Node-balancing values

Node-balancing values are used to balance the workload at nodes across a fulfillment network. The node balancing cost is one of the optimization objectives that IBM® Sterling Intelligent Promising considers when optimizing orders. When this objective is prioritized, fulfillment decisions are based primarily on balancing workload at nodes.

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 the node capacity 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