Modeling Expiry stock in SAP IBP Time-Series-Based Supply Planning Optimizer

[pmadaan0]

issue-with-modeling-exipry-stock-using-inventory-c.png

Hi all

We want to model stock that is going to expire in a certain bucket which should lead to the Projected Inventory going down by that amount and more supply (be it production or distribution) be requested at the Product Location. The user will have the control to specify how much quantity is expiring in what bucket (we are not enabling shelf life planning here but just want to specify the wastage quantity as stock that is going to expire).

Initially we thought of using the Key figure INVENTORYCORRECTION to model the same. The modeling worked good for many scenarios and we were able to reduce the Projected stock by creating a fictive supply using the INVENTORYCORRECTION Key figure. But when there was a constrained scenario where we have limited supply in the initial buckets and there is demand to be met with INVENTORYCORRECTION specified in future. The optimizer carries the inventory to be consumed by INVENTORYCORRECTION instead of meeting the demand hence it is not meeting the requirement.(Details on issue with modeling Expiry stock using Inventory Correction attached)

A) Is there a setting or parameter that we can use to tweak the behavior here?

B) Is there any other way to model the expiring stock. We were also thinking of using the Independent Demand Key figure to model the same. Is this the standard practice?

Please let us know your experience.

Thanks

Priyanka

[lingaiahvanam · Accepted solution]

Hi pmadaan0

It is standard behavior, you can try using the Independent Demand Key figure.

Make sure that it should not impact on other scenarios.

Best Regards,

Lingaiah

[pmadaan0 · Accepted solution]

Thanks Lingaiah for your prompt response and for confirming that its the standard practice.

I will start my modeling Expiry stock using the INDEPENDENTDEMAND Key Figure. Important consideration that I am going to keep in mind is the cost settings as the cost for violation of INDEPENDENTDEMAND should be set keeping in mind the CONSENSUSDEMAND violation costs. Please confirm if below looks to be the correct approach.

1. INDEPDEMLATEDELIVMAX ( Z Maximum Late-Delivery Periods for Independent Demand) = 0

2. Costs should be set as below:

WEEK 1

INDEPDEMANDNONDELIVERYCOSTRATE ( Non-Delivery Cost Rate for Ind Dem) of Week 1 should be MORE THAN NONDELIVERYCOSTRATE (Non-Delivery Cost Rate for Customer Demand) of Week 1

WEEK 2

INDEPDEMANDNONDELIVERYCOSTRATE ( Non-Delivery Cost Rate for Ind Dem) of Week 2 should be MORE THAN NONDELIVERYCOSTRATE (Non-Delivery Cost Rate for Customer Demand) of Week 2 BUT LESS THAN the

NONDELIVERYCOSTRATE (Non-Delivery Cost Rate for Customer Demand) of Week 1

This set up will ensure if there is any available stock it is first used to consume the Independent Demand and then the Customer Demand of a Week. But when there is a competition between the Customer Demand of Week 1 and Independent Demand of Week 2 the Week 1 Customer Demand should get the priority.

Thanks

Priyanka

[pmadaan0]

Hi Lingaiah.

We are running into the same issue of optimizer carrying the inventory and meeting the independent demand instaed of meeting the customer demand. This is because we have lateness allowed ( which most customers have) and hence it is trying to meet all the rest of the customer demand late but carry inventory to meet independent demand.

Please suggestion or share the modeling that you used. Thanks.

Thanks

Priyanka