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Forecast Consumptions

Supply Plan Calculations (MRP) and Forecast Consumptions

By default, the Supply Plan Calculations (MRP) use today's date as the Plan Start Date. This ensures that the Supply Plan includes all current period forecasts with starting dates before the Plan Start Date.

Why Forecast Consumptions Are Necessary

The purpose of forecast consumption is to prevent overstating demand when both sales forecasts and sales orders exist for the same period. The Supply Plan needs to adjust the forecast demand by accounting for actual sales orders to ensure an accurate reflection of total demand.


Example Scenario

Inventory Period Type: By Month
Today's Date: 3/26/20

In this scenario, the Supply Plan will include sales forecasts from the current month (with a Forecast Date of 3/1/20) and future months (e.g., 4/1/20, 5/1/20, etc.) in its demand calculation. It will also include sales orders with shipment dates in the current and future months.

To avoid overstating demand, the Supply Plan calculates forecast consumption, which compares the sales order quantities with the forecast quantity for each period.


Forecast Demands Example

Forecast demands for 3/1/20 and 4/1/20:

Forecast Date

Quantity

3/1/20

150

4/1/20

150

Sales Orders Example

There are three sales orders with shipment dates in the current or future periods:

Order No.

Order Date

Shipment Date

Order Quantity

Outstanding Quantity

1

1/1/20

2/1/20

100

0

2

2/1/20

3/1/20

100

0

3

2/10/20

3/10/20

100

20

4

3/10/20

4/10/20

100

100

Demand Quantity Without Forecast Consumption

Without considering forecast consumption, the total demand for the forecast and sales orders would be:

Period Date

Quantity

3/1/20

170 (150 forecast + 20 outstanding sales order quantity)

4/1/20

250 (150 forecast + 100 outstanding sales order quantity)


Calculating Forecast Consumption

Forecast consumption compares the total sales order quantity against the forecast quantity for each period, and the lesser amount is used as the consumption quantity.

For the current scenario, orders #2, #3, and #4 must be included since their shipment dates are after 3/1/20.

Period Date

Consumption Qty.

Reasons

3/1/20

150

150 forecast qty < 200 total order qty

4/1/20

100

100 total order qty < 150 forecast qty


Net Demand Calculation

The Net Demand is calculated by subtracting the consumption quantity from the total demand for each period:

Period Date

Net Demand Qty

Reasons

3/1/20

20

170 - 150

4/1/20

150

250 - 100

By adjusting for forecast consumption, the Supply Plan accurately reflects the real demand for each period, preventing over-ordering and ensuring efficient inventory management.

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