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 Maintaining Cost Functions

Use

Use the cost function for setting fixed and variable costs per unit. These functions are used in optimization runs for calculating the cost of procuring, producing, or transporting a specific quantity of product within the specified interval.

The fixed costs represent the baseline costs. No matter how large or small the quantity within the interval, the fixed costs always apply.

The variable costs for the specified interval are used by the optimizer to determine the effect on costs of producing, procuring, or transporting varying quantities of the product within the interval. In general, a higher quantity of product within the interval should mean lower variable costs.

Procedure

To create cost functions:

  1. Access the Supply Chain Engineer menu in Change mode.

  2. Choose Start of the navigation path GoTo Next navigation step Cost Function End of the navigation path .

  3. In the Cost Function: Initial Screen , enter a name for the cost function.

  4. Select the procurement method for the unit: transport, production or external procurement.

  5. Choose Create.

  6. In the Change Function screen, enter a descriptive text for the cost function.

  7. Maintain the table as shown in the example below.

  8. Save.

Result

The cost function will be included in the Possible Entries for cost functions in the Product Procurement maintenance screen.

Example Example

Cost Function Maintenance:

End of the example.

Unit quantities

Costs per unit

From:

To:

Fixed costs

Variable costs

0000

5,000

7

1.8

5,000

10,000

8

1.6

10,000

20,000

9

1.4