Allocation types: Scenarios of Optimization-Driven Allocation
About this article
In this article we detail a number of scenarios of the Optimization-Drive Allocation type found in the Allocation rules settings. Read more about the Allocation type setting here.
Overall, the Allocation type setting gives you the flexibility to choose the allocation type that best suits your needs, either keeping the current Priority-Driven Allocation or adopting Optimization-Driven Allocation to optimize your stock allocation strategy.
Scenario 1 - ideal scenario, multiple products ordered
In this scenario, the order contains three products with the following quantities:
| x | Product A | Product B | Product C |
|---|---|---|---|
| Ordered quantity | 1 | 2 | 3 |
There are two warehouses, each with its corresponding priority set in the allocation rule. The stock availability per product in each warehouse is shown below:
Available stock in warehouse:
| Warehouses | Product A | Product B | Product C |
|---|---|---|---|
| Warehouse 1 | 0 | 2 | 3 |
| Warehouse 2 | 2 | 3 | 4 |
- Warehouse 1 - Has two out of three ordered products in stock, while the remaining product is out of stock
- Warehouse 2 - Has all the ordered products, including their required quantities, in stock.
Based on the Allocation type ‘Optimization-Driven Allocation’ and available stock, the order is allocated from warehouse 2:
Order allocation:
| Warehouses | Product A | Product B | Product C |
|---|---|---|---|
| Warehouse 2 | 1 | 2 | 3 |
This is because warehouse 2 has all the required products and quantities in stock and has a higher efficiency than warehouse 1, since the order will not be split in different shipments. It therefore becomes the preferred choice for order fulfillment.
Scenario 2 - split allocation scenario
In this scenario, the order contains four products with the following quantities:
| x | Product A | Product B | Product C | Product D |
|---|---|---|---|---|
| Ordered quantity | 1 | 2 | 3 | 4 |
There are three warehouses, each with its corresponding priority set in the allocation rule. The stock availability per product in each warehouse is shown below:
Available stock in warehouse:
| Warehouses | Product A | Product B | Product C | Product D |
|---|---|---|---|---|
| Warehouse 1 | 2 | 0 | 0 | 0 |
| Warehouse 2 | 2 | 2 | 0 | 0 |
| Warehouse 3 | 0 | 5 | 5 | 5 |
- Warehouse 1 - Has product A available, but the rest (B, C, D) are out of stock
- Warehouse 2 - Has products A and B available, but the rest (C, D) are out of stock
- Warehouse 3 - Has products B, C, and D available, but product A is out of stock.
Based on the Allocation type ‘Optimization-Driven Allocation’ and available stock, the order is allocated from warehouses 3 and 1:
Order Allocation:
| x | Product A | Product B | Product C | Product D |
|---|---|---|---|---|
| Warehouse 3 | 0 | 2 | 3 | 4 |
| Warehouse 1 | 1 | 0 | 0 | 0 |
| Total | 1 | 2 | 3 | 4 |
In this scenario, the goal is to optimize order fulfillment and reduce shipment splits. Centra prioritizes allocating from a single warehouse to fulfill the majority of the demand whenever possible. It looks for the highest number of pieces available in a single warehouse that can cover the order demand to streamline logistics and shipping. However, if a product is available in multiple warehouses, the allocation follows the priority set in the 'Geography Priority' settings of the Allocation rules. This ensures efficient order handling while still accounting for the designated priorities for each warehouse.
- Products B, C, and D are allocated from warehouse 3, since it has the highest efficiency and priority among the warehouses with available stock
- Product A is allocated from warehouse 1, since it has the highest priority among the warehouses that have it in stock.
Scenario 3 - ideal scenario, same product ordered
In this scenario, there is an order for 10 units of a specific product:
| x | Product A |
|---|---|
| Ordered quantity | 10 |
There are three warehouses, each with its corresponding priority set in the allocation rule. The stock availability per product in each warehouse is shown below:
Available stock in warehouse:
| Warehouses | Product A |
|---|---|
| Warehouse 1 | 2 |
| Warehouse 2 | 5 |
| Warehouse 3 | 20 |
- Warehouse 1 - Has 2 units of the product in stock
- Warehouse 2 - Has 5 units of the product in stock
- Warehouse 3 - Has 20 units of the product in stock.
