Tuesday, July 26, 2016

Demand forecasting

In the next two posts, we will cover demand forecasting and master planning at a basic level.

Forecasting is a long-term estimation, required to estimate and adjust future capacities of item supply and work centers.

Forecast models
First thing needed in setting up forecasting is a forecast model (Inventory management > Setup > Forecast > Forecast models). Forecast models represent different planning scenarios.

Forecast plans
Forecast models refer to forecast plans (Master planning > Setup > Plans > Forecast plans).
You specify the forecast model on a forecast plan. A Forecast plan is the basis for calculating forecasts in forecast scheduling. You may include forecast plans in master scheduling as well. It includes time fences and safety margin. More on time fences in next post.
You may enter the current forecast plan in the master planning parameters (Master planning> Setup> Parameters). The current forecast plan is the default for displaying forecast scheduling results.

Forecasting is based on items but you can also use item allocation key, if you do not enter forecasts per item number. Item allocation keys are groups, containing a percentage for every item included in the key.
You may specify item allocation keys in the form Inventory management> Setup> Forecast> Item allocation keys. After selecting or inserting an item allocation key, you may push the button Lines to enter the item numbers that are assigned to the key together with their percentage of the group total.

Demand forecast
Next you enter Demand forecast. Go to Released products > Plan tab > Demand forecast.

One option is to manually insert lines. Select a forecast model, select the site and warehouse, date, sales quantity and sales price.

Another option could be to use demand forecasting calculated using the new functionality in AX R3. With the R3 release of 2012, a new feature was added that allows your to have the system create your statistical forecasts based on the history in the system and then allow you to adjust the forecasts through Excel before automatically uploading them back into the demand forecast tables.

Yet another option could be to write custom logic to estimate forecasts from item's sales history. For example, daily sales data could be obtained by dividing sales qty sold by the no of days that item is sold. Daily sales figure can be multiplied by the no of days in the period we will order, say 1 week. Sales data can be obtained from Inventory transactions (InventTrans or SalesLines). And a batch job to run overnight and fill up your demand forecast table (ForecastSales). This needs some thinking.

In our example, we will insert few lines manually. Create two lines with date separated by a week 1/8/2016 and 8/8/2016, quantities 10 and 6.


Forecast scheduling batch job
Next you run Forecast scheduling batch job (Master planning > Periodic > Forecast scheduling) to calculate the gross requirements of finished items. As a result of forecast scheduling, Dynamics AX creates planned purchase/production orders covering the gross requirements of forecasting. These planned orders refer to the selected forecast plan.

Note: Since forecast scheduling refers to a long-term estimation, it does not include the current inventory as well as current sales and purchase orders in the calculation.

We can check the results at Released products > Plan tab > Gross requirements.
Select the forecast plan you used on top filter. Top grid shows the warehouse and the Coverage group used. (More on coverage groups in the next post on Master planning)
Lower grid shows the lines from demand forecast and a planned order with required quantity against those quantities. If you 'View details' on the planned order number, will open the planned order created, with the demand forecast lines pegged against it.

Note: As a result of these orders, there are no transactions (InventTrans) created against the item. Also its not mandatory to run forecast scheduling batch job. You can directly run master scheduling batch job that uses your demand forecast to create planned orders. Difference is the orders would be shown under a different plan (filter in planned orders list page).


Next post we will cover the basics of master planning.

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