September 2000

Forecasting

Release
OneWorld® Xe

1
 J.D. Edwards World Source Company

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Portions of this document were reproduced from material prepared by J.D. Edwards.

Copyright J.D. Edwards World Source Company, 2000

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Overviews

The Forecasting system allows you to effectively manage customer demand with
timely, reliable forecasts. Understanding the importance of forecasts can help you
plan and manage your forecasts to suit your specific business needs.

Overviews consist of the following:

GIndustry Overview

GForecasting Overview

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Industry Overview

To understand the critical role that forecasts play in the business environment, you
must be aware of the different types of forecasts and the data used to create these
forecasts.

The industry overview consists of the following topics:

GIndustry Environment and Concepts for Forecasting

GIdea to Action: The Competitive Advantage

Industry Environment and Concepts for Forecasting

Forecasting has grown beyond the simple prediction of future sales based on data
from previous years. The globalization of businesses has created a need for
multiple forecasts by area, revision level, and perhaps even by key customer.

Now more than ever, businesses must be able to quickly create multiple scenarios
for instant evaluation in making informed planning decisions. Businesses require
the ability to build customer or item forecasts at the detail and aggregate level with
algorithms that reflect product demand patterns. It’s imperative that companies
can proactively plan and manage forecasts with the flexibility needed for specific
business requirements.

Forecasting characteristics include the following topics:

• Forecasting methods
• Multilevel forecasting
• Demand forecasting
• Simplifying the forecast
• Measuring accuracy
• Integrating information

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Forecasting

Forecasting Methods

To stay competitive, companies need to build realistic forecasts based on their

organization’s unique business practices. For example, companies require the
ability to use multiple industry-standard forecast algorithms for Quantitative or
Intrinsic forecasting, including the following values to match market patterns:

• Seasonal
• Weighted average
• Exponential smoothing
• Percent over last year
• Calculated percent over last year
• Last year to this year
• Moving average
• Linear approximation
• Least square regression
• Second degree approximation
• Flexible method
• Linear smoothing
Using these industry-standard forecasting equations, businesses need their system
to calculate the percentage of accuracy for the “best fit” forecast, normally using
Mean Absolute Deviation (MAD), according to current and historical demand
information.

Businesses also require the ability to revise the data going into their forecast. For
example, a business might leave data that is not typical. To forecast more
accurately, the data must be revised. Another example for this revision capability
requirement is the need to insert data that was not captured in the past because of
some unpredictable on-hand information.

Forecasting uses the Qualitative technique. It uses subjective projections based on

judgment, intuition, and informed opinions. Extrinsic techniques, using economic
indicators, are also necessary methods in calculating a forecast. For example, an
economic indicator can be the amount of disposable income, which affects
demand.

The ability to develop hypothetical scenarios using the different forecasting

methods and techniques is a must if companies want to keep up-to-date.

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 Industry Overview

Multilevel Forecasting

Businesses require the ability to forecast at any level. For example, they might need
to generate either detail forecasts (single-item) or summary forecasts that reflect
product line demand patterns. They might need to forecast at the company,
department, item group, or at a specific item level.

Demand Forecasting

In today’s customer-focused environment, businesses need to create separate

forecasts for major customers or customer groups in order to isolate key demand
sources. Demand forecasting is essential in a customer-driven environment.
Coordination between planning by the Operations department, through materials
management, and meeting customer needs by the Marketing department is the key
to recognizing and managing product demand.

Simplifying the Forecast

To simplify the forecast process, companies generally use a Planning Bill. Planning
Bills are an artificial grouping of components, or bills of material, used for
planning purposes. For example, if there are 24 different bills of material, based on
different end products, the 24 bills can show the percentage split for each type of
component on one bill.

Measuring Accuracy

Forecast error due to bias, which is the difference between actual demand and
forecast demand, needs to be calculated to make more informed forecasting
decisions. One commonly used method for measuring error is MAD. MAD is
calculated by dividing the sum of absolute deviations by the number of total
observations.

Integrating Information

Companies need integration within their supply chain. The ability to access all
pertinent information for accurate forecasting and planning is imperative. Systems
need to talk to each other to facilitate decision-making and planning. This
integration eases the process of obtaining the necessary information to generate an
accurate forecast.

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Forecasting

Idea to Action: The Competitive Advantage

The following is a typical problem in the forecasting industry, the business

activator that resolves the problem, the return on investment, and the industry that
is affected by the problem.

How do I create reliable Solution: Because distilled beverages are manufactured in

forecasts for distilled two phases, liquid production and bottling, you can use
beverages in the long-term rolling forecasts in both detail and summary.
Consumer Packaged Using this type of forecasting, you can supply your
Goods industry? customers with the right product, in the right quantity, and
at the right time. And, by providing higher customer
satisfaction, you increase your revenue.

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Forecasting Overview

Effective management of distribution and manufacturing activities begins with

understanding and anticipating market needs. Forecasting is the process of
projecting past sales demand into the future. Implementing a forecasting system
allows you to quickly assess current market trends and sales so that you can make
informed decisions about your operations.

You can use forecasts to make planning decisions about:

• Customer orders
• Inventory
• Delivery of goods
• Work load
• Capacity requirements
• Warehouse space
• Labor
• Equipment
• Budgets
• Development of new products
• Work force requirements
The Forecasting system generates the following types of forecasts:

Detail forecasts Detail forecasts are based on individual items.

Summary forecasts Summary (or aggregated) forecasts are based on larger

product groups, such as a product line.

Planning bill forecasts Planning bill forecasts are based on groups of items in a bill
of material format that reflect how an item is sold, not how
it is built.

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Forecasting

System Integration

The Forecasting system is one of many systems that make up the Enterprise
Requirements Planning and Execution (ERPx) system. Use the ERPx system to
coordinate your inventory, raw material, and labor resources to deliver products
according to a managed schedule. ERPx is fully integrated and ensures that
information is current and accurate across your business operations. It is a closed-
loop manufacturing system that formalizes the activities of company and
operations planning, as well as the execution of those plans.

The following graphic shows the systems that make up the J.D. Edwards ERPx
product group.

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 Forecasting Overview

ERPx
(Enterprise Requirements Planning and Execution)

Strategic Business Plan

Product Data Management

(Systems 30 and 48)
Product Costing (System 30)

Inventory Management
(System 41)
Tactical Plan

Sales Order Management Resource

(Systems 40 and 42) Requirements Planning
(System 33)
Forecasting (System 36)

Distribution Requirements
Planning (System 34)

Master Production Operational Plan Rough Cut Capacity

Schedule (System 34) Planning (System 33)

Material Requirements
Planning (System 34)
Requirements
Capacity Planning
(System 33)

Procurement (Systems 40
and 43) Execution

Shop Floor Management Finite Scheduler

(System 31)

Manufacturing
Accounting (System 31)

The Forecasting system generates demand projections that you use as input for the
J.D. Edwards planning and scheduling systems. The planning and scheduling
systems calculate material requirements for all component levels, from raw
materials to complex subassemblies.

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Forecasting

Detail Forecast
(F3460)

Detail Forecasts
RRP Resource Requirements Planning
MPS Master Production Schedule
MRP Material Requirements Planning

DRP Distribution Requirements Planning

The Resource Requirements Planning (RRP) system uses forecasts to estimate the
time and resources needed to make a product.

The Master Production Schedule (MPS) system plans and schedules the products
your company expects to manufacture. Forecasts are one MPS input that helps
determine demand before you complete your production plans.

Material Requirements Planning (MRP) is an ordering and scheduling system that

explodes the requirements of all MPS parent items to the component levels. You
can also use forecasts as input for lower-level MRP components that are service
parts with independent demand, which is demand not directly or exclusively tied to
production of a particular product at a particular branch or plant.

Distribution Requirements Planning (DRP) is a management system that plans and

controls the distribution of finished goods. You can use forecasts as input for DRP
so you can more accurately plan the demand that you supply through distribution.

Features

You can use the Forecasting system to:

• Generate forecasts
• Enter forecasts manually
• Maintain both manually entered forecasts and forecasts generated by the
system
• Create unique forecasts by large customer
• Summarize sales order history data in weekly or monthly time periods

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 Forecasting Overview

• Generate forecasts based on any or all of 12 different formulas that address

a variety of forecast situations you might encounter
• Calculate which of the 12 formulas provides the best fit forecast
• Define the hierarchy that the system uses to summarize sales order histories
and detail forecasts
• Create multiple hierarchies of address book category codes and item
category codes, which you can use to sort and view records in the detail
forecast table
• Review and adjust both forecasts and sales order actuals at any level of the
hierarchy
• Integrate the detail forecast records into DRP, MPS, and MRP generations
• Force changes made at any component level to both higher levels and lower
levels
• Set a bypass flag to prevent changes generated by the force program being
made to a level
• Store and display both original and adjusted quantities and amounts
• Attach descriptive text to a forecast at the detail and summary levels
Flexibility is a key feature of the J.D. Edwards Forecasting system. The most
accurate forecasts take into account quantitative information, such as sales trends
and past sales order history, as well as qualitative information, such as changes in
trade laws, competition, and government. The system processes quantitative
information and allows you to adjust it with qualitative information. When you
aggregate, or summarize, forecasts, the system uses changes that you make at any
level of the forecast to automatically update all other levels.

You can perform simulations based on the initial forecast to compare different
situations. After you accept a forecast, the system updates your manufacturing and
distribution plan with any changes you have made.

The system writes zero or negative detail records. For example, if the quantities or
amounts in Extract Sales Order History, Detail Forecast Generation, or
Enter/Change Actuals are zero or negative, the system creates zero or negative
records in the Forecast table (F3460).

Forecasting Levels and Methods

You can generate both detail (single item) forecasts and summary (product line)
forecasts that reflect product demand patterns. The system analyzes past sales to
calculate forecasts using 12 forecasting methods. The forecasts include detail

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Forecasting

information at the item level and higher level information about a branch or the
company as a whole.

Best Fit

The system recommends the best fit forecast by applying the selected forecasting
methods to past sales order history and comparing the forecast simulation to the
actual history. When you generate a best fit forecast, the system compares actual
sales order histories to forecasts for a specific time period and computes how
accurately each different forecasting method predicted sales. Then, the system
recommends the most accurate forecast as the best fit.

Demand

Best Fit

History Holdout Future

Period

Present
The system uses the following sequence of steps to determine the best fit:

1. Use each specified method to simulate a forecast for the holdout period.

2. Compare actual sales to the simulated forecasts for the holdout period.

3. Calculate the percentage of accuracy or the MAD to determine which

forecasting method most closely matched the past actual sales. The system
uses either the percentage of accuracy or the MAD based on the processing
options that you select.

4. Recommend a best fit forecast by the percentage of accuracy that is closest

to 100 percent (over or under) or the MAD closest to zero.
MAD is the mean of the absolute values of the deviations between actual and
forecast data. It is a measure of the average magnitude of errors to expect, given a
forecasting method and data history.

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 Forecasting Overview

Forecasting Methods

The Forecasting system uses 12 methods for quantitative forecasting and indicates
which method provides the best fit for your forecasting situation. Specify the
method you want the system to use in the processing options for the Create Detail
Forecast program (P34650).

Method 1 - This method uses the Percent Over Last Year formula to
multiply each forecast period by the specified percentage
Percent Over Last Year increase or decrease.

This method requires the number of periods for the best fit
plus one year of sales history to forecast demand. This
method is useful to forecast demand for seasonal items
with growth or decline.

Method 2 - This method uses the Calculated Percent Over Last Year
formula to compare the past sales of specified periods to
Calculated Percent Over sales from the same periods of the previous year. The
Last Year system determines a percentage increase or decrease, then
multiplies each period by the percentage to determine the
forecast.

This method requires the number of periods of sales order

history plus one year of sales history to forecast demand.
This method is useful to forecast short-term demand for
seasonal items with growth or decline.

Method 3 - This method uses last year’s sales for the following year’s
forecast.
Last Year to This Year
This method requires the number of periods best fit plus
one year of sales order history to forecast demand. This
method is useful to forecast demand for mature products
with level demand or seasonal demand without a trend.

Method 4 - This method uses the Moving Average formula to average

the specified number of periods to project the next period.
Moving Average You should recalculate it often (monthly or at least
quarterly) to reflect changing demand level.

This method requires the number of periods best fit plus

the number of periods of sales order history to forecast
demand. This method is useful to forecast demand for
mature products without a trend.

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Forecasting

Method 5 - This method uses the Linear Approximation formula to

compute a trend from the number of periods of sales order
Linear Approximation history and project this trend to the forecast. You should
recalculate the trend monthly to detect changes in trends.

This method requires the number of periods best fit plus

the number of specified periods of the sales order history.
This method is useful to forecast demand for new products
or products with consistent positive or negative trends that
are not due to seasonal fluctuations.

Method 6 - This method derives an equation describing a straight-line

relationship between the historical sales data and the
Least Square Regression passage of time. LSR fits a line to the selected range of data
(LSR) such that the sum of the squares of the differences between
the actual sales data points and the regression line are
minimized. The forecast is a projection of this straight line
into the future.

This method requires sales data history for the period

represented by the number of periods best fit plus the
specified number of historical data periods. The minimum
requirement is two historical data points. This method is
useful to forecast demand when there is a linear trend in the
data.

Method 7 - This method uses the Second Degree Approximation

formula to plot a curve based on the number of periods of
Second Degree sales history to project the forecast.
Approximation
This method requires the number of periods best fit plus
the number of periods of sales order history times three.
This method is not useful to forecast demand for long
term.

Method 8 - This method allows you to select the number of periods

best fit block of sales order history starting n months prior
Flexible Method (Percent and apply a percentage increase or decrease with which to
Over n Months Prior) modify it. This method is similar to Method 1, Percent
Over Last Year, except that you can specify the number of
periods that you use as the base.

Depending on what you select as n, this method requires

the number of periods best fit plus the number of periods
of sales data indicated. This method is useful to forecast
demand for a planned trend.

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 Forecasting Overview

Method 9 - The Weighted Moving Average formula is similar to

Method 4, Moving Average formula, because it averages the
Weighted Moving previous month’s sales history to project the next month’s
Average sales history. With this formula, however, you can assign
weights for each prior period.

This method requires the number of weighted periods

selected plus the number of periods best fit data. Similar to
Moving Average, this method lags demand trends, so it is
not recommended for products with strong trends or
seasonality. This method is useful to forecast demand for
mature products with demand that is relatively level.

Method 10 - This method calculates a weighted average of past sales

data. In the calculation, this method uses the number of
Linear Smoothing periods of sales order history (from 1 to 12) indicated in the
processing option. The system uses a mathematical
progression to weigh data in the range from the first (least
weight) to the final (most weight). Then, the system
projects this information to each period in the forecast.

This method requires the month’s best fit plus the sales
order history for the number of periods specified in the
processing option.

Method 11 - This method calculates a smoothed average, which

becomes an estimate representing the general level of sales
Exponential Smoothing over the selected historical data periods.

This method requires sales data history for the time period
represented by the number of periods best fit plus the
number of historical data periods specified. The minimum
requirement is two historical data periods. This method is
useful to forecast demand when there is no linear trend in
the data.

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Forecasting

Method 12 - This method calculates a trend, a seasonal index, and an

exponentially smoothed average from the sales order
Exponential Smoothing history. The system then applies a projection of the trend to
with Trend and the forecast and adjusts for the seasonal index.
Seasonality
This method requires the number of periods best fit plus
two years of sales data, and is useful for items that have
both trend and seasonality in the forecast. You can enter
the alpha and beta factor or have the system calculate them.
Alpha and beta factors are the smoothing constant the
system uses to calculate the smoothed average for the
general level or magnitude of sales (alpha) and the trend
component of the forecast (beta).

See Also

• Appendix A: Forecast Calculation Methods for more detail and samples of each
method

Demand Patterns

The Forecasting system uses sales order history to predict future demand. Six
typical examples of demand patterns follow. Forecast methods available in the J.D.
Edwards Forecasting system are tailored for these demand patterns.

