OperatorKeyFigure-SAP IBP

Basic Key Figures of the S&OP Supply Planning Operator
January 22nd, 2019
Authors: Volkmar Soehner, Michael Brueckner and Stefan Wedner
Change history:
- January 2019: Minor correction in section 10.1.
- August 2019: The chapter about location-centric view was improved.
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1. Introduction
This document describes the meaning of the key figures relevant to the SCM
planning operator of S&OP on HANA. By the superordinate term SCM planning
operator we refer to SCM planning algorithms in S&OP, i.e. S&OP Heuristic and the
S&OP Optimizer which are used to compute a supply plan.) In general, there are
several input key figures which contain input data for the SCM planning algorithms.
Input key figures are not updated or modified by the SCM planning algorithms. In
addition, there are several output key figures containing the result of these
algorithms, i.e. the supply plan and dependent demands computed by the algorithm.
As mentioned above, S&OP on HANA offers several SCM planning algorithms. Not
each of them reads all input key figures and not each updates each output key figure.
All cost and revenue related key figures are read by the optimizer but not by the
heuristics, for example. So, the usage of the key figures depends on the algorithm.
For only a few key figures it is possible to describe by a mathematical formula how to
compute them. This is possible, for instance, for the key figure Projected Stock. Most
key figures, however, are not computed by a simple formula rather than by a complex
algorithm. The key figure Supply, for instance, is – at least when running a finite
planning algorithm – the output of a very complex mathematical procedure, which
has to take into account entire supply chain networks. For that reason we will give in
most cases a description only, accompanied by an example picture in order to
explain the meaning of the key figures of the S&OP on HANA planning algorithms.
2. Customer Demands
Related to customer demands (also called consensus demands) there are two key
figures: Customer Demand and Total Customer Receipts. The key or “planning level”
of both is customer and product.
2.1 Customer Demand

Technical name: CONSENSUSDEMAND, key: Customer, Product.
Customer Demand is an input key figure for supply planning. This key figure is not
changed by the planning algorithms. This key figure defines the requested or
forecasted demand of a customer for a certain product for each period of the
planning horizon.
2.2 Total Customer Receipts

Technical name: TOTALCONSTRAINEDDEMAND, key: Customer, Product.
This output key figures contains per period the computed supply for this customer-
product combination. Sometimes this key figure is also called Constrained Demand
because it reflects that demand that can actually be supplied by the network.
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Figure 1 depicts a customer demand of customer C1 for product P1, along a horizon
of two periods. For the first period the customer requests 80 units, however, the
planning algorithm computed that the requested demand cannot be satisfied (for
some reason); the supply is 72 units only.
Let’s note here that for different planning algorithms the output will in general be
different, so figure 1 is just an example to illustrate the point that the two numbers
can be different. This is even true for infinite heuristics as there can be adjusted key
figures or other constraints even if resources capacity is considered infinite and not
constraining the solution.
Key Figures of Customer Demands
Customer C1 / Product P1
Customer Demand: 80 | 100
Tot. Custom. Receipts: 72 | 50
© 2012 SAP AG. All rights reserved.
Figure 1: Key Figures of a Customer Demand
3. Key Figures between Customer Demands and Own

Locations
3.1 Outbound Customer Demand
Technical name: DEPENDENTCUSTOMERDEMAND,
key: Customer, Product, Location
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Customer Demands are propagated by the planning heuristics to “own” locations, i.e.
distribution centers and / or plants which are locations belonging planner’s supply
chain – in contrast to customer locations which do not belong to the planner’s supply
chain. The propagated demand is stored in the key figure Outbound Customer
Demand – see figure 2. The prefix “Outbound” emphasizes the direction in which this
demand is propagated: it is propagated from a customer demand towards own
locations and therefore coming outbound from a customer demand.
As mentioned in section 1 not all S&OP planning algorithms can compute all output
key figures. Heuristics, in general, propagate demands through the network and then
compute according to their strategy supply to satisfy the propagated demands.
Therefore, demand and supply might be different, i.e. supply might be lower than
demand if, for instance, the capacity supply of one or several resources does not
fulfill the capacity demands.
The optimizer in contrast has a completely different approach. The whole planning
problem is mapped to a mathematical method (“Mixed Integer Linear Programming”)
which has a very different approach to compute a supply plan. The optimization
algorithm computes the cost or profit optimal supply from all possible supply plans.
To do so, the optimizer does not explicitly propagate demands thru the net so that all
demand related key figures are not relevant. As all key figures should have some
values after either a heuristic or the optimizer did run, S&OP just copies the supply
key figures into the corresponding demand key figures. For that reason key figure
Customer Receipts is copied into key figure Outbound Customer Demand – after the
optimizer computed a plan.
3.2 Customer Receipts

Technical name: CONSTRAINEDDEMAND, key: Customer, Product, Location
As depicted in figure 2 the computed supply, stored in key figure Customer Receipts
shows the product quantity which is supplied from a location to a customer per
period, computed by a planning algorithm. So, in period 1 the supplied quantity for
costumer C1 is 72, for customer C2 18 units only.
Outbound Customer Demand and Customer Receipts are called arc-related key
figures as they belong logically to an arc between two nodes (location-products) of
the supply network. A key of such arc-related key figures usually consists (at least)
out of the product identifier and the two involved locations or the one (own) location
which is in figure 2 the “Plant A” and the customer identifier.
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Key Figures between Cons. Demands and Own Locations
Plant A
Dep. Demand: 100 | 200
Supply: 90 | 100
Figure 2: Key Figures between Consensus Demands and Own Locations
4. Node-Related Key Figures

Besides of arc-related key figures there exist node-related key figures which belong
to a node of the network, i.e. a product-location combination. The key of node related
key figures contain (at least) the product identifier and the identifier of the involved
location (product / location). The most important node-related key figures are
illustrated by figure 3. These are:
4.1 Stock on-hand

Technical name: INITIALINVENTORY, key: Product, Location
This input key figure contains the available quantity of the product at the given
location at the beginning of the first period, which is the period of the current time
when the planning algorithm is run. Note, in contrast to all other key figures this one
is relevant only for the bucket corresponding to the current time.
4.2 Inventory Target

Technical name: INVENTORYTARGET, key: Product, Location
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This input key figure defines the target inventory for the end of each period. This
means, the planning algorithm tries generate a supply plan so that the Projected
Inventory (= actual inventory at the end of a period) should equal this quantity. The
targeted inventory can be seen as a safety stock which enables the supply chain to
satisfy demands in the future which are actually higher than the expected, forecasted
demands.
4.3 Dependent Demand

Technical name: DEPENDENTDEMAND, key: Product, Location
This output key figure stores the sum of all dependent demands (which are Outbound
Customer Demand, Outbound Location Demand and Outbound Production Demand)
for the location-product. In figure 2 this is 100 units in the first period, which is derived
out of both Outbound Customer Demands (80 and 20 units) propagated to the
location “Plant A”.
Period
1 2 3
Stock on-hand
2
Inventory Target
5 10 5
Dependent Demand
10 10 10
Net Demand
13 18 15
Receipts
10 0 15
Supply
10 10 10
Projected Stock
2 -8 5
Deficit
3 18 0
Shortage
0 0 0
Figure 3: Node-related key figures
For the same reasons as mentioned in section 3.1 the key figure Dependent Demand
is computed only by an S&OP heuristic, but not by the optimizer. For that reason this
key figure is just set equal to key figure Supply after the optimizer computed a supply
plan.
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4.4 Net Demand
Technical name: NETDEMAND, key: Product, Location
This is an output key figure. Net Demand is the demand that needs to be sourced for
a location-product. This is computed based on several other key figures, which are
Dependent Demand, Stock on-hand / Projected Stock of the previous period, lot size
parameters and the planning algorithm used to compute the supply plan.
For the same reasons as mentioned in section 3.1 the key figure Net Demand is
computed only by an S&OP heuristic, but not by the optimizer. For that reason this
key figure is just set equal to key figure Receipts after the optimizer computed a
supply plan.
4.5 Receipts
Technical name: TOTALRECEIPT, key: Product, Location
This is an output key figure which equals (for each period) the sum of all receipts -
everything that is received (coming in) at a location for a product. The various
receipts types are:
- Production receipts, defining the amount received via a production sourcing rule
(source type P),
- Transport receipts, defining the amount received via a transport sourcing rule
(source type T) and
- External receipts which is the quantity that is received via an “unspecified”
sourcing rule (source type U)
This document will explain these receipts types in detail in a subsequent section.
4.6 Supply
Technical name: SUPPLY, key: Product, Location
This is an output key figure which is the sum of all supplies - everything that leaves a
location. These are quantities that are transported (in downstream direction) to
another location or transported to a customer or are consumed in a production
process.
If figure 2 plant A supplies 90 units to the two customers who have requested product
P1 in both periods.
4.7 Inventory
4.7.1 Projected Stock

Technical name: PROJECTEDINVENTORY, key: Product, Location
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This output key figure contains the quantity in inventory, or in other words, the
planned stock on-hand for a location product at the end of each period. The formula
used to compute Projected Stock PS(t) in period t is:
PS(1) = Stock on-hand + Receipts(1) – Supply(1)
where period 1 is assumed to be the planning period corresponding to the current

time.
PS(t) = MAX { PS(t-1); 0 } + Receipts(t) – Supply(t) for t = 2, 3, …, T.
The term “Max { PS(t-1); 0 }” means that if the Projected Stock in period (t-1) is
negative the SCM Planning Operator assumes an inventory at the end of period (t-1)
of zero in order to compute the Net Demand in period t.
Note: the values of Projected Stock can be negative - after an heuristic run only. The
optimizer will never compute a supply plan leading to negative Projected Stocks.
4.7.2 Inventory Correction

Technical name: INVENTORYCORRECTION, key: Product, Location
The SCM Planning Operator computes a supply plan for the supply chain model
defined by the master data of S&OP on HANA. The major results of this computation
are the receipts and supply quantities which are stored in key figures Production
Receipts, Production Supply, Transportation Receipts and Transportation Supply,
External Receipts, Customer Receipts and Customer Supply. Based on these
receipts and supply quantities (and on the Stock on-hand) the SCM Planning
Operator derives key figure Projected Stock as explained in section 4.7.1.
With input key figure Inventory Correction S&OP on HANA enables a user to interfere
the computation of the Projected Stock. If the value of key figure Inventory Correction
is not initial the SCM Planning Operator adds this value to the Projected Stock as
follows:
PS(1) = Stock on-hand + Receipts(1) – Supply(1) + Inventory Correction(1)
where period 1 is assumed to be the first period within the planning horizon and key
figure Stock on-hand stores the available stock at the beginning of period 1.
PS(t) = MAX { PS(t-1); 0 } + Receipts(t) – Supply(t) + Inventory Correction(t)

for t = 2, 3, …, T.
A user can enter positive or negative values into key figure Inventory Correction.
These values are added to the Projected Stock – as explained by the formulas
above.
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For the S&OP heuristic a non-initial value in key figure Inventory Correction,
however, does not merely impact the computation of the Projected Stock.
Additionally, it has an impact on the computation of the Net Demand ND(t) of that
period t for which an Inventory Correction is defined. We explain this effect along the
two following figures. In Figure 3a we see the initial plan, i.e. a supply plan for four
periods, consisting of one Consensus Demand and one location product (at DC1) for
product P. The S&OP heuristic has computed the supplies and receipts so that the
Consensus Demands and the Inventory Targets are met exactly.
4.7.3 Inventory Correction Violation

Technical name: INVENTORYCORRECTIONVIOLATED, key: Product, Location
Inventory Corrections are modelled as pseudo-hard constraints for the optimizer.

