Order Routing: Cost-based Options

Order routing determines which inventory sources to use to fulfill order items. Inventory may be sourced from one of your facilities or from one of your external vendors (i.e. Dropship, JIT, and 3PL vendors). The Order Routing options allow you to modify the default routing logic to best serve your needs. There are two different order routing modes: Preferential and Cost-based.

Cost-based order routing allows you to configure a variety of parameters to use the most cost-effective routing options available. This allows you to take into account factors such as item depreciation and customer expectation.

Preferential order routing allows you to prioritize different inventory sources over others. If inventory is available from two different sources, RetailOps will prefer the source prioritized more highly.

This article details the options for cost-based routing (CBR). The CBR mode allows you to modify the routing logic to minimize fulfillment costs. The CBR options take into account factors such as item depreciation and customer expectation. These let you model both actual costs (e.g. payment to the shipping carrier) and perceptual costs (e.g. the potential loss of the customer if a shipment is late) into your routing logic to use the most cost-effective routing options available. See below for an explanation of the CBR options available.

Routing Option	Description
Backorder penalty	This prioritizes inventory currently available by penalizing external SKUs in 'Backorder' mode. Each external SKU is worth a percentage of its unit cost. Values greater than 100% will penalize these external SKUs; lower values will prioritize them.
DS Default Shipment Fee	This prioritizes JIT over Dropship inventory sources. Dropship shipments incur a flat penalty per item.
Default SKU Weight	If no weight is specified for a SKU, the routing system will use the value set in the CBR tool as a default for routing calculations.
Depreciation percentage immediate	This prioritizes local and 3PL inventory instead of purchasing additional DS/JIT units for fulfillment. Local and 3PL inventory depreciates to a percentage of its cost to be prioritized.
Depreciation percentage inflight	This prioritizes inflight inventory for fulfillment. Inflight inventory depreciates to percentage of its cost to be prioritized.
Depreciation timeline (days)	This prioritizes local and 3PL inventory. Local and 3PL inventory depreciates over time, resulting in shorter inventory retention times. Local and 3PL inventory depreciates to $0 in the number of days specified
Expectation violation penalty (base)	This penalizes routing options that would exceed the expected shipping window conveyed to the customer. The penalty is a percentage of the order total as a base.
Expectation violation penalty (per day fraction)	This penalizes routing options that would exceed the expected shipping window conveyed to the customer. The penalty is a percentage of the order total per day after the expected shipping window.
External SKU cost multiplier	This allows you to prioritize or deprioritize external SKUs for fulfillment as desired. External SKUs are considered to be a percentage of the unit cost. Values greater than 100% will deprioritize these external SKUs; lower values will prioritize them.
Holding penalty (per day)	This penalizes routing options that would use a combination of local and JIT inventory. The penalty is a percentage of the order total per day that local inventory must be held while waiting for JIT inventory to arrive.
Holding penalty maximum days	The per-day holding penalty will be capped at the number of days specified.
Immediate shipping bonus	This prioritizes sending at least one local or 3PL shipment immediately to improve customer relations. Plans in which all shipments require purchase orders will be penalized by a flat fee.
Immediate shipping bonus percent	This prioritizes sending at least one local or 3PL shipment immediately to improve customer relations. Plans in which all shipments require purchase orders will be penalized by a percentage of the order value.
International Shipment Penalty	Default additional shipping cost for international shipments.
Lot cost multiplier	This allows you to prioritize or deprioritize local lots for fulfillment as desired. Local lots are considered to be a percentage of the unit cost. Values greater than 100% will deprioritize these external SKUs; lower values will prioritize them.
Maximum number of plans to consider	This helps maintain performance within the app. RetailOps will evaluate the maximum number of fulfillment plans set here for each order. A higher maximum may cause performance issues.
Minimum backorder cost	This prioritizes inventory currently available by incurring a minimum flat penalty for external SKUs in 'Backorder' mode.
Minimum external SKU cost	This prioritizes local inventory by incurring a minimum flat penalty for all external SKUs, including external SKUs with no cost stored.
Minimum lot cost	This prioritizes external inventory by incurring a minimum flat penalty for all local lots, including lots with no cost stored.
Minimum price	This sets a minimum flat value for all cost-based penalties.
Minimum shipment cost	This sets a minimum flat cost for all shipments, even when no data is available for the carrier.
Split item penalty	This prioritizes single-shipment routing options by penalizing options that would create multiple shipments for order line items with multiple quantities. The penalty is a percentage of the item price.
Split order penalty	This prioritizes single-shipment routing options by penalizing options that would create multiple shipments for the entire order. The penalty is a percentage of the order total.

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