- Select the Work with forecast control codes menu item.
- On the first main panel, select the control key class for which you want to define forecasting methods.
- The second main panel displays the forecast codes that have been created for the selected control key class, if any. Click Add.
- On the Work with forecast control codes detail panel, the following fields are mandatory:
- Key value
- Enter a key value. For each warehouse and key value in this control key class, you define a method and parameters to be used for calculating forecast. Note: The key value must be a valid code for the control key class displayed in the header. For example, if you are entering data for the item control key class, then you must enter a valid item code. Note: This rule is valid for each control key class except the nickname class and default class. The nickname class allows you to define an arbitrary name that is not connected to a key within the system.
- Description
- Enter a description of the new record.
- Exponential smoothing
- Indicate if you want to use this forecast method. The forecast will be calculated based on the forecast and demand values in the historical forecast periods, where the values in each forecast period carry exponentially less and less weight as you go back in time. That is, the statistics in the older forecast periods influence forecast less than statistics for the most recent forecast periods.
- Note: Exponential smoothing can be combined with demand adjustment, workday adjustment, seasonal adjustment and sales promotion adjustment. In addition you can have exponential smoothing that accounts for trend by setting Trend code to YES for an item/warehouse combination in the Item/Warehouse file.
- Moving average
- Indicate if you want to use this forecast method. This method is an arithmetic average of a certain number of periods (n), where (n) = the number of forecast periods to use for the average. Unlike the exponential smoothing, this method gives equally as much weight to older forecast periods as to the most recent forecast periods.
- Note: Moving average can be combined with demand adjustment, workday adjustment, season adjustment and sales promotion adjustment.
- Forecast copy
- Indicate if you want to use this forecast method. This method allows you to copy actual demand, including demand adjustment, from the corresponding forecast period in the previous year.
- Note: You can enter a percentage (+ or -) in Markup/down % indicating the estimated demand change in percentage per forecast period in the present year.
- Alpha value
- Mandatory entry for all three forecast methods. Enter an alpha value (smoothing factor) in the range of 0.01 to 1.00. This value is used to control how quickly the forecast method should react to changes in demand.
- A low alpha (0.01 – 0.10) makes the forecast react slowly to changes in demand and therefore produces a stable forecast which places less emphasis on the actual demand of the previous period.
- A high alpha (0.40 – 0.50) makes the forecast react quickly to changes in demand, risking an unstable forecast. However, the forecast will be more sensitive to the demand from the previous forecast period.
- Auto alpha update
- Indicate if the system should update the alpha value automatically during the inventory calculation.
- If YES, then the system will use the forecast error information to adjust the alpha value in order to optimise performance of the forecast method.
- If NO, then the value in Alpha value will be used for every period.
- Note: When the system calculates a new alpha value, it checks that the alpha is greater than the minimum alpha value and lower than the maximum alpha value defined in the fields below.
- Minimum alpha
- Mandatory entry if Auto alpha update is set to YES. Enter the minimum alpha value to be used in the automatic update.
- Maximum alpha
- Mandatory entry if Auto alpha update is set to YES. Enter the maximum alpha value to be used in the automatic update. This value must be greater than the minimum alpha value.
- Markup/down %
- Only relevant if you have selected the Forecast copy method. Enter a percentage indicating the estimated increase or decrease in demand from the previous year to the current year. The value will be used for each forecast period. For example, if you enter 10 in this field, the system copies the demand plus a 10% increase to the current forecast period from the corresponding forecast period in the previous year. If this field is left blank, the demand from each forecast period of the previous year will be copied as the forecast for each forecast period in the current year.
- No of periods MA
- Mandatory entry if you have selected the Moving average method. Enter a value indicating the number of forecast periods on which the forecast calculation should be based.
- Tracking limit
- Enter a value in the range of 0.01 to 1.00 to be used for the evaluation of forecast errors. Each time the inventory calculation is run, the system uses the tracking limit to measure the forecast bias. The tracking limit can also be used to update the alpha value if Auto alpha update is set to YES.
- No of track errors
- Mandatory entry if Tracking limit is set to YES. Enter the number of allowed tracking errors. This number represents the number of consecutive calculations you will allow a forecast error to occur before the system prints an error line on the Inventory calculation printout.
- Maximum deviation %
- Enter the allowed maximum deviation between the present period forecast value and the previous period forecast value. This value is used to determine if a forecast error has occurred during forecast calculation. These errors are printed on the Inventory calculation printout. Note: If you leave this field blank, then the system cannot alert you to deviations in forecast.
Select method
Select one of the following forecast methods:
Note: See About working with forecasts for more information about the available methods.
Enter parameters
Depending on the selected forecast method you must complete certain parameters. The parameters are:
Click OK. Exit the routine.