Pseudo-hard, in general, means that very high penalty costs guide the optimizer to
fulfill these constraints. However, it can happen that the optimizer’s solution violates
such a pseudo-hard constraint if it would be impossible to find a feasible solution
otherwise. The new (output) key figure INVENTORYCORRECTIONVIOLATED
returns a zero value if the pseudo-hard constraint related to an Inventory Correction
could be fulfilled. It returns the sum or the difference (see examples below) between /
of the quantity requested via key figure Inventory Correction and the actual quantity
computed by the optimizer.
A negative Inventory Correction is de facto a fictive supply. If this supply quantity

could not completely provided by a location product then key figure
INVENTORYCORRECTIONVIOLATED returns the sum between the requested and
the actual value. For example, if the user entered -100 units into key figure Inventory
Correction and the location product could deliver only 80 units (and not more in
order to avoid a negative Projected Stock) the key figure
INVENTORYCORRECTIONVIOLATED would return -100 + 80 = -20.
A positive Inventory Correction is de facto a fictive receipt. If this receipt quantity

could not be completely accepted (received) by a location product then key figure
INVENTORYCORRECTIONVIOLATED returns the difference between the requested
and the actual value. For example, if the user entered +60 into key figure Inventory
Correction and the optimizer accepted only 10 units the resulting value in
INVENTORYCORRECTIONVIOLATED would be 60 – 10 = 50. However, as
maximum inventory level is modelled as a soft-constraint we do not expect that this
case ever will occur so that we only expect zero or values < 0 in key figure
INVENTORYCORRECTIONVIOLATED.
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Initial Supply Plan: Without Inventory Correction
DC1 / P
D: 20 20 20 20
C1 / P I: 15 10 05 00
IC: 00 00 00 00
CD: 20 20 20 20 DCD: 20 | 20 | 20 | 20 IT: 15 10 05 00
TCR: 20 20 20 20 N: 35 15 15 15
CD: 20 | 20 | 20 | 20 S: 20 20 20 20
R: 35 15 15 15
CD: Consensus Demand D: Dependent Demand IT: Inventory Target R: Receipts

TCR: Total Customer Receitps I: Projected Stock N: Net Demand
DCD: Dependent Loc. Demand IC: Inventory Correction S: Supply
Figure 3a: Initial Supply Plan – without Inventory Corrections
Now, we assume that a user has entered the red colored (see Figure 3b) Inventory
Corrections in periods 1, 3 and 4. After calling the heuristic the supply plan as shown
in Figure 3b will be displayed. Values in red indicate a user entry (before the heuristic
was called), green colored values have changed in comparison to the initial plan of
Figure 3a.
The Inventory Correction of -10 in period 1 implies that beside of the Supply of 20
units additional 10 units will leave the inventory in period 1 so that the Projected
Stock would be decreased from 15 (Figure 3a) to 5. However, the heuristic tries to
satisfy this additional demand of 10 units and therefore it increases the Net Demand
in the same period (from 35 in Figure 3a up to 45 units in Figure 3b) and as the
heuristic is able to satisfy this additional demand (Receipts equal the Net Demand of
45!) the resulting Projected Inventory remains unchanged at 15 (which equals the
intended Inventory Target). This means that a negative Inventory Correction does not
primarily impact the Projected Stock but the Net Demand of the same period.
Negative Inventory Corrections have to be considered as additional supplies which
are supposed to leave the corresponding location product which is the reason why
the heuristic tries to balance them out by increasing the Net Demand.
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Analogously, positive Inventory Corrections have to be seen as additional receipts –
as we will see when we look at periods 3 and 4.
Supply Plan based on Inventory Corrections
DC1 / P
D: 20 20 20 20
C1 / P I: 15 10 05 05
IC: -10 00 10 20
CD: 20 20 20 20 DCD: 20 | 20 | 20 | 20 IT: 15 10 05 00
TCR: 20 20 20 20 N: 45 15 05 00
CD: 20 | 20 | 20 | 20 S: 20 20 20 20
R: 45 15 05 00
CD: Consensus Demand D: Dependent Demand IT: Inventory Target R: Receipts

TCR: Total Customer Receitps I: Projected Stock N: Net Demand
DCD: Dependent Loc. Demand IC: Inventory Correction S: Supply
Figure 3b: Supply Plan based on Inventory Corrections
In period 3 the user has entered a positive Inventory Correction of 10 units which the
system interprets as an additional receipt. Consequently, the S&OP heuristic
decreases the Net Demand accordingly – as shown in Figure 3b – and as
consequence to a lower Net Demand it computes a lower Receipt (of only 5 units).
The heuristic computes the Net Demand (ND) as follows:
ND(t) = MAX { DD(t) + IT(t) – Max { PS(t-1); 0 } – Inventory Correction(t) ; 0 }

for t = 2, 3, …, T.
whereas DD denots the Dependent Demand and IT the Inventory Target.
Note: There exist cases in which the computation of the Net Demand is not
performed according to the above formulas. Up to S&OP 3.0 (June 2014) this is the
case for Production Cycles and Co-Products.
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The important thing related to Inventory Corrections is that they impact the Net
Demand in the same period they are defined and by impacting the Net Demand they
might impact the Projected Stock. As the heuristic usually can fulfill all demands (with
some exceptions) it usually can equalize the impact of negative Inventory Corrections
so that the Projected Stock remains unchanged. Positive Inventory Corrections, in
contrast, might lead to higher Projected Stocks, as in the example of Figure 3b in
period 4.
The S&OP Optimizer follows a different approach to consider Inventory Corrections.

The optimizer does not compute Net Demands. From the optimizer’s perspective
negative / positive Inventory Corrections are modelled as additional supplies /
receipts whereas these fictive supplies do not arrive at a “Ship-to Location” and these
fictive receipts never have an origin at a “Ship-from Location”.
When using the S&OP Optimizer in conjunction with Inventory Corrections one
should know that the optimizer never computes negative Projected Stocks. This
means, if a negative Inventory Correction would lead to a negative Projected Stock,
(in case the optimizer cannot find enough supply) the S&OP Optimizer will take into
account only that portion of the Inventory Correction which leads to a Projected Stock
of zero, but not below. In such cases, output key figure Inventory Correction
Violation (technical name: INVENTORYCORRECTIONVIOLATED, key: location,
product) returns the difference between the additional supply requested by the
negative Inventory Correction and the actual supply computed by the optimizer.
With positive Inventory Corrections it is possible to violate the defined Maximum

Inventory, i.e. to increase the receipts to an extend so that the resulting Projected
Inventory goes above the maximum possible inventory level as defined in the master
data. (Such an Inventory Correction would be accepted by the optimizer as the
Maximum Inventory is modelled as a soft-constrained.)
4.8 Deficit
Technical name: DEFICIT, key: Product, Location
Output key figure Deficit is the non-cumulative difference between the Net Demand
and Receipts for a location product for each period. It is computed according to this
formula:
Deficit(t) = Max { (Net Demand(t) – Receipts(t) );0} for t = 1, …, T.
Note: Deficit is greater or equal to zero. (No negative values.)
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Note: As explained in section 4.4 the optimizer does not compute key figure Net
Demand explicitly. Instead, the system copies all values of key figure Receipts into
key figure Net Demand so that key figure Deficit is always equal to zero after a plan
was computed by the optimizer.
4.9 Shortage
Technical name: SHORTAGE, key: Product, Location
Output key figure Shortage stores the non-cumulative difference between Dependent
Demand and Supply for a location product. It is computed according to this formula:
Shortage(t) = ( Dependent Demand(t) – Supply(t) ) for t = 1, …, T.
Note: Shortage is greater or equal to zero. (No negative values.)
Note: As explained in section 4.3 the optimizer does not compute key figure
Dependent Demand which is therefore set equal to key figure Supply after an
optimization run. Consequently, key figure Shortage is always equal to zero after the
current supply plan was computed by the optimizer.
Note: When using the S&OP heuristic “Infinite without Shortages” the key figure
Shortage also will be zero in all buckets. The reason is that the strategy of this
heuristic is to supply always the requested Dependent Demand which can result in a
negative Projected Stock.
5. Key Figures between Locations

Beside of the two arc-related key figures explained in section 2, both of them related
to Consensus Demands, there are a lot of additional arc-related key figures used to
describe the flow of goods between locations. We will introduce in this section step
by step these key figures. All of them are output key figures meaning that they are
computed by an S&OP planning algorithm.
5.1 Outbound Location Demand

Technical name: DEPENDENTLOCATIONDEMAND,
key: Product, Location, Ship-from location
This key figure describes the net demand which is propagated from the receiving
location to the ship-from location which is requested to satisfy a Net Demand.
Figure 4 illustrates an example: the requesting location is Distribution Center 1

propagating a Net Demand of 6 units (for product P) in period 1 according to the
quota of 50 % so that there is a Outbound Location Demand of 3 units on both arcs
directing to their ship-from locations Plant A and B. (The arcs are derived out of a
transportation sourcing rule, defining that demands at Distribution Center 1 should be
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sourced to Plant A and B in a portion of 50% for each.) The Outbound Location
Demand is summed up at the ship-from locations as a Dependent Demand (3 units in
both cases as there are no other demand sources.) Stock on-hand at Distribution
Center 1 is 4 units meaning that at the beginning of period 1 there are 4 units
available in stock. The Dependent Demand in period 1 is 10 and in period 2 it is 20
units. Figure 4 depicts the key figure values for both periods.
Note: As for the reasons explained in section 3.1 the optimizer does not compute
Outbound Location Demand. Therefore, key figure Transport Receipts is copied into
Outbound Location Demand after the optimizer has computed a plan.
Key Figures between Own Locations
Plant A / Prod. P
Dep. Dem.: 3 10
Proj. Stock: 0 0 0
Net Demand: 3 10
Receipts: 2 7
Distrib. Center 1 / Supply: 2 7
Product P
Dep. Dem.: 10 20
Proj. Stock: 4 0 0
Net Demand: 6 20
Receipts: 5 15
Supply: 9 15
Plant B / Prod. P
Dep. Dem.: 3 10
Proj. Stock: 5 2 0
Net Demand: 0 8
Receipts: 0 6
Supply: 3 8
Figure 4: Outbound Location Demand and Transport Receipts
5.2 Transport
5.2.1 Transport Receipts

Technical name: TRANSPORT, key: Product, Location, Ship-from location
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S&OP planning heuristics compute Transport Receipts as a response to the
propagated Dependent Demand. To do so, the Net Demands of Plant A and B have
to be propagated to their ship-from locations until the end of the network is reached.
Then the Transport Receipts (and Supply) can be computed which is in the example
of figure 4 two units at Plant A and three units at Plant B. These quantities are
supposed to be transported in period 1 to Distribution Center 1 which is documented
by (output) key figure Transport Receipts.
5.2.2 Transport Receipts Ship-To

Technical name: TRANSPORTSHIPTO, key: Product, Location, Ship-to location
This key figure contains the same values as Transport Receipts, however, with a
different key structure. Instead of Ship-from location the third key attribute is Ship-to
location. The purpose of this output key figure is explained in chapter 5. of the
specification about Planning Units.
5.3 Outbound Production Demand

Technical name: DEPENDENTPRODUCTIONDEMAND,
key: Product, Location, Component, SourceID (PRDID - LOCID - PRDFR –
SOURCEID)
This key figure is related to a production process. It stores the demand for
components (input products) which is derived from the Net Demand of a finished or
semi-finished product. All components of a production or an assembly process are
defined by an S&OP Production Source.
Figure 5 depicts an example in which finished product P is produced out of

components X and Y whereas the component coefficient for X is 1 (depicted by 1:1
meaning that for each unit of P one unit of X is needed) and for Y it is 3 units
(depicted by 1:3 meaning that for each unit of P three units of Y are needed.) Based
on this master data an Outbound Production Demand for X of 3 and for Y of 9 units
are derived in period 1. These Outbound Production Demands “arrive” at the
component level as Dependent Demands of 3 and 9 units, respectively.
As we are going to explain later on in section 6, a user can specify several alternative
Production Sources, for instance, to model that there are several alternative
resources on which a production process can be performed. To allow this we
introduce an additional node type, called the Production Source Node which is
defined per alternative Production Source. There are only two key figures available
on Production Source Node level which are Production Receipts and Adjusted
Production Receipts. Both will be explained in subsequent sections of this
documentation.
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Figure 5 illustrates that such a Product Source Node (for Production Source S1) is
connected with one corresponding location-product (in figure 5, this is the node
“Plant A / Product P” on the left) on which a production process is defined. (This
means, for “Plant A, Product P” there exists a production source rule.)
All key figures, connecting a Production Source Node with a subsequent location-
product node contain the attribute SourceID in their key. So, for example key figure
Outbound Production Demand has the key (Product, Location, Component,
SourceID).
Production Key Figures

Plant A / Component X
Dep. Dem.: 3 10
Proj. Stock: 0 0 0
Net Demand: 3 10
Receipts: 3 10
Supply: 3 10
Plant A / Prod. P Plant A / Prod. P /

Dep. Dem.: 3 10 SourceID S1
Proj. Stock: 0 0 0 Prod.
Net Demand: 3 10 Receipts: 3 10
Prod. Receipts: 3 10
Supply: 3 10
Plant A / Component Y
Dep. Dem.: 9 30
Proj. Stock: 0 0 0
Net Demand: 9 30
Receipts: 9 30
Supply: 9 30
Figure 5: Outbound Production Demand and Production Receipts
Note: As for the reasons explained in section 3.1 the optimizer does not compute
Outbound Production Demand. Therefore, key figure Component Usage is copied
into Outbound Production Demand after the optimizer has computed a plan.
5.4 Component Usage