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 Forecasting Overview

Six Typical Demand Patterns

Demand Demand Demand

Time Time Time

Horizontal Demand Positive Trend Demand Negative Trend Demand

Demand Demand Demand

Time Time Time

Seasonal Demand Trend-Seasonal Demand Non-Annual Cycle

You can forecast the independent demand of the following information for which
you have past data:

• Samples
• Promotional items
• Customer orders
• Service parts
• Interplant demands
You can also forecast demand for the following manufacturing strategy types using
the manufacturing environments in which they are produced:

Make-to-stock The manufacture of end items that meet the customers’

demand occurring after the product is completed.

Assemble-to-order The manufacture of subassemblies that meet customers’

option selections.

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Forecasting

Make-to-order The manufacture of raw materials and components that are

stocked in order to reduce leadtime.

Forecast Accuracy

The following statistical laws govern forecast accuracy:

• A long-term forecast is less accurate than a short-term forecast because the

further into the future you project the forecast, the more variables can
impact the forecast.
• A forecast for a product family tends to be more accurate than a forecast for
individual members of the product family. Some errors cancel each other as
the forecasts for individual items summarize into the group, creating a more
accurate forecast.

Forecast Considerations

You should not rely exclusively on past data to forecast future demands. The
following circumstances might affect your business and require you to review and
modify your forecast:

• New products that have no past data

• Plans for future sales promotion
• Changes in national and international politics
• New laws and government regulations
• Weather changes and natural disasters
• Innovations from competition
• Economic changes
You can also use the following kinds of long-term trend analysis to influence the
design of your forecasts:

• Market surveys
• Leading economic indicators

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 Forecasting Overview

Forecasting Process

You use Extract Sales Order History to copy data from the Sales Order History
table (F42119), the Sales Order Detail table (F4211), or both, into either the
Forecast table (F3460) or the Forecast Summary table (F3400), depending on the
kind of forecast you plan to generate.

You can generate detail forecasts or summaries of detail forecasts based on data in
the Forecast table. Data from your forecasts can then be revised.

The following graphic illustrates the sequences you follow when you use the detail
forecasting programs.

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Forecasting

Detail Forecasts

Sales Order History

F42119

Extract Sales
Order History
P3465

Online Enter/Change
Simulation Actuals
F3460 P3460

Generate Detail
Forecast
P34650

Forecast Pricing
P34007

Price Rollups
P3460

Summarize Detail
Forecasts Review By Type
P34300
P34600

Enter/Change
Summaries Forecast Summary
F3400
P34200

Force Changes Forecast Summary

P34610 F3400

DRP/MPS/MRP
Detail Forecasts Generation
F3460 P3482

Enter/Change DRP/MPS/MRP
Actuals Generation
F3460 P3483

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 Forecasting Overview

Tables Used by Forecasting

Business Unit Master Identifies branch, plant, warehouse, or business unit

(F0006) information, such as company, description, and assigned
category codes.

Address Book Master Stores all address information pertaining to customers,

(F0101) vendors, employees, prospects, and others.

Forecast Summary Contains the summary forecasts generated by the system

(F3400) and the summarized sales order history created by the
Extract Sales Order History program.

Forecast Summary Work Ties the summary records from the Forecast Summary table
(F34006) (F3400) to the detail records in the Forecast table (F3460).

Forecast Prices (F34007) Stores price information for item, branch, customer, and
forecast type combinations.

Forecast (F3460) Contains the detail forecasts generated by the system and
the sales order history created by the Extract Sales Actuals
program.

Category Code Key Stores the summary constants you set up for each product
Position (F4091) hierarchy.

Item Master (F4101) Stores basic information about each defined inventory item,
such as item numbers, description, category codes, and
units of measure.

Item Branch (F4102) Defines and maintains warehouse or plant level

information, such as costs, quantities, physical locations,
and branch level category codes.

Sales Order Detail Provides sales order demand by the requested date. The
(F4211) system uses this table to update the Sales Order History
table (F42119) for forecast calculations.

Sales Order History Contains past sales data, which provide the basis for the
(F42119) forecast calculations.

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Forecasting

Menu Overview

Forecasting (G36)

Periodic Forecasting Operations (G3421)

Advanced and Technical Operations (G3630)

* Forecasting Interpretability (G36301)

Forecasting Setup (G3441)

Fast Path Commands

The following table lists the fast path commands you can use to access the
Forecasting menus. From any menu, enter the fast path command at the command
line.

Fast Path Command Menu Title

FC G3421 Periodic Forecasting Operations
PFOR G3421 Periodic Forecasting Operations
SFOR G3441 Forecasting Setup

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Detail Forecasts

Detail forecasts are based on individual items. Use detail forecasts to project
demand at the single-item level according to each item’s individual history.

Forecasts are based on sales data from the Sales Order History table (F42119) and
the Sales Order Detail table (F4211). Before you generate forecasts, you use the
Extract Sales Order History program to copy sales order history information from
the Sales Order History table and the Sales Order Detail table into the Forecast
table (F3460). This table also stores the generated forecasts.

Detail forecasts consists of the following tasks:

GSetting up detail forecasts

GWorking with sales order history

GWorking with detail forecasts

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Setting Up Detail Forecasts

Before you generate a detail forecast, you set up criteria for the dates and kinds of
data on which the forecasts are based, and set up the time periods the system
should use to structure the forecast output.

To set up detail forecasts, you must:

• Set up inclusion rules to specify the sales history records and current sales
orders on which you want to base the forecast
• Specify beginning and ending dates for the forecast
• Indicate the date pattern on which you want to base the forecast
• Add any forecast types not already provided by the system
Setting up detail forecasts consists of the following tasks:

GSet up forecasting supply and demand inclusion rules

GSet up forecasting fiscal date patterns

GSet up the 52-period date pattern (optional)

GSet up forecast types

GDefine large customers

Setting Up Forecasting Supply and Demand Inclusion Rules

The Forecasting system uses supply and demand inclusion rules to determine
which records from the Sales Order History table (F42119) and Sales Order Detail
table (F4211) to include or exclude when you run the Extract Sales Order History
program. Supply and demand inclusion rules allow you to specify the status and
type of items and documents to include in the records. You can set up as many
different inclusion rule versions as you need for forecasting.

To forecast by weeks, set up a 52-period calendar.

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Forecasting

► To set up forecasting supply and demand inclusion rules

From the Material Planning Setup menu (G3442), choose Supply/Demand

Inclusion Rules.

1. On Work With Supply/Demand Inclusion Rules, complete the following

field and click Find:

• Rule Version

2. Review the following fields:

• Included

• Order Type

• Line Type

• Line Status

3. Choose the lines that you want to include and click Select.
The program changes the Included value of each line you selected from 0
(not included) to 1 (included).

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 Setting Up Detail Forecasts

Field Explanation
Rule Version A user defined code (40/RV) that identifies an inclusion
rule that you want the system to use for this branch/plant.
The Manufacturing and Warehouse Management systems
use inclusion rules as follows:
• For Manufacturing:
Allows multiple versions of resource rules for
running MPS, MRP, or DRP.
• For Warehouse Management:
Allows multiple versions of inclusion rules for
running putaway and picking. The system
processes only those order lines that match the
inclusion rule for a specified branch/plant.
If you leave this field blank, the system does not update the
capacity plan when you create a work order or change the
status of a work order.
Included A code used to prompt detail selection from a list of items.
0 Not included
1 Included
Order Type A user defined code (00/DT) that identifies the type of
document. This code also indicates the origin of the
transaction. J.D. Edwards has reserved document type
codes for vouchers, invoices, receipts, and time sheets,
which create automatic offset entries during the post
program. (These entries are not self-balancing when you
originally enter them.)
The following document types are defined by J.D. Edwards
and should not be changed:
P Accounts Payable documents
R Accounts Receivable documents
T Payroll documents
I Inventory documents
O Purchase Order Processing documents
J General Accounting/Joint Interest Billing
documents
S Sales Order Processing documents
OS Subcontract
OP Purchase Order
R2 Contract Billing

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Forecasting

Field Explanation
Line Type A code that controls how the system processes lines on a
transaction. It controls the systems with which the
transaction interfaces, such as General Ledger, Job Cost,
Accounts Payable, Accounts Receivable, and Inventory
Management. It also specifies the conditions under which a
line prints on reports and is included in calculations. Codes
include the following:
S Stock item
J Job cost
N Nonstock item
F Freight
T Text information
M Miscellaneous charges and credits
W Work order
Line Status A user defined code (40/AT) that indicates the status of the
line.

See Also

• Setting Up Supply and Demand Inclusion Rules in the Manufacturing and Distribution
Planning Guide

Setting Up Forecasting Fiscal Date Patterns

Fiscal date patterns are user defined codes (H00/DP) that identify the year and the
order of the months of that year for which the system creates the forecast. The
Forecasting system uses fiscal date patterns to determine the time periods into
which the sales order history is grouped. Before you can generate a detail forecast,
you must set up a standard monthly date pattern. The system divides the sales
history into weeks or months, depending on the processing option you choose. If
you want to forecast by months, you must set up the fiscal date pattern. If you
want to forecast by weeks, you must set up both the fiscal date pattern and a 52-
period date pattern.

To set up fiscal date patterns, specify the beginning fiscal year, current fiscal
period, and which date pattern to follow. The Forecasting system uses this
information during data entry, updating, and reporting. Set up fiscal date patterns
for as far back as your sales history extends, and as far forward as you want to
forecast.

Use the same fiscal date pattern for all forecasted items. A mix of date patterns
across items that will be summarized at higher levels in the hierarchy causes
unpredictable results. The fiscal date pattern must be an annual calendar, for

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 Setting Up Detail Forecasts

example, from January 1, 1999 through December 31, 1999 or from June 1, 1999
through May 31, 2000.

J.D. Edwards recommends you set up a separate fiscal date pattern for forecasting
only, so you can control the date pattern. If you use the date pattern already
established in the Financials system, the financial officer controls the date pattern.

► To set up forecasting fiscal date patterns

From the Organization & Account Setup menu (G09411), choose Company
Names & Numbers.

1. On Work With Companies, click Find to locate the companies in the

system.

2. Choose a company, and then choose Data Pattern from the Form menu.

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Forecasting

3. On Work With Fiscal Date Patterns, click Add.

4. On Set Up Fiscal Date Pattern, complete the following fields:

• Fiscal Date Pattern

• Date Fiscal Year Begins

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 Setting Up Detail Forecasts

5. Complete the following field for each period and click OK:

• End Date

Field Explanation
Fiscal Date Pattern A code that identifies date patterns. You can use one of 15
codes. You must set up special codes (letters A through N)
for 4-4-5, 13-period accounting, or any other date pattern
unique to your environment. An R, the default, identifies a
regular calendar pattern.
Date Fiscal Year Begins The first day of the fiscal year.
End Date 1 The month end date in 12-period (monthly) accounting.
The period end date in 13-period, or 4-4-5 period, or 52-
period accounting.
................................Form-specific information.................................
You can use period 13 for audit adjustments in 12-period
accounting by setting up period 12 to end on December 30
and period 13 to end on December 31. You can set up
period 14 in the same way for 13-period or 4-4-5
accounting. The system validates the dates you enter.

See Also

• Setting Up Fiscal Date Patterns in the General Accounting Guide

Setting Up the 52-Period Date Pattern

After you set up forecasting fiscal date patterns, you must set up a 52-period
pattern for each code to forecast by weeks. When you set up a 52-period date
pattern for a forecast, the period end dates are weekly instead of monthly.

► To set up the 52-period date pattern

On the 52-Period Accounting menu (G09313), choose Set 52 Period Dates.

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Forecasting

1. On Work With 52 Periods, click Add.

2. On Set Up 52 Periods, complete the following fields:

• Fiscal Date Pattern

• Date Fiscal Year Begins

• Date Pattern Type

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 Setting Up Detail Forecasts

3. Complete the following field for each period and click OK:

• Period End Date

Field Explanation
Date Pattern Type This field is used by a report tool to determine the column
headings that print on reports. It differentiates normal
calendar patterns from 4-4-5 and 13-period accounting
patterns. You can maintain headings for non-standard
patterns in vocabulary override records R83360Mx, where x
represents the value for this field.
For World, the report tool is Financial Analysis Spreadsheet
Tool and Report Writer (FASTR).
For OneWorld, the report tool is Financial Report Writer.

Setting Up Forecast Types

You can add codes to the user defined code table (34/DF) to identify forecast
types, such as BF for Best Fit and AA for sales order history. The Forecasting
system uses these codes to determine which forecasting types to use when
calculating a forecast. For example, using different forecast types, you can set up
multiple forecasts for the same item, branch/plant, and date.

Processing options in Distribution Requirements Planning (DRP), Master

Production Schedule (MPS), and Material Requirements Planning (MRP) allow you
to enter forecast type codes to define which forecasting types to use in
calculations. You can also use forecast type codes when you generate forecasts
manually.

See Also

• User Defined Codes in the OneWorld Foundation Guide for detailed information
about user defined codes

Defining Large Customers

For customers with significant sales demand or more activity, you can create
separate forecasts and actual history records. Use this task to specify customers as
large so that you can generate forecasts and actual history records for only those
customers.

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Forecasting

After you set up the customer, set the appropriate processing option so that the
system searches the sales history table for sales to that customer and creates
separate Detail Forecast records for them.

Use a processing option to enable the system to process larger customers by Ship
To instead of Sold To.

If you included customer level in the hierarchy, the system summarizes the sales
actuals with customers into separate branches of the hierarchy.

► To define large customers

From the Sales Order Management Setup menu (G4241), choose Customer Billing
Instructions.

1. On Work With Customer Master, complete the following fields and click
Find:

• Alpha Name

• Search Type

2. Choose the row you want to define as a large customer and click Select.

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 Setting Up Detail Forecasts

3. On Customer Master Revision, click the Credit tab, type A in the following
field, and then click OK:

• ABC Code Sales

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Working with Sales Order History

The system generates detail forecasts based on sales history data, current sales data,
or both, that you copy from the Sales Order History table (F42119) and the Sales
Order Detail table (F4211) into the Forecast table (F3460). If you want the
forecast to include current sales data, you must specify so in a processing option
for the extraction program. When you copy the sales history, you specify a date
range based on the request date of the sales order. The demand history data can be
distorted, however, by unusually large or small values (spikes or outliers), data
entry errors, or lost sales (sales orders that were cancelled due to lack of inventory).

You should review the data in the date range you specified to identify missing or
inaccurate information. Then, you can revise the sales order history to account for
inconsistencies and distortions before you generate the forecast.

Working with sales order history consists of the following tasks:

GCopying sales order history

GRevising sales order history

Copying Sales Order History

From the Periodic Forecasting Operations menu (G3421), choose Extract Sales
Actuals.

The system generates detail and summary forecasts based on data in the Forecast
table, Forecast Summary table, or both. Use Extract Sales Order History to copy
the sales order history (type AA) from the Sales Order History table to the
Forecast table, Forecast Summary table, or both, based upon criteria that you
specify.

This program lets you:

• Select a date range for the sales order history, current sales order
information, or both
• Select a version of the inclusion rules to determine which sales history to
include
• Generate monthly or weekly sales order histories

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Forecasting

• Generate a separate sales order history for a large customer

• Generate summaries
• Generate records with amounts, quantities, or both
You do not need to clear the Forecast table before you run this program. The
system automatically deletes any records for the same:

• Period as the actual sales order histories to be generated

• Items
• Sales order history type
• Branch/plant

Before You Begin

GSet up the detail forecast generation program. See Setting Up Detail Forecasts.

GUpdate sales order history. See Updating Customer Sales in the Sales Order
Management Guide.

