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<ManualTopic ID="/baanerp/cp/onlinemanual/000042" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">To optimize logistic parameters</Title>
		<Keyword><Level1>Optimizing logistic parameters</Level1>
		</Keyword>
		<Keyword><Level1>Logistic parameters</Level1>
			<Level2>optimizing</Level2>
		</Keyword>
		<Keyword><Level1>Lot size</Level1>
			<Level2>optimizing</Level2>
		</Keyword>
		<Keyword><Level1>Order interval</Level1>
			<Level2>optimizing</Level2>
		</Keyword>
		<Keyword><Level1>Economic Order Quantity</Level1>
			<Level2>optimizing</Level2>
		</Keyword>
	</Header>
	<GeneralSection><Paragraph>The <Link href="/baanerp/ti/glossary/glossary#OrderInterv.ti" role="glossary">order interval</Link> of an item influences the cost effectiveness of your production process.</Paragraph>
		<List><ListIntro>You must find the right balance between long order-intervals and short intervals:</ListIntro>
			<ListItem>If order intervals are long, the average inventory levels are relatively high in order to meet the demand between two subsequent production orders. This causes high <Link href="/baanerp/wh/glossary/glossary#000328" role="glossary">inventory carrying costs</Link>.</ListItem>
			<ListItem>If order intervals are short, many changeovers occur between items that are produced with the same resource. A lot of valuable resource time is spent as setup time. As a result, the average production cost rises.</ListItem>
		</List>
		<Paragraph>Frequent changeovers have yet another disadvantage: they decrease the total production capacity.</Paragraph>
		<Paragraph>The <Link href="/baanerp/wh/glossary/glossary#000349" role="glossary">lot size</Link> has a direct relationship with the <Link href="/baanerp/ti/glossary/glossary#OrderInterv.ti" role="glossary">order interval</Link>:</Paragraph>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> Lot size = Total demand per day x Order interval </Paragraph>
		</Formula>
		<Paragraph>The computation method for these parameters takes the capacity constraints into account.</Paragraph>
		<GeneralSection><SectionTitle>How to optimize logistic parameters</SectionTitle>
			<List><ListIntro>Use the following procedure to optimize logistic parameters:</ListIntro>
				<ListItem>Define the resource parameters in the <GUIRef href="/baanerp/cp/rao/cprao3120m000" role="session">Resource Cost Values (cprao3120m000)</GUIRef> session.</ListItem>
				<ListItem>Optimize the logistic parameters by resource with the <GUIRef href="/baanerp/cp/rao/cprao3200m000" role="session">Optimize Lot Sizing (cprao3200m000)</GUIRef> session.</ListItem>
				<ListItem>Evaluate the results with the <GUIRef href="/baanerp/cp/rao/cprao3110m000" role="session">Plan Items - Optimized Lot Sizes (cprao3110m000)</GUIRef> session, and select the items for which you want to transfer the optimized parameters.</ListItem>
				<ListItem>Transfer the optimized parameters with the <GUIRef href="/baanerp/cp/rao/cprao3210m000" role="session">Copy Lot Sizes to Item Ordering Data (cprao3210m000)</GUIRef> session.</ListItem>
			</List>
		</GeneralSection>
	</GeneralSection>
	<RelatedTopics><SectionTitle>Related topics</SectionTitle>
		<RelTopic><Link href="/baanerp/cp/onlinemanual/000131" role="manual">Optimization algorithm for logistic parameters</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/cp/onlinemanual/000060" role="manual">Lot sizing</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/tc/onlinemanual/000055" role="manual">Order quantity settings</Link>
		</RelTopic>
	</RelatedTopics>
</ManualTopic>
