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Demand Driven Forecasting

  • 88views
  • February 7, 2024

Demand Driven Forecasting

To access the Forecasting Report, navigate to:

Home > Manufacturing > Reports > Forecasting

Utilizing the exponential smoothing method and historical Sales Order / Delivery Note / Quotation data, the system calculates the forecasting.

By employing the exponential smoothing method, the system predicts the forecast for each period, and this same forecast data is used to predict upcoming period data.

How does the exponential smoothing method works

In this example, we utilize one-year sales order data recorded monthly. The forecast for the first month is determined by averaging the total orders across all months. Starting from the second month, we calculate the forecast by multiplying the difference between the total orders of the previous month and the forecast value by the Smoothing Constant Value, which falls between 0 and 1. The default value for the Smoothing Constant is set at 0.3 to ensure accurate forecasting. The difference between the total orders of the last month and the forecast value represents the forecasting error, which is added to the forecast value of the subsequent month to calculate the forecast for the next month.

How do the filters work

  1. Company:– Users can conduct forecasting for specific companies by applying the company filter.
  2. From Date and To Date:– The system performs forecasting for the specified period. The default start date is the current date, and the end date is one year ahead of the current date.
  3. Based On Document:– By default, the system utilizes past sales order data for forecasting. Users have the option to select other documents such as delivery notes or quotations for forecasting purposes.
  4. Based On:– The system presents forecast data based on quantity or amount.
  5. Based On Data (in years) :- Forecasting requires historical data. This filter enables the system to retrieve past data for the specified number of years.
  6. Periodicity: – Forecasting data can be viewed on a monthly, quarterly, half-yearly, or yearly basis. For improved clarity, old forecast data cannot be displayed on a monthly basis.
  7. Smoothing Constant – The Smoothing Constant is utilized in forecasting data. Its value should fall between 0 and 1.