lease 12 Feature Document - Process Manufacturing Product Development - Least Cost Formulation (LCF) (Doc ID 414155.1)To Bottom

Modified:Apr 15, 2013Type:BULLETIN

"Checked for relevance on 04-Apr-2013" Process Manufacturing ProductDevelopmentSupport Feature Document ForLeast Cost FormulationPrepared by Author:Nelsedine ZIANI Creation Date:26 January 2007Last Updated: 07 February 2007File Name:LCF_Least_Cost_Formulation.docVersion:1.0Status:Draft Oracle Confidential For Internal and Customer Use OnlyDocument ControlDocument control maintained on WEB IV Comments section-- Please use that section of WEBIV to note changes if revised.Change Record1DateAuthorVersionChange Reference

26-Jan-07Nelsedine ZIANI1.0Initial creation

Table of Contents1.Introduction2.Feature Descriptions3.Minimum Level Requirements (Product)4.New or Changed Profiles, Forms and Objects5.Reports6.Implementation Considerations7.How To Setup and Use This Feature8.Performance Considerations9.Troubleshooting Tips10.References11.Feedback1. IntroductionThe objective of the Support Feature Document is to provide information the new feature, Least Cost Formulation, introduced in Release 12 from a technical and functional perspective so that Oracle Support and Customers have the necessary information to help implement and troubleshoot the new features.This is release specific and not cumulative. For information on prior releases, please see previous Oracle Documentation.Disclaimer: This document is for informational purposes only and is intended solely to assist you in planning for the implementation and upgrade of the product features described. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described in this document remains at the sole discretion of Oracle.2. Feature DescriptionsA generic description of the concept of Least Cost Formulation can be: It is a manufacturing process consisting of planning, purchasing, production scheduling, and formula/batch optimization that enables companies to optimize usage of their raw materials while minimizing costs. Least Cost Formulation generates a formulation from a list of alternative ingredients based on optimization of cost and other technical or quality parameters: Formulas and recipes are developed and optimized based on targets and constraints. Formulation targets can include properties such as fat, moisture content, nutrient requirements, or other parameters that are unique to each industry. Specific formulation constraints can require identification of the maximum contribution of a single ingredient type. Alternate ingredients can be used to optimize formulations for cost, or to meet product weight and volume requirements.Define Product SpecificationsThe user, generally a formulator, is able to enter a complete product specification in the software that represents the target properties of the product(s) that must be met as part of the least cost formulation. The Product Specification is used by the Least Cost Formulation program to generate formulas and batches.Specify Which Costs to UseAny cost method can be used as part of the optimization equation- standard or actual costs. Users of least cost formulation specify which cost method to use in determining the least cost and retrieving costs that already exist in costing tables. Choose Materials Based on Item Categories or Substitute Items The least cost formulation program is able to find the best materials to allocate based on the attributes of the available materials. However, there are some restrictions around which materials can be chosen for a given formula or batch. For instance, if the %FAT attribute is considered as part of the equation for making Ice Cream, the LCF program would NOT choose a material from the Meat family that has %FAT as an attribute. Generate Formulas Based on Least Cost The system generates least cost formulas while meeting the requirements defined within the product specification. Two methods of formula generation are supported: Loading an existing formula into a tool like the simulator/optimizer and optimizing the ingredients based on the latest costs available while meeting the requirements from the product specification. Creating a new formula where no ingredients have been previously entered the new formula would be based completely upon the least cost and product specification.Generate Batches Based on Least CostThe system generates least cost batches while meeting the requirements defined within the product specification. Two methods of batch generation are supported: Loading an existing batch into a tool like the simulator/optimizer and optimizing the ingredients and lot allocations based on the latest costs available while meeting the requirements from the product specification. Creating a new batch where no formula/recipe has been previously entered the batchs bill of materials would be based completely upon the least cost, product specification, and available materials. As part of the Production processes, a user can choose the least cost recipe validity rule. For instance, when creating an individual batch, the software would sort the possible choices for recipe validity rules ordered by the least cost to most cost.Example Of Least Cost formulation: To produce sausages, a current standard formula can be the following table:IngredientsWeight (KG)

Chicken20

Pork30

Beef50

Total = 100 KGThe three ingredients (with these fixed quantities) yeld into product Hot Dog sausage.Now, with Least Cost Formulation, you can perform development of formulas based on specifications. These specifications contain ingredient and technical information used to develop a formula that will combine different constraints/characteristics like:- Min and max quantity of each ingredient (chicken, pork, ingredient) that must be involved to respect a Hot Dog designation- Min and Max of Fat purcentage (30-55%) or moisture (0-40%) that items must contain- Objective of the formulation like minimize Cost of final product (so using as much as possible the least expensive materials)Here is below a Table example of Least cost formulation process resulting in new formulation when taking into account the parameters.IngredientsCOST%MOISTURE%FATWeight KG

