Demand Discount Factor used in OBP Optimizer run

[former_member654033]

Hi All,

As per SAP Help Page, OBP Optimizer automatically applies demand discount factor.

https://help.sap.com/docs/SAP_INTEGRATED_BUSINESS_PLANNING/09154e4f345c46edb1d74f782be4d9bd/1fb6a5ff...

Note the following regarding demand prioritization and demand cost rules:

• Demand cost rules give you more flexibility in defining non-delivery costs and late delivery costs.

• In both cases, whether they are determined by demand prioritization or by demand cost rules, the optimizer applies discounting to demand costs.

  This works in a way that demands in later periods have slightly lower late delivery and non-delivery costs than demands in earlier periods. The discount is applied per demand to the cost value, considering the time lag from the planning start. This discounting increases the probability for prompt demand fulfillment in the optimizer plan.

Its not mentioned how they are discounted, Do we know the formula behind this?

This is required to setup the right safety stock violation cost.

Thanks

Girish

[former_member815279 · Accepted solution]

Hi Girish,

in OBP, we set the maximum discount to 10% and assign this maximal discount rate to last bucket in the planning horizon. Demands in that bucket thus observe a non-delivery penalty cost rate of 90% of the original (undiscounted) costs. On the other hand, the first bucket gets a discount of 0% and all buckets in between are interpolated linearly.

As the documentation already mentions, this discount is always applied. We will update the documentation to provide more details.

Hope this helps,

Andreas