Understanding Tier Levels and Inheritance in Buying Structures
When you create a buying structure for a company, you specify tier levels and inheritance. You set up the tier levels in the Address Book when you create the organizational structure. You define the inheritance when you create direct price adjustments on the Price Adjustment Schedule Revisions form. The system uses the Inheritance Flag field with the tier level to indicate whether an adjustment is inherited by an address with a numerically greater tier level than the tier level that you are defining.
This table shows an example of price adjustments that apply to specific entities within a buying structure:
Entity |
AB # |
Tier Level |
Inheritance |
Applicable Price Adjustment |
|---|---|---|---|---|
International Corporation |
4280 |
1 |
Yes |
All of International Corporation's distribution centers, for example, Central Distributor (tier level 3), receive 3 percent off the base price on all items. This is a corporate discount. |
US Warehouse |
4281 |
2 |
Yes |
US Warehouse receives a regional rebate of 1.00 USD per unit when sales or Item A reach 10,000 units. (Tiered Rebate) |
Central Distributor |
4284 |
3 |
Yes |
Central Distributor receives a 5 percent promotional discount. |
Columbia Store |
4287 |
4 |
Yes |
Because it is a large store in International Corporation, the Columbia Store receives a 6 percent discount off the base price when ordering a minimum of 100 units of Item A. |
When the Columbia Store places an order of 150 units of Item A, the system uses buying structure functionality to apply the price adjustments and calculate the net unit price, as illustrated in this table:
Price Adjustment |
Unit Price |
Other |
|---|---|---|
Base Price |
10.00 USD |
|
Store Discount (6 percent off) Columbia Store, 4287 |
.60– |
|
Promotional discount (5 percent off) |
.47– |
|
Regional rebate (tiered rebate) |
1.00 USD |
|
Corporate discount (3 percent off) |
.30– |
|
Net Unit Price: |
8.63 USD |
If you do not enable the Inheritance Flag field on the Price and Adjustment Schedule Revisions form when the buying structure is set up, Columbia Store receives only its tier-level discount of 6 percent and does not inherit the other tier level adjustments.
See Setting Up Parent, Child Relationships.
See Setting Up Tiers for Parent, Child Organizational Structures.