Commodity Pricing Engine (CPE) – Formula

CPE – Formula

• Defines how the price of a commodity contained in a product is calculated (formula input):
• • Consists of CPE terms as sub-elements
  • Controls how the formula results are calculated out of term results (for example, using the sum, the highest value, provisional versus final term)
  • Defines the target currency, pricing unit and unit of measure
• Is the result(s) of this calculation (formula output)
  • Formula rate and formula value
  • Formula status
  • Used quantity
• Is evaluated during the net price calculation of a document item

The input data can be as follows:

• Predefined in customizing which will be defaulted in the documents
• Manually entered or changed in the documents

Components in a Formula

1. Combination Routine: This defines how multiple terms will be combined together to get final values.
2. Splitting Routine: This defines how the formula quantity will be split into multiple terms i.e. should each formula has the full quantity of divided equally, etc.

For example:

Formula Quantity: 100 TO

Term 1: Price – 120USD

Term 2: Price – 140USD

If there are more than one terms (2) then there can be two possible cases:

CASE 1:

1. Combination Routine: Lowest Terms
2. Splitting Routine: Whole Quantity for each term.

In this case, each term will have 100 TO quantity and the price of formula will be the price of term 1 since it is lowest amongst the two terms.

CASE 2:

1. Combination Routine: Average of Terms
2. Splitting Routine: Equal Split between all terms

In this case, each term will have 50 TO quantity and the price of formula will be the average price of Term 1 and Term 2 i.e. 130USD

So, we see that it is extremely important to keep the values of Combination Routine and Splitting Routine accordingly they can impact the price of the formula for the assigned quantity.

3. Quantity Conversion Rule: This defines the rule for converting a quantity from item UoM to Commodity UoM. As seen in the snapshot, this routine converts from BBL(Item Quantity) to BB6(Commodity Quantity)

Other key things to note:

1. Formula Key: This represents a formula set up in the customizing which is fetched for evaluation. This formula key disappear if any change is done in the formula or anything inside the formula i.e. term

2. Formula Status: Show the status of formula i.e. whether it is provisional, final, blocked, etc.
3. Terms: It shows the terms associated with the current formula and some key details of the terms.