SAP IBP Optimizer

[Former Member]

Hello All,

There is one scenario for which we would like to get some idea.

There are 2 products: PRD1 and PRD2. One location: SITE1 , One Customer: CUST1 and one resource as RES1.

SITE1 is a Plant and it supplies the finished product to CUST1.We are running TS Optimizer. The planning is done in daily.

Capacity of the resource is : 25 Qty/day

Demand for PRD1 is: 10 daily

Demand for PRD2 is: 11 daily.

As a result there is excess capacity of 4 qty every day.

Now on one day the capacity is zero as there there is a shut down in the plant. Now if we run optimizer , system will build up stock in advance for both the product. We are using 'Profit Maximization' mode and Non Deliver Cost rate is mentioned as 1000 for both the product PRD1 and PRD2.

After the execution of optimizer:

We have observed that optimizer is building stock in advance for PRD2 ( Demand is 11 qty ) slowly for 6 days.

But for PRD1 it has build up stock on one day of 10 qty.

Question:

Is there anyway to force optimizer to build up stock equally for both the product ?

At present because the Non Delivery cost is same , Optimizer is taking any one product and building stock in advance for the period when capacity is zero. Once it is done , it moves to next product and create excess supply for PRD1.

But business wants to see if optimizer can build up stock evenly for both the products. Business wants it in this way as it will help them to represent the data properly in front of other planners. Also it will help then to plan the capacity properly.

Please refer the attached document.

current-behaviour-of-ts-opt.jpg - It shows the current behavior of the TS Optimizer

expected-behaviour-of-ts-opt.jpg -- It shows the expected result.

[carsten_schumm · Accepted solution]

Hello Abhijit,

you can use fair-share for inventory holding to achieve the expected behavior. Please check the help for more information:
https://help.sap.com/viewer/feae3cea3cc549aaa9d9de7d363a83e6/2011/en-US/1912ee57d6050f70e10000000a44...

You need to populate the key-figure MAXINVENTORY in that case. Probably you can set it to 10 resp. 11 in you scenario.

Kind regards, Carsten

[Former Member]

Hello Carsten,

Thanks for your explanation.

Actually if I just set the Maximum Inventory as 10 for PRD1 and 11 for PRD2 then run Fair Share the system is building projected stock almost in even proportion for the week where the capacity is not available.

This is the scenario: there are 10 periods and in period 5 the capacity is Null. If the Non Delivery costs are same for PRD1 and PRD2 then Fair Share with ' Segments with Inventory Holding' generates good result which business would like to see. System builds up stock gradually for both PRD1 and PRD2 before period 5 wherever excess capacity is available.

But Business does not want to maintain 'Maximum Inventory' for each product as it will a huge work for multiple Prod Location combination and every time they would need to change Maximum Inventory when customer demand changes.

Is there anyway to influence optimizer to build up projected stock evenly between the 2 products with out maintaining Maximum Inventory ?

[carsten_schumm]

Hello Abhijit,

unfortunately I see currently no option without maximum inventory. Maybe you can involve our optimization expert consulting service (see SAP note 2427153 for more information). They can analyse the business requirements and possible mitigation options in detail.

Kind regards, Carsten

[Former Member]

Hello Carsten,

Thanks for your response.

I have performed following change in the network:

1. Created a new Resource RES2 and Dummy Location : SITE2D

2. Extended products PRD1 and PRD2 in SITE2D in 'Location Product' master data.

3. In 'Location Source' master data maintained the following

Ship from Location Product

SITE1 SITE2D PRD1

SITE1 SITE2D PRD2

SITE2D SITE1 PRD1

SITE2D SITE1 PRD2

we are using 'Location Sourcing Ratio' . Initially I have maintained 0.5 but optimizer failed with an error that total ratio is more than 1 ( the value is 1.5). So for now I have switched off that value. We have removed the quota option from S&OP Optimizer profile.

4. In 'Location Resource' maintained the following

SITE1 RES1

SITE2D RES2 (Resource Type = 1 as Storage Resource )

Constraint Type = F for both

5. Maintained 'Location Product Resource'

SITE2D PRD1 RES2 SITE2D PRD2 RES2

6. I have maintained Stick Holding Cost Rate as 500 for PRD1 and PRD2 in SITE2D.

7. Maximum Inventory is Zero for PRD1 and PRD2 in SITE1.

8. In S&OP Optimizer Profile , we have selected Fair Share with 'Segments for Inventory Holding'.

9. High Non Delivery cost is maintained for PRD1 and PRD2 for CUST1.

After this we have executed the Optimizer but system has not generated any receipts. Job has completed successfully.

Not sure if I am missing anything. Let me know if you find any gap.

[carsten_schumm]

Hello Abhijit,

you don't need a storage resource at the dummy location (unless you want to want have a storage limit of the sum of PRD1 and PRD2).

Maximum inventory for PRD1 and PRD2 in SITE1 should be kept to the wanted limit for fair-share (probably 10 and 11). The goal is that the inventory is held in a fair-share manner at SITE1. Location SITE2D should only hold inventory when needed (e.g. large pre-production are required).

Hope this helps. If you still see no receipts, please try the optimizer explanations - they should indicate why the demands aren't satisfied.

Cheers, Carsten

[Former Member]

Hello Carsten,

Thanks for your response.

Fair Share for inventory holding along with Maximum Inventory worked for our scenario.:)

But as I mentioned earlier business does not want to maintain maximum inventory. Because every time they would need to maintain it as the customer demand varies during every cycle. If we put some fixed high number as Max. Inventory then system behaves differently which they don't want. They are fine to maintain minimum inventory as a one time activity.

I really liked the approach mentioned by you on Dummy storage location. Can you please elaborate on how to design the supply chain model in the case where Maximum inventory will be empty?

In our scenario , we have location : SITE1 ( Production Location )

Product: PRD1 and PRD2

Resource : RES1

Source ID: SITE1_PRD1_1_RES1 , SITE1_PRD2_2_RES1

Production Source Header: SITE1_PRD1_1_RES1 is for PRD1

SITE1_PRD2_2_RES1 is for PRD2

[carsten_schumm]

Hello Abhijit,

the workaround is to limit max inventory for PRD1 and PRD2 to the expected levels (to allow fair-share).
For excess inventory you need to allow the storage of PRD1 and PRD2 at another dummy-location with high inventory holding costs.
Additionally you need according transport sources (for example SITE1 => dummy-location => SITE1).
On the dummy location of course no fair-share happens.
Hope this clarifies the idea. Not nice - but probably no easier solution exists.

Cheers, Carsten

[Former Member]

Hello Carsten,

Thanks for your response. I have tried this option earlier but did not get the desired result.

Let me try this option again.

One point to note, business does not want to restrict the production with Max Inventory is resource has sufficient capacity. They are fine to set minimum figure but does not want to set maximum inventory.

Thanks again for your help.

[carsten_schumm]

Hello Abhijit,

to avoid the limitation of maximum inventory, you may add some additional storage capacity at a dummy location for exceptional cases. Inventory holding costs at that dummy location should be quite high, so that it isn't used normally.

Regards, Carsten