Technical name: PRODUCTIONCOMPONENT,
key: Product, Location, ProductFrom, SourceID
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This output key figure stores the quantity of a component which is produced
(according to a Production Source) and supplied for a production or assembly
process requested by a previous node of the network.
Figure 5 shows the Component Usage as an arc-related key figure. Note, the
quantities of this key figure are multiplied by the Component Coefficients. So, for
component Y the Component Usage is 9 units in period 1 which is needed to
produce 3 units of the output product P.
5.5 Combined Dependent Demands

If, for instance, a component is used for a production process and it is delivered to a
distribution center and to customers (as a spare part) we have a situation as shown
by figure 5b. The Dependent Demand of component Y is the sum of the Outbound
Customer Demand (generated by the Consensus Demand of customer C1) and the
Outbound Location Demand (propagated from distribution center DC1) and the
Outbound Production Demand generated by the production process at plant A. So, in
period 1 the Dependent Demand of Y is 10 + 20 + 2 = 32 pieces.
Combined Dependend Demands

Customer C1 / Component Y
DC 1 / Component Y
Dep. Dem.: 20 20 Dep. Dem.: 32 34
Proj. Stock: 0 0 Outb. Location Dem. 20 | 20 Proj. Stock: 0 -2 -4
Net Demand: 20 20 Net Demand: 32 34
Receipts: 20 20 Receipts: 30 30
Transport Receipts 20 | 20 Supply: 32 34
Supply: 20 20
Plant A / Product P
Plant A / Prod. P /
Dep. Dem.: 2 4 SourceID S1
Proj. Stock: 0 0 0
Prod.
Net Demand: 2 4
Receipts: 2 4
Prod. Receipts: 2 4
Supply: 2 4
Figure 5b: Combined Dependent Demands
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5.6 Production Receipts
Technical name: PRODUCTION, key: Product, Location, SourceID
This output key figure is node-related. It models the receipts of a component which is
supplied for the corresponding production process. In figure 5 the Production
Receipts of product P at Plant A are 3 and 10 units in the first two periods. We come
back to this key figure in section 6.
5.7 Capacity Demand

S&OP on HANA offers two types of resources: handling and production resources.
Handling resources apply to all goods receipts at a location in the sense that each
arriving unit of a product consumes a certain capacity unit of the resource. This
resource type is relevant for all receipts of the location product, which are Transport,
Production and External Receipts.
Production resources, in contrast, model a production or assembly process. Their

capacity is consumed per produced or assembled unit of product. Transport and
External Receipts do not consume capacity of a production resource.
All key figures related to capacities have in their key the attributes Resource,
Location and Product – independent of the resource type. The key figures related to
production capacities have in addition the attribute Production Source ID
(“SourceID”) in their key. Even the key of a production resource contains the Source
ID. For that reason, the key figures Capacity Consumption Rate, Capacity Demand
and Capacity Usage exist separately for handling and for production resources.
5.7.1 Capacity Demand (of handling resources)

Technical name: CAPADEMAND, key: Resource, Location, Product
The Capacity Demand of a handling resource describes the amount of capacity

which is needed to handle the entire Net Demand of a location-product.
This output key figure is derived out of the Net Demand of a location-product
multiplied (in general) by the key figure Capacity Consumption Rate of Production
Resource which is an input key figure - explained in a subsequent section -
specifying how many units of a resource’s capacity supply is consumed by receiving
one unit of the product at the location. With handling resources a user models all
activities to be performed during the goods arrival at a location, which are unloading
a truck, storing the goods etc. Included in this computation are all kind of receipts, i.e.
Transport, Production and External Receipts.
Figure 6 illustrates a handling resource. The Net Demand is 8 units (in the first
period). The resulting Capacity Demand is 8 [units] * 5 [hours/unit] = 40 [hours]
assuming the resource’s capacity is measured in hours.
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Capacity Demand of Handling Resources
Plant A / Prod. P
Dep. Dem.: 8 10
Proj. Stock: 0 0 0 Outbound Location Dem. 8 | 10
Net Demand: 8 10
Receipts: 8 10
Supply: 8 10 Transport Receipts 8 | 10
Capacity Consumption Rate: 5
Cap. Demand: 40 50
Resource R / Product P Cap. Usage: 40 50
Figure 6: Capacity Demand and Capacity Usage (of handling resources)
5.7.2 Capacity Demand of Production Resource

Technical name: PCAPADEMAND,
key: Resource, Location, Product, SourceID
The Capacity Demand of Production Resource describes the amount of capacity

which is needed to produce the portion of the Net Demand of a location-product
which is sourced via a P-rule to a Production Source.
This output key figure is derived out of the Net Demand which is satisfied via a
production process multiplied by the key figure Capacity Consumption Rate of
Production Resource. This is an input key figure - explained in a subsequent section
- specifying how many units of a resource’s capacity supply is consumed by the
production process to produce one unit of the output product. Figure 6b provides an
example in which the Capacity Consumption Rate of Production Resource R is 5
over all periods). The Capacity Demand of Production Resource is derived out of the
Net Demand of 3 units of product P in period 1 multiplied by the Capacity
Consumption Rate of Production Resource) resulting in a Capacity Demand of
Production of 15 [capacity units].
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Capacity Demand of Production Resources
Plant A / Prod. P
Dep. Dem.: 3 10 Plant A / Prod. P /
Proj. Stock: 0 0 0 SourceID S1
Net Demand: 3 10 Prod.
Supply: 3 10
Capacity Consumption Rate of Prod: 5
Cap. Demand
Resource R / Product P / of Production: 15 50
SourceID X Cap. Usage:
of Production: 15 50
Figure 6b: Capacity Demand and Capacity Usage of production resources
Figure 6c illustrates a situation in which only a portion of 50% of the Net Demand of
the location-product “Plant A, Product P” is sourced via a P-rule to a Production
Source S1, while the remaining 50% are sourced via a T-rule. The Net Demand of 4
pieces is split according to this quota so that 2 units are to be produced and 2 are to
be satisfied by a stock transfer from another location. At the location-product
handling resource R1 is defined, on the level of the Production Source we have a
production resource R2. To compute the Capacity Demand of handling resource R1
the entire Net Demand of 4 units is taken into account and multiplied by the Capacity
Consumption Rate of 2 resulting in a Capacity Demand of 8 and 20 in the two
periods. In contrast to this, for computing the Capacity Demand of the production
resource R2 we consider only that portion of the Net Demand sourced to the
Production Source S1, which are 2 units. So in period 1 the 2 units as a “Net
Demand of Production” are multiplied by the Capacity Consumption Rate of
Production which is 1 resulting in a Capacity Demand of Production for resource R2
and product P for Production Source S1 of 2 [capacity units].
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Production and Handling Resources
Plant A / Prod. P /
SourceID S1
Outb. Product. Dem. 2 | 5
Prod.
Receipts: 2 5 1:1
Plant A / Prod. P
Cap. Cons. Rate
Dep. Dem.: 4 10 of Production: 1
Proj. Stock: 0 0 0
Net Demand: 4 10 Resource R2 / Prod. P /
Receipts: 4 10 SourceID S1
Supply: 4 10 Cap. Demand
of Production: 2 5
Cap. Usage
Cap. Cons. Rate: 2 of Production: 2 5
Resource R1 / Prod. P
Cap. Demand: 8 20
Cap. Usage: 8 20
Figure 6c: Capacity Demand for both resource types.
5.8 Capacity Usage
5.8.1 Capacity Usage of Production Resource

Technical name: PCAPAUSAGE, key: Resource, Location, Product, SourceID
This output key figure shows how much of a resource’s capacity supply is consumed
by the production of a product. If there is enough capacity supply available to satisfy
the capacity demand caused by all products the Capacity Usage of Production
Resource equals the Capacity Demand of Production Resource (as assumed for the
example of figure 6). If there is not enough capacity available and the plan is
computed with a finite planning algorithm the Capacity Usage of Production
Resource is, in general, smaller than the Capacity Demand of Production Resource.
In order to find out whether there is a capacity shortage the algorithms summarize,
for each resource, the capacity demands over all products resulting in the overall
capacity demand (per resource). This overall capacity demand is matched against
the overall available Capacity Supply which is an input key figure (as explained in
one of the subsequent sections).
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The Capacity Usage of Production Resource can easily be computed by this formula
(for production resources):
Capacity Usage(t) = Production Receipts(t) *

Capacity Consumption Rate of Production Resource(t)
5.8.2 Capacity Usage (for handling resources)

Technical name: CAPAUSAGE, key: Resource, Location, Product
This output key figure has the analogous meaning as the Capacity Usage of
Production Resource – which is described in the previous section. The formula to
compute this key figure is
Capacity Usage(t) = Receipts(t) * Capacity Consumption Rate(t)
5.9 External Receipts

Technical name: RECEIPT, key: Product, Location
This output key figure is needed to model receipts at the boundary of the supply
chain. If, for instance, the supply network terminates at a location product where
components are purchased and the supply chain of the supplier should not be taken
into account one needs sourcing rules indicating the planning algorithms to stop the
network propagation but to make supply available. This is the task of so-called U-
rules whereas U stands for “unspecified”. The meaning of a U-rule is that the
propagated Net Demand is available without defining in detail where it comes from. It
could come from a supplier (procurement) or also through in-house production, which
however in this case does not get modeled and is not tied to a resource constraint.
Figure 7 illustrates the usage of a U sourcing rule for the components X and Y. The
meaning is that for this supply chain model it is assumed that both components can
be purchased somewhere without limitations and therefore the External Receipts are
always equal to the Net Demand of X and Y in each period. The key figure External
Receipts documents the amount received at a location-product via such an U-rule.
The key figure Receipts summarizes all quantities which are received via all sourcing
rules – if there are several as described in the subsequent section.
For the amount sourced via the U-rule we do not have an arc-related key figure like
the Outbound Production Demand or the Outbound Location Demand (on the
demand side) since there is no origin modeled in the network. The demand
propagated to such an U-rule, however, can be derived from the Net Demand of the
connected node.
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External Receipts
Dep. Dem.: 3 10
Proj. Stock: 0 0 0
Net Demand: 3 10 U
Ext. Receipts: 3 10
Plant A / Prod. P Receipts: 3 10
Supply: 3 10
Dep. Dem.: 3 10
Proj. Stock: 0 0 0
Net Demand: 3 10
Supply: 3 10
Dep. Dem.: 9 30
Proj. Stock: 0 0 0
U
Net Demand: 9 30
Ext. Receipts: 9 30
Receipts: 9 30
Supply: 9 30
Figure 7: External Receipts
It is important to know that if there is no U-rule specified there will be no supply

meaning that a location-product having a Net Demand for which no U-rule is defined
does not receive anything. If the user has specified a U-rule in the master data the
requested supply will be available without any limit (constraint).
5.10 Missing Sourcing Rules

The heuristic (not the optimizer) travels along the supply network starting from
Customer Demands, then following customer sourcing rules to propagate Consensus
Demands to location-products (nodes) and then onwards from location-products to
succeeding location-products. If for a certain location-product there is – possibly by
mistake - not defined any sourcing rule at all the heuristic has to stop at this point.
The whole sub-network (i.e. all location-products) behind this point will not be
reached by the heuristic at all, if there is not another entry point. This means that for
all location-product belonging to such an isolated sub-network no key figures are
computed at all by the heuristic.
The optimizer has a different approach to compute a supply plan. Nevertheless there
is no need for the optimizer to compute supply for an isolated sub-network.
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Consequently, the optimizer also will not compute key figures for location-products
belonging to isolated sub-networks.
6. Multiple Source Types

