💸 Setting Up Fixed Order Costs
Fixed Order Costs are expenses you incur every time you place a purchase order with a supplier, regardless of the size or value of that order. Optiply uses this value to calculate the most economical order frequency and quantity, helping you minimise total purchasing and inventory costs.
What Is Included in Fixed Order Costs?
It is crucial to set this value accurately, as it directly influences Optiply's advice. Fixed order costs typically include:
Logistics Costs: Fixed freight charges, shipping insurance, or customs clearance fees that apply per shipment.
Processing Costs: Administrative time and labour required for placing the order, processing supplier invoices, and receiving the goods into the warehouse.
Inspection Fees: Any mandatory inspection costs incurred per shipment.
Why Optiply Needs This Value
Optiply uses the Fixed Order Cost as a primary input for its calculations (based on Economic Order Quantity, or EOQ logic).
High Fixed Cost: If this cost is high, Optiply will advise you to order less frequently but in larger quantities to spread the high fixed cost across more units.
Low Fixed Cost: If this cost is low, Optiply will advise you to order more frequently but in smaller quantities, reducing your inventory holding costs.
How to Set the Fixed Order Costs
You must enter the fixed order cost value on the individual supplier's configuration page.
Navigate to Suppliers: Go to the Suppliers page in Optiply.
Select the Supplier: Click on the specific supplier you wish to configure.
Locate the Field: On the main details page (labelled Information), find the field labelled Fixed Order Costs.
Enter the Value: Input the total fixed cost incurred per purchase order (e.g., enter 75.00 if the cost is €75).
Save Changes: Scroll down and click the Save button at the top of the page to finalise the setting.
❓ Frequently Asked Questions (FAQs)
Should I include VAT/Taxes in the Fixed Order Cost?
Generally, no. Input the net, pre-tax cost incurred. Consult your accountant if you are unsure how to calculate the true cost of placing an order.
My shipping cost changes based on weight. Is that a Fixed Order Cost?
No. If a cost varies based on the size, weight, or value of the order, it should be treated as a variable cost. Only costs that apply equally to an order of one item or one thousand items should be entered as a Fixed Order Cost.
Why did my advised order frequency change after I updated the Fixed Order Cost?
This is expected. If you increased the Fixed Order Cost, Optiply's calculation correctly shifted the advice to larger, less frequent orders to make the ordering cost more economical.
If I leave the Fixed Order Cost blank, what value does Optiply use?
If the field is left empty, Optiply will assume the Fixed Order Cost is zero (0). This will skew your purchasing advice toward ordering very frequently in tiny amounts, which is rarely cost-effective in reality.