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Determining the Source Under a Quota Arrangement

Use

The system calculates the next source from which a specific material requirement is to be procured from among the sources that have been assigned a quota in the current validity period. This calculation is carried out if you have the source of supply for a requested material determined by the system.

Activities

Calculating the Quota Rating

The system assigns a quota rating to each source of supply. The quota rating is calculated as follows:

Quota-allocated quantity + Quota base quantity
------------------------------------------------------------- = Quota rating
Quota

where

• Quota-allocated quantity

• = Total quantity from all purchase requisitions, purchase orders, release orders, and scheduling agreement schedules allocated to a given source of supply. (The quantities of quota-allocated planned orders are also taken into account.)
• Quota base quantity

• = Quantity used to control the quota arrangement when new sources of supply are included.
• Quota

• = A number specifying which portion of a total requirement should be obtained from a certain source.

The source with the lowest quota rating represents the valid source, even if it has a quota rating of 0 (that is, the quota-allocated quantity and the quota base quantity have the value 0). If more than one source of supply has a quota rating of 0, the item with the highest quota is the valid source of supply.

According to the formula, the following applies: The higher the quota, the lower the quota rating and the higher the likelihood that the relevant source will be determined as the valid source.

Determining the Quota Base Quantity

The quota base quantity is used only when you include a new source in an existing quota arrangement.

The quota base quantity enables you to prevent the new source from being assigned all requirements (in the form of requisitions or Pos, for example) until its quota-allocated quantity exceeds the quota-allocated quantity of one of the existing sources. This is achieved as a result of the fact that the quota base quantity acts as an additional quota-allocated quantity in the calculation of the quota rating.

Suppose you include a new vendor in an already existing quota arrangement for a material. The existing quota arrangement consists of two vendors, each of which has been allocated 50% of the total requirement of a material over a period. Each of these vendors has a large quota-allocated quantity because a lot of material has been ordered from them to date during the course of the quota arrangement period.

The new vendor is to be assigned a share of the total requirement of the material equal to that of the two other vendors in the quota arrangement. However, in accordance with the formula for the calculation of the quota rating, all subsequent requisitions will be assigned to the new vendor until such time as the latter’s quota rating exceeds the quota rating of one of the other vendors.

However, if the requisitions are to be assigned on an equal basis (that is, as though the new vendor had always participated in the quota arrangement), you must have the quota base quantity for the new vendor determined by the system.

Individual and Collective Calculation

Two procedures for determining the quota base quantity are available in the system:

Individual calculation
Calculation of the quota base quantity of the selected quota arrangement items. Select the items whose quota base quantity is to be calculated and choose Edit

® Base quantities ® Indiv. calculation.

Collective calculation
Calculation of the quota base quantity of all quota arrangement items. Use this procedure if the assignment of individual requirements is to be effected on an equal basis for all sources of supply. Choose Edit ® Base quantities ® Collect. calculation.

As a result of the calculation of the quota basis quantity, the quota rating of a new source exceeds the quota rating of the source representing the valid source (that is, the source to which the next individual requirement is assigned because it has the lowest quota rating).

Calculating the Quota Rating: Example

You wish to include the new vendor C in an existing quota arrangement that has been in effect for a year and previously only included vendors A and B.

Each vendor has the quota set out in the following table:

Quota arrangement for vendors A, B, and C

 Vendor Quota Quota-allocatedquantity Quota base quantity A 3 780 0 B 2 380 0 C 1 0 260

The quota base quantity 260 for vendor C was set with Edit

® Base quantities ® Indiv. calculation.

According to the previously-discussed formula, the quota ratings for vendors A, B, and C are as follows:

780 + 0
A =

-------- = 260
3

380 + 0
B =
--------- = 190
2

0 + 260
C =
---------- = 260
1

Result: The next requisition will be assigned to Vendor B because this vendor has the lowest quota rating.