Calculate Financial Metrics Using Price Lists

You can determine the selling price of an item using a single price list or by averaging multiple price lists associated with a plan.

You can use this selling price to calculate end demand values and financial metrics, such as revenue and margin. The measures can be displayed in tables and graphs. The updated end demand values are displayed in the Supplies and Demands, Exceptions, and Demand Fulfillment views in the supply plan output.

This functionality is available for constrained and unconstrained supply, demand and supply, and sales and operations plans.

Here’s how you can calculate financial metrics using a price list in a plan.

1. Navigate to the Plan Inputs work area from the navigator.
2. From the Tasks menu, click Collect Planning Data.
3. Select Items in the Reference Data tab and Include Price List check box in the Demand Planning Data tab.
4. Click Submit to initiate the collections process.
5. On the Manage Plans page, create a new plan by selecting the price lists in the plan option to derive the selling price for the item.

   You also can edit the existing plan options to allow the price lists to derive the selling price.

6. Click Edit for the price list in the plan option.
7. Click Add in the Manage Price Lists window.
8. Select the Primary check box to indicate a primary price list.

   You can select a user-defined price list or the Item list Price.

9. Enable the Include When Deriving Selling Price plan option for the price lists that must be used to calculate the selling price. Select multiple price lists to compute the average selling price of the item.

   The planning process performs all the necessary units of measure and base currency conversions and represents them in the primary unit of measure. This value takes precedence over the Item List Price.

10. Click OK to save the options and run the plan.
11. Click Open in the plan output work area and search for the Items view.

    You can see that the plan has computed the Selling Price and Net Selling Price from the price list associated with the plan.

    In the Supplies and Demands view, the Selling Price is used to compute and display the End Demand Value for the forecast.

    Note: This view is available in supply and demand, and supply plans.

Things to Consider When Calculating Financial Metrics Using Price Lists

Here’s some additional information about this functionality.

• The Include When Deriving Selling Price check box is disabled for Item List Price since it is the default price list for all calculations. The check box is enabled for user-defined price lists collected from Product Information Management (Fusion source) or using file-based data integration (external source).
• The Selling Price is the same as the Item List Price if you don’t assign any user-defined price lists to the plan. You can uncheck Include When Deriving Selling Price to consider the Item List price as the Selling Price.
• The Price measure is calculated for the price list you set as Primary. The planning process does not compute the time-varying Price measure values for a price list that is not set as Primary and for which Include When Deriving Selling Price is enabled.
• The Price measure calculated with a Primary price list is used to compute shipment or booking forecast value measures. You also can use it to compute the value in a user-defined measure with an expression in a supply plan.

Examples Showing How to Calculate Financial Metrics Using Price Lists

Example 1 shows how the selling price of an item is derived from the price lists for price list details specified in Oracle SCM. The price list and item price details are created in the Pricing work area.

The item KB-SS-PUMP106’s price is defined in two price lists in Pricing. In the price list SN PRICE: LIST1, the price is 98 USD, and in the price list SN PRICE LIST2, the price is 99 USD.

1. Select the item’s price list and price details, and run the Collect Planning Data scheduled process. The details are collected in Oracle SCP.
2. Create a plan, and add price lists SN PRICE LIST1 and SN PRICE LIST2 in the Manage Price Lists in the plan option.
3. Select the Include When Deriving Selling Price check box for both the lists.
4. Run the plan to see the item's Selling Price and Net Selling Price values in the Items view. These values are calculated from the price lists associated with the plan.

Example 2 shows how the time-varying price is used to calculate the revenue in a sales and operations plan.

The planning process uses the time-varying price for revenue calculation when you mark a single price list as Primary, and select Include When Deriving Selling Price in plan options.

For example, the Revenue of 32,000 in March 2030 is calculated by multiplying the Constrained Forecast (200) and Price (160).

The Selling Price value in the Items table is computed as the average of the time-varying prices for an item in the plan output.

If you mark more than one price list as Include When Deriving Selling Price in plan options, then the computed average Selling Price is used in revenue calculations instead of the time-varying price.

Example 3 shows how the average selling price is derived for an item from price lists in a supply plan.

The item AS7311 in an organization M1 is collected with the following price list details from the source system:

• Price List 1 with the price of 10 USD, effective from January 1st, 2022.
• Price List 2 with the price of 11 USD, effective from February 2nd, 2022.
• Price List 3 with the price of 9.5 Euros, effective from March 3rd, 2022.
• Price List 4 with the price of 14 USD, effective from January 1st, 2022 to June 30th, 2022.

A supply plan is created with the plan horizon start date of July 29th, 2022. The supply planning process derives the selling price for item AS7311 from price lists. Include When Deriving Selling Price is marked for all four price lists. The default price list “Item List Price” is marked as Primary.

The items AS7311 and CM1234 have a collected list price as a selling price of 10 USD.

The currency of Organization M1 is USD. The latest collected conversion rate from Euros to USD is 1.2, with the conversion date effective from Jan 1st,2022. The price of 9.5 Euros from Price List 3 is converted to USD using the latest conversion rate. The price of 14 USD from Price List 4 is ignored, as the To Date ends before the plan horizon start date. So, the average selling price for the item AS7311 is derived from Price List 1, Price List 2, and Price List 3 as 10.8 USD.

Since item CM1234 does not have any price list detail, the list price of the item is applied as a selling price of 10 USD in the plan.

The financial metrics in the plan for item AS7311 are calculated based on the selling price derived from price lists associated to the supply plan.