Processing Options: Extract Sales Order History

Process Tab

These processing options let you specify how the system performs the following
edits when generating sales history:

• Use the default forecast type

• Use the version of the Supply and Demand Inclusion Rules program
(P34004)
• Use weekly or monthly planning
• Create summary records
• Use Ship To address
• Use quantities and amounts
• Include sales order detail

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 Working with Sales Order History

1. Forecast Type

Use this processing option to specify the forecast type that the system uses when
creating the forecast actuals. Forecast type is a user defined code (34/DF) that
identifies the type of forecast to process. Enter the forecast type to use as the
default value or choose it from the Select User Define Code form. If you leave this
field blank, the system creates actuals from AA forecast types.

2. Supply/Demand Inclusion Rules

Use this processing option to specify the version of the Supply/Demand Inclusion
Rules program (P34004) that the system uses when extracting sales actuals. You
must enter a version in this field before you can run the Extract Sales Order
History program (R3465).

Versions control how the Supply/Demand Inclusion Rules program displays

information. Therefore, you might need to set the processing options to specific
versions to meet your needs.

3. Actuals Consolidation

Use this processing option to specify whether the system uses weekly or monthly
planning when creating actuals. Valid values are:

1 The system uses weekly planning.

Blank The system uses monthly planning.

4. Large Customer Summary

Use this processing option to specify whether the system creates summary records
for large customers when creating actuals. Valid values are:

1 The system creates summary records for large customers.

Blank The system does not create summary records.

5. Ship To or Sold To Address

Use this processing option to specify whether the system uses the Ship To address
on which to base large customer summaries on, or the Sold To address, when
creating actuals. Valid values are:

1 The system uses the Ship To address.

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Forecasting

Blank The system uses the Sold To address.

6. Amount or Quantity

Use this processing option to specify whether the system creates detail forecasts
with quantities, amounts, or both. Valid values are:

1 The system creates forecasts with only quantities.

2 The system creates forecasts with only amounts.

Blank The system creates forecasts with both quantities and amounts.

7. Use Active Sales Orders

Use this processing option to specify whether the system uses both the Sales Order
Detail table (F4211) and the Sales Order History table (F42119) when creating
actuals, or uses only the history table. Valid values are:

1 The system uses both tables.

Blank The system uses only the history table.

Dates Tab

These processing options let you specify the fiscal date pattern that the system
uses, and the beginning and ending dates of the records that the system includes in
the processing.

1. Fiscal Date Pattern

Use this processing option to specify the fiscal date pattern that the system uses
when creating actuals. Fiscal date pattern is a user defined code (H00/DP) that
identifies the fiscal date pattern. Enter a pattern to use as the default value or
choose it from the Select User Defined Code form.

2. Begin Extract Date

Use this processing option to specify the beginning date from which the system
processes records. Enter the beginning date to use as the default value or choose it
from the Calendar. If you leave this field blank, the system uses the system date.

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 Working with Sales Order History

3. End Extract Date

Use this processing option to specify the ending date that the system uses when
creating actuals. Enter the ending date to use as the default value or choose it from
the Calendar. Enter an ending date only if you want to include a specific time
period.

Summary Tab

These processing options let you specify how the system processes the following
edits:

• Create summarized forecast records

• Use summary codes
• Retrieve address book category codes

1. Summary or Detail

Use this processing option to specify whether the system creates summarized
forecast records, detail forecast records, or both. Valid values are:

1 The system creates both summarized and detail forecast records.

2 The system creates only summarized forecast records.

Blank The system creates only detail forecast records.

2. Forecast Summary Code

Use this processing option to specify the summary code that the system uses to
create summarized forecast records. Summary code is a user defined code (40/KV)
that identifies the code to create summarized forecast records. Enter the code to
use as the default value or choose it from the Select User Define Code form.

3. Category Codes Address Book

Use this processing option to specify from where the system retrieves the address
book category codes. Valid values are:

1 The system retrieves the address book number from the Forecast table
(F3460).

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Forecasting

Blank The system uses the cost center to determine which address book number
to use to retrieve the category codes.

Interoperability Tab

These processing options let you specify the default document type for the system
to use for the purchase order and whether to use before or after image processing.

1. Transaction Type

Use this processing option to specify the transaction type to which the system
processes outbound interoperability transactions. Transaction type is a user defined
code (00/TT) that identifies the type of transaction. Enter a type to use as the
default value or choose it from the Select User Define Code form.

2. Image Processing

Use this processing option to specify whether the system writes before or after
image processing. Valid values are:

1 The system writes before the images for the outbound change transaction
are processed.

Blank The system writes after the images are processed.

Revising Sales Order History

After you copy the sales order history into the Forecast table, you should review
the data for spikes, outliers, entry errors, or missing demand that might distort the
forecast. You can then revise the sales order history manually to account for these
inconsistencies before you generate the forecast.

Enter/Change Actuals allows you to create, change, or delete a sales order history
manually. You can:

• Review all entries in the Forecast table

• Revise the sales order history
• Remove invalid sales history data, such as outliers or missing demand
• Enter descriptive text for the sales order history, such as special sale or
promotion information

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 Working with Sales Order History

Example: Revising Sales Order History

In this example, you run Extract Sales Order History. The program identifies the
actual quantities as shown in the following form.

You use Enter/Change Actuals to associate the forecasted quantities with the
forecasted amounts. The system reflects the changes made to a quantity in its
corresponding amount and to an amount in its corresponding quantity. The system
does so by retaining the same ratio that existed before the change. For example,
when a change increases the quantity to 24, a quantity of 15 and an amount of 100
become a quantity of 24 and an amount of 160.

► To revise sales order history

From the Periodic Forecasting Operations menu (G3421), choose Enter/Change

Actuals.

1. On Work With Forecasts, complete the following fields and click Find:

• Item Number

• Branch/Plant

2. Choose an item and click Select.

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Forecasting

3. On Detail Forecast Revisions, review the following fields:

• Item Number

• Forecast Type

• Request Date

• Original Quantity

• Original Amount

4. To attach information to a forecast type, choose the type, then choose

Attachments from the Form menu.
See Attaching Media Objects in the OneWorld Foundation Guide for information
on attaching objects to records.

Field Explanation
Item Number A number that the system assigns to an item. It can be in
short, long, or third item number format.
For process work orders, the item number is the process.

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 Working with Sales Order History

Field Explanation
Branch/Plant An alphanumeric field that identifies a separate entity
within a business for which you want to track costs. For
example, a business unit might be a warehouse location,
job, project, work center, branch, or plant.
You can assign a business unit to a voucher, invoice, fixed
asset, employee, and so on, for purposes of responsibility
reporting. For example, the system provides reports of
open accounts payable and accounts receivable by business
units to track equipment by responsible department.
Security for this field can prevent you from locating
business units for which you have no authority.
Note: The system uses the job number for journal entries if
you do not enter a value in the AAI table.
Forecast Type A user defined code (34/DF) that indicates one of the
following:
• The forecasting method used to calculate the
numbers displayed about the item
• The actual historical information about the item
Request Date The date that an item is to arrive or that an action is to be
complete.
Original Quantity The quantity of units affected by this transaction.
Original Amount The number of units multiplied by the unit price.

Processing Options for Enter/Change Actuals

Defaults

1. Default Forecast Type.

Forecast Type ____________

2. Enter a ’1’ to default header

Forecast Type to grid records on
Copy.

Default Forecast Type ____________

3. Customer Self Service

Blank = Bypass Customer ____________

Self-Service functionality
1 = Activate Customer Self
Service functionality to use in
Java/HTML

Interop

1. Enter the Transaction Type for

processing outbound interoperability
transactions

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Forecasting

Type - Transaction ____________

2. Enter a ’1’ to write before images

for outbound change transactions. If
left blank, only after images will
be written.

Before Image Processing ____________

Versions

Enter the version for each program. If

left blank, version ZJDE0001 will be
used.

1. Forecast Online Simulation ____________

(P3461)
2. Forecast Price (P34007) ____________

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Working with Detail Forecasts

After you set up the actual sales history on which you plan to base your forecast,
you can generate the detail forecast. You can then revise the forecast to account
for any market trends or strategies that might make future demand deviate
significantly from the actual sales history.

Working with detail forecasts consists of the following tasks:

GCreating detail forecasts

GReviewing detail forecasts

GRevising detail forecasts

GRevising forecast prices

GGenerating a forecast price rollup

Creating Detail Forecasts

The system creates detail forecasts by applying multiple forecasting methods to

past sales histories and generating a forecast based on the method that provides
the most accurate prediction of future demand. The system can also calculate a
forecast based on a method that you select.

When you generate a forecast for any method, including best fit, the system rounds
off the forecast amounts and quantities to the nearest whole number.

When you create detail forecasts, the system:

• Extracts sales order history information from the Forecast table (F3460)
• Calculates the forecasts using methods that you select
• Calculates the percent of accuracy or the mean absolute deviation for each
selected forecast method
• Creates a simulated forecast for the months you indicate in the processing
option
• Recommends the best fit forecast method

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Forecasting

• Creates the detail forecast in either dollars or units from the best fit forecast
The system designates the extracted actual records as type AA and the best fit
model as BF. These forecast type codes are not hard-coded, so you can specify
your own codes. The system stores both types of records in the Forecast table.

Creating detail forecasts allows you to:

• Specify the number of months of actual data to use to create the best fit
• Forecast for individual large customers for all methods
• Run the forecast in proof or final mode
• Forecast up to five years into the future
• Create zero forecasts, negative forecasts, or both
• Run the forecast simulation interactively
Creating detail forecasts consists of the following tasks:

• Create forecasts for multiple items

• Create forecasts for a single item

Creating Forecasts for Multiple Items

From the Periodic Forecasting Operations menu (G3421), choose Create Detail
Forecast.

Use the Create Detail Forecast program to create detail forecasts for multiple
items. Review the processing options to select the applicable values you want the
program to use.

See Also

• R34650, Create Detail Forecast in the Reports Guide for a report sample

Processing Options: Create Detail Forecast

Methods 1 - 3 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit forecast. You can also specify whether the system
creates detail forecasts for the selected forecast method.

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 Working with Detail Forecasts

Enter 1 to use the forecast method when calculating the best fit. The system does
not create detail forecasts for the method. If you enter zero before the forecast
method, for example 01 for Method 1 - Percent Over Last Year, the system uses
the forecast method when calculating the best fit and creates the forecast method
in the Forecast table (F3460). If you leave the field blank, the system does not use
the forecast method when calculating the best fit and does not create detail
forecasts for the method.

A period is defined as a week or month, depending on the pattern selected from

the Date Fiscal Patterns table (F0008). For weekly forecasts, verify that you have
established 52 period dates.

1. Percent Over Last Year

Use this processing option to specify which type of forecast to run. This forecast
method uses the Percent Over Last Year formula to multiply each forecast period
by a percentage increase or decrease that you specify in a processing option. This
method requires the periods for the best fit plus one year of sales history. This
method is useful for seasonal items with growth or decline. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

01 The system uses the Percent Over Last Year formula to create detail
forecasts.

2. Percent

Use this processing option to specify the percent of increase or decrease used to
multiply by the sales history from last year. For example, type 110 for a 10%
increase or type 97 for a 3% decrease. You can enter any percent amount;
however, the amount cannot be a negative amount. Enter an amount to use or
choose it from the Calculator.

3. Calculated Percent Over Last Year

Use this processing option to specify which type to run. This forecast method uses
the Calculated Percent Over Last Year formula to compare the periods specified of
past sales to the same periods of past sales of the previous year. The system
determines a percentage increase or decrease, then multiplies each period by the
percentage to determine the forecast. This method requires the periods of sales
order history indicated in the processing option plus one year of sales history. This
method is useful for short-term demand forecasts of seasonal items with growth or
decline. Valid values are:

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Forecasting

Blank The system does not use this method.

1 The system calculates the best fit forecast.

02 The system uses the Calculated Percent Over Last Year formula to create
detail forecasts.

4. Number of Periods

Use this processing option to specify the number of periods to include when
calculating the percentage increase or decrease. Enter a number to use or choose a
number from the Calculator.

5. Last Year to This Year

Use this processing option to specify which type of forecast to run. This forecast
method uses Last Year to This Year formula which uses last year’s sales for the
following year’s forecast. This method uses the periods best fit plus one year of
sales order history. This method is useful for mature products with level demand
or seasonal demand without a trend. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

03 The system uses the Last Year to This Year formula to create detail
forecasts.

Methods 4 - 6 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit. You can also specify whether the system creates detail
forecasts for the selected forecast method.

Enter 1 to use the forecast method when calculating the best fit. The system does
not create detail forecasts for the method. If you enter zero before the forecast
method, for example 01 for Method 1 - Percent Over Last Year, the system uses
the forecast method when calculating the best fit and creates the forecast method
in the Forecast table (F3460). If you leave the field blank, the system does not use
the forecast method when calculating the best fit and does not create detail
forecasts for the method.

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 Working with Detail Forecasts

A period is defined as a week or month, depending on the pattern selected from

the Date Fiscal Patterns table (F0008). For weekly forecasts, verify that you have
established 52 period dates.

1. Moving Average

Use this processing option to specify which type of forecast to run. This forecast
method uses the Moving Average formula to average the months that you indicate
in the processing option to project the next period. This method uses the periods
best fit from the processing option plus the number of periods of sales order
history from the processing option. You should have the system recalculate this
forecast monthly or at least quarterly to reflect changing demand level. This
method is useful for mature products without a trend. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

04 The system uses the Moving Average formula to create detail forecasts.

2. Number of Periods

Use this processing option to specify the number of periods to include in the
average. Enter a number to use or choose a number from the Calculator.

3. Linear Approximation

Use this processing option to specify which type of forecast to run. This forecast
method uses the Linear Approximation formula to compute a trend from the
periods of sales order history indicated in the processing options and projects this
trend to the forecast. You should have the system recalculate the trend monthly to
detect changes in trends. This method requires periods best fit plus the number of
periods that you indicate in the processing option of sales order history. This
method is useful for new products or products with consistent positive or negative
trends that are not due to seasonal fluctuations. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

05 The system uses the Linear Approximation formula to create detail

forecasts.

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Forecasting

4. Number of Periods

Use this processing option to specify the number of periods to include in the linear
approximation ratio. Enter the number to use or choose a number from the
Calculator.

5. Least Squares Regression

Use this processing option to specify which type of forecast to run. This forecast
method derives an equation describing a straight-line relationship between the
historical sales data and the passage of time. Least Squares Regression (LSR) fits a
line to the selected range of data such that the sum of the squares of the
differences between the actual sales data points and the regression line are
minimized. The forecast is a projection of this straight line into the future. This
method is useful when there is a linear trend in the data. This method requires
sales data history for the period represented by the number of periods best fit plus
the number of historical data periods specified in the processing options. The
minimum requirement is two historical data points. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

06 The system uses the Least Squares Regression formula to create detail
forecasts.

6. Number of Periods

Use this processing option to specify the number of periods to include in the
regression. Enter the number to use or choose a number from the Calculator.

Methods 7 - 8 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit. You can also specify whether the system creates detail
forecasts for the selected forecast method.

Enter 1 to use the forecast method when calculating the best fit. The system does
not create detail forecasts for the method. If you enter zero before the forecast
method, for example 01 for Method 1 - Percent Over Last Year, the system uses
the forecast method when calculating the best fit and creates the forecast method
in the Forecast table (F3460). If you leave the field blank, the system does not use
the forecast method when calculating the best fit and does not create detail
forecasts for the method.

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 Working with Detail Forecasts

A period is defined as a week or month, depending on the pattern selected from

the Date Fiscal Patterns table (F0008). For weekly forecasts, verify that you have
established 52 period dates.

1. Second Degree Approximation

Use this processing option to specify which type of forecast to run. This method
uses the Second Degree Approximation formula to plot a curve based on the
number of periods of sales history indicated in the processing options to project
the forecast. This method adds the periods best fit and the number of periods, and
then multiplies by three. You indicate the number of periods in the processing
option of sales order history. This method is not useful for long-term forecasts.
Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

07 The system uses the Second Degree Approximation formula to create detail
forecasts.

2. Number of Periods

Use this processing option to specify the number of periods to include in the
approximation. Enter the number to use or choose a number from the Calculator.

