Margin Erosion Agent (Formula Expressions)

This page provides summary of the Formula Expressions used for the Margin Erosion Agent.

Potential Revenue

Definition

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The estimated additional revenue if the unit margin on the item is raised from the current level to the suggested level while holding the current quantity constant; operationally, it sums per‑unit margin uplift times current quantity.

Formula

 Current Quantity * (Suggested Unit Margin – Current Unit Margin)

Potential Profit

Definition

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The estimated additional profit if the unit margin on the item is raised from the current level to the suggested level while holding the current quantity constant; because unit margin is profit per unit, this equals the revenue uplift expression in the unit‑margin case.

Formula

Current Quantity * (Suggested Unit Margin – Current Unit Margin)

Threshold Unit Margin

Definition

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The guidance value used for compliance (chosen from the Negotiation Guidance floor/target/ceiling for unit margin), optionally adjusted by a user‑defined offset in the compliance criteria.

Formula

Recommended Unit Margin + Offset

Current Unit Margin

Definition

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The profit per unit realized at the current level. Conceptually gross margin divided by quantity.

Formula

Gross Margin / Quantity

Suggested Unit Margin

Definition

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The proposed unit margin obtained by moving from the current unit margin toward the guidance threshold.

Formula

Current Unit Margin + p × (Threshold Unit Margin − Current Unit Margin)

Difference to Threshold

Definition

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The amount by which the current metric (e.g., unit margin) deviates from the selected guidance threshold (floor/target/ceiling, including any configured offset). Positive values indicate the current value is below the threshold when “higher is better” (e.g., unit margin), and negative values indicate it is above.

Formula

Threshold Metric − Current Metric