Consumption of Stock in IBP Optimizer

[former_member1320828]

Hello Experts,

We have a scenario where for a product, if stock exists, then after optimizer run, if demand > stock ; the stock is not getting consumed. Instead receipts are produced for the total quantity.

The requirement is: If demand = 100 and stock = 20, then optimizer should consume 20 and generate receipts of remaining 80 quantity.

This calculation works fine with heuristics where Net demand = Dependent Demand + Target Stock - Stock On Hand. A similar expectation is from Optimizer , is it possible?

Regards,

Suman

[vru · Accepted solution]

Hello Suman,

From your provided details I would expect more the direction of "Delivery Maximization", because you have that big penalty for "Non-Delivery Cost Rate".

My recommendation would be to change the operator to "Delivery Maximization" and / or run a Supply Planning Optimizer with Explanation.

I hope this will help.

Regards,

Vlase

[former_member661204]

Hello Suman,

There isn't a simple answer to your question, but there could be different reasons for this behaviour:

- what kind of parameter do you have in the operator profile: Profit Maximization or Delivery Maximization?

- also, you need to investigate also what kind of costs you maintained in the system? Check also costs maintained directly in the operator profile. If you didn't maintained any costs (Non-delivery costs, Holding costs, Production costs, Transportation costs etc.), or the costs are very very low (or even zero) it could be that based on the parameters maintained in the operator profile, the system would consider for example that is cheaper to just produce and generate inventory and not deliver any demand.

Start just with a very small set of products and maintain some costs and you should expect different behaviour based on the data maintained.

I hope this helps.

Regards,

Vlase

[former_member1320828]

Hello Vlase,

Thanks for the response.

To answer your queries -

1. In optimizer profile 'Profit Maximization' is selected

2. Non-Delivery Cost Rate has the maximum cost (100000) followed by Maximum-Inventory-Violation Cost Rate (1000) , Late-Delivery Cost Rate(1000); Production Cost Rate (100), Inventory Holding Cost Rate (10). Other cost factors are maintained as 1.

I have tried with a small set of products, but consumption of stock is not happening. Wanted to understand if this scenario is possible in optimizer or is there a limiatation.

Regards,

Suman.