Requirements - Forecasting (FOR)

Requirements - Forecasting

Overview

Forecasts are generated to provide future sales projections in terms of dollars or units for product groups and individual line items. Forecast periods are usually monthly intervals for one to five years. Forecasting and Master Production Scheduling are frequently combined as one application due to the role which the sales forecast plays in deriving the master schedule.

The forecast results are usually modified by management to include factors which have not been allowed for in the computer program. This modified forecast provides the input to the MPS and is used to develop production requirements for each period. The forecast must be traced and compared with actual sales and revised periodically (at least yearly). In cases where the product sales are seasonal, the forecast will probably be smoothed into a balanced production plan which will provide the input for the master schedule.

Forecasts should be generated for finished good end items only and not for raw material and component parts. The demands for the latter are calculated through MRP.

Forecasting

• Enter and maintain historical sales data
• Order date
• items ordered
• quantity ordered
• date shipped
• dollar value of sale
• Develop periodic forecast accuracy measurements by comparing actual sales with the management forecast
• Provide upward and downward forecasting in order to explode a dollar and product group forecast down to the item number level or roll upward from the item number level to obtain product group and total dollar forecast.
• Provide alternate mathematical forecasting formulas:
• Moving average
• Exponential smoothing
• Arithmetic equation
• Trend
• Trend-seasonal
• Linear regression
• Leading indicators
• Plot forecast data graphically
• Compare forecast to budgets using:
• Average selling price
• Time phased future price
• Provide an unlimited forecast horizon
• Forecast in time periods that can vary in length
• Perform forecast simulation and "what-if" alternatives off-line and produce a hard copy without affecting original forecast
• Forecast new products which do not have historical data based on management input
• "Force" the totals at the item level to equal the product group forecast
• Automatically consume the forecast with actual customer orders in order to report on forecast accuracy and/or drive MRP process.
• Enter forecast data in dollars or units
• Manually override system calculated forecasts
• Maintain a history of frozen forecast revisions
• Calculate forecasts by:
• Constant annual amount
• Historical annual sales
• Historical with percentage increase
• Weighted average
• Single seasonality factor
• Multiple seasonality factor
• Single average
• Rolling average
• Weighted average
• Generate forecasts for:
• Customers
• Products
• Product Groups
• End Items
• User defined (e.g., divisions, product lines)
• Compute:
• Average selling price
• Time phased future prices
• Gross actual selling price
• Cost
• Forecast for non uniform time periods
• Maintain multiple forecast versions
• Track and maintain seasonality factors and formulas
• Modify historical data to minimize influence of price increases and promotions

Reports

• Forecast Tracking Report – Provides historical data on actual shipments and order bookings as compared to management forecasts
• Forecast Report – Generates forecast detail for each forecasted item by time period
• Management Forecast – Generates as a summary by product line and product group with monthly and yearly totals by product group and by period for the product line
• Period Summary Forecast – Forecasts by line item within product group for each period with summaries by period for the group and yearly for line items
• Marketing Management Summary – Forecast worksheets for revisions with the following data presented:
• Product group forecast for future periods
• Historical actual for the same periods in the previous year
• Mathematical model forecast as a basis of comparison
• Forecast Audit Summary – Automatically reports the forecast accuracy by summing the forecast items within each time period, calculates an error range and reporting them as a percent of the total items on a quarterly basis or the mean absolute deviation (MAD). Also shows exceptions based on user defined exception tolerances. The report provides an overall picture of general accuracy of forecast and the degree of significance in the errors.
• Forecast Simulation Reports – Produced as a result of forecast simulation processing. The principal output is the values of smoothing constants and historical trend data, and the resulting forecast in order to select the optimum set of smoothing constants.
• Item Demand and Forecast – Presents several years of historical data (userspecified) and the next twelve periods of forecast demand for each item. Typical data elements can include YTD totals, total yearly demand and period totals with comparisons by percent between items and their total product group
• Forecast Variances - Variance from original and revised forecasts
• Production Comparisons - Variances between actual sales, production and forecasts

Inquiry

• On-line display of forecast to actual sales for user specified period:
• Item
• Product group
• Feature/option group
• Sales region/territory/salesperson
• Customer/Customer Group

Interfaces

• Master Production Scheduling - Post sales forecast data for MPS.
• Material Requirements Planning – Feeds item dependent and independent demand (e.g., service parts)
• Cost Management - Receive product costs for calculating dollar forecasts
• Sales Analysis - Receive sales history to generate forecasts
• Audit Trails
• Track all changes to forecasts for a user specific time period