the Optimizer Profile ( Dispose the Expired Products ), which will not use the expired products and my Shelf Life is Only 5 days,, now when I run the optimizer I see the Penalty Cost for Storage is 1130588.09, and I as you said the Penalty cost is the Storage Cost + Procurement Cost.

Q1: The Total Storage Cost should 330*1.000(Procurement Cost ) but the Total cost is around 1 Million, which is not correct.

Q2: As my Shelf Life is 5 Days only, and I have a demands on 06/04/2016 with 10 , after I run The Optimizer 7 of these demands have been covered from the remaining 330 and that 7 Supply are created on 05/22/2016, Why this behavior?  I would expect the Optimizer to not use from the 330 and rather create 10,20,300 as planned order.

thank you and Regards