What is shrink factor in SAP SCM-APO-PPS - Production Planning and Detailed Scheduling?

SAP Term: shrink factor

• Component: SCM-APO-PPS

• Component Name: Production Planning and Detailed Scheduling

• Description: The maximum extent to which an operation can be shrunk without changing the quantity or other parameters.

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• Key Concepts: 
  Shrink factor is a concept used in Production Planning and Detailed Scheduling (PPS) in SAP's Supply Chain Management (SCM) module. It is used to adjust the planned production quantity to account for expected losses due to shrinkage, such as spoilage, breakage, or other losses. The shrink factor is expressed as a percentage of the planned production quantity. 
  
  How to use it: 
  The shrink factor can be set up in the PPS system by going to the “Planning” tab and selecting “Shrink Factor” from the drop-down menu. The user can then enter the desired percentage of the planned production quantity that should be adjusted for shrinkage. The system will then automatically adjust the planned production quantity accordingly. 
  
  Tips & Tricks: 
  It is important to set an appropriate shrink factor that accurately reflects the expected losses due to shrinkage. If the shrink factor is set too low, it may result in an overproduction of goods, while if it is set too high, it may result in an underproduction of goods. 
  
  Related Information: 
  The shrink factor can also be used in conjunction with other planning parameters, such as safety stock and lot size, to ensure that the planned production quantity accurately reflects expected demand and losses due to shrinkage.