Gross Margin is most commonly calculated by dividing the difference of the selling price and the cost by the selling price (or by unit cost). In an Order Management application it is important to know what the gross margin of an order line and an order itself is, and also to take action on orders based on business rules that use Gross Margin.
Order Management uses Oracle Costing to get a cost that is consistent within the eBusiness suite.

Gross Margin is a number that represents the profit to be made when selling something.   In general, higher margins are more desirable than lower ones. During order entry you may need to:

• Ensure that an item is not selling below its cost
• See if a line is worth fulfilling
• Substitute a product with a higher margin

Note: For drop-shipped items, the cost is the price from the purchase order issue. Order Management obtains that information when the purchase order is created for these items. We will attempt to get the cost from the purchase order which is our purchase price, however; this price might not be available before item is shipped. If the price is not yet available, we will get the cost from the List Price of the Purchasing tab of the Item Master in Inventory setup, specified in the financial system parameters of the Purchasing responsibility.

During Order Management you might want to view the gross margin of an order or line:
• To expedite shipments – to prioritize shipments of lines with higher margins
• To allocate scarce product – you might want to allocate the product to the orders/lines with the highest gross margin
• Review orders that request a certain product and allocate the product to those orders with the largest margin
• Specify what the minimal acceptable margin on an order level should be, and orders that did not meet that margin would be set aside for review