3. Flexible Method

Use this processing option to specify which type of forecast to run. This forecast
method specifies the periods best fit block of sales order history starting “n”
months prior and a percentage increase or decrease with which to modify it. This
method is similar to Method 1 - Percent Over Last Year, except that you can
specify the number of periods that you use as the base. Depending on what you
select as “n”, this method requires periods best fit plus the number of periods
indicated in the processing options of sales data. This method is useful for a
planned trend. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

08 The system uses the Flexible method to create detail forecasts.

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Forecasting

4. Number of Periods

Use this processing option to specify the number of periods prior to the best fit
that you want to include in the calculation. Enter the number to use or choose a
number from the Calculator.

5. Percent Over Prior Period

Use this processing option to specify the percent of increase or decrease for the
system to use. For example, type 110 for a 10% increase or type 97 for a 3%
decrease. You can enter any percent amount, however, the amount cannot be a
negative amount.

Method 9 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit. You can also specify whether the system creates detail
forecasts for the selected forecast method.

Enter 1 to have the system use the forecast method when calculating the best fit.
The system does not create detail forecasts for the method. If you enter zero
before the forecast method, for example 01 for Method 1 - Percent Over Last
Year, the system uses the forecast method when calculating the best fit and creates
the forecast method in the Forecast table (F3460). If you leave the field blank, the
system does not use the forecast method when calculating the best fit and does not
create detail forecasts for the method.

The total of all the weights used in the Weighted Moving Average calculation must
equal 100. If you do not enter a weight for a period within the specified number of
periods, the system uses a weight of zero for that period. The system does not use
weights entered for periods greater than the number of specified periods.

A period is defined as a week or month, depending on the pattern selected from

the Date Fiscal Patterns table (F0008). For weekly forecasts, verify that you have
established 52 period dates.

1. Weighted Moving Average

Use this processing option to specify which type of forecast to use. The Weighted
Moving Average forecast formula is similar to Method 4 - Moving Average
formula, because it averages the previous number of months of sales history
indicated in the processing options to project the next month’s sales history.
However, with this formula you can assign weights for each of the prior periods in
a processing option. This method requires the number of weighted periods

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 Working with Detail Forecasts

selected plus periods best fit data. Similar to Moving Average, this method lags
demand trends, so it is not recommended for products with strong trends or
seasonality. This method is useful for mature products with demand that is
relatively level. Valid values are:

Blank The system does not use this forecast.

1 The system calculates the best fit forecast.

09 The system uses the Weighted Moving Average formula to create detail
forecasts.

2. One Period Prior

Use this processing option to specify the weight to assign to one period prior for
calculating a moving average. Enter the number to use or choose it from the
Calculator.

3. Two Periods Prior

Use this processing option to specify the weight to assign to two periods prior for
calculating a moving average. Enter a number to use or choose it from the
Calculator.

4. Three Periods Prior

Use this processing option to specify the weight to assign to three periods prior for
calculating a moving average. Enter the number to use or choose it from the
Calculator.

5. Four Periods Prior

Use this processing option to specify the weight to assign to four periods prior for
calculating a moving average. Enter the number to use or choose it from the
Calculator.

6. Five Periods Prior

Use this processing option to specify the weight to assign to five periods prior for
calculating a moving average. Enter the number to use or choose a number from
the Calculator.

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Forecasting

7. Six Periods Prior

Use this processing option to specify the weight to assign to six periods prior for
calculating a moving average. Enter the number to use or choose a number from
the Calculator.

8. Seven Periods Prior

Use this processing option to specify the weight to assign to seven periods prior
for calculating a moving average. Enter a number to use or choose a number from
the Calculator.

9. Eight Periods Prior

Use this processing option to specify the weight to assign to eight periods prior for
calculating a moving average. Enter the number to use or choose a number from
the Calculator.

10. Nine Periods Prior

Use this processing option to specify the weight to assign to nine periods prior for
calculating a moving average. Enter the number to use or choose a number from
the Calculator.

11. Ten Periods Prior

Use this processing option to specify the weight to assign to 10 periods prior for
calculating a moving average. Enter the number to use or choose a number from
the Calculator.

12. Eleven Periods Prior

Use this processing option to specify the weight to assign to 11 periods prior for
calculating a moving average. Enter the number to use or choose a number from
the Calculator.

13. Twelve Periods Prior

Use this processing option to specify the weight to assign to 12 periods prior for
calculating a moving average. Enter the number to use or choose a number from
the Calculator.

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 Working with Detail Forecasts

14. Periods to Include

Use this processing option to specify the number of periods to include. Enter the
number to use or choose a number from the Calculator.

Methods 10 - 11 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit. You can also specify whether the system creates detail
forecasts for the selected forecast method.

Enter 1 to use the forecast method when calculating the best fit. No detail
forecasts are created for the method. If you enter the method number, for example
11 for Method 11 - Exponential Smoothing, the system uses the forecast method
when calculating the best fit and creates the forecast method in the Forecast table
(F3460). If the field is blank, the system does not use the forecast method when
calculating the best fit and no detail forecasts are created for the method

A period is defined as a week or month, depending on the pattern selected from

the Date Fiscal Patterns table (F0008). For weekly forecasts, verify that you have
established 52 period dates.

1. Linear Smoothing

Use this processing option to specify which type of forecast to run. This forecast
method calculates a weighted average of past sales data. You can specify the
number of periods of sales order history to use in the calculation (from 1 to 12) in
a processing option. The system uses a mathematical progression to weigh data in
the range from the first (least weight) to the final (most weight). Then, the system
projects this information for each period in the forecast. This method requires the
periods best fit plus the number of periods of sales order history from the
processing option. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

10 The system uses the Linear Smoothing method to create detail forecasts.

2. Number of Periods

Use this processing option to specify the number of periods to include in the
smoothing average. Enter the number to use or choose a number from the
Calculator.

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Forecasting

3. Exponential Smoothing

Use this processing option to specify which type of forecast to run. This forecast
method uses one equation to calculate a smoothed average. This becomes an
estimate representing the general level of sales over the selected historical range.
This method is useful when there is no linear trend in the data. This method
requires sales data history for the time period represented by the number of
periods best fit plus the number of historical data periods specified in the
processing options. The minimum requirement is two historical data periods. Valid
values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

11 The system uses the Exponential Smoothing method to create detail

forecasts.

4. Number of Periods

Use this processing option to specify the number of periods to include in the
smoothing average. Enter the number to use or choose a number from the
Calculator.

5. Alpha Factor

Use this processing option to specify the alpha factor, a smoothing constant, the
system uses to calculate the smoothed average for the general level or magnitude
of sales. You can enter any amount, including decimals, from zero to one.

Method 12 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit. You can also specify whether the system creates detail
forecasts for the selected forecast method.

Enter 1 to use the forecast method when calculating the best fit. No detail
forecasts are created for the method. If you enter the method number before the
forecast method, for example 12 for Method 12 - Exponential Smoothing With
Trend and Seasonality, the system uses the forecast method when calculating the
best fit and creates the forecast method in the Forecast table (F3460). If the field is
blank, the system does not use the forecast method when calculating the best fit
and no detail forecasts are created for the method.

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 Working with Detail Forecasts

A period is defined as a week or month, depending on the pattern selected from

the Date Fiscal Patterns table (F0008). For weekly forecasts, verify that you have
established 52 period dates.

1. Exponential Smoothing with Trend and Seasonality

Use this processing option to specify which type of forecast to run. This forecast
method calculates a trend, a seasonal index, and an exponentially smoothed
average from the sales order history. The system then applies a projection of the
trend to the forecast and adjusts for the seasonal index. This method requires
months best fit plus two years of sales data and is useful for items that have both
trend and seasonality in the forecast. Use the processing options to enter the alpha
and beta factor rather than have the system calculate them. Valid values are:

Blank The system does not use this method.

1 The system calculates the best fit forecast.

12 The system uses the Exponential Smoothing with T&S method to create
detail forecasts.

2. Alpha Factor

Use this processing option to specify the alpha factor, a smoothing constant, the
system uses to calculate the smoothed average for the general level or magnitude
of sales. You can enter any amount, including decimals, from zero to one.

3. Beta Factor

Use this processing option to specify the beta factor, a smoothing constant, the
system uses to calculate the smoothed average for the trend component of the
forecast. You can enter any amount, including decimals, from zero to one.

4. Seasonality

Use this processing option to specify whether the system includes seasonality in
the calculation. Valid values are:

0 The system does not include seasonality.

1 The system includes seasonality.

Blank The system does not include seasonality.

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Forecasting

Defaults Tab

These processing options let you specify the defaults the system uses to calculate
forecasts. The system extracts actual values from Sales History and stores the
forecasts that are generated in the Forecast table (F3460). You can define your
own forecast types for Actuals (AA) and best fit (BF).

1. Actuals Forecast Type

Use this processing option to specify the forecast type that identifies the sales
order history used as the basis for the forecast calculations, or Actuals. Forecast
type is a user defined code (34/DF) that identifies the type of forecast to run.
Enter the forecast type to use as the default value or choose it from the Select User
Define Code form.

2. Best Fit Forecast Type

Use this processing option to specify the forecast type that is generated as a result
of the best fit calculation. Forecast type is a user defined code (34/DF) that
identifies the type of forecast to run. Enter the forecast type to use as the default
value or choose it from the Select User Define Code form.

Process Tab

These processing options let you specify whether the system:

• Runs the Forecast Generation program in proof or final mode

• Creates forecasts for large customers
• Creates weekly or monthly forecasts
In addition, you use the processing options to specify:

• The start date, length, and data used when the system creates forecasts
• How the system calculates the best fit forecast
The system applies the selected forecasting methods to past sales order history and
compares the forecast simulation to the actual history. When you generate a
forecast, the system compares actual sales order histories to forecasts for the
months or weeks you indicate in the processing option and computes how
accurately each of the selected forecasting methods would have predicted sales.
Then, the system recommends the most accurate forecast as the best fit.

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 Working with Detail Forecasts

Mean Absolute Deviation (MAD) is the mean of the absolute values of the
deviations between actual and forecast data. MAD is a measure of the average
magnitude of errors to expect, given a forecasting method and data history.
Because absolute values are used in the calculation, positive errors do not cancel
out negative errors. When comparing several forecasting methods, the one with
the smallest MAD has shown to be the most reliable for that product for that
holdout period.

Percent of Accuracy (POA) is a measure of forecast bias. When forecasts are

consistently too high, inventories accumulate and inventory costs rise. When
forecasts are consistently too low, inventories are consumed and customer service
declines. A forecast that is 10 units too low, then 8 units too high, then 2 units too
high, is an unbiased forecast. The positive error of 10 is canceled by negative errors
of 8 and 2.

1. Mode

Use this processing option to specify whether the system runs in proof or final
mode. Valid values are:

Blank The system runs in proof mode, creating a simulation report.

1 The system runs in final mode, creating forecast records.

2. Large Customers

Use this processing option to specify whether to create forecasts for large
customers. Based on the Customer Master table (F0301), if the ABC code is set to
A and this option is set to 1 the system creates separate forecasts for large
customers. Valid values are:

Blank The system does not create large customer forecasts.

1 The system creates large customer forecasts.

3. Weekly Forecasts

Use this processing option to specify weekly or monthly forecasts. For weekly
forecasts, use fiscal date patterns with 54 periods. For monthly forecasts, use fiscal
date patterns with 14 periods. Valid values are:

Blank The system creates monthly forecasts.

1 The system creates weekly forecasts.

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Forecasting

4. Start Date

Use this processing option to specify the date on which the system starts the
forecasts. Enter a date to use or choose a date from the Calendar. If you leave this
field blank, the system uses the system date.

5. Forecast Length

Use this processing option to specify the number of periods to forecast. You must
have previously established fiscal date patterns for the forecasted periods. If you
leave this field blank, the system uses 3.

6. Actual Data

Use this processing option to specify the number of periods of actual data that the
system uses to calculate the best fit forecast. If you leave this field blank, the
system uses 3.

The system applies the selected forecasting methods to past sales order history and
compares the forecast simulation to the actual history. When you generate a
forecast, the system compares actual sales order histories to forecasts for the
months or weeks you indicate in the processing option and computes how
accurately each of the selected forecasting methods would have predicted sales.
Then, the system recommends the most accurate forecast as the best fit.

7. Mean Absolute Deviation

Use this processing option to specify whether the system uses the Mean Absolute
Deviation formula or the Percent of Accuracy formula to calculate the best fit
forecast. Valid values are:

Blank The system uses the Percent of Accuracy formula.

1 The system uses the Mean Absolute Deviation formula.

8. Amounts or Quantity

Use this processing option to specify whether the system calculates the best fit
forecast using amounts or quantities. If you specify to use amounts, you must also
extract sales history using amounts. This also affects forecast pricing. Valid values
are:

Blank The system uses quantities.

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 Working with Detail Forecasts

1 The system uses amounts.

9. Fiscal Date Pattern

Use this processing option to specify the fiscal date pattern type to use for the
forecast calculations. When generating weekly forecasts, the fiscal date pattern
defined here must be set up for 52 periods.

10. Negative Values

Use this processing option to specify whether the system displays negative values.
Valid values are:

Blank The system substitutes a zero value for all negative values.

1 The system displays negative values.

Interoperability Tab

This processing option lets you specify the transaction type the system uses for
interoperability.

1. Transaction Type

Use this processing option to specify the transaction type used for interoperability.
Valid values are:

Blank The system does not create outbound forecasts.

JDEFC The system creates outbound forecasts.

See Also

• Appendix A: Forecast Calculation Methods for more information about the

forecast types and how the system calculates forecasts and best fit

Creating Forecasts for a Single Item

Use Online Simulation to create a detail forecast for a single item. After you run
the simulation interactively, you can modify the simulated forecast and commit it
to the Forecast table (F3460).

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Forecasting

► To create forecasts for a single item

From the Periodic Forecasting Operations menu (G3421), choose Online

Simulation.

1. On Work With Forecast Simulations, complete the following fields and click
Find:

• Item Number

• Branch

• Actual Type

2. Choose a method and click Select.

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 Working with Detail Forecasts

3. On Forecast Calculations, modify the simulated forecasts as necessary and

click OK to commit the changes to the Forecast table (F3460).

Field Explanation
Actual Type A code from the user defined code table 34/DF that
indicates either:
• The forecasting method used to calculate the
numbers displayed about the item
• The actual historical information about the item

Processing Options for Forecast Online Simulation

Method 1- 3

Enter a ’1’ or a Forecast Type next to

the Method desired.

1.) Percent Over Last Year ____________

Percent ____________

Note: Enter the percent increase over

last year (eg. 110 for a 10%
increase, 97 for a 3% decrease).

2.) Calculated Percent Over Last ____________

Year
Enter the number of periods to ____________
include in the percentage.
3.) Last Year to This Year ____________

Method 4 - 6

4.) Moving Average ____________

Enter the number of periods to ____________

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Forecasting

include in the average.

5.) Linear Approximation ____________
Enter the number of periods to ____________
include in the ratio.
6.) Least Squares Regression ____________
Enter the number of periods to ____________
include in the regression.

Method 7- 8

7.) Second Degree Approximation ____________

Enter the number of periods. ____________
8.) Flexible Method (Percent over ____________
N periods prior)
Enter the number of periods ____________
prior.
Enter the percent over the prior ____________
period (eg. 110 for a 10%
increase, 97 for a 3% decrease).

Method 9

9.) Weighted Moving Average ____________

Note: The weights must add up to 100

(i.e. 60, 30, and 10)

Weight for one period prior ____________

Weight for two periods prior ____________
Weight for three periods prior ____________
Weight for four periods prior ____________

Method 9 Cont.