A Net Demand of a product at a location can be satisfied either by a production
process, by a transport or by an unspecified mode, where the model does not
describe where supply comes from. To plan supply via a production process one has
to specify a suitable production sourcing rule (P-rule). To plan supply through stock
transfer from another location one has to specify a suitable transport sourcing rule (T-
rule). If the source of supply should not be modeled explicitly the user has to specify
a U sourcing rule. There can only be one U rule per location product – and more than
one wouldn’t make sense as they cannot be differentiated.
So far, in this document we considered that for a specific location-product only one of
these three sourcing types is used to get supply. However, it is possible to mix
multiple source types, which implies that one can specify that the Net Demand
should be distributed according to quotas between different sourcing types. It would
be possible, for instance, to source a Net Demand to 30% to a P-rule, to 50% to a T-
rule and the remaining 20% to an U-rule meaning that 30% of the Net Demand
should be propagated to a production process, 50% to another location and 20% of
the Net Demand are assumed to be available without limitations – whatever real use
case might be behind such a model.
The sum of quotas has to sum up to 100% (+/- a small epsilon which is needed due
to rounding errors).
Figure 8 depicts a model in which a Net Demand at Distribution Center 1 has to be

sourced to 50% from Plant A. The U-rule takes over the rest – without the need to
specify a quota for a U-rule. (It is even not possible to specify a quota for a U-rule.
The reason for this is that one cannot have more than one U rule per location-
product.).
A finite algorithm might not be able to supply the whole Outbound Location Demand
sourced to Plant A, the U-rule however always will supply the complete Net Demand
sourced to this rule – as indicated by the numbers in figure 8.
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Multiple Source Types: T- and U-rule
Plant A / Prod. P
Dep. Dem.: 3 10
Proj. Stock: 0 0 0
Net Demand: 3 10
Receipts: 2 7
Product P
Dep. Dem.: 10 20
Proj. Stock: 4 0 0
Net Demand: 6 20
Ext. Receipts 3 10
Receipts: 5 17
Supply: 9 17
Figure 8: Multiple Source Types: T- and U-rule
As mentioned in section 5.3 Production Source Nodes are used in the diagrams to
illustrate multiple Production Sources. Figure 9 depicts a model with two alternative
Production Sources S1 and S2. In the example of figure 9 the Net Demand of
product P at Plant A is satisfied by two alternative Production Sources S1 and S2
(with a quota of 50% for each). Consequently, the Net Demand of 6 pieces in period
1 is split into 3 pieces for S1 and S2. From the Production Source Node the demand
is propagated to the components and the Component Usage (number of receiving
components) is receipted at the Production Source Node level (documented in key
figure Production Receipts).
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Multiple Production Sources
Dep. Dem.: 3 10
Plant A / Prod. P /
Proj. Stock: 0 0 0
SourceID S1
Net Demand: 3 10
Receipts: 3 10 Supply: 3 10
Plant A / Prod. P Plant A / Component Y

Dep. Dem.: 6 20 Dep. Dem.: 9 30
Proj. Stock: 0 0 0 Proj. Stock: 0 0 0
Supply: 6 20 Plant A / Prod. P /
Supply: 9 30
SourceID S2
Prod.
Receipts: 3 10
Plant A / Component Z
Dep. Dem.: 6 20
Proj. Stock: 0 0 0
Net Demand: 6 20
Receipts: 6 20
Supply: 6 20
Figure 9: Multiple Production Sources with Production Source Nodes
An example of a model in which a Net Demand is sourced to a mixture of several

different sourcing types is depicted by figure 10. A Net Demand of product P at Plant
A is propagated to 50% to a production process (via a Production Source), to 30% to
a transportation source (T-) rule and the remaining 20% are to be supplied via a U-
rule. From the Net Demand of 10 pieces in the first period 5 are to be produced, 3 to
be supplied via a transport from distribution center DC 1 and the remaining quantity
(2 pieces) is supposed to be delivered without constraints (via the U-rule).
The 5 pieces to be produced cause an Outbound Production Demand of 5 pieces for

component X (in period 1). These 5 pieces are delivered via the Component Usage
which is receipted via key figure Production Receipts (at the Production Source
Node).
The 3 pieces to be transported from DC 1 are documented in key figure Outbound

Location Demand causing a corresponding Depending Demand at DC1.
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Multiple Source Types: P-, T- and U-rule
Dep. Dem.: 5 10
Plant A / Prod. P /
Proj. Stock: 0 0 0
SourceID S1
Net Demand: 5 10
Plant A / Prod. P DC 1 / Prod. P

Dep. Dem.: 10 20 Dep. Dem.: 3 6
Proj. Stock: 0 0 0 30% Outb. Loc. Demand 3 | 6 Proj. Stock: 0 0 0
Ext. Receipts: 2 4 Transport Receipts 3 | 6 Receipts: 3 6
Supply: 10 20
Figure 10: Mixture of P-, T- and U-rules
7. Master Data Input Key Figures

This section completes the descriptions of input key figures. The key figures of this
section are similar to Master Data in the sense that they describe properties of the
supply chain network.
7.1 Capacity Supply

Technical name: CAPASUPPLY, key: Resource, Location
This key figure stores the available capacity of a resource per period. The unit of key
figure Capacity Supply is arbitrary but be aware that the Capacity Consumption Rate
has to have a unit converting the production quantities into the unit in which the
Capacity Supply is specified. So, for instance, if Capacity Supply is denoted in
[hours] the unit of the Capacity Consumption Rate has to be in [hours / quantity unit].
This way the result of production quantity multiplied by the corresponding Capacity
Consumption Rate is in [hours] which can be matched against the given Capacity
Supply in [hours].
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7.2 Capacity Consumption Rate
7.2.1 Capacity Consumption Rate (for handling resources)

Technical name: CAPACONSUMPTION, key: Resource, Location, Product
This key figure defines the capacity which is consumed on a handling resource by
the receipt of one unit of a location-product.
Example: We assume that the Capacity Consumption Rate for product P1 on

(handling) resource R1 in location L1 is 0.2 hours per piece. If the Net Demand for
P1 at L1 is 100, the resulting Capacity Demand is
Capacity Demand = 100 [pieces] * 0.2 [hours/piece] = 20 [hours]
(in the considered period).
7.2.2 Capacity Consumption Rate of Production Resource

Technical name: PCAPACONSUMPTION,
key: Resource, Location, Product, SourceID
Similar to the Capacity Consumption Rate of handling resources the “Capacity

Consumption Rate of Production Resource” defines how much capacity is consumed
per unit of product produced. In this case, however, the consumption rate is related
to a production or assembly process and the consumption rate is per produced /
assembled piece. In contrast to the Capacity Consumption Rate of handling
resources this key figure contains additionally the ID of the Production Source
(“SourceID”) in its key.
The resulting Capacity Demand of Production Resource is computed in the same

way as explained for handling resources in the previous section. However, if the Net
Demand is sourced only to a certain quota to a Production Source (as illustrated in
figure 6c) then only this portion of the Net Demand (let us call it “Net Demand of
Production”) is used instead of the entire Net Demand to compute the Capacity
Demand of a production resource.
Both types of resource consumption can be combined for a location product.
7.3 Component Coefficient

Technical name: COMPONENTCOEFFICIENT,
key: Product, Location, Component, SourceID
This input key figure defines the relative quantity of a component in relation to the
output product in a Production Source. A component coefficient of 2:3 means that 3
units of the component are needed to produce two units of the output product. Here 2
is the Output Coefficient explained in the next section.
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7.4 Output Coefficient
Technical name: OUTPUTCOEFFICIENT,
key: Product, Location, SourceID
This input key figure defines the output product coefficient in Production Sources
which is the relative quantity of output products in a Production Source. In case there
are several output products (co-products) the output coefficients define the ratios in
which the output products are produced. So if the output coefficients for the output
products O1, O2 and O3 are 2, 2.5 and 0.8 this means that the output quantities of
these three output products have a relation 2 : 2.5 : 0.8
If the production process to produce O1, O2 and O3 needs input components C1 and
C2 and their component coefficients are 0.7 and 3.2 this means that 0.7 units of C1
and 3.2 units of C2 are needed to produce 2 units of O1, 2.5 units of O2 and 0.8 units
of O3.
7.5 Customer Sourcing Quota

Technical name: CUSTOMERRATIO, key: Customer, Product, Location
This input key figure contains the quotas for sourcing customer demand for a product
from various ship-from locations. For instance, if a customer demand should be
satisfied by 40% from distribution center 1 and the remaining 60% from distribution
center 2 these ratios are defined by the customer sourcing quota. As these quotas
may vary over time they are stored in a key figure. This key figure is connected with a
corresponding customer sourcing rule. The sum of all Customer Sourcing Quotas for
a customer product combination has to add up to 1 in each period.
Note: These quotas are respected by the S&OP heuristics but not by the optimizer.
The optimizer itself computes cost- and / or profit optimal distributions of supply from
locations to customers - independent of the Customer Sourcing Quotas.
7.6 Location Sourcing Quota

Technical name: LOCATIONRATIO, key: Product, Location, Ship-From Location
This input key figure defines the quotas according to which a Net Demand for a
location product should be sourced from various locations via stock transfers.
Note: These quotas are respected by the S&OP heuristics but not by the optimizer.
The optimizer itself computes cost- and / or profit optimal distribution of supply
between locations - independent of the Location Sourcing Quotas.
7.7 Production Sourcing Quota

Technical name: PRODUCTIONRATIO, key: Product, Location, SourceID
This input key figure defines the percentage to which a Net Demand for a location
product is propagated to a production source. So, in figure 9 the Production Sourcing
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Quota for both given Production Sources is 50% meaning that the Net Demand of
product P1 at Plant A is propagated to 50% to each of the two Production Sources
S1 and S2.
Location sources can be combined with production sources und unspecified sources.
The sum of the quotas for each location-product and time period has to be 1 if there
are no unspecified sources and less than or equal to 1 if there is an unspecified
source.
In figure 10, the Net Demand of product A at Plant A is sourced to 50% to the
Production Source S1 as the corresponding Production Source Quota is equal to
50%. 30% of this Net Demand is sourced via a transport because the corresponding
Location Sourcing Quota is set to 30%. The remaining 20% are automatically
sourced via the U-rule as an External Receipt.
Note, these quotas are respected by the S&OP heuristics but not by the optimizer.
The optimizer itself computes cost- and / or profit optimal distributions of supply
between own locations - independently of the Production Sourcing Quotas.
8. Input Figures for the Optimizer

There are several input key figures which are relevant for the optimizer only. In most
cases, these key figures represent various cost types, such as inventory holding
costs, production and transportation costs, etc. As the existing S&OP heuristic does
not take into account any cost types at all these key figures are ignored when the
user chooses a heuristic to compute a plan.
Most cost key figures are rates meaning that these costs are defined per unit of
quantity (and per period). The total cost of each of these quantity-proportional costs
is computed for the objective function of the optimizer by multiplying a quantity (like a
transport or inventory quantity) with the appropriate cost rate key figure. Cost rates
include in their name the term “rate”. In addition to these proportional cost types there
are cost types which are fixed and therefore independent of a quantity. Fixed costs
are incurred by definition if a quantity in a period is greater than zero. So, for
instance, if the production quantity is greater than zero the Fixed Production Costs
are considered within the objective function. If the production quantity is zero no
Fixed Production Costs will be considered.
All the key figures explained in the following sub-sections refer to a cost type. Behind
the cost type there might be several different real costs to be included in this type.
So, for instance, the cost type Production Cost Rate should include all costs which
are caused by a production process and which are (within the precision of the model)
proportional to the production quantity. These could be costs for energy, machine
usage, labor and maybe others. During an S&OP implementation one needs to
decide which real costs are to be included in each cost type. Some cost key figures
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are not intended to store real costs. If for an example, there are no real costs related
to production setup, in an implementation one still might decide to set a non-zero
Fixed Production Costs to prevent the optimizer to plan too small production lot sizes
in too many separate periods. This could be helpful if spread out production should
be avoided due to technical, organizational or business reasons. Conversely if the
Fixed Production Costs are zero in all periods and the Inventory Holding Cost Rates
are greater than zero, the optimizer will probably follow a lot-for-lot-strategy, so that
in all periods the demand of the period is produced but nothing put on stock.
Obviously, the purpose of such artificial costs is to push the optimizer towards a
certain planning pattern.
Beside of cost key figures there exist other key figures, storing quantities in most
cases, which are relevant for only the optimizer and not the heuristic.
8.1 Non-Delivery Cost Rate for Customer Demand

Technical name: NONDELIVERYCOSTRATE, key: Customer, Product
This key figure defines the costs per unit of a Customer Demand quantity (and per
period) that is not met by the supply plan which is stored in key figure Total Customer
Receipt (that is the cost incurred is proportional to the difference between Customer
demand and Total Customer Receipt).
These costs should contain the lost revenue per unit of product. These costs can
contain, if this is reasonable, additional non-delivery costs for example for an image
loss resulting out of not fulfilling customer demands or any other penalty cost.
The non-delivery costs are taken into account by the objective function of the Mixed
Integer Linear Program which minimizes the value of the objective function. The
objective function summarizes all costs which are defined by the key figures
described in this section.
Example: Assume the sales price of product X (for all customers) is 4 EURO. As in
that business a non-delivery does not result in an image loss the Non-Delivery Cost
Rate is set equal to the sales price (per unit), i.e. to 4 EURO. If the demand of
customer A for this product X in period 1 is 10 and the supply computed by S&OP is
7 units only, the non-delivery costs in period 1 would be:
(10 – 7) * 4 [EUR / unit] = 12 EURO.
8.2 Inventory Target Violation Cost Rate

