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<ManualTopic ID="/baanerp/td/onlinemanual/000031" xml:lang="en">
   <Header>
      <Title>Using margin control</Title>
      <Keyword type="header" order="d1e1597855">
         <Level1>Margin control</Level1>
         <Level2>using</Level2>
      </Keyword>
   </Header>
   <AimSection ID="aim_sales_using_margin_control">
      <Paragraph>If <Link href="/baanerp/td/glossary/glossary#MarginContro_td" role="glossary"
               Update="No">margin control</Link> is implemented, when a sales order or
		quotation is entered, several checks are automatically executed and exceeded
		margins are logged.</Paragraph>
   </AimSection>
   <GeneralSection>
      <ProcedureList>
         <ListIntro>The following steps are completed:</ListIntro>
         <ListItem>ERP Enterprise searches the margin control parameters for the login code of the user who is
		  entering the sales order or quotation. For each login code, margin control
		  parameters determine the action(s) that must be taken when the sales price
		  falls outside the margin. If no margin control parameters exist for the login
		  code of a particular user, margin control is not used for sales orders or
		  quotations that are entered by that user.</ListItem>
         <ListItem>ERP Enterprise checks the item sales data and the sold-to business partner data for the
		  allowed margin variances, which are defined as a percentage and compared
		  against a target price or cost price depending on the type of margin being
		  checked.</ListItem>
         <ListItem> 
            <List>
               <ListIntro>ERP Enterprise determines any of the following:</ListIntro>
               <ListItem>For (price) margin control, the target price for an item.
				The target price can be the sales price, cost price, recommended retail price,
				or the price defined in the price structure. The target price is multiplied by
				the upper and lower margins, as defined in the item sales data to determine the
				margin range.</ListItem>
               <ListItem>For gross margin control, the standard cost of the item
				from the item costing data. The cost price is multiplied by the upper and lower
				margins, as defined in the item sales data or sold to business partner
				data.</ListItem>
            </List>
         </ListItem>
         <ListItem>ERP Enterprise checks the net price defined for the sales order or quotation line. If this
		  price falls within the margins, the order is processed. If the price falls
		  outside the allowed margin, ERP Enterprise takes the action defined for the user in the <Link href="/baanerp/td/sls/tdsls0120m000" role="session">Margin Control Parameters (tdsls0120m000)</Link> session.</ListItem>
         <ListItem> 
            <List>
               <ListIntro>Sales orders or quotations whose margins are exceeded and
				that must be logged, can be viewed in the following sessions:</ListIntro>
               <ListItem>
                  <GUIRef href="/baanerp/td/sls/tdsls4518m000" role="session">Sales Orders below/above Allowed Margin (tdsls4518m000)</GUIRef>
               </ListItem>
               <ListItem>
                  <GUIRef href="/baanerp/td/sls/tdsls1518m000" role="session">Sales Quotations below/above Allowed Margin (tdsls1518m000)</GUIRef>
               </ListItem>
            </List> 
            <List>
               <ListIntro>Sales orders whose margins are exceeded and that must be
				blocked, can be viewed in the following session:</ListIntro>
               <ListItem>
                  <GUIRef href="/baanerp/td/sls/tdsls4520m000" role="session">Blocked Sales Order (Lines) (tdsls4520m000)</GUIRef>
               </ListItem>
            </List>
         </ListItem>
         <ListItem>Logged instances of sales orders or quotations whose margins
		  are exceeded can be deleted in the <GUIRef href="/baanerp/td/sls/tdsls4218m000" role="session">Delete Margin Log for Sales Orders below/above Allowed Margin (tdsls4218m000)</GUIRef> session or
		  the <GUIRef href="/baanerp/td/sls/tdsls1218m000" role="session">Delete Margin Log for Sales Quotations below/above Allowed Margin (tdsls1218m000)</GUIRef> session if these margins are no longer required.</ListItem>
      </ProcedureList>
   </GeneralSection>
   <Note>
      <SectionTitle>Note</SectionTitle>
      <List>
         <ListItem>When a sales order or quotation falls outside the defined
		  margins, more than one action can be taken at a time. For example, ERP Enterprise can signal,
		  log, and block a quotation or an order.</ListItem>
         <ListItem>If an order is blocked due to margin guidelines, the block must
		  be manually removed, even if the price is corrected to fall in margin
		  guidelines.</ListItem>
         <ListItem>Blocking occurs at the step specified in the order type as the
		  blocking step.</ListItem>
      </List>
   </Note>
   <ExampleSection>
      <SectionTitle>Example</SectionTitle>
