You can use the Cost calculation rule to define the cost function used to optimize bids, set optimization goals, and exclude bids from the evaluation. After you edit settings, click Save Changes at the top of the tab.
Optimization Goal
Optimization goal: Select whether Sourcing Optimizer optimizes for lower values or higher values.
- Lower values are better: This setting can be used if lower results are preferred. For example, for price.
- Higher values are better: This setting can be used if higher results are preferred. For example, for a quality score.
Optimization Objective
Select a formula or numeric column in which you want to use to optimise the scenario. You have the option to optimise scenarios using any formula or numeric column ,while still reporting on a cost function. By default, the primary cost function continues to be used for both optimisation and reporting.
For example, you can create scenarios based on lead time or CO2 emissions using the Optimization Objectives.
Cost
Cost: Select a primary formula, secondary formula, or a column to be used as the cost calculation formula from the dropdown list. By default, the primary formula is selected. If you do not have a secondary cost calculation formula configured and want to create one, go to Design > Cost Calculation, or click the secondary formula link under the dropdown list. For more information on cost calculation, see Cost Calculation overview.
Exclude: Set parameters for excluding outlier bids using the Below and Above fields. Outlier bids are unrealistic, anomalous, or erroneous bids that can skew analysis if they are not omitted. Only values within the limits set by these parameters will be considered during evaluation.
For example, if certain columns collect inputs that are not directly used in the cost calculation, you can create a formula column or secondary cost calculation that takes these other columns into consideration. You can then set that formula as the Cost Calculation rule in your scenario to assess cost using a different method
Historic Cost
Historic cost: Select Event default, a secondary formula, or a column to be used to calculate the historic cost from the dropdown list. By default, Event default is selected. If you selected a non-primary cost calculation formula, it can be useful to also specify an alternative formula for historic cost so that so that savings can be calculated effectively.
Exclude: Set parameters for excluding outlier bids using the Below and Above fields. Outlier bids are unrealistic, anomalous, or erroneous bids that can skew analysis if they are not omitted. Only values within the limits set by these parameters will be considered historic cost.
For example, you can select a specific historic cost column which has previous cost included. This ensures that the optimization compares current bids against actual past costs.
Cost of Change
Select the the column to be used in Cost of change. Define the Cost of change as Fixed or Variable charge. Define whether or not the Cost of Change should be included in the optimization goal and report or Report only.
For example, you can account for each lot by selecting a "Cost of Change" column and defining it as a fixed charge. You can choose to include this cost in the optimization goal to influence award decisions, or set it to "Report only" to highlight the impact without affecting the outcome.