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<ManualTopic ID="/baanerp/cp/onlinemanual/000067" xml:lang="en">
   <Header>
      <Title>To compute the cost of obsolete items</Title>
      <Keyword type="header" order="d1e188273">
         <Level1>Cost of obsolete items</Level1>
         <Level2>computing</Level2>
      </Keyword>
      <Keyword type="header" order="d1e188278">
         <Level1>Obsolete items</Level1>
      </Keyword>
   </Header>
   <GeneralSection>
      <Paragraph>If an item has a long <Link href="/baanerp/ti/glossary/glossary#OrderInterv_ti" role="glossary">order interval</Link>, the item can
		become obsolete at a time when you still have a lot of inventory left.</Paragraph>
      <Paragraph>This risk is important
		for products with short life cycles. For example, products which are influenced
		by fashion or fast technological developments.</Paragraph>
      <Paragraph>The <GUIRef href="/baanerp/cp/rao/cprao3120m000#cprao320.ripe" role="manual">Risk %</GUIRef> field in the <GUIRef href="/baanerp/cp/rao/cprao3120m000" role="session">Resource Cost Values (cprao3120m000)</GUIRef> session expresses the chance per day that an
		item becomes obsolete.</Paragraph>
      <Paragraph>The cost of becoming
		obsolete is calculated as follows:</Paragraph>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph> Costs = (RP/100) * OI * C </Paragraph>
      </Formula>
      <Paragraph>Where: RP = risk
		percentage OI = order interval [days] C = cost price</Paragraph>
      <ExampleSection>
         <SectionTitle>Example</SectionTitle>
         <Paragraph>The sales of an item
		  declines. You do not know when the last sales order will close, but you
		  estimate that sales of the product will be discontinued in the next 200 days. A
		  reasonable estimate of the risk percentage is 0.5%.</Paragraph>
      </ExampleSection>
      <Paragraph>Data: C = 20 $ (cost
		price) OI = 120 days (order interval) RP = 0.5 %/day (risk percentage)</Paragraph>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph> Costs = (RP/100) * OI * C </Paragraph>
      </Formula>
      <Paragraph>Result of the
		calculation: The cost of becoming obsolete is $12</Paragraph>
   </GeneralSection>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/cp/onlinemanual/000042" role="manual">To optimize logistic parameters</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/cp/onlinemanual/000131" role="manual">Optimization algorithm for logistic parameters</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>