Entering Control Forecast Parameters

Forecast parameters filter transactions to determine product demand so the system can make a more accurate demand forecast. The Forecast Parameters For Demand Calculation control maintenance record defines the system-wide forecast parameters.

You can assign forecast parameters at the branch level that apply to all products in that branch, unless overridden at the buy line or the product level. These include parameters to filter demand, set the forecast method and forecast period, and to calculate a product's economic order quantity (EOQ).

To enter system default forecast period parameters:

1. From the System > System Files menu, select Control Maintenance to display the Control Maintenance window.

2. In the Keyword field, enter forecast parameters for demand to display the Control Forecast Parameters Maintenance dialog box.

3. Double click the INVM control maintenance record that displays.

4. In the Branch field, select the branch, branches, or territories for which you want to apply control forecast parameters.

5. Complete the main fields to apply to the branch.

   Field	Value
   Forecast Method	Whether the system uses the standard or median forecasting method for this product.
   Lost Sale	The maximum number of days in the forecast period that the system uses to increase an item's raw demand to compensate for lost sales of a product.
   Exceptional %	The exceptional sales percentage for the product. The system eliminates from demand forecasting any sale exceeding the percentage difference between the two largest sales in the forecast period.
   Trend %	The positive or negative percent to change the calculated demand forecast in anticipation of a trend increasing or decreasing the demand. Note: You can enter negative numbers, if needed.
   EOQ $	The theoretical cost of reordering and restocking a single item, used in calculating the EOQ of the product. We recommend using 1.00 for $1.00.
   EOQ %	The carry cost percentage used in calculating the EOQ of the product. We recommend using 28 for 28%.

6. In the Auto-Trend area, select to apply an automatic trend for seasonal products. The system calculates and applies a trend based on recent demand compared to the previous year's demand.

• Max Decrease% - The maximum negative trend to apply to the demand forecast for the product. This parameter only applies to seasonal products when the Auto-Trend check box is selected.

• Max Increase% - The maximum positive trend to apply to the demand forecast for the product. This parameter only applies to seasonal products when the Auto-Trend check box is selected.

7. Select Include Directs to include direct shipments in the demand calculation for the branch demand calculations.

8. Select Seasonal if you have products in the branch that sell more at certain times of the year than at other times.  For example, you may count furnaces as a seasonal product because you sell more during winter months.

9. In the Regular section, enter non-seasonal product forecast parameters.

   Field	Description
   Hits	The number of times an item sold within the regular Min Days and Max Days range. The system uses hits to calculate the forecast period for calculating demand for a non-seasonal product. The Demand Hit Definition control maintenance record determines how the system calculates hits based on sales orders.
   Min Days	Minimum days used with regular Hits to determine the forecast period for calculating demand for a non-seasonal product.
   Max Days	Maximum days used with regular Hits to determine the forecast period for calculating demand for a non-seasonal product.

Note: If the date of the first transaction for a product is less than the defined Max Days, the system uses the date of the first transaction as Max Days. If the date of the first transaction for a product is also less than the defined Min Days, the program uses the date of the first transaction as Min Days.

10. In the Seasonal section, enter seasonal product forecast parameters.

    Field	Description
    Hits	The number of times an item sold within the seasonal Min Days and Max Days range. The system uses hits to calculate the forecast period for calculating demand for a seasonal product. The Demand Hit Definition control maintenance record determines how the system calculates hits based on sales orders.
    Min Days	Minimum days used with seasonal Hits to determine the forecast period for calculating demand for a seasonal product.
    Max Days	Maximum days used with seasonal Hits to determine the forecast period for calculating demand for a seasonal product.

Note: If the date of the first transaction for a product is less than the defined Max Days, the system uses the date of the first transaction as Max Days. If the date of the first transaction for a product is also less than the defined Min Days, the program uses the date of the first transaction as Min Days.

11. In the Days Out Calculation Parameters area, select Exclude Ship From Different Branch to eliminate including the days out calculation from another branch.

For example, a customer orders 20 garbage disposals. You have none in your warehouse, but have them in branch 2. You have them directly shipped to the customer, but do not want to consider that you have them on-hand in your days out calculation although you can get them to the customer. Select this option to exclude shipping from them from a different branch in the calculation of on-hand.

12. Click OK to save changes and exit the window.

See Also:

Buy Line Maintenance

Forecasting Overview

How the System Calculates Trend for Seasonal Products