What is opportunity cost in SAP SCM-APO-SNP - Supply Network Planning (SNP)?

SAP Term: opportunity cost

• Component: SCM-APO-SNP

• Component Name: Supply Network Planning (SNP)

• Description: Revenue or profit that is lost in comparison with a better handling alternative. In SNP optimization this term is used to describe the costs that are incurred when it is not possible to fulfil a sales order. It is not only the revenue from this this order that is lost but other "opportunities", such as subsequent orders etc.

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• Key Concepts: 
  Opportunity cost is a concept in economics that refers to the cost of an alternative that must be forgone in order to pursue a certain action. In SAP Supply Network Planning (SNP), opportunity cost is used to refer to the cost of not using a certain resource or material in order to pursue a certain action. 
  
  How to use it: 
  In SAP SNP, opportunity cost can be used to determine the most efficient way of using resources and materials. For example, if a company has two different materials that can be used for a certain product, the opportunity cost of using one material over the other can be calculated. This calculation can help the company decide which material is more cost-effective and should be used. 
  
  Tips & Tricks: 
  When calculating opportunity cost in SAP SNP, it is important to consider all factors that could affect the cost of using one material over another. This includes factors such as availability, quality, and price. Additionally, it is important to consider any potential future costs that could arise from using one material over another. 
  
  Related Information: 
  Opportunity cost is closely related to the concept of marginal analysis, which is used to determine the optimal level of production or consumption for a given resource or material. Additionally, opportunity cost can also be used in conjunction with other optimization techniques such as linear programming and goal programming.