Balance component consumption TS Optimizer

[andy_yeri]

Experts:

We've a component, for which, we want to plan - an Independent Demand & a Dep Production Demand in such a way that the component inventory available must be consumed equally across both the demand elements. While we can provide the system with a non-delivery cost rate for Independent Demand, want to understand how I could balance the Dep Production Demand coming over on the same product.

Sort of looking for a fair-share distribution, however, it is down at the component level

Cheers

[guglanigaurav1987]

Hello Anand,

IBP Time Series Optimizer is not capable of pegging supply elements to specific demand elements. It simply adds up total Demand ( Independent + Dep Demand ) for a product location in a period. and nets it against available firm receipts and stock at that location in that period.

In your case, I am assuming, you are looking for equal fulfillment of Customer Demand for FG and Customer Demand for its component. You can handle that by manipulating your Non-Delivery cost for each of them so that it is higher than the sum of production/transportation costs.

Regards

Gaurav

[andy_yeri]

Hi Gaurav:

In your case, I am assuming, you are looking for equal fulfillment of Customer Demand for FG and Customer Demand for its component. You can handle that by manipulating your Non-Delivery cost for each of them so that it is higher than the sum of production/transportation costs. - I do not have any customer demand @ the Component. There are 2 kinds of demand for this reference component - an Independent Demand & then a Dependent Production Demand. When it comes to consuming inventory of this components (by the 2 demand elements mentioned), I want to be able to ensure both demands are equally met. To do that I know I can have the non-delivery cost @ the Indep Demand set, however, am not sure if the Customer non-delivery from the FG will impact/prioritize the Dep Prod Demand at all.

Cheers

[guglanigaurav1987]

Hi Anand,

1. Optimizer will try to final an optimal solution which gets it to the lowest cost for the Solution
2. You have a product that has both Independent Demand and Dependent Production Demand.
3. Levers You have got to play with are, Non-Delivery costs for Independent Demand for FG, Non-Delivery costs for Independent Demand for the component, Production costs for the Source of Supply involving your FG and component, Transportation costs ( If any ), and Storage Costs ( if any ).
4. To get your component inventory allocated to both the independent demands ( FG and Component ), you have to set up your cost model in a way that the Net cost of Non-Delivery for both of them becomes equal (. e.g. If the Non-delivery cost for Independent Demand for the Component is 10 units, and the Production costs associated with the source of supply are 2 units, then non Delivery costs for Independent Demand for FG should be set as 12 units.
5. This is assuming no other costs are involved in the final delivery of the finished good. If there are, then the cost model has to be tweaked accordingly. Also, in this case, the Production to consumption ratio is assumed to be 1:1.
6. If global cost factors have been used, then they have to be taken into account while setting up the cost model.

If the above approach doesn't work for you, then you will have to manually assign the inventory using 'adjusted' key figures and then perform the optimizer run.

Hope this helps!

Regards

Gaurav