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Re: Difference between Optimizer and Profit Optimization

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Hi Joseph

 

Below may not answer your question completely -

 

Cost Minimization works to determine the most cost-effective solution based on the costs defined in the model. If Penalty costs for non-delivery is considered as non-profit. idea is to maximize the gorss profit. Please refer configuration for SCM Operator/ OPTIMIZE -  "Use Penalty Cost"  and "Minimize Non-Delivery Cost" settings defines the optimization mode in IBP.

 

This is from APO on Profit Maximization (but it may help get some clue) -  {  The total profit achieved by a plan is calculated according to the following formula: Total of all delivered location products, multiplied by the penalty costs for non-delivery that have been defined for these location products, minus all the costs defined in the optimizer cost profile (such as production costs, storage costs and transportation costs). }

 

Just my two cents on this topic

 

Hope this will help.

 

Thank you

Satish Waghmare


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