# Node-balancing values

Node-balancing values are used to balance the workload at nodes across a fulfillment network.

Node-balancing values are defined for each node or node type in terms of backlog threshold days, overcapacity penalty, and the tiebreaker cost. They determine the penalty that is applied to a node during node capacity balancing optimization.

Backlog threshold days
The number of days of capacity that a node can consume before the overcapacity penalty is charged. This value needs to be determined based on the backlog that a node can manage so that the overcapacity penalty causes orders to be fulfilled by another node only when necessary. Typically, the value is set in the range of 1 - 3 days.
Overcapacity penalty
A penalty that is charged when a node exceeds its specified backlog threshold days. The overcapacity penalty is charged for each day that a fulfillment location cannot ship new orders due to a backlog in fulfilling previous orders. Typically, the value is set in the range of \$2 - \$5.
Tiebreaker cost
The extra shipping cost that a fulfillment center is willing to invest to select a ship node based on the goal of balancing node capacity across the network. Typically, the value is set in the range of \$.10 - \$.30 to maintain an optimal balance in the fulfillment network without incurring a high tradeoff in the shipping costs. Ideally, similar nodes have similar values set for this parameter.

## Example

The following example demonstrates how node-balancing values impact order fulfillment. In this scenario, the values of the backlog threshold days, the overcapacity penalty, the tiebreaker cost, and the per day capacity of the node are configured as shown.

Table 1. Configurations of node-balancing values at two nodes.
Node Tiebreaker cost Backlog threshold days Overcapacity penalty Node capacity per day
Day 1 Day 2 Day 3 Day 4 Day 5
A 0.5 2 5 10 20 30 40 50
B 0.1 1 2 50 60 70 80 90

Consider that the estimated shipping cost from node A is \$5.20 and \$5.25 from Node B. The following example illustrates how a node is selected for shipping based on the values of the node-balancing values.
Table 2. Calculations based on node-balancing values.
Node Number of units that are assigned to the node Estimated shipping cost Estimated node-balancing penalty (primarily determined by the value of the tiebreaker cost) Total cost
A 5 \$5.20 \$0.002 \$5.202
B 25 \$5.25 \$0.004 \$5.254