Technical name: INVENTORYTARGETVIOLATIONCOSTRATE, key: Product,
Location
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This key figure contains the costs per quantity unit of product and per period that the
Projected Stock is below the safety stock. These costs are typically not directly
related to real costs but they are entered as penalty costs.
Example: Assume the following situation for a given location-product:
Period 1 2 3 4
Inventory Target 6 6 6 6
Projected Inventory 8 6 5 0
Inv. Target Viol. Cost Rate 2 2 2 2
Inv. Target Viol. Cost 0 0 2 12
The Inventory Target Violation Cost Rate is two EURO in all periods. The total
penalty costs (computed as part of the objective function) for not reaching the Target
Inventory is computed for all 4 periods as follows:
0 * 2 + 0 * 2 + (6 – 5) * 2 + (6 – 0) * 2 = 14 EURO.
8.3 Inventory Holding Cost Rate

Technical name: INVENTORYHOLDINGCOSTRATE, key: Product, Location
This key figure defines the cost for inventory holding per quantity unit of product and
period and is related to the key figure Projected Stock. Within the objective function
the Projected Stock of each period (denoting the amount of goods at the end of a
period) is multiplied by the Inventory Holding Cost Rate of each period to compute
the total cost of having the projected amount of products on stock. To achieve this all
costs related to inventory holding should be included in this rate, capital cost as well
as actual cost of storage.
8.4 Customer Transportation Cost Rate

Technical name: CUSTOMERTRANSPORTATIONCOSTRATE,
This key figure should store all costs which are proportional to the transport quantity
of a product from a location to a customer. The transportation costs are defined per
unit of product and period for customer receipts.
8.5 Fixed Customer Transportation Cost

Technical name: FIXEDCUSTOMERTRANSPORTATIONCOST,
This key figure models a fixed cost per period for each period where customer
receipts for a product, customer and (ship-from) location are non-zero.
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8.6 Transportation Cost Rate
Technical name: TRANSPORTATIONCOSTRATE,
key: Product, Location, Ship-to Location
This cost rate defines the cost per quantity unit of product and period for Transport
Receipts between two locations.
8.7 Fixed Transportation Cost

Technical name: FIXEDTRANSPORTATIONCOST,
key: Product, Location, Ship-to Location
This key figure models a fixed cost per period for each period where transport
receipts for a product, location and ship-from location are non-zero.
8.8 Production Cost Rate

Technical name: PRODUCTIONCOSTRATE, key: Product, Location, SourceID
This key figure models the cost per quantity unit of product and period for Production
Receipts. Note: this key figure should not contain the cost for components / input
material consumed by the Production Source. This is because optimizer computes
the value of the components consumed separately – based on costs to purchase raw
material and to produce and transport all intermediate / semi-finished products, i.e.
the whole supply chain process needed to get the components.
8.9 Fixed Production Cost

Technical name: FIXEDPRODUCTIONCOST, key: Product, Location, SourceID
This key figure models a fixed cost per period for each period where production
receipts for a product in a location are non-zero.
8.10 External Receipt Cost Rate

Technical name: EXTERNALRECEIPTCOSTRATE, key: Product, Location
This key figure models a cost per quantity unit of product and period for External
Receipts for a location-product. External Receipts can be used to model the
purchase of products which are input for the planners supply chain (or for other
receipts not further specified and detailed within the S&OP supply chain network).
8.11 Fixed External Receipt Cost

Technical name: FIXEDEXTERNALRECEIPTCOST, key: Product, Location
This key figure models a fixed cost per period for each period where External
Receipts for a location-product are non-zero.
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8.12 IPU Non-Delivery Cost Rate
Technical name: IPUNONDELIVERYCOSTRATE,
key: Product, Location, Ship-To Location
This key figure is relevant only if the feature “Planning Units” is used. For a detailed
description please see the specification about “Planning Units”.
8.13 IPU Receipts Cost Rate

Technical name: IPURECEIPTCOSTRATE,
key: Product, Location
This key figure is relevant only if the feature “Planning Units” is used. For a detailed
description please see the specification about “Planning Units”.
8.14 Independent Demand Non-Delivery Cost Rate

Technical name: INDEPDEMANDNONDELIVERYCOSTRATE,
key: Product, Location
This key figure is relevant only if key figure Independent Demand (see chapter 12.4
below) contains values. If for a location product additional demand is defined via key
figure Independent Demand, the optimizer uses the “Independent Demand Non-
Delivery Cost Rate” to compute penalty costs for non-delivered quantities (by
multiplying the Independent Demand Non-Delivery Cost Rate with the non-delivered
quantity).
8.15 Maximum Key Figures

S&OP on HANA offers several Maximum Key Figures which limit the quantities of
several output key figures of the SCM Planning Operator, such as Projected
Inventory, Production Receipts, Transport Receipts, etc. These Maximum Key
Figures are respected only by the S&OP Optimizer and not by the S&OP Heuristic.
This means that the heuristic might compute supply plans which violate such
maximum constraints. Such violations can be made visible by configuring a
corresponding alert in S&OP on HANA.
All Maximum Key Figures are modelled as hard constraints for the optimizer, except
for the Maximum Inventory which is modelled as a soft constraint.
8.15.1 Maximum Inventory

Technical name: MAXINVENTORY, key: Product, Location
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The purpose of this key figure is to define a constraint for the optimizer, which is the
maximum inventory level for a location product. The optimizer respects this constraint
by limiting the production, the purchase or the transport of this location-product so
that the Projected Inventory remains at or under below the value stored in key figure
in each period.
The Maximum Inventory is modelled as a soft constraint for the optimizer, i.e.
violations (quantities above the given limit) causing penalty costs in the optimizer’s
objective function. The corresponding penalty costs are to be defined via the
following key figure Maximum Inventory Violation Cost Rate:
8.15.2 Maximum Inventory Violation Cost Rate

Technical name: MAXINVENTORYVIOLATIONCOSTRATE, key: Product, Location
This key figure contains the costs per quantity unit of product and per period that the
Projected Stock is above the Maximum Inventory which is defined in the master data.
These costs are typically not directly related to real costs but they are entered as
penalty costs. These costs should be significantly higher as the normal cost rates (for
instance such as the values in Inventory Holding Cost Rate) to ensure that the
Maximum Inventory constraint usually will be respected and will be violated only in
exceptional cases, for example, if a user entry in key figures Adjusted Transport or
Minimum Transport forces the system to increase the Projected Stock beyond the
Maximum Inventory level.
8.15.3 Maximum Customer Receipts

Technical name: MAXCONSTRAINEDDEMAND, key: Customer, Product, Location
This key figure limits the output key figure Customer Receipts, i.e. the supply of a
Consensus Demand.
8.15.4 Maximum Customer Supply

Technical name: MAXCONSTRAINEDDEMANDDS, key: Customer, Product,
Location
This key figure is the corresponding Downstream Key Figure (see chapter 9. of this
document) to key figure Maximum Customer Receipts. It limits the quantities
computed by the optimizer for key figure Customer Supply.
8.15.5 Maximum Transport Receipts

Technical name: MAXTRANSPORT key: Product, Location, Ship-from location
This key figure limits the output key figure Transport Receipts.
8.15.6 Maximum Transport Supply

Technical name: MAXTRANSPORTDS, key: Product, Location, Ship-to location
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This key figure is the corresponding Downstream Key Figure (see chapter 9. of this
document) to key figure Maximum Transport Receipts.
8.15.7 Maximum Production Receipts

Technical name: MAXPRODUCTION, key: Product, Location, SourceID
This key figure limits the output key figure Production Receipts.
8.15.8 Maximum External Receipts

Technical name: MAXRECEIPT, key: Product, Location
This key figure limits the output key figure External Receipts.
8.16 Late Delivery

Per default the optimizer tries to satisfy all Customer Demands in time which means
that it tries to plan in each period a Customer Receipts which matches the
corresponding Customer Demand (for each customer product). If the optimizer
cannot generate a supply plan providing enough receipts for a Customer Demand the
non-delivered quantities are lost sales as these non-delivered quantities are not
taken over into one of the sub-sequent periods.
If the optimizer, in contrast to the default setting, should take over the non-delivered
quantities into a sub-sequent period a user can configure this feature by using the
following key figures:
8.16.1 Late Delivery Maximum Periods

Technical name: CONSDEMLATEDELIVMAX, key: Customer, Product
Via this input key figure a user specifies the maximum number of periods that a
Customer Demand, or a portion of it, can be delivered late.
8.16.2 Late Delivery Cost Rate

Technical name: CONSDEMLATEDELIVCOSTRATE, key: Customer, Product
Cost rate for late delivery (per unit of measure and per period). These costs arise for
the amount delivered late in each late period.
To avoid unnecessary late deliveries this key figure needs to be filled accordingly.
Late deliveries are penalized in the objective function by the number of periods and
by the quantities which are delivered late multiplied with this cost rate.
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8.16.3 Total Delivered
Technical name: CONSDEMDELIVERED, key: Customer, Product
This output key figure contains the total amount of the consensus demand which is
delivered on time or late, i.e. which is delivered in any period.
We explain this key figure and the difference compared to key figure Total Customer
Receipts along an example. For a customer product we assume a Customer
Demand of 10 units in period 1 and 2. We further assume that for the demand in
period 1 the customer receives 6 units and in period 2 he receives another 3 units
late so that altogether 9 units are delivered which means there remains a non-
delivered quantity of 1 unit. The Customer Demand in period 2 is shipped in period 2,
but only 8 units can be supplied so that there is a shortage of 2 units. The three
relevant key figures will store the following values:
Key Figure Period 1 Period 2
Customer Demand 10 10
Total Customer Receipts 6 11
Total Delivered 9 8
9. Downstream Key Figures for Location Centric View

Typically, planners want to see all demand and supply key figures related to a
location product on one screen, i.e. one planning view in Excel. Beside of the key
figures related to the location product itself, there are key figures related to the
location sources of supply connected with that location product. The background is
that planners want to see for a location product the incoming demand, i.e. how much
demand it receives via which location source from which preceding location product
in the supply chain network. Analogously, planners want to see the outgoing
demand, i.e. how much demand a location product requests from its subsequent
location products in the supply chain network. And planners want to compare
incoming and outgoing demand for individual location products. The preceding
location products are in downstream direction, the subsequent location products are
in upstream direction.
Planners usually want to compare demand and supply. For that reason, it is also
important to display for a location product on one screen the outgoing supply, i.e.
how much it supplies in downstream direction along which location source to which
preceding location product. And it is important to know the incoming supply, i.e. how
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much supply a location product receives via which location source from which
upstream location products.
The problem is that the key figures showing the incoming and the outgoing demand
have different keys so that it is impossible to display both on one planning view. In
addition, the two key figures show the same demand in different periods, due to the
lead time shift. The same problem exists for incoming and outgoing supply, as shown
by figure 11 – which will be explained below in detail.
Location Centric View
Lead Time: 1 Lead Time: 1

DC0/P1 DC1/P1 DC2 / P1
D: 11 12 13 14 OLD: 11 | 12 | 13 | 14 D: 12 13 14 _ OLD: 12 | 13 | 14 | _
D: 13 14 _ _
I: -11 0 0 0 I: -12 0 0 0
N: 11 12 13 14 N: 12 13 14 0
R: _ 12 13 14 R: _ 13 14 _
S: 11 12 13 14 S: 12 13 14 _ S: 13 14 _ _
TR: _ | 12 | 13 | 14 TR: _ | 13 | 14 | _
Key Figure ProdId LocId LocFrom 1 2 3 4

