Modelling Operation Costs
Creation date: 3/3/2026 4:20 AM
Updated: 4/15/2026 8:45 AM
Configuring costs is the third step in configuring your Scenario, after defining the Supply and Demand Location Types and Flow Types in the Forecast, as well as the Operations that connect this supply and demand.
As a reminder, SimPath’s Cost configuration is flexible. You can set to zero any sections that are not a business priority.
Operations in SimPath can be Transfers, where the input and output Flow Types are the same,
and Transformations, where the input and output Flow Types are different.
For more information please go to our Operations article.
As a concrete example, consider this supply chain network.
Operations in this example have previously been configured as follows:
Transfers
- Distribution Centres transfer Packaged Products.
Transforms
- Factories transform Materials into Products.
- Distribution Centres transform Products into Packaged Products.
- Treatment Centres transform Products into Treated Products.
Costs can be defined for each of these operations. Any tiers you previously defined in the Fixed Costs section will appear here, but this is not mandatory. When facility tiers are not defined, the interface will default to the max capacities observed in the data for each Location Type.
In our example, the only location type that does Transfers are the Distribution Centres.
As you can see, Packaged Products are simply transferred at Distribution Centres. We can also see there is a Medium and a Large tier.
This is because these tiers were previously defined for Distribution Centres in the Fixed Costs section.
For more information, please see our Fixed Costs configuration article.
In this example, we assume we don’t actually incur costs when transferring packaged products at Distribution Centres,
so both of these values are set to zero.
Now let’s look at the Transform costs.
We have previously defined different operations for these locations types
in the Operations section of the Scenario,
as well as different location tiers in the Fixed Costs section of the Costs configuration.
Starting with Distribution Centres,
they perform a packaging operation where the Product Flow Type becomes Packaged Products.
This has a cost of £0.85 per box at a medium sized Distribution Centre, and £0.55 per box at a large one.
Next, our Factories
This is where Products are manufactured from Materials. In this example, one box of Product costs £2.20 to manufacture at a medium sized Factory, and £1.60 at a large one.
Finally, our Treatment Centres. Here we transform Products into Treated Products
The treatment is the most expensive operation in my example supply chain,
costing £3.50 per box of product at a medium sized facility, and £2.60 at a large one.
We have now finished configuring the Costs of our Operations,
and we’re ready for the final step, the Transport Costs.
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