How the System Proposes Probability for Each Item in a Sales Document

What Is Probability in a Sales Document?

In the sales document header, users must enter a probability percentage (IMG)—this indicates the likelihood that the customer will confirm the inquiry or quotation and convert it into a sales order.

How the System Uses Item Probabilities

The system evaluates each item in the sales document by multiplying its net value by its associated probability percentage. This enables the system to:
  • Calculate the expected order value.
  • Propose individual probabilities for each item based on sales document category.
  • Allow users to manually adjust item-level probabilities for more accuracy.

Example of Probability Calculation

Consider a sales quotation with two items:
  • Item 1: $100 value, 100% probability
  • Item 2: $200 value, 25% probability

Step-by-step Calculation:

Expected Value = (($100 × 100%) + ($200 × 25%)) / $300
              = ($100 + $50) / $300
              = 50%
In this example, the total quotation probability is 50%, meaning there's a 50% chance of the quotation converting into a sales order.

Impact on Requirement Generation

When generating material requirements from a quotation, the system uses the probability to determine expected demand. For instance:
  • A quotation with 100 pieces and a 50% probability will result in requirements for 50 pieces only.
This allows for optimized resource planning based on realistic sales expectations.

Key Takeaways

  • The probability is a percentage reflecting the likelihood of conversion.
  • It's entered in the sales document header and affects all item-level calculations.
  • The expected order value is derived using a weighted average based on each item's value and probability.
  • Manual adjustments are possible, allowing customization based on the sales document category.
  • The system uses this data for requirement generation, aligning inventory with sales likelihood.
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