Weight for five periods prior ____________

Weight for six periods prior ____________
Weight for seven periods prior ____________
Weight for nine periods prior ____________
Weight for nine periods prior ____________
Weight for ten periods prior ____________

Method 9 Cont.

Weight for eleven periods prior ____________

Weight for twelve periods prior ____________

Note: If no weight is entered for a

period within the number of periods
specified, a weight of zero will be
used for that period. Weights
entered for periods greater than the
number of periods specified will not
be used.

Enter the number of periods to ____________

include.

Method 10-11

10.) Linear Smoothing ____________

Enter the number of periods to ____________
include in smoothing average.
11.) Exponential Smoothing ____________
Enter the number of periods to ____________

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 Working with Detail Forecasts

include in the smoothing average.

Enter the Alpha factor. If zero ____________
it will be calculated.

Method 12

12.) Exponentail Smoothing with ____________

Trend and Seasonality factors
Enter the Alpha factor. If zero it ____________
will be calculated.
Enter the Beta factor. If zero it ____________
will be calculated.
Enter a ’1’ to include seasonality ____________
in the calculation. If blank
seasonality will not be used.

Process 1

1.) Enter the Forecast Type to use ____________

when creating the Best Fit
Forecast.
2.) Enter a ’1’ to create summary ____________
records for large customers (ABC =
type).
3.) Enter a ’1’ to specify weekly ____________
forecasts. Blank defaults to
monthly.
4.) Enter the date to start ____________
forecasts. Default of today’s
date if left blank.
5.) Enter Number of periods to ____________
forecast. Default to 3 periods if
blank.
6.) Enter the number of periods of ____________
actual data to be used to
calculate best fit forecast. If
left blank 3 periods of data will
be used.

Process 2

7.) Enter a ’1’ to calculate Best ____________

Fit forecast using Mean Absolute
Deviation. Blank will calculate
the Best Fit using Percent of
Accuracy.
8.) Enter a ’1’ to forecast using ____________
amounts. Default of blank will
forecast quantities.
9.) Enter the Fiscal Date Pattern ____________
Type to use for forecast dating.
10.) Enter a ’1’ to allow negative ____________
values to be written. If left
blank, negative values will be
written as zeroes.

Versions

Enter the version for each program. If

left blank, version ZJDE0001 will be
used.

1. Forecast Review by Type ____________

(P34300)

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Forecasting

Reviewing Detail Forecasts

Review forecasts to compare the actual sales to the detail forecast. The system
displays the forecast values and actual quantities or sales order extended price for
an item for the specified year.

Example: Comparing Forecast to Sales Order History

1,000,000
900,000 Sales Order History
800,000
Forecast
700,000
600,000
500,000
400,000
300,000
200,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

You can review information by planner, master planning family, or both. You can
then change the forecast type to compare different forecasts to the actual demand.
You can also display all information stored in the Forecast table, choose whether
to review quantities or amounts, and display the data in summary or detail mode.

► To review detail forecasts

From the Periodic Forecasting Operations menu (G3421), choose Review

Forecast.

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 Working with Detail Forecasts

1. On Work With Forecast Review, complete the following fields:

• Branch/Plant

• YR

• FT

2. Complete one of the following fields and click Find:

• Planner Number

• Master Planning Family

3. Review the following fields:

• Forecast Quantity

• Actual Quantity

• Qty %

• Forecast Amount

• Actual Amount
Detail mode lists all item numbers. Summary mode consolidates data by master
planning family. Click the Summary option in the header area to review
information in summary mode.

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Forecasting

Field Explanation
YR A number that identifies the year that the system uses for
the transaction.
Planner Number The address number of the material planner for this item.
Master Planning Family A code (table 41/P4) that represents an item property type
or classification, such as commodity type, planning family,
or so forth. The system uses this code to sort and process
like items.
This field is one of six classification categories available
primarily for purchasing purposes.
Forecast Quantity The quantity of units forecasted for production during a
planning period.
Actual Quantity The quantity of units affected by this transaction.
Qty % Threshold 2 Percent
Forecast Amount The current amount of the forecasted units for a planning
period.
Actual Amount The number of units multiplied by the unit price.

Processing Options for Forecast Review

Defaults

1. Enter the default Forecast ____________

Type
2. Enter the default type for ____________
Actual

Versions

Enter the version for each program. If

left blank, version ZJDE0001 will be
used.

1. Forecast Revisions (P3460) ____________

Revising Detail Forecasts

After you generate and review a forecast, you can revise the forecast to account for
changes in consumer trends, market conditions, competitors’ activities, your own
marketing strategies, and so on. When you revise a forecast, you can change
information in an existing forecast manually, add or delete a forecast, and enter
descriptive text for the forecast.

You can access the forecasts that you want to revise by item number,
branch/plant, forecast type, or any combination of these elements. You can
specify a beginning request date to limit the number of periods.

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 Working with Detail Forecasts

As you revise the forecast, be aware that the following combination must be
unique for each item number and branch record:

• Forecast type
• Request date
• Customer number
For example, if two records have the same request date and customer number,
they must have different forecast types.

► To revise detail forecasts

From the Periodic Forecasting Operations menu (G3421), choose Enter/Change

Forecast.

1. On Work With Forecasts, complete the following fields and click Find:

• Branch/Plant

• Item Number

• U/M

• Forecast Type

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Forecasting

2. Choose a forecast and click Select.

3. On Detail Forecast Revisions, change the information in one of the

following fields and click OK:

• Forecast Quantity

• Forecast Amount

4. To associate information, such as text or drawings, with a forecast type,

choose the row, then choose Attachments from the Form menu.
See Attaching Media Objects in the OneWorld Foundation Guide for information
on attaching objects to records.

Field Explanation
U/M A user defined code (00/UM) that indicates the quantity in
which to express an inventory item, for example, CS (case)
or BX (box).

See Also

• Revising Sales Order History to review the processing options for the
Enter/Change Forecast program

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 Working with Detail Forecasts

Revising Forecast Prices

You can enter prices for unique combinations of item number, branch/plant,
forecast type, and customer number. All these values are stored in the Forecast
Prices table (F34007) and are used to extend the amount or quantity on a detail
forecast record in the Forecast table (F3460) and the Forecast Summary table
(F3400). You can roll up these prices to the higher level items in the forecast
hierarchy using the Price Rollup program.

If the forecast is stated in terms of quantity, you can use the Forecast Prices table
to extend the forecast in amounts, for example, as a projection of revenue. In the
case of a sales forecast, the forecast may already be stated in terms of revenue. In
this case, you might want to convert the forecast into quantities to support
production planning.

► To revise forecast prices

From the Periodic Forecasting Operations menu (G3421), choose Enter/Change

Forecast Price.

1. On Work With Forecast Prices, click Find to view all unique combinations
of item number, branch/plant, forecast type, and customer number.

2. Choose a forecast to which you want to change the price and click Select.

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Forecasting

3. On Forecast Pricing Revisions, complete the following fields and click OK:

• Effective Date

• Expiration Date

• Price

Field Explanation
Effective Date A date that indicates one of the following:
• When a component part goes into effect on a bill
of material
• When a routing step goes into effect as a sequence
on the routing for an item
• When a rate schedule is in effect
The default is the current system date. You can enter future
effective dates so that the system plans for upcoming
changes. Items that are no longer effective in the future can
still be recorded and recognized in Product Costing, Shop
Floor Management, and Capacity Requirements Planning.
The Material Requirements Planning system determines
valid components by effectivity dates, not by the bill of
material revision level. Some forms display data based on
the effectivity dates you enter.

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 Working with Detail Forecasts

Field Explanation
Expiration Date A date that indicates one of the following:
• When a component part is no longer in effect on a
bill of material
• When a routing step is no longer in effect as a
sequence on the routing for an item
• When a rate schedule is no longer active
The default is December 31 of the default year defined in
the Data Dictionary for Century Change Year. You can
enter future effective dates so that the system plans for
upcoming changes. Items that are no longer effective in the
future can still be recorded and recognized in Product
Costing, Shop Floor Management, and Capacity
Requirements Planning. The Material Requirements
Planning system determines valid components by effectivity
dates, not by the bill of material revision level. Some forms
display data based on the effectivity dates you enter.
Price The list or base price to be charged for one unit of this
item. In sales order entry, all prices must be set up in the
Base Price table (F4106).

Generating a Forecast Price Rollup

From the Periodic Forecasting Operations menu (G3421), choose Price Rollup.

Use the Price Rollup program to roll up the prices you entered on the
Enter/Change Forecast Price form to the higher level items in the forecast
hierarchy. This program uses the manually entered prices to extend the amount or
quantity on a detail record and rolls up the prices through the forecasting
hierarchy.

Processing Options for Forecast Price Rollup

Control

1.) Enter the Summary Code to use ____________

for pricing the summary forecast
records. If left blank only the
detail forecasts will be priced.
2.) Enter a ’1’ to Rollup based ____________
on Amount. Blank will default to
Rollup based on Quantity.

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Summary Forecasts

You use summary forecasts to project demand at a product group level. Summary
forecasts are also called aggregate forecasts. You can generate a summary of a
detail forecast based on detail sales histories or a summary forecast based on
summary actual data.

Summary forecasts consists of the following tasks:

GUnderstanding summary forecasts

GSetting up summary forecasts

GSummarizing detail forecasts

GWorking with summarized detail forecasts

GGenerating summary forecasts

Company Hierarchies

You must define your company’s hierarchy before you generate a summary
forecast. J.D. Edwards recommends that you organize the hierarchy by creating a
diagram or storyboard.

The following graphic is an example of a company hierarchy.

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Forecasting

Diagram 1

Company

East West

Customer A
Define company-specific
information to get a
high-level forecast

Product Product
Family X Family Y

Item 1 Item 2 Item 1 Item 2

Produce a more
detailed forecast that
includes product-level Customer B
information

Product Product
Family X Family Y

Item 1 Item 2 Item 1 Item 2

Establish a forecasting structure that realistically depicts the working operation of

your company, from item level to headquarters level, to increase the accuracy of
your forecasts. By defining your company’s processes and relationships at multiple
levels, you maintain more detailed information and can plan better for your future
needs.

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Understanding Summary Forecasts

Summary forecasts consist of the following topics:

GDefining distribution hierarchies

GSummary of detail forecasts

GSummary forecasts

Defining Distribution Hierarchies

When planning and budgeting for divisions of your organization, you can
summarize detailed forecasts based on your distribution hierarchy. For example,
you can create forecasts by large customer or region for your sales staff, or create
forecasts by product family for your production staff.

To define the distribution hierarchy, you must set up summary codes and assign
summary constants. You also must enter address book, business unit, and item
branch data.

Example: Distribution Hierarchy

The following chart shows an example of a distribution hierarchy.

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Forecasting

Distribution Hierarchy

Business Unit/Level
of Detail

Company A Corporate
Level/ 01
(Business Unit A)

Region 1 Region 2 Regional Level/ 02

(Business Unit A1) (Business Unit A2)

Division 1 Division 2 Sales Territory Level/

(Business Unit A10) (Business Unit A20) 03

Distribution Distribution Distribution Center

Center 1 Center 3 Level/ 04
(Business Unit A11) (Business Unit A21)

Distribution Distribution
Center 2 Center
(Business Unit A12) (Business Unit A22)

Example: Manufacturing Hierarchy for Company 200

You might want to see a forecast of the total demand for a product summarized by
product families. The following chart shows an example of how to set up a
hierarchy to get the forecast summary by product.

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 Understanding Summary Forecasts

Manufacturing Hierarchy

Business Unit/Level
of Detail

Company 200 Corporate Level/ 01

Division 1 Sports Equipment

Division Level/ 02

Bike Planning Accessory Master Planning

Family Planning Family Level/ 03
Family

Bike 1 Accessory 1 Item Level/ 04

Bike 2 Accessory 2

Bike 3 Accessory 3

(Business Unit M30) (Business Units M30, M40) Branch or

Plant/ 05

Summary of Detail Forecasts

A summary of a detail forecast uses item-level data and predicts future sales in
terms of both item quantities and sales amounts.

The system updates the Sales Order History table (F42119) with sales data from
the Sales Order Detail table (F4211). You copy the sales history into the Forecast
table (F3460) to generate summaries of detail forecasts. The system generates
summary forecasts that provide information for each level of the hierarchy that
you set up with summary constants. These constants are stored in the Category
Code Key Position table (F4091). Both summaries of detail forecasts and summary
forecasts are stored in the Forecast Summary table (F3400).

The shaded blocks of the following graphic show this process.

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Forecasting

Periodic Forecasting
Operations
Menu G3421

Detail Forecast Summary Forecast

Detail History Summary History

Extract Sales Extract Sales
Order History Order History
(P3465) (P3465)

Detail History Summary History/Forecasts

Enter/Change Enter/Change Summaries
Actuals (P3460) (P34200)

Detail Forecasts Summary Forecasts

Create Detail Create Summary
Forecast Forecast
(P34650)
P34640
Summary
Forecasts
Summarize
Detail Forecasts Summary History/Forecasts
Detail Forecasts Enter/Change Summaries
Review Forecast (P34600)
(P34200)
(P34201)

Detail Forecasts Summary

Enter/Change History/Forecasts
Forecast (P3460) Force Changes
(P34610)

Summary Forecasts

Use summary forecasts to project demand at a product group level. Summary

forecasts are also called aggregate forecasts. You generate a summary forecast
based on summary actual data.

Summary forecasts combine sales history into a monetary value of sales by product
family, by region, or in other groupings used as input to the aggregate production
planning activity. You can use summary forecasts to run simulations.

The system updates the Sales Order History table (F42119) with sales data from
the Sales Order Detail table (F4211) to generate summary forecasts. You copy the
sales history into the Forecast Summary table (F3400) to generate summary
forecasts. The system generates summary forecasts that provide information for
each level of the hierarchy that you set up with summary constants. Summary
constants are stored in the Category Code Key Position table (F4091). Both
summary forecasts and summaries of detail forecasts are stored in the Forecast
Summary table.

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 Understanding Summary Forecasts

The shaded blocks in the following graphic illustrate the process flow of generating
a summary forecast.

Periodic Forecasting
Operations
Menu G3421

Detail Forecast Summary Forecast

Detail History Summary History

Extract Sales Extract Sales
Order History Order History
(P3465) (P3465)

Detail History Summary History/Forecasts

Enter/Change Enter/Change Summaries
Actuals (P3460) (P34200)

Detail Forecasts Summary Forecasts

Create Detail Create Summary
Forecast Forecast
(P34650)
Summary P34640
Forecasts
Summarize
Detail Forecasts Summary History/Forecasts
Detail Forecasts Enter/Change Summaries
Review Forecast (P34600)
(P34200)
(P34201)

Detail Forecasts Summary

Enter/Change History/Forecasts
Forecast Force Changes
(P3460) (P34610)

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Setting Up Summary Forecasts

For summary forecasts, the Forecasting system requires you to set up the
information for detail forecasts and set up and define a summary hierarchy.

You set up your summary codes (40/KV) and then identify the constants for each
summary code. These summary codes and constants define your distribution
hierarchy.

To set up summary forecasts, you must:

• Define the hierarchy with summary codes and constants

• Enter address book data, business unit data, and item branch data
Complete the following tasks:

GSetting up summary codes

GAssigning constants to summary codes

GRevising address book category codes

GReviewing business unit data

GReviewing item branch category codes

Before You Begin

GSet up detail forecasts. See Setting Up Detail Forecasts.

Setting Up Summary Codes

To set up the hierarchy, you must set up summary codes and summary constants.
For each hierarchy you define, you must specify a unique identifier called a
summary code. For example, you can use summary code 999 to represent a
hierarchy called Summarization by Region. When creating summary forecasts, you
choose a summary code to indicate which hierarchy you want to work with.

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Forecasting

Before You Begin

GUpdate the sales history. See Updating Customer Sales in the Sales Order
Management Guide.

