Price sets

You can use price sets to group sets of pricing data together for both feedstock purchases and product sales. This allows you to easily manage your pricing data over time and then apply your data to cases within a supply chain model. You can add different traded materials to a price set, and these can then have multiple pricing scenarios associated with them, to allow different price values to be used for the same traded material, over a particular time period or demand configuration. Prices can be expressed using formulae relative to other parameters or each other. This allows complex definition of pricing through dynamic data.

Once price sets have been defined, they can be assigned to cases within a supply chain model to provide pricing data for materials:

• Crudes and imports

• Sales

• Supplies

• Demands

• Transport links

You can access price set information in watch sets. From a watch set you can review and update final price set calculated values (in effect, overriding the price set formula), or review and update price set parameters. Where a parameter is updated, all pricing formulae using that parameter will automatically update.

There are many different ways in which price sets can be used, depending on your organizational needs, as well as the way in which you have configured your models and the way in which you want to use pricing. Possible configurations of price sets include:

• Within a single price set, different scenarios for high price/low demand, low price/low demand and so on. The different price set scenarios could be used in a case stack to investigate the robustness of solution to price and demand variability.

• Within a single price set, different scenarios for each month of a year. The different scenario are applied across a supply, so that within each supply period the expected supply price is computed from the scenario pricing.

  Note: You must have the relevant group permissions to edit price sets.

Use price sets in a case

1. Create the price set

   To add a new price set, select the Price Sets page in the Model Explorer and open the Price Sets tab. This shows a list of available price sets that have been configured.

   Right-click and select Add Price Set, or click Add Price Set in the Price Set group of the Home ribbon tab.

   

   You can then edit the Name, Share and Base Formula of your new price set directly on the page. Once you have defined some prices (see next step), the Base Formula column will allow you to set up a single formula that will be inherited automatically by your pricing data.

2. Add the prices

   Open the Prices tab. Add any necessary traded materials to the set by clicking Add Price in the Price Set group of the Home ribbon tab.

   You can access different options by clicking the small arrow next to the Add Price button:

   • Add Material Price: The same as clicking the Add Price button.

   • Add Freight Price: Add the price of transporting a traded material between two locations. These are typically used in Network cases.

   • Add Many: Add multiple material prices at once.

   • Duplicate: Create a duplicate of the currently selected price.

     

     The Material Price Editor allows you to enter the details of the new price. Within the Material Price Editor it is possible to associate the traded material with a Market, which allows the material to have a different price formula in different geographic areas. When a market is selected, the market name is appended to the Symbol name for the material, and another entry for the traded material is added to the Prices list.

     Each price element has a Symbol. This text can be used to refer to the final calculated value in other formulae. For example, the crude Brent might have the Symbol BRENT. Another crude such as Agbami could have a formula BRENT + 0.5 to represent a differential to the benchmark crude. Formulae can contain complex mathematical equations, and can also make use of parameters.

     

     

     Review the prices you have added. If you want to modify a price, double click the corresponding row and the Price Editor window will open.

     

3. Add scenarios

   Scenarios represent alternate pricing configurations for your traded materials. Scenarios can have associated date ranges, if required. When you enter a date range for a scenario, these dates are used along with Supply and Demand dates to compute the relevant price for supplies and demands which span more than one pricing scenario.

   To add a scenario, open the Scenarios tab and, from the drop-down menu, select the price set you are interested in. Click the Add Scenario button to create the scenario.

   

   Scenario date ranges

   Take care when setting up dates in scenarios. These are used along with supply dates and demand dates to compute prices for materials. When a supply date does not exactly match a scenario duration, unexpected behavior may occur:

   • If a supply date is longer than one scenario duration, multiple scenario may be used. The final supply price is calculated by averaging the prices in each scenario with respect to the scenario duration and the overlap with the supply date, so that if you have a six week supply, and two scenarios for January and February, then the final price is 4/6 the January price and 2/6 the February price.

   • If a supply date is less than one scenario duration, no price is calculated for the supply.

     Take care when setting the start and end times on scenarios. If you want the scenario to cover the whole of January, start it on 01 Jan 00:00 and end it on 01 Feb 00:00. That is, do not accidentally set the scenario to end on the 31 Jan 00:00, which is midnight at the start of the 31st and so does not include the last day of January.

4. Add parameters

   Parameters can be used as arbitrary factors in your pricing formulas. This is useful, for example, to allow for certain price premiums, or to allow for inclusion of freight price factors.

   Open the Parameters tab to add one or more parameters, either manually or by copying and pasting in from another application, such as Microsoft Excel. Define a Name for your parameter, the Symbol that you want to be used in your pricing formulas, and do not forget the Units of Measurement.

   

   Tip: To undo changes made since the last Get and which have not been committed to the central server, click Undo Changes. This will undo your locally saved changes and reset model workspaces and reference data to the server version.

