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Function Capital Lockup Profiles

 

Sometimes it makes sense to order a larger quantity than is actually required. Before doing so, you need to compare the costs of procurement and storage, while taking future demand into account.

The system uses the capital lockup profile to compare capital lockup costs with ordering costs to determine the most economical order quantity. Ordering costs are fixed costs for each order item in a valid currency, irrespective of the ordered quantity (for example, logistics costs).

You enter the capital lockup for each base unit of measure and year as a percentage based on the purchase price, and the system uses the capital lockup to calculate the optimum order quantity. This percentage rate should include the storage costs and the current interest rate costs of the product value. The lower the fixed order costs for each order and the higher the capital lockup costs, the more frequently the system creates an order proposal and the smaller the order quantities are for each product.

Prerequisites

  • You have defined a capital lockup profile in Customizing for F&R.

  • You have assigned the profile to a location product in the master data.

  • You can define profiles in Customizing and assign them in the master data. A default profile has already been defined. The system uses this profile if you have not assigned another profile in the master data.

Activities

For more information about the capital lockup profile, see the Implementation Guide (IMG) under:

Forecasting and Replenishment  → Requirement Quantity Optimization → Maintain Capital Lockup Profiles.

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