Costs for production exceed costs for not delivering

[former_member182449]

Dear All,

I work with SNP optimizer

I need to make source determination based on cost of production (Single-Level Costs (Variable) only

when i run optimizer i got this message "Product P-100: Costs for not delivering are missing"

I need to consider the cost of production only

Could you please tell me how i can make that ?

Regards

Rami

[Former Member]

Hi,

Non delivery cost needs to be maintained in SNP 1 view of the product master for the demand class so that system will compare the production cost maintained in the PPM and non delivery costs and makes decision whether to produc or not during optimization.

Whichever costs is least accordingly system will either produce or demand shortfall occurs.

Also in making the sourcing decision optimizer also considers storage costs and transportation costs.

ex to produce 10EA production costs is 10 Rs.

Non delivery costs if not produced is 5 Rs.

In this case system will not produce and demand short fall occurs.

Thanks,

nandha

[former_member182449]

Thanks for your response

I understand that clearly , i need to work only with PPM cost

It's mandatory to maintain Non delivery cost ?

Please advise

Rami

[Former Member]

Hi,

The SNP optimizer offers cost-based planning. It searches through all feasible plans in an attempt to find the most cost-effective (in terms of total costs). Total costs refers to the following:

u2022 Production, procurement, storage, and transportation costs

u2022 Costs for increasing the production capacity, storage capacity, transportation capacity, and handling capacity

u2022 Costs for violating (falling below) the safety stock level

u2022 Costs for late delivery

u2022 Stockout costs(Non delivery costs)

In the optimizer view, a plan is feasible when it satisfies all the Supply Chain Model constraints that you set in the

SNP optimizer profile.

A feasible solution might also involve due date or safety stock constraint violations.(soft constraints to which you assign violation costs).

If NDC is zero or very less when compared with Production costs system will never plan.

Though it is not a mandatory field in the product master but for the optimizer to suggest plans the NDC should be more compared to PPM Production costs.

Thanks,

nandha