5. Add parameter values

   The Parameter Values tab is where you control the different values of each parameter, for each material and scenario. Any values you have defined in the Parameters tab will remain as the default, unchanging values throughout. These will appear dimmed in the Parameter Values tab.

   

6. Add pricing data

   Prices can be constructed using pricing formulae. These allow the price to be determined in terms of other pricing elements, such as other prices, or your parameters.

   Open the Pricing Data tab. Add the actual pricing data for the traded materials and each scenario. You can either do this individually (see below), or in one go by using the Base Formula in the Price Sets tab. It is recommended that you go back to the Price Sets tab and use the base formula, as this will save you effort and limit human error. Any formulae that have been inherited from the base formula will appear dimmed on the Pricing Data tab.

   

   Formulae can contain min or max components to choose between different values. For example, you could write a formula min(BRENT + 0.5, 110), where the value would be the smallest of either Brent + 0.5, or 110, so if Brent was 50 $/bbl, then the final value would be 50.5 $/bbl.

   You can filter the displayed prices and scenarios by typing keywords in the Prices and Scenarios boxes.

   When a price set formula references another price, as opposed to a parameter, the variable representing the price in the formula is treated as dimensionless. No unit of measure conversion is performed. This means that the numbers will be added without additional conversion, even if the referenced price is in a different unit than the price being calculated. For instance:

   Price	Unit of measure	Formula	Computed value
   PriceA	$/tonne	41	41
   PriceB	$/barrel	PriceA + 1	42

   Moreover, if a price is converted to volume units using a reference density, the price is expressed in K$/m3. This happens for each price variable in the formula, as well as for the final calculation using the reference density of the price being computed.

   You will also need to enter values (or leave them blank) for the following columns, which are available for each scenario within your price set:

   Column name	Description
   Active	Whether the price is active in the current scenario.
   Formula	The formula for the price
   Base Price	The base price value on which the final price for the current traded material is based. You can enter a base price directly or select a traded material in the Benchmark cell to use its price. You cannot edit the price when a traded material is selected in the Benchmark cell.
   Multiplier	A multiplicative value applied to the base price to obtain the final price. For example, a value of 1.1 means that the base price is increased by 10%.
   Offset	An additive value applied to the base price to obtain the final price. You can enter negative values to decrease the base price.
   Final Price	The final price for the traded material, obtained according to the formula Final Price = Base Price ⋅ Multiplier + Offset. Note that the offset is applied after the base price has been multiplied by the Multiplier value. You cannot edit the final price directly.
   Diagnostic	Any diagnostic messages about the price.
   Ref. Density	The reference density for the traded material. When a reference density is entered, weight-based prices will be converted to a volume basis using the reference density, and the purchase or sale will occur in volume basis.

   If you decide to add your formulae manually, when you type in the Formula column, an auto-completion list appears, showing the symbol and parameter names containing the text you have typed.

   

   You can also copy tabular data into the grid from external applications, such as Microsoft Excel.

   

7. Commit changes

   Commit your updates to the server by clicking Commit in the Sharing group of the Home ribbon tab.

   

8. Update supply chain model to use price set

   As price sets are global reference data, the supply chain model should be updated to ensure the price set is correctly registered in the model. This can be done using the Model Update Wizard.

   

9. Manage purchases and sales for model

   

   The price sets must be associated separately with both the purchases and sales. From within a case, open either the Purchases or Sales page and click Manage in the Price Sets group of the Home ribbon tab.

   For a multi-plant case, do the same for supplies and demands.

   Note: Manually entered values take precedence over price sets. If you've already entered prices in the grids for materials, these manually entered values will still show in the grid and be used during optimization. To use the price set values you must delete the manual entries.

10. Select scenario for case

    

    For the purchases and sales add the required price scenarios. Several scenarios can be added to the same set of materials, and scenarios higher up the list take precedence.

    Click the icon to add a new scenario to the current case. The priority of scenarios can be changed by clicking the icon to move the scenario up and increase its priority, or by clicking the icon to move the scenario down and decrease its priority.

    Price set scenarios apply at the case level and are applied to the current case and its children, where not overridden lower down the hierarchy.

11. Review prices

    Review the prices in the case using the purchases and sales grids.

    

12. Override prices

    If necessary, prices within a case can be overridden by typing in a new value. The manually entered value takes precedence over the price set value, and will not be updated if the price set is updated.

    To return to the price set value, delete the manually entered value.

    

Update price sets in a case

13. Select the pricing data

    On the Pricing Data tab, select the name of the price set whose prices should be edited.

    

14. Update the pricing data

    Make the desired changes in the price set.

    

15. Commit data

    After entering the new prices, commit your data to the central server before it can be applied to any supply chain models.

    

    Pricing data is standard reference data, so it can be committed independently of other changes to supply chain models.

    

16. Update model

    To use the new pricing data in a supply chain model, run the Model Update Wizard for each supply chain model.

    

    Choose the necessary price sets to update within the model.

    

17. Review changes

    After updating the model, review your new prices.