Outb. Loc. Dem. (OLD) P1 DC1 DC2 12 13 14
Transport Receipts (TR) P1 DC1 DC2 13 14
Receipts (R) P1 DC1 13 14
Supply (S) P1 DC1 12 13 14
Figure 11: Location centric view
Figure 11 shows (in its upper area) three location products which are connected by
two location sources of supply, each having a lead time of one period. The (outgoing)
demand of DC0/P1 is propagated via key figure Outbound Location Demand (OLD)
in upstream direction to DC1/P1. At DC1 the demands are lead time shifted which
means that the demand of DC0/P1 of 12 pieces in period 2 is shifted at DC1 to
period 1. The reason is that due to the lead time, a transport departing at DC1 in
period 1 arrives at DC0 in period 2. Consequently, a demand of DC0 in period 2
needs to be scheduled at DC1 already in period 1 so that a resulting supply, i.e. a
transport is planned to depart in period 1.
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To compare the incoming and outgoing demand at DC1 one could compare key
figure OLD at the location source between DC0 and DC1 with the OLD between DC1
and DC2. However, as shown in figure 11, due to the lead time shift these two key
figures show the corresponding demands in different periods so that a comparison
period by period is impossible. In addition, both key figures have the same planning
level, which is (ProductID, LocationID, LocationFrom) but they have a different key
values: the OLD between DC0 and DC1 has the key values P1, DC0, DC1 whereas
the OLD between DC1 and DC2 has the key values P1, DC1, DC2. For one key
figure the attribute LocationID is DC0 whereas for the second one it is DC1.
Consequently, if the planner selects key figure OLD for DC1/P1 only the OLD
between DC1 and DC2 appears – as shown in the table in figure 11. The same two
problems exist for supply key figure Transport Receipts (TR).
To resolve the issue with the lead time shift and the issue with different key values
S&OP introduced the concept of the location-centric view: For several demand and
supply key figures a corresponding key figure called downstream key figure is
offered, as shown by figure 12. (Downstream key figures are colored red.)
Location Centric View with Downstream Key Figures
Lead Time: 1 Lead Time: 1

DC0/P1 DC1/P1 DC2 / P1
D: 11 12 13 14 OLD: 11 | 12 | 13 | 14 D: 12 13 14 _ OLD: 12 | 13 | 14 | _
D: 13 14 _ _
I: -11 0 0 0 DLD: 12 | 13 | 14 | _ I: -12 0 0 0 DLD DS: 13 | 14 | _ | _
N: 11 12 13 14 N: 12 13 14 0
R: _ 12 13 14 TS: 12 | 13 | 14 | _ R: _ 13 14 _ TS: 13 | 14 | _ | _
S: 11 12 13 14 S: 12 13 14 _ S: 13 14 _ _
TR: _ | 12 | 13 | 14 TR: _ | 13 | 14 | _
Location Centric View for DC1 / P1:

Key Figure ProdId LocTo LocId LocFrom 1 2 3 4
Dep. Loc. Dem. (DLD) P1 DC0 DC1 12 13 14
Out. Loc. Dem. (OLD) P1 DC1 DC2 12 13 14
Transport Supply (TS) P1 DC0 DC1 12 13 14
Transport Receipts (TR) P1 DC1 DC2 13 14
Receipts (R) P1 DC1 13 14
Supply (S) P1 DC1 12 13 14
Figure 12: Location Centric View with Downstream Key Figures
Related down- and upstream key figures always belong logically to the same source
of supply. So, for instance in figure 12, at the location source between DC0/P1 and
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DC1/P1, key figure Outbound Location Demand (OLD) is the upstream key figure
and its corresponding downstream key figure is Dependent Location Demand (DLD) -
at the same location source. The S&OP planning algorithms compute the values of
all upstream key figures. The content of their related downstream key figure is then
computed in a post-processing step (after the planning algorithms) which merges all
values of each upstream into its related downstream key figure. To merge means
that the values are copied from the upstream into the related downstream key figure
but with a lead time shift. So, depending on the lead time of the underlying location
source the values are shifted into another period. (In figure 12 the lead time is 1
period.) In addition, during this merge the key values of the upstream key figures are
transformed accordingly into the key values of the downstream key figures. The
reason is that upstream and downstream key figures are on different planning levels.
As shown in the table of figure 12, OLD has the planning level (ProductID,
LocationID, LocationFrom), whereas its related downstream key figure DLD has the
planning level (ProductID, LocationTo, LocationID). (We will explain below why
downstream key figures are always on a different planning level.)
To explain the naming convention “upstream” and “downstream” one first should
know that the “downstream direction” in all our graphics is the direction in which
supply, i.e. goods flow through the supply chain network, from purchased
components or raw materials via semi-finished goods to finished goods towards
customers or customer-facing distribution centers. Our graphics usually show the
downstream direction from right to left. Upstream is the opposite direction, the
direction in which the demand “flows” through the network. Downstream key figures
are on the downstream, i.e. the right side of a location product. Upstream key figures
are on the upstream, i.e. the left side of a location product. From the perspective of
the location product DC1/P1 (the location product in the middle of the supply chain of
figure 12) key figure DLD is on the downstream side and key figure OLD (belonging
to another location source which is between DC1/P1 and DC2/P1) is on the upstream
side. Note: as these two key figures belong to different location sources they are not
related up- and downstream key figures. Nevertheless, both key figures are
connected with the same location product DC1/P1 and these two key figures are
required for the location-centric view of that location product, as we will below:
If a planner wants to get the location-centric view for a product, for instance to
compare all incoming with all outgoing demands and supplies he needs to select all
demand and supply key figures for that location product. To get such a location-
centric view for product P1 at location L1 (in figure 12), the planner needs to select
the required key figures with LocationID = L1 and ProductID = P1. The result is
shown in the lower area of figure 12: beside of key figures Receipts and Supply
(which are related to that location product), there are key figures OLD, DLD, TR and
TS which are related to the location sources connected with DC1/P1. Key figure DLD
is the one “left” of DC1/P1. It shows the incoming demand. Key figure OLD is the key
figure displayed right of DC1/P1, showing the outgoing demand.
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Analogously, key figure Transport Supply (TS) shows the outgoing supply and hence
is placed on the left side of DC1/P1. Key figure Transport Receipts shows the
incoming (i.e. “received”) supply and is placed on the right side of DC1/P1. The
planning levels of the up- and downstream key figures are exactly defined in a way
so that by this simple selection (LocationID = L1 and ProductID = P1) all relevant key
figures are displayed on one planning view.
The technical names of downstream key figures always end with the suffix DS (which
is a shortcut for DownStream). The following sections describe briefly all available
downstream key figures (except for the Adjusted Downstream Key Figures which are
listed in the subsequent section “Adjusted Key Figures”).
9.1 Dependent Customer Demand

Technical name: DEPENDENTCUSTOMERDEMANDDS,
As a downstream key figure the Dependent Customer Demand belongs to the

downstream side of location-products – as shown in figure 13 for location-product
Plant A/P1.
Downstream Key Figures for Customer Demand
Plant A / P1
Dep. Demand: 100 | 200
Supply: 90 | 100
Figure 13: Downstream Key Figures for Customer Demand

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As shown in figure 13, Dependent Customer Demand is the Downstream Key Figure
corresponding to the upstream key figure Outbound Customer Demand
Note, figure 13 depicts the same example as figure 2, however figure 2 contains only
the upstream key figures.
9.2 Customer Supply

Technical name: CONSTRAINEDDEMANDDS, key: Customer, Product, Location
In figure 13 we also introduced downstream key figure Customer Supply which

corresponds to Customer Receipts. Customer Receipts describes the transports
starting at an own location towards a customer.
9.3 Dependent Location Demand

Technical name: DEPENDENTLOCATIONDEMANDDS,
key: Product, Ship-To Location, Location
Figure 14 introduces the downstream key figure Dependent Location Demand which
corresponds to the upstream key figure Outbound Location Demand.
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Downstream Key Figures between own Locations
Plant A / Prod. P
Dep. Dem.: 3 10
Proj. Stock: 0 0 0
Net Demand: 3 10
Receipts: 2 7
Product P
Dep. Dem.: 10 20
Proj. Stock: 4 0 0
Net Demand: 6 20
Receipts: 5 15
Supply: 9 15
Plant B / Prod. P
Dep. Dem.: 3 10
Proj. Stock: 5 2 0
Net Demand: 0 8
Receipts: 0 6
Supply: 3 8
Figure 14: Downstream Key Figures between own Locations
For a more detailed example with Dependent Location Demand see figure 12.
9.4 Transport Supply

Technical name: TRANSPORTDS, key: Product, Location, Ship-To Location
As shown in figure 14, the downstream key figure Transport Supply corresponds to
the upstream key figure Transport Receipts.
For a more detailed example with Transport Supply see figure 12.
9.5 Dependent Production Demand

Technical name: DEPENDENTPRODUCTIONDEMANDDS,
key: Output Product, Location, Product, Source ID
With figure 15 we introduce the downstream key figure Dependent Production

Demand which corresponds to the upstream key figure Outbound Production
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Demand. The Dependent Production Demand describes the amount of components
needed to satisfy the Net Demand of the higher level product.
Downstream Key Figures for Production

Dep. Dem.: 3 10
Proj. Stock: 0 0 0
Net Demand: 3 10
Receipts: 3 10
Supply: 3 10
Plant A / Prod. P
Dep. Dem.: 3 10
Proj. Stock: 0 0 0 Prod.
Net Demand: 3 10 Receipts:
Supply: 3 10
Dep. Dem.: 9 30
Proj. Stock: 0 0 0
Net Demand: 9 30
Receipts: 9 30
Supply: 9 30
Figure 15: Downstream Key Figures for Production
9.6 Component Supply

Technical name: PRODUCTIONCOMPONENTDS,
key: Output Product, Location, Product, Source ID
Figure 15, in addition, introduces downstream key figure Component Supply which
corresponds to the upstream key figure Component Usage.
10. Adjusted Key Figures

As mentioned in section 1 S&OP planning algorithms read multiple input key figures
and write the computational results into multiple output key figures. Input key figures
can be modified either by database updates of the corresponding S&OP database
table or interactively during a planning session. So, for instance, the key figure Stock
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On-Hand might be updated on a daily or weekly batch cycle via database inserts or
updates of the S&OP on HANA database table
SOPDD_TIMESERIES_<planning area>. In addition, key figures like Customer
Demand and Capacity Supply can also be changed interactively during a what-if
analysis within a planning session.
It does not make sense to change output key figures interactively or via database
updates as these changes would be overwritten after the next call of a planning
algorithm or as soon as the planning results are saved into the database table
respectively. Hence, output key figures are not editable. However, users might want
to change the computed plan that is to manually set output key figure values
differently from what the planning algorithm has computed. S&OP on HANA uses
Adjusted Key Figures for this purpose. Via an Adjusted Key Figure a user can
interactively determine the values of output key figures (per period). This works
because they are taken into account as additional input to the planning algorithms.
The main use case of Adjusted Key Figures is interactive planning, where a user
changes these key figures manually to influence the output of a planning algorithm.
For that reason, Adjusted Key Figures are also called manual adjustments.
Adjusted Key Figures are input key figures. Their values are (per period) either initial
(not yet set by the user) or any non-negative value including zero. If no entries to an
Adjusted Key Figure are made and the value remains initial, there is no change to the
plan computed by the algorithms. Planning algorithms handle non-initial Adjusted
Key Figures in that sense that the computed values of the corresponding output key
figure are substituted (for each location-product) by the value of the corresponding
Adjusted Key Figure if it is not initial. The further computation of the planning
algorithm then uses the adjusted value as a fixed boundary condition instead of the
previously computed value.
Adjusted key figures are provided for the following key figures:
- Dependent Demand: Adjusted Demand

- Outbound Customer Demand: Adjusted Outbound Customer Demand
- Dependent Customer Demand: Adjusted Dependent Customer Demand
- Customer Receipts: Adjusted Customer Receipts
- Customer Supply: Adjusted Customer Supply
- Production Receipts: Adjusted Production Receipts
- External Receipts: Adjusted External Receipts
- Transport Receipts: Adjusted Transport Receipts
- Transport Supply: Adjusted Transport Supply
Adjusted Key Figures are not available for all output key figure. As it does not make
any sense to overwrite, for instance the output key figure Projected Stock, S&OP on
HANA does not offer an Adjusted Key Figure for Projected Stock. The value of this
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key figure is computed according to a formula (see section 4.7) and to overwrite the
formula’s results would result in inconsistencies.
10.1 Adjusted Demand

Technical name: ADJUSTEDDEMAND, key: Product, Location
Adjusted Demand enables a user to overrule the sum of the values in key figures
Independent Demand and Dependent Demand for the computation of the Net
Demand. Planning algorithms handle Adjusted Demands in that sense that the
computed Dependent Demand plus the Independent Demand are substituted (for
each location-product and in each period) to compute the Net Demand if the value of
the corresponding Adjusted Key Figure is not initial.
Note: This key figure is only taken into account by the S&OP Heuristic but not
by the S&OP Optimizer.
10.2 Adjusted Outbound Customer Demand