See Also

• User Defined Codes in the OneWorld Foundation Guide for more information
about user defined codes

Assigning Constants to Summary Codes

For each summary code, use summary constants to define each level of the
hierarchy. You can use category codes from the Address Book Revision program
(P01012) and Item Master table (F4101) to define up to 14 levels in the hierarchy.
You can define these levels as follows:

• Define the top level as the Global Summary to summarize forecasts for
several companies into a single corporate view.
• Define the second level as the Company Summary to summarize forecasts
for all facilities in a single company.
• Define up to 11 middle levels, which include the category codes and the
customer level.
• Use as many as 20 address book category codes and 20 item branch category
codes to assign other levels in the hierarchy.
• Use the Customer Level field as another category code. You can specify
each of your large customers as a level of the hierarchy. This action allows
you to create specific forecasts for each large customer.
• The lowest level you can define is the item level.
• Define an Item Summary level that provides forecasts for the individual
item level. All detail forecast records for an item can be summarized at this
level.
Detail records for a branch/plant item are automatically placed after all levels of
the hierarchy. The system does not include these detail records as one of the 14
levels of the hierarchy.

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 Setting Up Summary Forecasts

► To assign constants to summary codes

From the Forecasting Setup menu (G3441), choose Summary Constants.

1. On Work With Summary Constants, click Add.

2. On Revise Summary Constants, complete the following fields:

• Summary Code

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Forecasting

• Global Summary Y/N

• Company Summary Y/N

• Item Summary Y/N

• Customer Level

3. To define the hierarchy levels, complete any of the following fields:

• Location or Branch

• Salesperson

• Sales Territory

• Category Code 04

• Category Code 05

• Category Code 06

• Category Code 07

• Category Code 08

• Review Criteria

• Review Priority

• Sales Catalog Selection

• Sub Section

• Sales Category Code 3

• Sales Category Code 4

• Sales Category Code 5

• Commodity Class

• Commodity Sub Class

• Vendor Rebate Code

• Master Planning Family

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 Setting Up Summary Forecasts

• Landed Cost Rule

4. To display and enter additional summary constants, click the More button.

5. Click OK.

Field Explanation
Summary Code A user defined code (40/KY) that indicates the type of
summary forecast.
Global Summary Y/N A code that indicates whether the forecast should be
summarized to the global level. The global level is the top
level of the forecasting hierarchy and represents a summary
of all levels.
Company Summary Y/N A code that indicates whether the forecast should be
summarized to the Company level. The company level is
the next level above the level indicated as number one in
the hierarchy. The system summarizes all forecasts within
the company into this level.
Item Summary Y/N A code that indicates whether the forecast should be
summarized down to the item number level. This level is
the last level in the hierarchy. The system summarizes all
forecast detail records for an item into this level.
Customer Level A code that indicates the customer number as one of the
levels in the forecasting hierarchy.

Revising Address Book Category Codes

After you define the summary hierarchy for your company, verify that address
book records exist for each business unit in the hierarchy. Then, assign the
appropriate business unit code to the corresponding user defined category code in
each address book record. These fields correspond to the levels in the hierarchy.
The address book category codes associate the levels in the hierarchy when you
generate summary forecasts.

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Forecasting

Example: Assigning Category Codes

Business Unit/Level
of Detail

Company 200 Corporate

Level/ 01
(Business Unit 200)

North American European Regional Level/ 02

Region Region
(Business Unit 430) (Business Unit 400)

Division 1 Division 5 Sales Territory

(Business Unit 300) (Business Unit 340) Level/ 03

Western Eastern Distribution Center

Distribution Distribution Level/ 04
Center Center
(Business Unit M10) (Business Unit M30)

Northern Central
Distribution Distribution
Center Center
(Business Unit M20) (Business Unit M40)

For example, Division 1 (in the North American Region) uses business unit code
430 as its address book Sales Territory (03) category code. The Western
Distribution Center resides in Division 1. To establish the link to the North
American Region, the address book category codes for the Western Distribution
Center must include the business unit codes defined at each level of the hierarchy.
In the address book for Western Distribution Center (M10), the Division 1
business unit code (300) resides in the Sales Territory (03) category code. The
North American Region’s business unit code (430) is assigned to the Region
category code (04). The following table illustrates the category codes for the North
American Region hierarchy.

Business Unit Business Level of Address Address Book

Description Unit Detail Book Category Code
Number
Corporate 200 1 200
Business Unit

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 Setting Up Summary Forecasts

North American 430 2 1234

Region

European 400 2 4567

Region
Division 1 300 3 5678 Territory (03): 430
Division 5 340 3 8765 Territory (03): 430
Northern Distribution M20 4 6066 Territory (03): 300
Region
Region (04): 430
Western Distribution M10 4 6058 Territory (03): 300
Region
Region (04): 430
Central Distribution M40 4 6082 Territory (03): 340
Region
Region (04): 430
Eastern Distribution M30 4 6074 Territory (03): 340
Region
Region (04): 430

At each level in the hierarchy, the first category code defines the highest level in
the hierarchy. The second category code defines the second higher level, and so
on.

Before You Begin

GEnter new records for all locations and customers defined in your
distribution hierarchy that are not included in your address book.

► To revise address book category codes

From the Daily Processing menu (G01), choose Address Book Revisions.

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Forecasting

1. On Work With Addresses, complete the following fields and click Find:

• Alpha Name

• Search Type

2. Choose an address number and click Select.

3. On Address Book Revision, click the Cat Code 1-10 tab and complete any
of the fields.

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 Setting Up Summary Forecasts

4. To access additional category code fields, click the Cat Code 11-30 tab.

See Also

• Entering Basic Address Book Information in the Address Book Guide

Field Explanation
Alpha Name The text that names or describes an address. This 40-
character alphabetic field appears on a number of forms
and reports. You can enter dashes, commas, and other
special characters, but the system cannot search on them
when you use this field to search for a name.

Reviewing Business Unit Data

Review the company business units and business unit address book numbers to
verify that the business units and corresponding address book numbers have been
set up correctly. To review company business units, review the level of detail for
each business unit in the company hierarchy, and verify that the appropriate
address book number is assigned to the business unit.

Before You Begin

GSet up the address book numbers for each business unit.

► To review business unit data

From the Organization & Account Setup menu (G09411), choose Business Units
by Company.

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Forecasting

1. On Work With Business Units, complete the following field and click Find:

• Company

2. Choose a business unit and click Select.

3. On Revise Business Unit, click the More Detail tab and complete the
following field:

• Address Number

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 Setting Up Summary Forecasts

Field Explanation
Company A code that identifies a specific organization, fund, entity,
and so on. The company code must already exist in the
Company Constants table (F0010) and must identify a
reporting entity that has a complete balance sheet. At this
level, you can have intercompany transactions.
Note: You can use Company 00000 for default values, such
as dates and automatic accounting instructions. You cannot
use Company 00000 for transaction entries.
Address Number A number that identifies an entry in the Address Book
system. Use this number to identify employees, applicants,
participants, customers, suppliers, tenants, a location, and
any other address book members.

See Also

• Creating Business Unit Structures in the General Accounting Guide

Reviewing Item Branch Category Codes

Information for an item at a specific branch is maintained in item branch records.

The system stores this information in the Item Branch table (F4102). You should
review the item branch records to verify that the items in each branch/plant
contain data for the category codes you selected as levels on the Summary
Constants form.

For example, if you select a Master Planning Family as part of a company

hierarchy, you must verify that a corresponding user defined code exists in the item
branch category code field for that Master Planning Family.

► To review item branch category codes

From the Inventory Master/Transactions menu (G4111), choose Item

Branch/Plant.

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Forecasting

1. On Work With Item Branch, complete the following field and click Find:

• Item Number

2. Choose a branch/plant and then choose Category Codes from the Row
menu.

3. On Category Codes, verify the following field:

• Commodity Class

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Summarizing Detail Forecasts

From the Periodic Forecasting Operations menu (G3421), choose Summarize

Detail Forecasts.

The Summarize Detail Forecasts program generates summary forecasts, which are
stored in the Forecast Summary table (F3400) and are based on data from the
Forecast table (F3460). The Summarize Detail Forecasts program (R34600) allows
you to use detail data to generate summary forecasts that provide both sales
amount and item quantity data. You can summarize detail actual sales data or
forecasted data. Proper data selection is critical to accurate processing. You should
include only items in the summary constants hierarchy.

Data in the Forecast table is based on both input that is copied from the Sales
Order History table (F42119) using the Extract Sales Order History program and
input that is generated by the Generate Detail Forecast program.

Sales Order History 1. Extract Sales

(F42119) Order History
(R3465)

Forecast
(F3460)

3. Create Detail 2. Enter/Change

Forecast Forecast (optional)
(R34650) (P3460)

4. Summarize Detail Forecast Summary

Forecasts (F3400)
(R34600)

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Forecasting

You do not need to clear the Forecast Summary table before you run this program.
The system deletes any forecasts in the table for the summary code that you
specify. If you enter the from and through dates, the system only deletes those
forecasts within the date range. The system adds the forecast amounts to the
selected record and to every record in the hierarchy above it.

Before You Begin

GRun the Generate Detail Forecast program.

Processing Options: Summarize Detail Forecasts

Process Tab

These processing options let you specify the defaults the system uses for the
Summarize Detail Forecasts program (R34600). These defaults include summary
code, forecast type, beginning and ending dates, address, and fiscal date pattern.

The Summarize Detail Forecasts program generates summary forecasts based on

data from the Forecast table (F3460), and stores the forecasts in the Forecast
Summary table (F3400). The summary forecasts provide both sales amount and
item quantity data. You can summarize Detail Actual Sales data or forecasted data.
Proper data selection is critical to accurate processing. You should include only
items in the summary constants hierarchy.

1. Summary Code

Use this processing option to specify which summary code the system uses when
running the summary. Summary code is a user defined code (40/KV) that
identifies the summary code for running the summary. You define summary codes
using the Summary Constants program (P4091) from the Forecasting Setup menu
(G3441). Enter the summary code to use as the default value or choose it from the
Select User Define Code form.

2. Forecast Type

Use this processing option to specify the detail forecast type that you want the
system to use to summarize the forecast. Forecast type is a user defined code
(34/DF) that identifies the detail forecast type. Enter the forecast type to use as
the default value or choose it from the Select User Define Code form.

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 Summarizing Detail Forecasts

3. From Date

Use this processing option to specify the date from which the system begins the
summary forecast. Enter a date to use as the beginning forecast date or choose a
date from the calendar. If you leave this field blank, the system uses all data to
generate the summary forecast.

4. Through Date

Use this processing option to specify the date from which the system ends the
summary forecast. Enter a date to use as the ending forecast date or choose a date
from the calendar. If you leave this field blank, the system uses all data to generate
the summary forecast.

5. Address

Use this processing option to specify whether the system considers the address
book numbers are part of the hierarchy or if the system retrieves the address book
numbers from the business unit associated with the forecast.

If you leave this field blank, the system retrieves the address book numbers from
the business units associated with the forecast detail. In the Business Units
program (P0006) on the Organization Account Setup menu (G09411) you can
determine which address number is assigned to a business unit. In this case, the
system uses the category codes for that address number if you are using address
book category codes in the summarization hierarchy.

If you enter 1, the system considers the address book numbers of the customers
are part of the hierarchy. This customer number comes from the Forecast table
(F3460). The customer number would be part of the forecast as a result of
generating forecasts for large customers. If you did not generate forecasts for large
customers or if you do not have any customers defined as large (ABC code on the
Customer Master table (F0301) set to A) the system does not associate address
book numbers with the forecasts.

Valid values are:

Blank The system retrieves the address book number from the business units
associated with the forecast detail.

1 The system considers the address book numbers of the customers are part
of the hierarchy.

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Forecasting

6. Fiscal Date Pattern

Use this processing option to specify the monthly fiscal date pattern the system
uses to create summary forecasts. Fiscal date pattern is a user defined code
(H00/DP) that identifies the date pattern for the forecast. The system retrieves the
pattern from the Date Fiscal Patterns table (F0008). Enter the fiscal date pattern to
use as the default value or choose it from the Select User Define Code form. If
you leave this field blank, the system creates records using dates from the detail
forecast records.

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Working with Summarized Detail Forecasts

After generating the forecasts, you can compare them to actual sales order
histories. You can then revise both history and forecast data according to your
own criteria.

When you review summaries of forecasts, you can also access a previously
generated forecast. You can access a date range to display the sales order history
and the forecast of item quantities or sales amounts. Then, you can compare actual
sales to the forecast.

When you revise summaries of forecasts, you revise information in a specific level
of the forecast. You can also use the Force Changes program to apply changes you
made to the summary. You can apply these changes up the hierarchy, down the
hierarchy, or in both directions.

Working with summarized detail forecasts consists of the following tasks:

GReviewing a summary forecast

GRevising a summary forecast

GRevising summary forecasts using Forecast Forcing (optional)

Before You Begin

GGenerate a summary forecast or a summary of detail forecast. See

Summarizing Detail Forecasts or Generating Summary Forecasts.

Reviewing a Summary Forecast

Use the Enter Change Summaries program to review summaries of your forecasts.
You can also review previously generated forecasts.

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Forecasting

► To review a summary forecast

From the Periodic Forecasting Operations (G3421) menu, choose Enter Change
Summaries.

1. On Work With Summary Forecasts, complete the following fields and click
Find:

• Summary Code

• Actual Type

• Forecast Type

• From Date

• Thru Date

2. Choose the record that you want to review and click Select.

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 Working with Summarized Detail Forecasts

3. On Summary Forecast Revisions, review the following fields:

• Original Quantity
• Adjusted Quantity
• Original Amount
• Adjusted Amount

Field Explanation
From Date The date that an item is to arrive or that an action is to be
complete.
Thru Date The date of the last update to the file record.
Adjusted Quantity The quantity of units forecasted for production during a
planning period.
Adjusted Amount The current amount of the forecasted units for a planning
period.

Processing Options for Enter/Change Summaries

Defaults

Forecast Type ____________

Actual Type ____________

Versions

Enter the version for each program. If

left blank, either ZJDE0001 or the
version listed will be used.

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Forecasting

1. Forecast Forcing (XJDE0001) ____________

(R34610)
called.
2. Forecast Review By Type ____________
(P34300)
3. Forecast Revisions (P3460) ____________

Revising a Summary Forecast

After reviewing the forecasts, you can compare them to actual sales order histories.
You can then revise both forecast data according to your own criteria.

If you run the Generate Summary Forecast program to update the Summary
Forecast table, the revision forms do not display lower-level forecasts of item
quantities. However, if you run the Summarize Detail Forecasts program to update
the Summary Forecast table, these forms display the lower-level forecasts of item
quantities.

► To revise a summary forecast

From the Periodic Forecasting Operations (G3421) menu, choose Enter Change
Summaries.

1. On Work With Summary Forecasts, complete the following fields and click
Find:
• Summary Code
• Actual Type
• Forecast Type
• From Date
• Thru Date

2. Choose the record that you want to review and click Select.

3. On Summary Forecast Revisions, complete the following fields to change

information for the forecast summary:
• Change Type
• Change Amount

4. To change information for individual lines, complete the following fields:

• Adjusted Quantity

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 Working with Summarized Detail Forecasts

• Adjusted Amount

5. Complete the fields that appear based on summary constants and click OK.

6. To apply the changes to higher or lower levels in the hierarchy, choose

Force Revisions from the Form menu.

Field Explanation
Change Type A field that tells the system whether the number in the New
Price field is an amount or a percentage. Codes are:
A Amount
% Percentage
Change Amount The amount of the future change in unit price. This
number can be either a dollar amount or a percentage value.
If the next field (Column Title = PT) is a $ sign, the change
is in dollars; if the value is a % sign, the change is to be a
percentage of the current price.
Note: When entering a percentage, enter it as a whole
number.

Revising Summary Forecasts Using Forecast Forcing

From the Periodic Forecasting Operations (G3421) menu, choose Force Changes.