Based on the Allocation type ‘Optimization-Driven Allocation’ and available stock, the order is allocated from warehouse 3:
Order allocation:
| Warehouses | Product A |
|---|---|
| Warehouse 3 | 10 |
This is because warehouse 3 has the highest efficiency among the warehouses and also has a sufficient quantity of the product to fulfill the entire order. Therefore, the allocation logic selects warehouse 3 as the optimal choice for fulfilling the order, ensuring that all 10 units are allocated from that warehouse.
Scenario 4 - split allocation, same product ordered
In this scenario, there is an order for 10 units of a specific product:
| x | Product A |
|---|---|
| Ordered quantity | 10 |
There are three warehouses, each with its corresponding priority set in the allocation rule. The stock availability per product in each warehouse is shown below:
Available stock in warehouse:
| Warehouses | Product A |
|---|---|
| Warehouse 1 | 2 |
| Warehouse 2 | 4 |
| Warehouse 3 | 7 |
- Warehouse 1 - Has 2 units of the product in stock
- Warehouse 2 - Has 4 units of the product in stock
- Warehouse 3 - Has 7 units of the product in stock.
Based on the Allocation type ‘Optimization-Driven Allocation’ and available stock, the order is allocated from warehouses 3 and 2:
Order allocation:
| x | Product A |
|---|---|
| Warehouse 3 | 7 |
| Warehouse 2 | 3 |
| Total | 10 |
The allocation logic aims to allocate as many units as possible from the same warehouse (warehouse 3 in this case) to optimize efficiency and minimize the splitting of shipments. Only when a single warehouse cannot fulfill the entire order, Centra allocates the remaining units from the next warehouse with the highest priority and available stock.
- Allocate 7 units from warehouse 3, as it has efficiency priority among the warehouses and has enough units to fulfill this portion of the order
- Since the remaining 3 units are not available in any single warehouse, allocate the remaining units from warehouse 2, as it has the next highest efficiency and has the next highest number of available units.
Scenario 5 - split allocation, same number of units that can be fulfilled from two warehouses
In this scenario, the order contains three products with the following quantities:
| X | Product A | Product B | Product C |
|---|---|---|---|
| Ordered quantity | 2 | 3 | 3 |
There are five warehouses, each with its corresponding priority set in the allocation rule. The stock availability per product in each warehouse is shown below:
Available stock in warehouse:
| Warehouses | Product A | Product B | Product C |
|---|---|---|---|
| Warehouse 1 | 2 | 1 | 2 |
| Warehouse 2 | 3 | 1 | 1 |
| Warehouse 3 | 1 | 1 | 1 |
| Warehouse 4 | 2 | 2 | 2 |
| Warehouse 5 | 0 | 3 | 3 |
- Warehouse 1 - Has product A available, but the rest (B, C) cannot be fully allocated from this warehouse
- Warehouse 2 - Has product A available, but the rest (B, C) cannot be fully allocated from this warehouse
- Warehouse 3 - No products can be fully allocated from this warehouse
- Warehouse 4 - Has product A available, but the rest (B, C) cannot be fully allocated from this warehouse
- Warehouse 5 - Has products B and C available, but product A cannot be fully allocated from this warehouse.
Based on the Allocation type 'Optimization-Driven Allocation' and available stock, the order is allocated from warehouses 4 and 1:
Order allocation:
| x | Product A | Product B | Product C |
|---|---|---|---|
| Warehouse 4 | 2 | 2 | 2 |
| Warehouse 1 | 0 | 1 | 1 |
| Total | 2 | 3 | 3 |
Warehouse 4 and warehouse 5 have the same number of units that can fulfill the majority of the order. So, the allocation happens towards warehouse 4 first, as it has a higher priority. Then, any remaining pieces are allocated from warehouse 1, which also has enough stock and is the highest priority warehouse for the remaining demand.