How Is The Demand Lateness Cost In The Penalty Cost Of Cost Breakdown KPI Is Calculated? (Doc ID 2034360.1)

Last updated on SEPTEMBER 09, 2016

Applies to:

Oracle Advanced Supply Chain Planning - Version 12.1.3 and later
Information in this document applies to any platform.

Symptoms

Running an optimized ECC-resource constrained manufacturing plan in a VCP environment.  Note the following test case:
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A certain resource is available as 1 unit and 24 hours for all workdays (except weekends).
The plan is an optimized ECC-resource constrained manufacturing plan. We only use the demand lateness% penalty factor (plan level), it is 10.

The results and inputs are summarized in the Figure-2.
Plan start date is 04-Mar-2015.
According to the results, there are two questions:
1) The penalty cost in the cost breakdown KPI is calculated as 22230 for Mar, is it an expected behavior, can this calculation be more detailed?
According to page 10-72 in the ASCP implementation and user’s guide (Key Performance Indicators, Cost Breakdown)
Penalty cost = Demand lateness cost * (Demand satisfied date – requirement date) * demand quantity * item list price
What is the demand lateness cost in the formulation, is it the demand lateness% penalty factor which is %10? Or is it (demand lateness% penalty factor * price)?

According to this test, demand lateness cost is used as (demand lateness% penalty factor * price). And if it is like that, than the penalty cost will be :
Penalty cost = demand lateness% penalty factor * (Demand satisfied date – requirement date) * demand quantity * item list price * item list price
Is it the expected behavior? If it is the expected behavior, then cannot understand why the square of item list price is used in the KPI?

Cause

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