Force Changes enables you to apply the manual changes that you made to the
summary of a forecast either up the hierarchy (aggregation), down the hierarchy
(disaggregation), or in both directions. The system stores these changes in the
Summary Forecast table.

You can force changes to quantities, amounts, or both. When you make changes
both up and down the hierarchy, the program resets the flag on the record to
indicate the change. The program makes changes down the hierarchy to the lowest
detail level. These changes are also updated in the Detail Forecast table.

Note: If you force changes in only one direction, the program resets the flag based
on a processing option. You can lose the ability to make changes in the other
direction if you force a change in only one direction.

On Enter/Change Summaries, you can set the Bypass Force flag for records in the
hierarchy below an adjusted record. The system subtracts the bypassed record
amounts and quantities from the parent amounts and quantities before calculating
the percentages. The system distributes the total amounts to the other children in
the hierarchy that were not bypassed. You can only bypass records when you make
changes down the hierarchy.

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Forecasting

Example: Using Force Changes

The Force Changes program uses the parent/child relationship at each level within
the hierarchy to calculate a parent/child ratio. The parent/child ratio is the
percentage of the amount or quantity for each child level, based on the total
amount or quantity of the parent.

In the following example, the parent’s original amount is 200 and its two children
in the next level each have an original amount of 100. The program calculates the
ratio as 50 percent of the parent. The parent/child ratio is calculated at each level
of the hierarchy.

Customer A
Qty 200

(Ratio 50%) (Ratio 50%)

Product Family X Product Family Y

Qty 100 Qty 100

(Ratio 50%) (Ratio 50%) (Ratio 60%) (Ratio 40%)

Item 1 Qty Item 2 Qty Item 3 Qty Item 4 Qty

50 50 60 40

When forcing the changes up the hierarchy, the program summarizes each record
again so that the summarized total of the records above it reflects the adjusted
amount.

The system summarizes the changes to the lower levels up to the parent level. If
you change Product Family X from a quantity of 100 to a quantity of 300, the
parent quantity changes to 400.

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 Working with Summarized Detail Forecasts

Change Customer A
to parent Qty 400

Product Family X Product Family Y

Change Qty 300 Qty 100
to child

Item 1 Qty Item 2 Qty Item 3 Qty Item 4 Qty

50 50 60 40

Summarized total of the

parent reflects the
adjusted amount of child

The Force Changes program also makes adjustments down the hierarchy. The
parent/child ratio can be based on an original parent/child ratio or an adjusted
parent/child ratio.

Original Customer A Change

Qty 600
Ratio to parent

(Original Ratio (Original Ratio

50%) 50%)

Product Family X Product Family Y

Qty 300 Qty 300

(Original Ratio (Original (Original (Original

50%) Ratio 50%) Ratio 60%) Ratio 40%)

Item 1 Qty Item 2 Qty Item 3 Qty Item 4 Qty

150 150 180 120

Level quantity plus

adjusted parent quantity
multiplied by ratio %

Using the original parent/child ratio, the system maintains the parent/child ratio
when the parent quantity changes. The system uses the adjusted quantity of the
parent to calculate the changes at the next lower level. An increase of 600 units to
Customer A using the original ratio of 50 percent for each child results in the
children calculation of 600 x .5 = 300 each.

The following graphic illustrates an adjusted parent/child ratio of 75 percent for

child 1 and 25 percent for child 2.

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Forecasting

Customer A Change
Adjusted Qty 600
Ratio to parent

(Adjusted Ratio (Adjusted Ratio

75%) 25%)

Product Family X Product Family Y

Qty 450 Qty 150

(Original (Original (Original (Original

Ratio 50%) Ratio 50%) Ratio 60%) Ratio 40%)

Item 1 Qty Item 2 Qty Item 3 Qty Item 4 Qty

225 225 90 60

Adjusted parent/child
ratio

Before You Begin

GReview and revise the summary forecast.

GChoose the processing option that indicates a specific forecast type with
which to make changes.

GChoose the processing option that indicates the direction in which you want
to make changes.

Processing Options: Force Changes (R34610)

Process Tab

These processing options let you specify how you want the system to process the
manual changes made to the applicable summary forecast. These processes
include:

• Forcing the changes in the specified hierarchy direction

• Resetting the flag for changed records
• Forcing only quantity or amount changes
• Using the adjusted or original forecast values
• Using the specified summary code

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 Working with Summarized Detail Forecasts

• Identifying which fiscal date pattern was used to create the summary
forecast

1. Hierarchy Direction

Use this processing option to specify the direction in which to force the changes
made to the summary forecast. The system updates the changes in the Forecast
table (F3460).

Blank The system forces the changes up and down the hierarchy and automatically
resets the flag on the record to indicate the change.

1 The system forces the changes up the hierarchy.

2 The system forces the changes down the hierarchy.

If you set this processing option to 1 or 2 and you want the system to reset the flag
on the changed record, set the Revised Flag processing option to 1.

2. Revised Flag

Use this processing option to specify whether the system resets the revised flag for
the records changed when you set the Hierarchy Direction processing option to 1
or 2.

Blank The system does not reset the Revised flag.

1 The system resets the Revised flag for the changed record.

3. Quantities and Amounts

Use this processing option to specify whether the system forces the changes made
to quantities or amounts or both.

Blank The system forces the changes made to both quantities and amounts.

1 The system forces only the quantity changes.

2 The system forces only the amount changes.

4. Ratio Calculations

Use this processing option to specify whether the system calculates the
parent/child ratios using the original or the adjusted forecast values. The

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Forecasting

parent/child ratio is the percentage of the amount or quantity for each child level,
based on the total amount or quantity of the parent.

Blank The system uses the original forecast values.

1 The system uses the adjusted forecast values.

5. Summary Code (Required)

Use this processing option to specify the summary code for which to force
changes. This processing option is required and the system overrides any summary
code specified in the data selection. Summary code is a user defined code (40/KV)
that identifies the summary code. You define summary codes using the Summary
Constants program (P4091) from the Forecasting Setup menu (G3441). Enter the
summary code to use or choose it from the Select User Define Code form.

6. Fiscal Date Pattern

Use this processing option to specify the fiscal date pattern used to create this
summary forecast. This processing option is required if you set the Hierarchy
Direction processing option to force changes down and if you created the
summary and detail forecasts using different fiscal date patterns. Fiscal date pattern
is a user defined code (H00/DP) that identifies the date pattern for the forecast.
The system retrieves the pattern from the Date fiscal Patterns table (F0008). Enter
the fiscal date pattern to use or choose it from the Select User Define Code form.
If you leave this field blank, the system forces the changes both up and down the
hierarchy.

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Generating Summary Forecasts

The system generates summary forecasts based on sales history data that you copy
from the Sales Order History table (F42119) into the Forecast Summary table
(F3400). When you copy the sales history, you specify a date range based on the
request date of the sales order. The sales history data can be distorted by unusually
large or small values (spikes or outliers), data entry errors, or missing demand (sales
orders that were cancelled due to lack of inventory).

You should review the data in the date range you specified to identify missing or
inaccurate information. You then revise the sales order history to account for
inconsistencies and distortions when you generate the forecast. If you want to
account for changes in sales order activity for an especially large customer, the J.D.
Edwards Forecasting system allows you to work with that customer’s changes
separately.

Note: To generate summary forecasts for item quantities on all levels of the
hierarchy, first generate a detail forecast, then run the Summarize Detail Forecasts
program.

Generating summary forecasts consists of the following tasks:

GCopying summary sales order history

GCreating a summary forecast

GRevising sales order history

Copying Summary Sales Order History

From the Periodic Forecasting Operations menu (G3421), choose Extract Sales
Actuals.

The system generates summary forecasts based on data in the Forecast Summary
table. Use Extract Sales Order History to copy the sales order history (type AA)
from the Sales Order History table to the Forecast Summary table based upon
criteria that you specify.

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Forecasting

Sales Order History

F42119

Actuals
Extract Sales
Order History Forecast Summary
P3465 F3400

Changed
Actuals
Enter/Change
Summaries Forecast Summary
P34200 F3400

Best Fit
Create Summary
Forecast Forecast Summary
F3400
P34640

Changed
Best Fit
Enter/Change
Summaries Forecast Summary
P34200 F3400

Changed
Best Fit

Force Changes Forecast Summary

P34610 F3400

The system stores sales order histories in the Forecast Summary table with forecast
type AA or a type code you designate.

You do not need to clear the Forecast Summary table before you run this program.
The system automatically deletes any records for the same:

• Period as the actual sales order histories to be generated

• Items
• Sales order history type (AA)
• Branch or plant

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 Generating Summary Forecasts

Note: The Extract Sales Order History program converts sales orders into the
primary unit of measure and adjusts the resulting quantities.

Before You Begin

GSet up detail forecasts. See Setting Up Detail Forecasts.

GSet up the summary forecast. See Setting Up Summary Forecasts.

See Also

• Creating Customer Records in the Accounts Receivable Guide

• Copying Sales Order History to review the processing options for Extract Sales
Actuals

Creating a Summary Forecast

From the Periodic Forecasting Operations menu (G3421), choose Create Summary
Forecast.

The Generate Summary Forecast program allows you to test simulated versions of
future sales scenarios without having to run full detail forecasts. You can use this
program to simulate and plan long-range trends because this program does not
update information in the Forecast table, which is used as input to DRP, MPS, and
MRP generation.

You can simulate multiple forecasting methods, including the system’s 12 hard-
coded methods, with past sales order histories and then select the best fit as
determined by the system or another appropriate model to generate a forecast of
future sales amounts. You can also select a specific forecasting method and use
that model to generate the current forecast. The system generates forecasts of sales
amounts for each level in the hierarchy and stores them in the Forecast Summary
table.

The Generate Summary Forecast program uses the same 12 forecasting methods
used to create detail forecasts. However, the system creates forecast information
for each level in the hierarchy.

You can also use the Generate Summary Forecast program to:

• Specify the summary code for the hierarchy for which you want to forecast
• Generate summary forecasts based on sales history

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Forecasting

• Select a best fit forecast

• Store any or all of the forecast methods in the Forecast Summary table
• Generate the forecast in a fiscal date pattern you select
• Specify the number of months of actual data to use to create the best fit
• Forecast for individual large customers
• Forecast an unlimited number of periods into the future
If you use the default type codes in the processing options, the actual sales history
records are identified by type AA, and the best fit model is identified by type BF.
The system saves the BF type and AA type records (or corresponding type codes
that you designate) in the Forecast Summary table. However, forecast types 01
through 12 are not automatically saved. You must set a processing option to save
them.

When you run the Generate Summary Forecast program, the system:

• Extracts sales order history information from the Forecast Summary table
• Calculates the forecasts using methods that you select
• Determines the percent of accuracy or Mean Absolute Deviation (MAD) for
each selected forecast method
• Recommends the best fit forecast method
• Generates the summary forecast in both monetary amounts and units from
the best fit forecast

Before You Begin

GRun the Extract Sales Order History program.

GMake changes to the sales order history with the Enter/Change Actuals
program.

GOn Generate Summary Forecast, set the Dollar/Unit Forecast processing

option to the value that means forecast summary amounts.

See Also

• R34640, Create Summary Forecasts in the Reports Guide for a report sample

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 Generating Summary Forecasts

Processing Options: Create Summary Forecast (R34640)

Methods 1 - 3 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit forecast for each level in the hierarchy. You can also
specify whether the system creates summary forecasts for the selected forecast
method.

Enter 1 to use the forecast method when calculating the best fit. If you leave the
processing option blank, the system does not use that forecast method when
calculating the best fit and does not create summary forecasts for the method.

The system defines a period as a week or month, depending on the pattern

selected from the Date Fiscal Patterns table (F0008). For weekly forecasts, verify
that you have established 52 period dates.

1. Percent Over Last Year

Use this processing option to specify which type of forecast to run. This forecast
method uses the Percent Over Last Year formula to multiply each forecast period
by a percentage increase or decrease. You specify the increase or decrease in the
Percent processing option. This method requires the periods for the best fit plus
one year of sales history. This method is useful for seasonal items with growth or
decline. Valid values are:

Blank The system does not use this method.

1 The system uses the Percent Over Last Year formula to create summary
forecasts.

2. Percent

Use this processing option to specify the percent of increase or decrease by which
the system multiplies the sales history from last year. For example, type 110 for a
10% increase or type 97 for a 3 percent decrease. Valid values are any percent
amount; however, the amount cannot be a negative amount. Enter an amount to
use or choose it from the Calculator.

3. Calculated Percent Over Last Year

Use this processing option to specify which type of forecast to run. This forecast
method uses the Calculated Percent Over Last Year formula to compare the

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Forecasting

periods of past sales that you specify to the same periods of past sales of the
previous year. The system determines a percentage increase or decrease, then
multiplies each period by this percentage to determine the forecast. This method
uses the periods of sales order history that you specify in the following Number of
Periods processing option plus one year of sales history. This method is useful for
short-term demand forecasts of seasonal items with growth or decline. Valid values
are:

Blank The system does not use this method.

1 The system uses the Calculated Percent Over Last Year formula to create
summary forecasts.

4. Number of Periods

Use this processing option to specify the number of periods to include when
calculating the percentage increase or decrease. Enter a number to use or choose it
from the Calculator.

5. Last Year to This Year

Use this processing option to specify which type of forecast to run. This forecast
method uses the Last Year to This Year formula which calculates the year’s
forecast based on the prior year’s sales. This method uses the periods best fit plus
one year of sales order history. This method is useful for mature products with
level demand or seasonal demand without a trend. Valid values are:

Blank The system does not use this method.

1 The system uses the Last Year to This Year formula to create summary
forecasts.

Methods 4 - 6 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit forecast for each level in the hierarchy. You can also
specify whether the system creates summary forecasts for the selected forecast
method.

Enter 1 to use the forecast method when calculating the best fit. If you leave the
processing option blank, the system does not use that forecast method when
calculating the best fit and does not create summary forecasts for the method.

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 Generating Summary Forecasts

The system defines a period as a week or month, depending on the pattern

selected from the Date Fiscal Patterns table (F0008). For weekly forecasts, verify
that you have established 52 period dates.

1. Moving Average

Use this processing option to specify which type of forecast to run. This forecast
method uses the Moving Average formula to average the months that you indicate
in the following Number of Periods processing option to project the next period.
This method uses the periods for the best fit from the Actual Data processing
option under the Process 1 tab plus the number of periods of sales order history.
You should have the system recalculate this forecast monthly or at least quarterly
to reflect changing demand level. This method is useful for mature products
without a trend. Valid values are:

Blank The system does not use this method.

1 The system uses the Moving Average formula to create summary forecasts.

2. Number of Periods

Use this processing option to specify the number of periods to include in the
Moving Average forecast method. Enter a number to use or choose it from the
Calculator.

3. Linear Approximation

Use this processing option to specify which type of forecast to run. This forecast
method uses the Linear Approximation formula to compute a trend from the
periods of sales order history and projects this trend to the forecast. You should
have the system recalculate the trend monthly to detect changes in trends. This
method uses period’s best fit plus the number of periods that you indicate in the
following Number of Periods processing option of sales order history. This
method is useful for new products or products with consistent positive or negative
trends that are not due to seasonal fluctuations. Valid values are:

Blank The system does not use this method.

1 The system uses the Linear Approximation formula to create summary

forecasts.

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Forecasting

4. Number of Periods

Use this processing option to specify the number of periods to include in the
Linear Approximation forecast method. Enter the number to use or choose it
from the Calculator.

5. Least Squares Regression

Use this processing option to specify which type of forecast to run. This forecast
method derives an equation describing a straight-line relationship between the
historical sales data and the passage of time. Least Squares Regression fits a line to
the selected range of data such that the sum of the squares of the differences
between the actual sales data points and the regression line are minimized. The
forecast is a projection of this straight line into the future. This method is useful
when there is a linear trend in the sales data. This method uses sales data history
for the period represented by the number of periods best fit plus the number of
historical data periods specified in the following Number of Periods processing
option. The system requires a minimum of two historical data points. Valid values
are:

Blank The system does not use this method.

