If the demand for an item/warehouse combination is unusually high or low, in a given forecast period, then the system can make adjustments so that the demand that influences the future forecast reflects normal demand for that item/warehouse combination. The adjusted demand is used in calculating forecast for the next forecast period. By adjusting demand, you influence the forecast for all forecast periods after the period in which you make the demand adjustment.
The demand can be adjusted in several ways:
- Automatic demand adjustment in the IC control file
This is described in Adjust demand automatically. - Manual demand adjustment in the Forecast file
This is described in Adjust demand manually. - Manual demand adjustment in the Demand variation list/update report
This is described in Identify and adjust abnormal demand.
Note: You must choose between:
- manual demand adjustment, and
- automatic demand adjustment.
You are not permitted to use both.
Keep in mind that when you make a demand adjustment, you are adjusting the demand values that will be used in calculating forecast. See Inventory control formulas for formula details.
- Via a Demand plan
DC1 Demand Plan must be installed and activated. See About demand planning for more information.
The following example shortly describes the procedure:
A new assortment is introduced. If the forecast is 1500 for a period, the demand % is defined to be 40%. In this example we guess that sales related to the introduction of the assortment is 900 and that normal future sales will be 600. When the period is passed, the real demand was 1800. When this demand is used for future forecast calculations, only 720 (40%) will be used as demand.
Calculation examples
Automatic demand adjustment
This section illustrates how the system calculates the demand adjustment. The following information is used in the calculation in this example:
| Forecast for item/warehouse combination in period October: – 280 units |
| Units sold for item/warehouse combination in period October: – 395 units |
Values in the IC control file:
|
Using these values, the forecast will calculate the upper limit and lower limit for normal demand for this item/warehouse combination:
| Upper limit: | 130% of 280 = 364 units |
| Lower limit | 70% of 280 = 196 units |
Based on the upper and lower limits, the normal demand should be between 196 and 364 units.
Actual demand for October was 395. Since the value exceeds the upper limit of 364 units, the system will not use it in calculating forecast for November. It will use upper limit value of 364 units instead.
Manual demand adjustment
This section illustrates how you can adjust the demand manually from the Demand variation list/update report. The following information is used in the calculation in this example:
| Forecast for item/warehouse combination in period May: – 1445 units |
| Units sold for item/warehouse combination in period May: – 988 units |
Values in the IC control file:
|
Demand variation list/update selection:
|
Using these values, the forecast will calculate the upper limit and lower limit for normal demand for this item/warehouse combination:
| Upper limit: | 125% of 1445 = 1806 units |
| Lower limit: | 75% of 1445 = 1084 units |
Since the actual demand for May was lower than the lower limit, the system calculates a positive demand adjustment:
| Demand Adjustment = Lower limit – Actual demand 1084 – 988 = 96 units |
The demand adjustment of +96 units will be added to the demand for this item/warehouse combination for May. It will be updated in Demand adjustment in the Forecast file, and a net demand will be displayed in Net demand.
Enquiries and printouts
- IC control file enquiry
- Forecast enquiry
- IC control file printout
- Demand variation list printout