      <Keyword type="section" order="d1e1597927">
         <Level1>Margin control</Level1>
         <Level2>example</Level2>
      </Keyword>
      <List>
         <ListIntro>For ITEM 1, the following is applicable:</ListIntro>
         <ListItem>The target price, which is set to the sales price, is
		  $500.</ListItem>
         <ListItem>The upper margin is 25%.</ListItem>
         <ListItem>The lower margin is 10%.</ListItem>
         <ListItem>The standard cost is $389.</ListItem>
      </List>
      <List>
         <ListIntro>In addition, the following data is available:</ListIntro>
         <ListItem>For ITEM 2, the standard cost is $317.</ListItem>
         <ListItem>For sold-to business partner NS Materieel, the upper margin is
		  set at 20%, and the lower margin is set at –5%.</ListItem>
         <ListItem>NS Materieel places an order for 25 pieces of ITEM 1 at $600,
		  and 25 pieces of ITEM 2 at $515.</ListItem>
      </List>
      <List>
         <ListIntro>As a result, the following margin checks are
		  calculated:</ListIntro>
         <ListItem>(Pice) margin check for ITEM 1. <List>
               <ListIntro>The formulas for this check are as follows:</ListIntro>
               <ListItem>Upper margin = target price * (1 + upper margin
				percentage)</ListItem>
               <ListItem>Lower margin = target price * (1 - lower margin
				percentage)</ListItem>
            </List>
         </ListItem>
         <ListItem>Gross margin check on line level for ITEM 1.</ListItem>
         <ListItem>Gross margin check on header level.</ListItem>
      </List>
      <TABLE border="1" borderstyle="default" space-and-orientation="indented-estimated">
         <TBODY noTR="3">
            <TR no="1" isLast="false">
               <TH colspan="2" width="582" rowspan="1">(Pice) margin
				check for ITEM 1</TH>
            </TR>
            <TR no="2" isLast="false">
               <TD width="348" rowspan="1" colspan="1">Upper margin</TD>
               <TD width="230" rowspan="1" colspan="1">500 * (1.25) = $625</TD>
            </TR>
            <TR no="3" isLast="true">
               <TD width="348" rowspan="1" colspan="1">Lower margin</TD>
               <TD width="230" rowspan="1" colspan="1">500 * (.9) = $450</TD>
            </TR>
         </TBODY>
      </TABLE>
      <Paragraph>Because the net selling price is $600, margins are not
		exceeded.</Paragraph>
      <Paragraph/>
      <TABLE border="1" borderstyle="default" space-and-orientation="indented-estimated">
         <TBODY noTR="3">
            <TR no="1" isLast="false">
               <TH colspan="2" width="582" rowspan="1">Gross margin check
				on line level for ITEM 1</TH>
            </TR>
            <TR no="2" isLast="false">
               <TD width="348" rowspan="1" colspan="1">Upper margin</TD>
               <TD width="230" rowspan="1" colspan="1">$389 * (1.25) = $486.25</TD>
            </TR>
            <TR no="3" isLast="true">
               <TD width="348" rowspan="1" colspan="1">Lower margin</TD>
               <TD width="230" rowspan="1" colspan="1">$389 * (.9) = $350.10</TD>
            </TR>
         </TBODY>
      </TABLE>
      <Paragraph>Because the net selling price is $600, the upper gross margin is
		exceeded.</Paragraph>
      <Paragraph/>
      <TABLE border="1" borderstyle="default" space-and-orientation="indented-estimated">
         <TBODY noTR="5">
            <TR no="1" isLast="false">
               <TH colspan="2" width="406" rowspan="1">Gross margin check
				on header level</TH>
            </TR>
            <TR no="2" isLast="false">
               <TD width="227" rowspan="1" colspan="1">Standard cost of both items</TD>
               <TD width="175" rowspan="1" colspan="1">$389 + $317 = $706</TD>
            </TR>
            <TR no="3" isLast="false">
               <TD width="227" rowspan="1" colspan="1">Upper
				margin</TD>
               <TD width="175" rowspan="1" colspan="1">$706 *(1.2) = $847.20</TD>
            </TR>
            <TR no="4" isLast="false">
               <TD width="227" rowspan="1" colspan="1">Lower margin</TD>
               <TD width="175" rowspan="1" colspan="1">$706 *(1.05) =
				$741.30</TD>
            </TR>
            <TR no="5" isLast="true">
               <TD width="227" rowspan="1" colspan="1">Net selling price for both items</TD>
               <TD width="175" rowspan="1" colspan="1">$600 + $515 = $1115</TD>
            </TR>
         </TBODY>
      </TABLE>
      <Paragraph>Because the net selling price is $1115, the upper gross margin
		is exceeded.</Paragraph>
   </ExampleSection>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/td/onlinemanual/000061" role="manual">Overview of margin control</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/td/onlinemanual/000030" role="manual">Types of margin control</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/td/onlinemanual/sls09410" role="manual">Order blocking</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>