Promotion rounding modes

Promotion rounding modes
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Promotion rounding modes

Tillypad XL enables you to apply various promotion types, including discounts, in order to promote customer loyalty.

Discounts are calculated individually for each order item, and the results are summed up. The value of each discount is calculated according to particular rules, which are set out in a promotion formula. The discounted amount is rounded individually for each order item according to the specified rule.

The Promotion rounding mode allows you to select a rounding rule, while the Rounding precision (sales) parameter determines the rounding precision (the number of places after the decimal point). Both of these parameters can be specified for a particular division or for all divisions in the system settings of the segment.

Figure 5.5. Promotion rounding mode Promotion rounding mode drop-down menu

You can select a promotion rounding mode from the list of options:

Mathematical denotes that the values of discounts (markups) will be rounded according to standard mathematical rules.
To the benefit of the company means that discounted amounts are always rounded down, while markups are always rounded up.
To the benefit of the guest means that discounted amounts are always rounded up, while markups are always rounded down.
To the benefit of the company (cumulative) denotes that when the value of a promotion is rounded, previously accumulated errors are taken into account. The final adjustment diminishes the discount (or increases the markup).
Note
When calculating discounts or markups in the cumulative mode, bear in mind the following:
Precise discount amount is the discounted amount for an order item before rounding,
Rounded discount amount is the discounted amount for an order item after rounding,
Accumulated error is equal to precise discount amount minus rounded discount amount plus previously accumulated error. At the start of the calculations, the accumulated error is zero.
The calculation procedure applied to each order item:
1. Sum up the precise discount amount and accumulated error, then round the result up or down depending on the cumulative mode setting. The result will be the rounded discount amount.
2. Accumulated error correction = accumulated error + precise discount amount - rounded discount amount.
3. Then the procedure is repeated for the next order item.
To the benefit of the guest (cumulative) denotes that when the amount of the promotion is rounded, previously accumulated errors are taken into account. The final adjustment increases the value of discounts (and decreases the value of markups).

Below you will find examples of how numbers are rounded in each of these modes:

1. Mathematical 
  0.173 = 0.17 
  0.178 = 0.18 

2. To the benefit of the company: 
  0.173 = 0.18 
  0.178 = 0.18 

3. To the benefit of the guest: 
  0.173 = 0.17 
  0.178 = 0.17 

4. To the benefit of the company (cumulative): 
  0.333 = 0.33 
  0.333 = 0.34 (+0.003) 
  0.333 = 0.33 
_____________________ 
          1.00 

5. To the benefit of the guest (cumulative): 
  0.333 = 0.34 
  0.333 = 0.33 (-0.003) 
  0.333 = 0.34 
_____________________ 
          1.01

Let us consider the following example:

Suppose there are two items in the order. They cost £100 and £200. A discount of 3.7% is applied to both of them. The values of each discount are £3.70 and £7.40, respectively. The total discount without rounding is calculated as £3.70 + £7.40 = £11.10. The total due will be calculated as £100 + £200 - £11.10 = £288.90.

Suppose the rounding precision is set to 0 in the system settings. This means that values will be rounded up or down to an integer.

Depending on the selected rounding mode, the following results can be obtained:

Mathematical – according to mathematical rounding rules: £3.70 (the discount amount for the first order item) will be rounded up to £4, while the £7.4 discount will be rounded down to £7. The total discount will be £4 + £7 = £11. The total due will be calculated as £300 - £11 = £289.
To the benefit of the company – the discount is rounded down: £3.70 will be rounded down to £3, and £7.40 discount will be rounded down to £7. The total discount will be £3 + £7 = £10. The total due will be calculated as £300 - £10 = £290.
To the benefit of the guest – the discount is rounded up: £3.70 will be rounded up to £4, and £7.40 discount will be rounded up to £8. The total discount will be £4 + £8 = £12. The total due will be calculated as £300 - £12 = £288.
To the benefit of the company (cumulative) – the discount is rounded down taking into account the accumulated error.
Rounding down the discount: The discount for the first order item amounts to £3.70; the accumulated error is 0; 3.70 + 0 = £3.70; the rounded discount amount is £3. Accumulated error correction: 3.70 - 3 + 0 = £0.70 The discount for the second order item amounts to £7.40; the accumulated error is 0.70; 7.40 + 0.70 = £8.10; the rounded discount amount is £8. Accumulated error correction: 7.40 - 8 + 0.70 = £0.10.
The total rounded discount will be 3 + 8 = £11. The total due will be calculated as £300 - £11 = £289.
To the benefit of the guest (cumulative) – the discount is rounded up, taking into account the accumulated error.
Rounding up the discount: The discount for the first order item amounts to £3.70; the accumulated error is 0; 3.70 + 0 = £3.70; the rounded discount amount is £4. Accumulated error correction: 3.70 - 4 + 0 = - £0.30 The discount for the second order item amounts to £7.40; the accumulated error is minus 0.3; 7.40 - 0.30 = £7.10; the rounded discount amount is £8. Accumulated error correction: 7.40 - 8 + 0.30 = - £0.90.
The total rounded discount will be £4 + £8 = £12. The total due will be calculated as £300 - £12 = £288.