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<ManualTopic ID="/baanerp/cp/onlinemanual/000131" xml:lang="en">
   <Header>
      <Title>Optimization algorithm for logistic parameters</Title>
      <Keyword type="header" order="d1e192794">
         <Level1>Optimization algorithm for logistic parameters</Level1>
      </Keyword>
      <Keyword type="header" order="d1e192797">
         <Level1>Logistic parameters</Level1>
         <Level2>optimization algorithm</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <ProcedureList>
         <ListIntro>The optimization procedure has the following
        steps:</ListIntro>
         <ListItem>Determine items that use the resource.</ListItem>
         <ListItem>Determine total demand.</ListItem>
         <ListItem>Set default values.</ListItem>
         <ListItem>Determine the remaining available capacity.</ListItem>
         <ListItem>Determine the item with the greatest cost advantage.</ListItem>
         <ListItem>Check if the available capacity is sufficient.</ListItem>
         <ListItem>Increase production frequency.</ListItem>
         <ListItem>Report totals and update database.</ListItem>
      </ProcedureList>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Details of the calculation</SectionTitle>
      <Paragraph>The optimized time
      period is determined by the <GUIRef href="/baanerp/cp/rao/cprao3120m000#cprao320.stdt" role="manual">Start Date</GUIRef> field and the <GUIRef href="/baanerp/cp/rao/cprao3120m000#cprao320.fidt" role="manual">Finish Date</GUIRef> field in the <GUIRef href="/baanerp/cp/rao/cprao3120m000" role="session">Resource Cost Values (cprao3120m000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 1: Determine items that use the resource</SectionTitle>
      <Paragraph>LN uses the
      resource's routing to determine the set of items that must be optimized. LN considers only the routing operations that are effective in the optimized time
      period.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 2: Determine total demand</SectionTitle>
      <Paragraph>The demand of each item
      is the sum of forecast demand and actual demand as recorded in the master plan
      (see <GUIRef href="/baanerp/cp/rmp/cprmp2101m000" role="session">Item Master Plan (cprmp2101m000)</GUIRef> session).</Paragraph>
      <Paragraph>LN corrects the total demand to account for:</Paragraph>
      <List>
         <ListItem>Starting inventory.</ListItem>
         <ListItem>Scheduled receipts.</ListItem>
         <ListItem>Inventory plan.</ListItem>
      </List>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 3: Set default values</SectionTitle>
      <Paragraph>The default for the
      number of times an item is produced in the optimized time period is one. In the
      following steps, the computation procedure will increase this number stepwise,
      until the optimum is reached.</Paragraph>
      <Paragraph>However, LN checks if an item has previously been optimized.
      If an item has been optimized based on the resource parameters of a
      higher-priority resource, the number of times the item is produced is based on
      the previous calculation. LN does not change that number anymore. See <Link href="/baanerp/cp/onlinemanual/000065" role="manual">Resource priority for optimization</Link>.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 4: Determine the remaining available
      capacity</SectionTitle>
      <Paragraph>LN determines the
      remaining available capacity of the resource in the specified time period as
      follows:</Paragraph>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph>AC = (F - S) * (1 + (OP/100)) - ACR</Paragraph>
      </Formula>
      <TABLE border="1" borderstyle="default" space-and-orientation="indented-estimated">
         <TBODY noTR="5">
            <TR no="1" isLast="false">
               <TD rowspan="1" colspan="1">AC</TD>
               <TD rowspan="1" colspan="1">remaining available capacity</TD>
            </TR>
            <TR no="2" isLast="false">
               <TD rowspan="1" colspan="1">F</TD>
               <TD rowspan="1" colspan="1">Total capacity of the resource</TD>
            </TR>
            <TR no="3" isLast="false">
               <TD rowspan="1" colspan="1">S</TD>
               <TD rowspan="1" colspan="1">Capacity reserved for production orders</TD>
            </TR>
            <TR no="4" isLast="false">
               <TD rowspan="1" colspan="1">OP</TD>
               <TD rowspan="1" colspan="1">Overtime percentage</TD>
            </TR>
            <TR no="5" isLast="true">
               <TD rowspan="1" colspan="1">ACR</TD>
               <TD rowspan="1" colspan="1">Additional capacity requirements</TD>
            </TR>
         </TBODY>
      </TABLE>
      <Paragraph>For more information about the calculation of the remaining
      available capacity, refer to online manual topic <Link href="/baanerp/cp/onlinemanual/000345" role="manual">Example: to calculate the remaining available capacity</Link>.</Paragraph>
      <Paragraph>ACR is the sum of (R x D + S x F) for all items,
      where:</Paragraph>
      <TABLE border="1" borderstyle="default" space-and-orientation="indented-estimated">
         <TBODY noTR="4">