Chicken.553550%13 (was 20 before)

Pork.16220%42 (was 30 before)

Beef.431533%45 (was 50 before)

55To produce the same quantity of Hot Dog product (100KG), LCF process will use different quantities for the ingredients, optimizing ingredient cost available but also still respecting the specifications in order to comply with the Hot Dog designation .Once the formula is developed, it can be modified, saved and approved for later use, or it can be taken directly into production. You can analyze the formula for technical characteristics, as well as cost.Least cost formulation is frequently used to generate formulations that are not reused (unique usage). By yielding products that meet the predefined product specification at the lowest possible cost, this tool maximizes profits, minimizes waste, and reduces the time and complexity involved in new formula creation. Least cost formulation eliminates many of the manual processes previously required to find proper materials to produce a batch.3. Minimum Level Requirements (Product) Oracle Inventory Oracle Process Quality Oracle Process Costing Oracle Process Execution4. New or Changed Profiles, Forms and ObjectsProfilesSeveral Profile options have been converted to parameters which are applicable only at the global or Organization level. A new parameter Costing Source Organization has been added to retrieve the costs.Parameters for Product Development are set up under the Product Development Security ManagerResponsibility. The Parameters form allows you to set up different parameter values by inventory Organization. Navigation: - Product Development Security Manager : Organization Parameters.Profile Options Replaced By Organization ParametersProfile Option NameFeature AreaOptional - Replaced By

