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Apr 26 at 02:53 AM

Demand Discount Factor used in OBP Optimizer run


Hi All,

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

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.