Technical name: ADJDEPENDENTCUSTOMERDEMAND,
Non-initial values in input key figure Adjusted Outbound Customer Demand do have
a different impact on the behavior of the S&OP heuristic and the S&OP Optimizer.
For the S&OP heuristic it changes the Outbound Customer Demand to be
propagated along the corresponding customer sourcing rule (C-rule). For the S&OP
Optimizer it changes the demand to be sourced to a Planning Unit (see
documentation about Planning Units) by over-ruling the quota-calculated contribution
for a specific customer sourcing rule. More details about the functionality of this key
figure is available in the specification about Adjusted Dependent Customer Demand.
Usually, a user displays either the Upstream or the corresponding Downstream

Key Figure on one screen, but not both. He can enter values (“manual
adjustments”) in both key figures. If he enters numbers in both key figures for
the same period (with respect to the lead time shift) then the input to the
Upstream Key Figure Adjusted Outbound Customer Demand is taken by the
SCM Planning Operator, i.e. the value entered into the Downstream Key Figure
will be ignored. This logic is valid for all Adjusted Key Figures providing an Up-
and Downstream version.
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10.3 Adjusted Dependent Customer Demand
Technical name: ADJDEPENDENTCUSTOMERDEMANDDS,
Input key figure Adjusted Dependent Customer Demand is the Downstream Key
Figure (see section 9) corresponding to the upstream key figure Adjusted Outbound
Customer Demand (see section 10.2). The functionality of both key figures is
explained in the specification about Adjusted Dependent Customer Demand.
10.4 Adjusted Customer Receipts

Technical name: ADJUSTEDCONSTRAINEDDEMAND,
This key figure allows manual adjustments to key figure Customer Receipts, i.e. to
transports from own locations to customers. A user can overwrite the computed
supply for one or several periods.
10.5 Adjusted Customer Supply

Technical name: ADJUSTEDCONSTRAINEDDEMANDDS,
Adjusted Customer Supply is a downstream key figure corresponding to the

upstream key figure Adjusted Customer Receipts.
10.6 Adjusted Production Receipts

Technical name: ADJUSTEDPRODUCTION, key: Product, Location, SourceID
This key figure allows manual adjustments to key figure Production Receipts. If the
adjusted values are non-initial the planning algorithms takes the given values instead
of computing the corresponding production quantities itself. Note: A planning
algorithm considers the availability of all components and usually it takes the minimal
available component quantity to determine the Production Receipts.
10.7 Adjusted External Receipts

Technical name: ADJUSTEDRECEIPT, key: Product, Location
This key figure enables a user to fix the quantities sourced via a U-sourcing instead
of having an unspecified supply of any quantity.
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Note: If there is a U rule and the user specifies an Adjusted External Receipts the
supply sourced via that U-rule is set to exactly that value specified in key figure
Adjusted External Receipts (in the corresponding period). If, however, if does not
exist a U-rule and the user specifies an Adjusted External Receipts these Adjusted
External Receipts are neglected meaning that they do not have any impact.
10.8 Adjusted Transport Receipts

Technical name: ADJUSTEDTRANSPORT,
key: Product, Location, Ship-from Location
This key figure is arc-related. It enables a user to fix the Transport Receipts sourced
via a transportation source. This means that the Transport Receipts delivered via this
arc are fixed to the given adjusted values, independent of whether the ship-from
location can ship this quantity (or would be able to ship more) and independent of
whether the receiving location needs more or less.
10.9 Adjusted Transport Supply

Technical name: ADJUSTEDTRANSPORTDS
key: Product, Ship-To Location, Location
Adjusted Transport Supply is a downstream key figure corresponding to the

upstream key figure Adjusted Transport Receipts.
11. Computation of Quotas

11.1 Introduction
The S&OP Heuristic propagates Consensus Demands and Net Demands in
upstream direction and if there exist multiple sourcing rules (C-, T- and / or P-rules)
the demand is split according to the quota defined for each rule, as for instance
shown by Figures 4 and 10 of this document. The heuristic then computes supply to
match the propagated demand - corrected by Projected Stock of the previous period
and possibly other factors, such as lot sizes etc. Usually the supply quantities match
exactly the demand at each location product and along each sourcing rule. The
S&OP Optimizer, in contrast, ignores completely all quotas and computes supply in a
way that the defined constraints are fulfilled and that the resulting supply plan is cost-
optimal.
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S&OP on HANA offers the user to call the SCM Planning Operator in a special mode
so that it does not compute a new supply plan, but it computes quotas based on the
supply plan, currently stored in the user’s planning session, previously generated by
the S&OP Optimizer. (As the heuristic respects the quotas of the sourcing rules, in
general, it does not make sense to compute quotas based on a supply plan
generated by the S&OP Heuristic.) The quotas are then computed based on the
actual supply provided via each sourcing rule. (This will be explained in detail below.)
The optimizer does not compute explicitly quotas but based on the supply quantities
computed by the optimizer it is possible to compute “cost-optimal quotas”. A user
might want to take over these computed quotas into the master data, i.e. to overwrite
the quotas stored with the sourcing rules by those cost-optimal ones. Another use
case might be to send these cost-optimal quotas back into another SCM planning
system, for instance SAP SCM/APO.
11.2 Computing Quotas

In the example of Figure 16 the computed quotas are shown in red color. They have
been computed on this supply plan (which is assumed to be computed in a preceding
step). Quotas for the T-rule to Plant A are computed by dividing the supply of that
sourcing rule (given by key figure Transport Receipts) divided by the sum of the
Transport Receipts of all T-rules connected with location product DC 1 / Product P:
Quota[Period 1] = 25 / (25 + 75) = 25%
Quota[Period 2] = 50 / (50 + 50) = 50%
Quota[Period 3] = 10 / (10 + 90) = 10%
For period 3 the user has fixed the supply from Plant A by an Adjusted Transport
Receipts of 10 units. The quota, however, is computed in the same way. The quotas
are always computed based on the values currently stored in key figure Transport
Receipts, independent of other master data and constraints, such as lot sizes,
capacities, lead times etc. Quotas for Customer Sourcing rules are computed
analogously, but based on Customer Receipts. Quotas for Production Sourcing rules
are computed according to a special procedure when a Production Cycle is defined
for that P-rule – as we will see below.
The quotas along the sourcing rule to Plant B in Figure 16 are computed accordingly.
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Computing Quotas for T-rules
Plant A / Product P
Dep. Dem.: 25 50 10
Proj. Stock: 0 0 0
Net Demand: 25 50 10
Receipts: 25 50 10
Supply: 25 50 10
DC 1 / Product P
Dep. Dem.: 100 100 100
Proj. Stock: 0 0 0
Net Demand: 100 100 100
Receipts: 100 100 100
Supply: 100 100 100
Plant B / Product P
Dep. Dem.: 75 50 90
Proj. Stock: 0 0 0
Receipts: 75 50 90
OLD: Outbound Location Demand Supply: 75 50 90
TRR: Transport Receipts
ATR: Adjusted Transport Receipts
Figure 16: Computing Quotas for T-rules
Figure 17 illustrates an example with a location product (DC 1 / product P) with two
sourcing rules: one T-rule going to Plant A / product P and one P-rule invoking
Production Source S1 whereas for the P-rule a Production Cycle with a period of
coverage (POC) of 3 periods is defined. Due to the POC of 3 periods a production
event occurs only every 3 periods and not in between. For that reason, the supply
plan of Figure 17 produces the production demand of 450 units in period 1 for all
three periods. It is important to be aware that this production lot in period 1 covers
the demand of all periods within that Production Cycle, i.e. the demands of perios1 to
3. Hence, it would be unreasonable to compute the quotas of this P-rule based on
this build-ahead quantity as the quotas are related to demand. To compute the
quotas of the P-rule the SCM Operator therefore equally distributes the production
quantity of the first period over all periods of that Production Cycle, as indicated by
the grey key figure called Production Receipts* showing a production quantity of 150
= 450 / 3 units in each period. The quotas for the P-rule are then derived out of the
fraction of this equally distributed production quantities and the sum of these
production quantities and the Transport Receipts, i.e.:
Quota[Period 1] = 150 / (150 + 150) = 50%
Quota[Period 2] = 150 / (150 + 75) = 66,66% => 67%
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Quota[Period 3] = 150 / (150 + 225) = 40%
Computing Quotas for P- and T-rules

Plant A / Product P
Dep. Dem.: 150 75 225
Proj. Stock: 0 0 0
Receipts: 150 75 225
Supply: 150 75 225
DC 1 / Product P
Dep. Dem.: 300 300 300
Proj. Stock: 300 75 0
Receipts: 600 75 225
DC 1 / Product P /
Supply: 300 300 300
Production Source S1
Prod. Receipts: 450 0 0
Prod. Receipts*: 150 150 150
Production Cycle with

Periods of Coverage = 3
OLD: Outbound Location Demand

Figure 17: Computing Quotas for one T- and one P-rule with a Production Cycle
For the example of Figure 17 it is assumed that the production event occurs in the
first sub-period of period 1 and that the next production event occurs outside of the
shown planning horizon (or in the first sub-period of period 4 which is not depicted).
When computing such quotas the SCM Planning Operator takes into account the
actual sub-periods in which production events occur to equally distribute the
production quantity over the cycle. If production events occur in sub-period 10 of
period 1 and period 4 the system would use the equally distributed production
quantities of 20/30 * 150 = 100 units for period 1, 150 units for periods 2 and 3 and
again 50 units for period 4 to compute the P-rule quotas.
There are several reasons why the supply might be equal to zero. Reasons might be:
- Consensus or Net Demand is zero
- User has set the supply to zero by an Adjusted Key Figure (for instance
Adjusted Transport Receipts as in period 2 in Figure 18)
- The optimizer has decided to set supply to zero at certain sourcing rules
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- A neighboring Planning Unit was not yet planned so that supply key figures
have not yet been populated at all.
U-rules do not store quotas at all. As we explained in conjunction with Figures 8 and
10 the S&OP Heuristic uses U-rules to fill up the sum of the quotas along all T- and
P-rules to 100%. Nevertheless, the SCM Planning Operator will compute cost-
optimal quotas for U-rules and this is done in the same way as it computes quotas for
other sourcing rules: the computation is based on the supply provided along each
sourcing rule. If in Figure 17 the P-rule was substituted by a U-rule and the system
had computed External Receipts of 150 units in each period (as the equally
distributed Production Receipts of Figure 17) then the computed quotas for the U-rule
would be the same as the ones shown in Figure 17.
Figure 18 gives an example in which the supply (Transport Receipts) from Plant A to
DC 1 is zero in all three periods – for different reasons. In period 1 the reason is that
the SCM Planning Operator has decided to satisfy the entire demand of DC 1 from
Plant B and nothing from Plant A. The system therefore computes a quota of 0% for
this T-rule and of 100% for the second T-rule going to Plant B.
In period 2 the user has fixed the supply to zero by an Adjusted Transport Receipts
(ATR) equal to zero so that the Transport Receipts is zero as well. The computed
quotas are the same as in period 1.
In period 3 there is a special case as supply is zero in all lanes connected with that
location product. It is obvious that in such a case the quotas cannot be computed.
For that reason, the SCM Planning Operator returns a NULL (initial value) for such
periods. A further processing step (for instance in a calculated key figure of S&OP on
HANA) then is enabled to differentiate between a quota of 0% and a NULL value. So,
for instance, if the computed quotas are used to overwrite the quotas in the master
data this might not be reasonable for the cases in which a quota could not be
computed.
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Computing Quotas when Supply = zero
Plant A / Product P
Dep. Dem.: 0 0 0
Proj. Stock: 0 0 0
Net Demand: 0 0 0
Receipts: 0 0 0
Supply: 0 0 0
DC 1 / Product P
Dep. Dem.: 10 20 0
Proj. Stock: 0 0 0
Net Demand: 10 20 0
Receipts: 10 20 0
Supply: 10 20 0
Plant B / Product P
Dep. Dem.: 10 20 0
Proj. Stock: 0 0 0
Net Demand: 10 20 0
Receipts: 10 20 0
OLD: Outbound Location Demand Supply: 10 20 0
ATR: Adjusted Transport Receipts
Figure 18: Computing quotas in cases where supply is zero
11.2 Key Figures for cost-optimal quotas

