Calculation of Savings from Reduced Stockholding Costs

Use

The inventory balancing service calculates savings from reduced stockholding costs that can arise following inventory balancing if the inventory balancing service triggers a stock transfer. These savings from reduced stockholding costs are a part of the benefit that makes up the cost-benefit analysis.

Features

The system calculates the savings from reduced stockholding costs as follows:

Savings = (STQ / Forc. 12 Per.) x STQ x SHC

Note Note

If you plan a location product in reorder-point-based planning mode, the system calculates the savings due to reduced stockholding costs according to the following formula (as the forecast is not taken into account for these location products):

Savings = STQ x SHC

End of the note.

STQ is the stock transfer quantity.

Forc. 12 Per. is the cumulated quantity of demand forecast for the next 12 months.

SHC are the stockholding costs per base unit of measure and per year. The stockholding costs per base unit of measure per year are the result of the procurement costs multiplied by the factor for stockholding costs. You specify the procurement costs in the location product master data on the Procurement tab page in the Procurement Costs field, and the factor for stockholding costs on the SPP DRP tab page in the Holding Cost Factor field.