            <TR no="1" isLast="false">
               <TD rowspan="1" colspan="1">R</TD>
               <TD rowspan="1" colspan="1">Required capacity per item unit</TD>
            </TR>
            <TR no="2" isLast="false">
               <TD rowspan="1" colspan="1">D</TD>
               <TD rowspan="1" colspan="1">Total demand over the time period</TD>
            </TR>
            <TR no="3" isLast="false">
               <TD rowspan="1" colspan="1">S</TD>
               <TD rowspan="1" colspan="1">Required capacity for setting up the resource</TD>
            </TR>
            <TR no="4" isLast="true">
               <TD rowspan="1" colspan="1">F</TD>
               <TD rowspan="1" colspan="1">Number of times an item is produced in the optimized time
            period</TD>
            </TR>
         </TBODY>
      </TABLE>
      <Paragraph>For more information about the calculation of additional
      capacity requirements, refer to online manual topic <Link href="/baanerp/cp/onlinemanual/000346" role="manual">Example: to calculate additional capacity requirements</Link>.</Paragraph>
      <Paragraph>The number of times an item is produced in the optimized time
      period is equal to the number of changeovers from one product to
      another.</Paragraph>
      <Paragraph>If no capacity is left, the computation stops.</Paragraph>
      <Paragraph>The total capacity and the capacity reserved for production
      orders are displayed by plan period in the <GUIRef href="/baanerp/cp/rmp/cprmp3501m000#cprmp101.cale" role="field">Available Capacity</GUIRef> field and in the <GUIRef href="/baanerp/cp/rmp/cprmp3501m000#cprmp101.casf" role="field">SFC Orders Capacity Use</GUIRef> field in the <GUIRef href="/baanerp/cp/rmp/cprmp3501m000" role="session">Resource Master Plan (cprmp3501m000)</GUIRef> session.</Paragraph>
      <Paragraph>You can define the overtime percentage in the <GUIRef href="/baanerp/cp/rao/cprao3120m000#cprao320.ovpe" role="field">Overtime %</GUIRef> field in the <GUIRef href="/baanerp/cp/rao/cprao3120m000" role="session">Resource Cost Values (cprao3120m000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 5: Determine the item with the greatest cost
      advantage</SectionTitle>
      <Paragraph>LN investigates the effect of increasing the number of times
      an item is produced by one. An increase in the number of times an item is
      produced implies:</Paragraph>
      <List>
         <ListItem>More frequent production orders.</ListItem>
         <ListItem>Shorter order interval.</ListItem>
         <ListItem>Smaller lot size.</ListItem>
      </List>
      <Note>
         <SectionTitle>Note</SectionTitle>
         <Paragraph>LN does not change the number of times an item is produced
        for items with a higher priority than the current priority.</Paragraph>
      </Note>
      <Paragraph>LN calculates the cost of each item. For details of the cost
      calculation, see online manual topic <Link href="/baanerp/cp/onlinemanual/000066" role="manual">To compute lot-size-related costs</Link>.</Paragraph>
      <Paragraph>LN selects the item with the greatest cost advantage.
      However, if the cost cannot be decreased any further, the computation stops.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 6: Check if the available capacity is
      sufficient</SectionTitle>
      <Paragraph>LN checks if the
      available capacity is sufficient to produce the item. If not, LN goes back
      to step 5 and retrieves another item. If LN cannot find a suitable item,
      the calculation proceeds with step 8.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 7: Increase production frequency</SectionTitle>
      <Paragraph>LN increases the
      number of times the selected item is produced by one. The other items remain
      unchanged in this step. The available capacity is decreased. The calculation
      goes back to step 5.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Step 8: Report totals and update database</SectionTitle>
      <Paragraph>LN prints a summary
      report of the optimization and updates the order parameters in the <GUIRef href="/baanerp/cp/rao/cprao3110m000" role="session">Plan Items - Optimized Lot Sizes (cprao3110m000)</GUIRef> session.</Paragraph>
      <Paragraph>For information about the calculation method that LN uses to
      determine the optimized order parameters, refer to online manual topic <Link href="/baanerp/cp/onlinemanual/000446" role="manual">Example: to calculate the optimized order parameters</Link>.</Paragraph>
      <Paragraph>LN takes the order lead time and the safety time into
      account in the calculation of the total inventory cost.</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/000065" role="manual">Resource priority for optimization</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/cp/onlinemanual/000066" role="manual">To compute lot-size-related costs</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/cp/onlinemanual/000346" role="manual">Example: to calculate additional capacity requirements</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/cp/onlinemanual/000347" role="manual">Example: source allocation in order planning</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>