There are four output key figures which return the computed cost-optimal quotas
after the SCM Planning Operator was called in the appropriate mode. These key
figures are:
11.2.1 Computed Customer Quotas
Technical name: CUSTOMERRATIOCOMP

key: Location, Product, Customer
The key figure returns the computed quotas for Customer Sourcing (C-) rules.
11.2.2 Computed Transportation Quotas
Technical name: LOCATIONRATIOCOMP

key: Location, Product, Location-from
The key figure returns the computed quotas for Transportation Sourcing (T-) rules.
11.2.3 Computed Production Quotas
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Technical name: PRODUCTIONRATIOCOMP
key: Location, Product, Production Source ID
The key figure returns the computed quotas for Production Sourcing (P-) rules.
11.2.4 Computed External Receipts Quotas
Technical name: RECEIPTRATIOCOMP

key: Location, Product
The key figure returns the computed quotas for External Receipts (U-rule).
Note: In the corresponding master data table the U-rule has the key (Location,
Product, SourceID). However, the SCM Operator ignores all entries in SourceID
when reading the U-rules. S&OP on HANA is not designed to have multiple U-rules
for one location product. For that reason, the computed quotas for External Receipts
do not have the attribute SourceID in its key.
U-rules do not have a quota in their master data. The reason for introducing key
figure Computed External Receipts Quotas is that a user might want to transfer this
data back to another SCM system, like SAP/APO.
12. Additional Key Figures

We consider the key figures explained in sections 2 through 7 of this document as
the basic key figures of the SCM planning operator. The cost key figures of section 8
a specific to the optimizer. The Adjusted Key Figures explained in section 9 are
relevant only in cases a user wants to use this functionality, i.e. overwriting output
key figures. Similar to Adjusted Key Figures S&OP on HANA will offer more
additional key figures which are relevant only when certain functionality is of interest.
These are:
12.1 Minimum Key Figers

Minimum Key Figures (explained in document “Specification for Extensions of S&OP
on HANA: Minimum Key Figures”)
12.2 In Transit Key Figures

In Transit Key Figures (explained in document “Specification for Extensions of S&OP
on HANA”)
12.3 Discretionary Inventory

a) Inter-Planning Unit (IPU) Key Figures (explained in document “Specification
for Extensions of S&OP on HANA: Planning Units”)
Page 54
12.4 Independent Demand
Technical name: INDEPENDENTDEMAND, key: location, product
Via input key figure Independent Demand a user can specify an additional,
anonymous demand for location products. The value has to be greater than zero
(zero has no effect). The SCM Planning Operator takes the sum of the Dependent
Demand and Independent Demand to compute the Net Demand for each location
product (in each period).
Independent Demand typically is used to model anonymous customer demands, for

instance, if customers are not modelled explicitly. In this case, the Consensus
Demands of all customers for a certain product can be defined as an Independent
Demand at the distribution center from which all these customers receive their supply
for this product.
The SCM Planning Operator returns the computed supply for Independent Demand
in output key figure “Independent Demand Supply” (technical name:
INDEPENDENTDEMANDSUPPLY, key: location, product).
12.5 Coverage
Technical name: COVERAGE key: location, product
Output key figure Coverage returns for each period t the number of future periods for
which the Dependent Demand can be satisfied by the Projected Stock of period t. In
other words, this key figure stores for each period the range of the Projected
Inventory. If, for example the Projected Stock of t (which is the inventory at the end of
period t) is 20 and the Dependent Demand of periods (t+1) and (t+2) is 15 and 5, key
figure Coverage will return the value 2 for period t. If the Dependent Demand of
period (t+1) is 40 units, Coverage in period t would be 0.5.
Figure 19 shows four examples. Each example is illustrated along one location
product (which is DC1 / P1 in all cases). The relevant key figures are described by a
shortcut of one letter (D, I, N, etc.). The meaning of each shortcut is explained in the
legend below: D stands for Dependent Demand, I for Projected Stock, C for
Coverage, etc. All examples have a planning horizon of three periods.
In example 1 the coverage of the Projected Inventory of period 1 is two periods as

the inventory at the end of period 1 is 20 and hence equal to the sum of the
Dependent Demand of the next two periods (i.e. period 2 and 3).
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As the Projected Inventory of period 2 covers the Dependent Demand of period 3 the
Coverage of period 2 is 1.
Example 1b is similar to example 1, the only difference is that the Receipts in period
1 is not 30 but 31 pieces. As now the Projected Stock of period 1 is greater than the
sum of the Dependent Demand of all remaining periods of the planning horizon, the
resulting Coverage is considered as infinite which is indicated by a 99.
Via the parameter COVERAGE_INFINITE_VALUE of the SCM Planning Operator

the user can specify the integer value to be returned in key figure Coverage for an
infinite coverage, i.e. when a Projected Stock covers more than the Dependent
Demand of all future periods within the planning horizon. Its default value is
999999.999999. In order to get a better readable value with less digits the parameter
could be set, for example, to 999.0.
Coverage
DC1 P1 DC1 P1
D: 10 10 10 D: 00 00 00
I: 20 10 00 I: 00 00 00
N: 10 00 00 N: 00 00 00
Example 1: S: 10 10 10 Example 2: S: 00 00 00
R: 30 00 00 R: 00 00 00
C: 02 01 00 C: 00 00 00
DC1 P1 DC1 P1
D: 10 10 10 D: 10 10 20
I: 21 11 01 I: 10 00 00
N: 10 00 00 N: 10 00 20
Example 1b: S: 10 10 10 Example 3: S: 10 10 20
R: 31 00 00 R: 20 00 20
C: 99 99 99 C: 01 00 00
D: Dependent Demand R: Total Receipts

I: Projected Stock C: Coverage
N: Net Demand IC: Inventory Correction
S: Supply
Figure 19: Key Figure Coverage
Example 2 explains that a Projected Stock of zero does not cover any future demand
even of the future demand is zero.
In example 3 the coverage in period 1 is one period as the Projected Stock of period
1 covers exactly the Dependent Demand of the second period. As the Projected
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Stock of period 2 is zero, it cannot cover any future demand and hence the coverage
is zero. The same is true for period 3.
If key figure Independent Demand has a value greater than zero in period t then the
SCM Planning Operator adds (internally / temporarily only) the value of Independent
Demand to the value of Dependent Demand of period t right before computing the
coverage. Output key figure Dependent Demand, however, will not return this
increased value.
Figure 20 illustrates how key figure Inventory Correction impacts the coverage
computation. Example 4 shows that a negative Inventory Correction increases the
Dependent Demand. This is the reason why the Projected Stock of period 1 (30
units) does cover only the Dependent Demand plus the demand defined by the
Inventory Correction of 20 units (given by a negative value) of period 2. The
Coverage of period 1 therefore is one period.
Coverage with Inventory Correction
DC1 P1
D: 10 10 10
I: 30 00 00
IC: 00 -20 00
Example 4: N: 00 00 00
S: 10 10 10
R: 40 00 00
C: 01 00 00
DC1 P1
D: 10 10 10
I: 10 18 08
IC: 00 18 00
Example 4b: N: 00 00 00
S: 10 10 10
R: 20 00 00
C: 01 99 99
D: Dependent Demand R: Total Receipts

I: Projected Stock C: Coverage
N: Net Demand IC: Inventory Correction
S: Supply
Figure 20: Impact of Inventory Correction on Coverage
A negative Inventory Correction defines an additional demand. For that reason, in

general, the operator adds (internally / temporarily only) the absolute value of a
negative Inventory Correction to the Dependent Demand before the coverage is
Page 57
computed. Output key figure Dependent Demand, however, will not return this
increased value.
If both, a negative Inventory and an Independent Demand are defined, the operator
adds (internally / temporarily only) the absolute Inventory Correction and the
Independent Demand to the Dependent Demand before it calculates the coverage.
A positive value in key figure Inventory Correction specifies additional receipts which
are not considered while computed the coverage. Example 4b shows that a positive
Inventory Correction is ignored while computing the coverage of period 1. However,
the consequence of a positive Inventory Correction is a higher Projected Inventory
(as the Projected Inventory of period 2 goes up to 18) and this higher Projected
Inventory of course leads to a higher Coverage of that period. Period 2 therefore has
an infinite coverage as the Dependent Demand of period 3 is 10 units only, i.e.
smaller than the Projected Stock of period 2.
Via input key figure “Number of Sub-Periods” (technical name: SUBPERIODNUM,

key: location, product) a user can divide logically each planning period of the
planning horizon into sub-periods. So, for instance, if a planning period covers a
month and if SUBPERIODNUM is set to 30, a sub-period models a day (for that
planning period). SUBPERIODNUM can store a different value for each period, for
instance to express that months have a different number of days.
If key figure “Number of Sub-Period” contains an integer value greater than 1 then
the corresponding value in key figure Coverage defines the number of future sub-
periods for which the Dependent Demand can be covered by the Projected Stock of
the previous planning period. If there is no value in SUBPERIODNUM or the value is
equal to 1, key figure Coverage relates to number of planning periods (and not sub-
periods).
If for example, a planning period covers a month and therefore SUBPERIODNUM is

set to 30 (for each planning period) and the Projected Stock of period 1 is 50
whereas the Dependent Demand of period 2 is 100 then the resulting value in key
figure Coverage for period 1 would be 15 – meaning that the inventory at the end of
period 1 covers the first 15 sub-periods (i.e. days) of the second planning period.
Page 58

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Basic Key Figures of the S&OP Supply Planning Operator

January 22nd, 2019

Authors: Volkmar Soehner, Michael Brueckner and Stefan Wedner

- January 2019: Minor correction in section 10.1.

- August 2019: The chapter about location-centric view was improved.

2.1 Customer Demand

2.2 Total Customer Receipts

Key Figures of Customer Demands

© 2012 SAP AG. All rights reserved.

Figure 1: Key Figures of a Customer Demand

3. Key Figures between Customer Demands and Own

3.2 Customer Receipts

© 2013 SAP AG. All rights reserved.

Figure 2: Key Figures between Consensus Demands and Own Locations

4. Node-Related Key Figures

4.1 Stock on-hand

4.2 Inventory Target

4.3 Dependent Demand

Figure 3: Node-related key figures

4.7.1 Projected Stock

PS(1) = Stock on-hand + Receipts(1) – Supply(1)

where period 1 is assumed to be the planning period corresponding to the current

PS(t) = MAX { PS(t-1); 0 } + Receipts(t) – Supply(t) for t = 2, 3, …, T.

4.7.2 Inventory Correction

PS(1) = Stock on-hand + Receipts(1) – Supply(1) + Inventory Correction(1)

PS(t) = MAX { PS(t-1); 0 } + Receipts(t) – Supply(t) + Inventory Correction(t)

4.7.3 Inventory Correction Violation

Inventory Corrections are modelled as pseudo-hard constraints for the optimizer.

A negative Inventory Correction is de facto a fictive supply. If this supply quantity

A positive Inventory Correction is de facto a fictive receipt. If this receipt quantity

CD: Consensus Demand D: Dependent Demand IT: Inventory Target R: Receipts

Figure 3a: Initial Supply Plan – without Inventory Corrections

Supply Plan based on Inventory Corrections

CD: Consensus Demand D: Dependent Demand IT: Inventory Target R: Receipts

Figure 3b: Supply Plan based on Inventory Corrections

The heuristic computes the Net Demand (ND) as follows:

ND(t) = MAX { DD(t) + IT(t) – Max { PS(t-1); 0 } – Inventory Correction(t) ; 0 }

whereas DD denots the Dependent Demand and IT the Inventory Target.

The S&OP Optimizer follows a different approach to consider Inventory Corrections.

With positive Inventory Corrections it is possible to violate the defined Maximum

Deficit(t) = Max { (Net Demand(t) – Receipts(t) );0} for t = 1, …, T.

Note: Deficit is greater or equal to zero. (No negative values.)

Shortage(t) = ( Dependent Demand(t) – Supply(t) ) for t = 1, …, T.

Note: Shortage is greater or equal to zero. (No negative values.)

5. Key Figures between Locations

5.1 Outbound Location Demand

Figure 4 illustrates an example: the requesting location is Distribution Center 1

Key Figures between Own Locations

© 2013 SAP AG. All rights reserved.

Figure 4: Outbound Location Demand and Transport Receipts

5.2.1 Transport Receipts

5.2.2 Transport Receipts Ship-To

5.3 Outbound Production Demand

Figure 5 depicts an example in which finished product P is produced out of

Production Key Figures

Plant A / Prod. P Plant A / Prod. P /

© 2013 SAP AG. All rights reserved.

Figure 5: Outbound Production Demand and Production Receipts

5.4 Component Usage

5.5 Combined Dependent Demands

Combined Dependend Demands

© 2013 SAP AG. All rights reserved.

Figure 5b: Combined Dependent Demands

5.7 Capacity Demand