GMD: Default Consumption / Yield TypeFormulaOrganization Parameter

GMD: Yield UOMFormulaOrganization Parameter

GMD: Byproduct ActiveFormulaOrganization Parameter

GMD: Formula Version ControlFormulaOrganization Parameter

GMD: Allow Zero Ingredient QuantityFormulaOrganization Parameter

GMD: Mass UOMRecipeOrganization Parameter

GMD: Volume UOMRecipeOrganization Parameter

GMD: Process Instruction ParagraphRecipeOrganization Parameter

GMD: Recipe Version ControlRecipeOrganization Parameter

GMD: Operation Version ControlProcess OperationOrganization Parameter

GMD: Routing Version ControlProcess RoutingOrganization Parameter

GMD: Step Release TypeProcess RoutingOrganization Parameter

GMD: Default LabLaboratoryObsolete - Replaced by context org

Forms Changed Form Organization Parameters GMDPRMED.fmbo NAV / Product Development Security Manager: Organization Parameterso This screen layout has also been redesigned into tabs to group relevant parameters by Formula, Operation, Routing, Recipe, and by Substitution and Laboratory which include new parameters for Release. The Costing Source Org is established under the Laboratory parameters. This organization code is used by Process Execution to obtain costs for a least cost batch Changed Form Technical Parameters GMDTCPRM.fmbo NAV / Formulator Responsibility : Technical Data : Technical Parameterso Form has been changed to accept organization context on entry .For Least Cost Formulation, a new parameter type has been added called Derived Cost. The Derived Cost parameter lets you link a technical parameter to Costs either those maintained in OPM Costing, or those obtained from an External source. Additionally, when you select the checkbox for Default Cost Parameter, this cost is used to determine a least cost formula for Process Execution Changed Form Technical Parameters Sequences GMDTPSEQ.fmbo NAV / Formulator Responsibility : Technical Data : Technical Parameter Sequenceso Enter technical parameter sequences to associate the technical parameters to itemso Item has been implemented as a key flex field. Form has been changed to accept organization context on entry Changed Form Item technical data GMDITDED.fmbo NAV / Formulator Responsibility: Technical Data : Item technical datao Enter item technical data for each item createdo Item has been implemented as a key flex field. The lot/sublot fields have been replaced with the Lot Number and organization fields. Form has been changed to accept organization context on entry Changed Form Simulator GMDSPDSH.fmbo NAV / Formulator Responsibility: Simulator.o Form has been changed to accept organization context on entryo Form has been changed to accept organization context on entry . Flex field has been implemented for item fields.Item revision field have been added to the material lines. Added action menus like Create Batch, Create Formula and Formulate New form - Formulation Specification Workbench - GMDFSPWB.fmbo NAV / Formulator : Formulation Specification Workbencho Create a new formulation specification for a product and specify the optimization objective o While entering the form, the context organization must be selected if not selected earliero The Formulation Specification, Material, Technical and Compositional Requirements can be created using this formo The Formulation Specification status should be Approved for General Use to access Actions > Formulate New form - Generate/Optimize Formulation - GMDLCFSG.fmbo NAV / Formulator : Formulation Specification Workbench : Actions : Formulateo Generate the formulation according to a cost effective dateObjects The following tables are used by the LCF formulation workbench to define/save the Formulation specification (i.e: before generate a Least Cost Formulation based on this Formulation). The spec name along with the product and other header attributes are stored in GMD_FORMULATION_SPECS table. The specification can be created with material, compositional and technical requirements and those are stored in GMD_MATERIAL_REQS, GMD_COMPOSITIONAL_REQS and GMD_TECHNICAL_REQS table. GMD_FORMULATION_SPECS GMD_COMPOSITIONAL_REQS GMD_TECHNICAL_REQS GMD_MATERIAL_REQS GMD_SPECIFICATIONS_ATTRIBUTES The following temporary tables are used by the LCF engine and the formulation screen: GMD_LCF_CATEGORY_HDR_GTMP GMD_LCF_CATEGORY_DTL_GTMP GMD_LCF_DETAILS_GTMP GMD_LCF_TECH_DATA_GTMP GMD_MATERIAL_DETAILS_GTMP GMD_MATERIAL_HEADER_GTMP The external cost is retrieved from the following table: GMD_LCF_EXTERNAL_COST5. Reports There is no report associated with this functionality.6. Implementation Considerations Product Development ParametersSet organization parameter for Costing Source Organization before creating a least cost batch Formulation Specification WorkbenchThe formulation specification can be created by using workbench screen is available under formulator responsibility. Create a formulation specification with requirementsThe formulation specification can be setup using the New Formulation Specification window. The spec name along with the product and other header attributes are stored in GMD_FORMULATION_SPECS table. The specification can be created with material, compositional and technical requirements and those are stored in GMD_MATERIAL_REQS, GMD_COMPOSITIONAL_REQS and GMD_TECHNICAL_REQS table.Approve the Formulation SpecificationA formulation specification becomes effective only after it is approved for general use. Formulation specification can be approved using the Change Status menu option available under the actions menu. When a formulation specification is approved the Action-Formulate menu option will be enabled to Generate/Optimize Formulation.Generate/Optimize FormulationOnce the formulation specification is approved for general use we can generate formulation by using the window Generate/Optimize Formulation. Upon pressing the generate button Least cost engine will return the output after meeting requirements specified in New Formulation Specification window. Output is stored in temporary tables GMD_LCF_DETAILS_GTMP and GMD_LCF_TECH_DATA_GTMP. using external cost function, define costs in external cost table GMD_LCF_EXTERNAL_COST Run cost update after setting up OPM item costs Sourcing the costIf using external cost function to get cost from external source, define costs in external cost table GMD_LCF_EXTERNAL_COST. For more detail regarding sourcing cost, please see:Note 412607.1: Release 12 Process Manufacturing Product Development Least Cost Formulation (LCF): Specify which cost to use7. How To Setup and Use This FeatureThe setup has been detailed in the following note:Note 412632.1 : OPM Release 12 Product Development - LEAST COST FORMULATION : Setup Checklist and Process Flow Here are below two typical examples of LCF feature use flow:Scenario IThe system generates least cost batches while meeting the requirements defined within the product specification. Two methods of batch generation are supported: Loading an existing batch into a tool like the simulator/optimizer and optimizing the ingredients and lot allocations based on the latest costs available while meeting the requirements from the product specification. Creating a new batch where no formula/recipe has been previously entered the batchs bill of materials would be based completely upon the least cost, product specification, and available materials. Scenario IIAs part of the Production processes, a user can choose the least cost recipe validity rule. For instance, when creating an individual batch in OPM batch form, the software would sort the possible choices for recipe validity rules ordered by the least cost to most cost.8. Performance ConsiderationsThere is no performance consideration associated with this functionality.9. Troubleshooting Tips The View Log button on the Generate Formulation screen provides the ingredients that were considered by the LCF engine for the formulation If the Generate Formulation option returns a warning message when unable to compute the best fit solution, Check the material, compositional and technical requirements for the min and max values and adjust them accordingly10. References Release Change Document (RCD) OU Training material Process Manufacturing R12 User guides (Tab Documentation) LCF TOI PowerPoint Least Cost Formulation Feature demo ViewletNote 412632.1 : OPM Release 12 Product Development - LEAST COST FORMULATION : Setup Checklist and Process FlowNote 412607.1: Release 12 Process Manufacturing Product Development Least Cost Formulation (LCF): Specify which cost to useNote 417933.1 Getting Started with R12 - Process Manufacturing FAQNote 416162.1 Getting Started With R12 - Process Manufacturing (OPM) Support Enhanced RCD