Configure Optimization Parameters

You can influence the plan results by configuring optimization parameters. By setting these parameters, you can better control the plan output and decision-making process.

The following optimization parameters are available:

• Penalty Cost Multiplier for Demand Backordering: The value by which the penalty cost for demand backordering is multiplied. The default value for this global parameter is 100.
• Penalty Cost Multiplier for Supplier Capacity Overloading: The value by which the penalty cost for supplier capacity overloading is multiplied. The default value for this parameter is 1000. You can overload the supplier category capacity to enforce demand due dates on time for assembly items. Set this parameter to -1 to set a hard constraint on the supplier category capacity.
• Penalty Cost Multiplier for Resource Capacity Overloading: The value by which the penalty cost for resource capacity overloading is multiplied. The default value for this parameter is 1000. You can overload the work center capacity to enforce demand due dates on time for assembly items. Set this parameter to -1 to set a hard constraint on the work center capacity.
• Penalty Cost Multiplier for Sourcing Allocation Violation: The value by which the penalty cost for violating the sourcing allocation percentage is multiplied. The default value for this parameter is 100.

Perform the following steps to configure the optimization parameters in your sales and operations plan:

1. In an open sales and operations plan, navigate to the Edit Plan Options page, Supply tab, and click Select Advanced Options.
2. In the Select Advanced Options dialog box, click the Optimization Parameters tab.
3. Select the Use declining storage costs to avoid building inventory early check box to use the storage penalty costs rolled up from the component items associated with an assembly item's bill of resources that decline over the plan horizon. Unselect the check box to use the same storage penalty cost over the plan horizon.
4. Optionally, update the values for the optimization parameters:
   • Penalty Cost Multiplier for Demand Backordering
   • Penalty Cost Multiplier for Supplier Capacity Overloading
   • Penalty Cost Multiplier for Resource Capacity Overloading
   • Penalty Cost Multiplier for Sourcing Allocation Violation
     Note: Oracle recommends consulting them before altering optimization parameters.
5. Click Reset to Default to remove your user-specific values.
6. Click Done.

Configure Optimization measure

Penalty Cost Multiplier for Demand Backordering is an editable measure that can influence plan results more precisely than the global optimization parameter. The measure uses the value set for the global optimization parameter by default. Adjust this value to increase the relative priority of fulfilling the end item demands. This measure gives you granular level control to prioritize which demands to fulfill first.

For example, if a new assembly item consumes capacity on a constrained work center, you can increase the measure value from 100 to 100,000 to prioritize fulfilling this new product.

Perform the following steps to use this measure to influence your plan results:

1. Add the Penalty Cost Multiplier for the Demand Backordering measure to the measure catalog of your sales and operations plan.
2. Run your plan with the Refresh with current data option selected on the Parameters tab in the Run Plan dialog box.
3. Create a table that uses this editable measure. You can adjust the measure values by organization, item, and time.