Related topics
The Purchase cost simulation program is useful to analyse the cost effect of different scenarios. The simulation will show the total cost for a certain purchase pattern. It is possible to simulate the quantity to buy, the discount received, the order cost and stock interest and evaluate the total cost. And, you can evaluate if it is worth to purchase an extra quantity to get a discount and similar situations.
This function can be called from:
- The menu item (Simulate purchase cost). In this case, the EOQ, safety stock and purchase price are retrieved from the Item file.
- The Purchase suggestion line maintenance. In this case, the suggested quantity, annual sales, safety stock and price from the line is brought into the simulation.
Note: This panel is only shown when the function is called from the menu item.
The following cost components are calculated:
- Purchase value, the total amount paid for one year supplies.
- Cost of tied up capital and the total ordering and freight cost during one year.
- Item
- Enter the item code of the item/warehouse combination for which you want to calculate simulated ROP/SST.
- Warehouse
- Enter the warehouse code of the item/warehouse combination for which you want to calculate simulated ROP/SST.
Purchase cost simulation (INVD5122)
On this panel you perform the actual purchase cost simulation. If this function is called from the Purchase suggestion maintenance program, then the quantities and prices are retrieved from the purchase suggestion line. If the function is called from the menu item, then the values are retrieved from the Item file.
Function keys
- Order quantity
- Displays the quantity purchased on every order. This is the suggested quantity from the purchase suggestion line, if the function is called from the Purchase suggestion line maintenance program. Otherwise, it is the EOQ from the Inventory management item file.
- Unit
- Displays the unit in which the order quantity is expressed.
- Qty stock unit
- Displays the quantity in stock unit, calculated by the program via the conversion factor.
- Conversion factor
- Displays the conversion factor from the Item file.
- Annual sales
- Displays the year forecast retrieved from the Inventory management item file, but can be changed. Enter the expected annual sales quantity.
- Safety stock
- Displays the safety stock for the item. This is the safety stock from the purchase suggestion line if the function is called from the Purchase suggestion line maintenance program. Otherwise, it is the SST from the Inventory management item file. This can be changed.
- Purchase price
- Displays the purchase price, from the purchase suggestion in suggestion currency or from the Item file, if the function is called from the menu item. This can be changed.
- Currency
- Displays the currency in which the purchase price is expressed.
- Price sys curr/st un
- Displays the purchase price in system currency, recalculated to the price per stock unit.
- Price unit
- Only displayed if the PRCUNIT (Price unit handling) function is activated in the Function control file. Displays the unit in which the price is presented. See About price unit handling for more information.
- Price unit quantity
- Only displayed if the PRCUNIT (Price unit handling) function is activated in the Function control file. Displays the price unit quantity (i.e. the purchase quantity presented according to the price unit). See About price unit handling for more information.
- Price discount
- Enter a discount (%) that will reduce the purchase price used in the cost calculation/simulation.
- Order cost
- Displays the order cost, retrieved from Work with replenishment control codes, in system currency. This can be changed.
- Stock interest
- Displays the stock interest, retrieved from Work with replenishment control codes. This can be changed.
- Landed costs
- Displays the total standard landed cost calculated for the item/warehouse combination.
- Calculated costs & Key values
- Displays the simulated total cost for one year if this situation would apply, split into three cost components. Along with the cost some logistic key values are calculated.
- Purchase value
- Displays the estimated purchase value, that is the total purchased quantity over one year, estimated to be the same as the annual sales multiplied by the purchase price. The discount entered will reduce the price and it is possible to add a handling cost per unit, added to the purchase price.
Annual sales * (Purch price * (1+ Unit handl cost/100)* (1- discount/100). Note that the purchase price is recalculated to stock unit and system currency.
- Inv turnover rate
- Displays the estimated inventory turnover rate, that is annual sales/average stock level.
- Tied up capital
- Displays the estimated cost of tied up capital, that is the interest cost of the tied up capital based on the estimated average stock level during one year.
(Purch price * (1+ Unit handl cost/100)* (1- discount/100) * (Order qty/2 + SST) * Stock interest/100. Note that the purchase price is recalculated to stock unit and system currency.
- Average stock level
- Displays the estimated average stock level.
(Order qty/2 + SST)
- Order cost
- Displays the estimated order cost, that is the total ordering and freight cost for all orders placed during one year.
(Annual sales/Order quantity) * (Order cost + Freight cost)
- Receipts per year
- Displays the number of deliveries per year.
(Annual sales/Order quantity)
- Avail qty in days
- Displays the current available inventory represented in days of supply. This is calculated as:
Available qty in days = Available stock quantity/Forecast demand per day
- Total annual cost
- Displays the sum of the cost components. This is the simulated cost of buying the simulated order quantity to purchase a total quantity that corresponds to the total annual sales.
- Purch qty in days
- Displays the entered purchase quantity represented in days of supply. This is calculated as:
Purch qty in days = Economic order quantity/Forecast demand per day