1 The system uses the Least Squares Regression formula to create summary
forecasts.

6. Number of Periods

Use this processing option to specify the number of periods to include in the Least
Squares Regression forecast method. You must enter at least two periods. Enter
the numbers to use or choose them from the Calculator.

Methods 7 - 8 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit forecast for each level in the hierarchy. You can also
specify whether the system creates summary forecasts for the selected forecast
method.

Enter 1 to use the forecast method when calculating the best fit. If you leave the
processing option blank, the system does not use that forecast method when
calculating the best fit and does not create summary forecasts for the method.

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 Generating Summary Forecasts

The system defines a period as a week or month, depending on the pattern

selected from the Date Fiscal Patterns table (F0008). For weekly forecasts, verify
that you have established 52 period dates.

1. Second Degree Approximation

Use this processing option to specify which type of forecast to run. This forecast
method uses the Second Degree Approximation formula to plot a curve based on
a specified number of sales history periods. You specify the number of sales
history periods in the following Number of Periods processing option to project
the forecast. This method adds the period’s best fit and the number of periods, and
then the sum multiplies by three. This method is not useful for long-term
forecasts. Valid values are:

Blank The system does not use this method.

1 The system uses the Second Degree Approximation formula to create

summary forecasts.

2. Number of Periods

Use this processing option to specify the number of periods to include in the
Second Degree Approximation forecast method. Enter the number to use or
choose it from the Calculator.

3. Flexible Method

Use this processing option to specify which type of forecast to run. This forecast
method specifies the period’s best fit block of sales order history starting “n”
months prior and a percent increase or decrease with which to modify the forecast.
This method is similar to Method 1 - Percent Over Last Year, except that you can
specify the number of periods that you use as the base. Depending on what you
select as “n”, this method requires period’s best fit plus the number of periods that
you specify in the following Number of Periods processing option. This method is
useful when forecasting products with a planned trend. Valid values are:

Blank The system does not use this method.

1 The system uses the Flexible Method formula to create summary forecasts.

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Forecasting

4. Number of Periods

Use this processing option to specify the number of periods prior to the best fit
that you want to include in the Flexible Method calculation. Enter the number to
use or choose it from the Calculator.

5. Percent Over Prior Period

Use this processing option to specify the percent of increase or decrease for the
system to use. For example, type 110 for a 10 percent increase or type 97 for a 3
percent decrease. Valid values are any percent amount; however, the amount
cannot be a negative amount. Enter an amount to use or choose it from the
Calculator.

Method 9 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit forecast for each level in the hierarchy. You can also
specify whether the system creates summary forecasts for the selected forecast
method.

Enter 1 to use the forecast method when calculating the best fit. If you leave the
processing option blank, the system does not use that forecast method when
calculating the best fit and does not create summary forecasts for the method.

The system defines a period as a week or month, depending on the pattern

selected from the Date Fiscal Patterns table (F0008). For weekly forecasts, verify
that you have established 52 period dates.

1. Weighted Moving Average

Use this processing option to specify which type of forecast to use. The Weighted
Moving Average forecast formula is similar to Method 4 - Moving Average
formula, because it averages the previous number of months of sales history
indicated in the following processing options to project the next month’s sales
history. However, with this formula you use the following processing options to
assign weights for each of the prior periods (up to 12). This method uses the
number of weighted periods selected plus period’s best fit. Similar to the Moving
Average, this method lags demand trends, so it is not recommended for products
with strong trends or seasonality. This method is useful for mature products with
demand that is relatively level. Valid values are:

Blank The system does not use this method.

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 Generating Summary Forecasts

1 The system uses the Weighted Moving Average formula to create summary
forecasts.

2. One Period Prior

Use this processing option to specify the weight to assign to one period prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

3. Two Periods Prior

Use this processing option to specify the weight to assign to two periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

4. Three Periods Prior

Use this processing option to specify the weight to assign to three periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

5. Four Periods Prior

Use this processing option to specify the weight to assign to four periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

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Forecasting

6. Five Periods Prior

Use this processing option to specify the weight to assign to five periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

7. Six Periods Prior

Use this processing option to specify the weight to assign to six periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

8. Seven Periods Prior

Use this processing option to specify the weight to assign to seven periods prior
for calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

9. Eight Periods Prior

Use this processing option to specify the weight to assign to eight periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

10. Nine Periods Prior

Use this processing option to specify the weight to assign to nine periods prior for
calculating a moving average. The total of all the weights used in the Weighted

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 Generating Summary Forecasts

Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

11. Ten Periods Prior

Use this processing option to specify the weight to assign to 10 periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

12. Eleven Periods Prior

Use this processing option to specify the weight to assign to 11 periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

13. Twelve Periods Prior

Use this processing option to specify the weight to assign to 12 periods prior for
calculating a moving average. The total of all the weights used in the Weighted
Moving Average calculation must equal 100. If you do not enter a weight for a
period within the specified number of periods, the system uses a weight of zero for
that period. The system does not use weights entered for periods greater than the
number of specified periods. Enter the number to use or choose it from the
Calculator.

14. Periods to Include

Use this processing option to specify the number of periods to include in the
Weighted Moving Average forecast method. Enter the number to use or choose it
from the Calculator.

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Forecasting

Methods 10 - 11 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit forecast for each level in the hierarchy. You can also
specify whether the system creates summary forecasts for the selected forecast
method.

Enter 1 to use the forecast method when calculating the best fit. If you leave the
processing option blank, the system does not use that forecast method when
calculating the best fit and does not create summary forecasts for the method.

The system defines a period as a week or month, depending on the pattern

selected from the Date Fiscal Patterns table (F0008). For weekly forecasts, verify
that you have established 52 period dates.

1. Linear Smoothing

Use this processing option to specify which type of forecast to run. This forecast
method calculates a weighted average of past sales data. You can specify the
number of periods of sales order history to use in the calculation (from 1 to 12).
You enter these periods in the following Number of Periods processing option.
The system uses a mathematical progression to weigh data in the range from the
first (least weight) to the final (most weight). Then, the system projects this
information for each period in the forecast. This method requires the period’s best
fit plus the number of periods of sales order history. Valid values are:

Blank The system does not use this method.

1 The system uses the Linear Smoothing formula to create summary forecasts.

2. Number of Periods

Use this processing option to specify the number of periods to include in the
Linear Smoothing forecast method. Enter the number to use or choose it from the
Calculator.

3. Exponential Smoothing

Use this processing option to specify which type of forecast to run. This forecast
method uses one equation to calculate a smoothed average. This becomes an
estimate representing the general level of sales over the selected historical range.
This method is useful when there is no linear trend in the data. This method
requires sales data history for the time period represented by the number of
period’s best fit plus the number of historical data periods specified in the

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 Generating Summary Forecasts

following Number of Periods processing option. The system requires that you
specify at least two historical data periods. Valid values are:

Blank The system does not use this method.

1 The system uses the Exponential Smoothing formula to create summary

forecasts.

4. Number of Periods

Use this processing option to specify the number of periods to include in the
Exponential Smoothing forecast method. Enter the number to use or choose it
from the Calculator.

5. Alpha Factor

Use this processing option to specify the alpha factor (a smoothing constant) that
the system uses to calculate the smoothed average for the general level or
magnitude of sales. Any amount from zero to one is valid. Enter the number to
use or choose it from the Calculator.

Method 12 Tab

These processing options let you specify which forecast types the system uses
when calculating the best fit forecast for each level in the hierarchy. You can also
specify whether the system creates summary forecasts for the selected forecast
method.

Enter 1 to use the forecast method when calculating the best fit. If you leave the
processing option blank, the system does not use that forecast method when
calculating the best fit and does not create summary forecasts for the method.

The system defines a period as a week or month, depending on the pattern

selected from the Date Fiscal Patterns table (F0008). For weekly forecasts, verify
that you have established 52 period dates.

1. Exponential Smoothing with Trend and Seasonality

Use this processing option to specify which type of forecast to run. This forecast
method calculates a trend, a seasonal index, and an exponentially smoothed
average from the sales order history. The system then applies a projection of the
trend to the forecast and adjusts for the seasonal index. This method requires
month’s best fit plus two years of sales data and is useful for items that have both

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Forecasting

trend and seasonality in the forecast. Use the following Alpha Factor and Beta
Factor processing options to enter the alpha and beta factors rather than have the
system calculate them. Valid values are:

Blank The system does not use this method.

1 The system uses the Exponential Smoothing with Trend and Seasonality
formula to create summary forecasts.

2. Alpha Factor

Use this processing option to specify the alpha factor (a smoothing constant) that
the system uses to calculate the smoothed average for the general level of
magnitude of sales. Any amount from zero to one is valid. Enter the number to
use or choose it from the Calculator.

3. Beta Factor

Use this processing option to specify the beta factor (a smoothing constant) that
the system uses to calculate the smoothed average for the trend component of the
forecast. Any amount from zero to one is valid. Enter the number to use or
choose it from the Calculator.

4. Seasonality

Use this processing option to specify whether the system includes seasonality in
the calculation. Valid values are:

Blank The system does not include seasonality.

1 The system includes seasonality in the Exponential Smoothing with Trend

and Seasonality forecast method.

Defaults Tab

These processing options let you specify the default values that the system uses to
calculate forecasts. The system extracts actual values from Sales History.

1. Forecast Type

Use this processing option to specify the forecast type that the system uses when
creating the summary forecast. Forecast type is a user defined code (34/DF) that
identifies the type of forecast to process. Enter the forecast type to use as the

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 Generating Summary Forecasts

default value or choose it from the Select User Define Code form. If you leave this
processing option blank, the system does not create any summaries. You must
enter a forecast type.

Process Tab

These processing options let you specify whether the system runs the program in
proof or final mode, creates weekly or monthly forecasts, and to specify the start
date, length and data used to create forecasts.

In addition, you use these processing options to specify how the system calculates
the best fit forecast. The system applies the selected forecasting methods to past
sales order history and compares the forecast simulation to the actual history.
When you generate a forecast, the system compares actual sales order histories to
forecasts for the months or weeks you indicate in the Forecast Length processing
option and computes how accurately each of the selected forecasting methods
predict sales. Then, the system identifies the most accurate forecast as the best fit.
The system uses two measurements for forecasts: Mean Absolute Deviation and
Percent of Accuracy.

Mean Absolute Deviation (MAD) is the mean of the absolute values of the
deviations between actual and forecast data. MAD is a measure of the average
magnitude of errors to expect, given a forecasting method and data history.
Because absolute values are used in the calculation, positive errors do not cancel
out negative errors. When you compare several forecasting methods, the forecast
with the smallest MAD has shown to be the most reliable for that product for that
holdout period.

Percent of Accuracy (POA) is a measure of forecast bias. When forecasts are

consistently too high, inventories accumulate and inventory costs rise. When
forecasts are consistently too low, inventories are consumed and customer service
declines. A forecast that is 10 units too low, then 8 units too high, then 2 units too
high, is an unbiased forecast. The positive error of 10 is cancelled by negative
errors of 8 and 2.

1. Mode

Use this processing option to specify whether the system runs the summary
forecast in proof or final mode. When you run this program in proof mode, the
system does not create any forecast records which allows you to run it again with
different criteria until you produce appropriate forecast information. When you
run this program in final mode, the system creates forecast records. Valid values
are:

Blank The system runs the summary forecast in proof mode.

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Forecasting

1 The system runs the summary forecast in final mode.

2. Weekly Forecasts

Use this processing option to specify monthly or weekly forecasts. For weekly
forecasts, use fiscal date patterns with 52 periods. For monthly forecasts, use fiscal
date patterns with 14 periods. Valid values are:

Blank The system creates monthly forecasts.

1 The system creates weekly forecasts.

3. Start Date

Use this processing option to specify the date on which the system starts the
forecast. Enter a date to use or choose one from the Calendar. If you leave this
processing option blank, the system uses the system date.

4. Forecast Length

Use this processing option to specify the number of periods to forecast. You must
have previously established fiscal date patterns for the forecasted periods. If you
leave this processing option blank, the system uses 3.

5. Actual Data

Use this processing option to specify the number of periods of actual data that the
system uses to calculate the best fit forecast. If you leave this processing option
blank, the system uses 3 periods.

The system applies the selected forecasting methods to past sales order history and
compares the forecast simulation to the actual history. When you generate a
forecast, the system compares actual sales order histories to forecasts for the
months or weeks that you indicate in the Forecast Length processing option and
computes how accurately each of the selected forecasting methods would have
predicted sales. Then, the system identifies the most accurate forecast as the best
fit.

6. Mean Absolute Deviation

Use this processing option to specify whether the system uses the Mean Absolute
Deviation formula or the Percent of Accuracy formula to calculate the best fit
forecast. Valid values are:

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 Generating Summary Forecasts

Blank The system uses the Percent of Accuracy formula.

1 The system uses the Mean Absolute Deviation formula.

7. Amounts or Quantities

Use this processing option to specify whether the system calculates the best fit
forecast using quantities or amounts. If you specify to use amounts, you must also
extract sales history using amounts. This processing option also affects forecast
pricing. Valid values are:

Blank The system uses quantities.

1 The system uses amounts.

8. Fiscal Date Pattern

Use this processing option to specify the fiscal date pattern type to use for the
forecast calculations. If you run weekly forecasts, the fiscal date pattern that you
specify here must be set up for 52 periods.

9. Negative Values

Use this processing option to specify whether the system displays negative values.
Valid values are:

Blank The system substitutes a zero value for all negative values.

1 The system displays all negative values.

See Also

• Appendix A: Forecast Calculation Methods in the Forecasting Guide for more

information about the forecast types and how the system calculates forecasts
and best fit

Revising Sales Order History

After you copy the sales order history into the Forecast Summary table (F3400),
you should review the data for spikes, outliers, entry errors, or missing demand
that might distort the forecast. Revise the sales order history manually to account
for these inconsistencies before you generate the forecast.

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Forecasting

Before You Begin

GRun the Extract Sales Order History program.

► To revise summary sales order history

From the Periodic Forecasting Operations menu (G3421), choose Enter Change
Summaries.

1. On Work With Summary Forecast, complete the following fields and click
Find:

• Summary Code

• Actual Type

• Forecast Type

• From Date

• Thru Date

2. Choose the record that you want to review and click Select.

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 Generating Summary Forecasts

3. On Summary Forecast Revisions, review the following fields:

• Original Quantity

• Adjusted Quantity

• Original Amount

• Adjusted Amount

4. Complete the following fields to change information for the forecast

summary:

• Change Type

• Change Amount

5. To change information for individual lines, complete the following fields

and click OK:

• Adjusted Quantity

• Adjusted Amount

• Bypass Forcing

6. On Work with Summary Forecast, choose Review from the Form menu.

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Forecasting

7. On Forecast Review by Type, review the following fields:

• Weekly

• Quantity

• Level 1-10

• Fiscal Year

• Type

• Periods 1-52

Field Explanation
Bypass Forcing This indicates whether to bypass the force changes
program. A Y indicates that the quantity and amount of a
forecast should not be changed by an adjustment made to a
forecast higher or lower in the hierarchy.
Fiscal Year Values are:
• 00 through 99 to designate a specific fiscal year
• blanks to designate the current fiscal year
(financial reporting date)
• * to designate all fiscal years
• -9 through -1 to designate a previous fiscal year
(relative to the financial reporting date)
• +1 through +9 to designate a future fiscal year
(relative to the financial reporting date)

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 Generating Summary Forecasts

Field Explanation
Weekly A flag to display weekly or monthly records.
Quantity A flag to display the Quantity or the Amount data in
records.
Level 1 The first key postion of the forecasting hierarchy. The
value in this field relates to the first level chosen in the
forecasting constants.
Level 10 The tenth key postion of the forecasting hierarchy. The
value in this field relates to the tenth level chosen in the
forecasting constants.
Period 1 Time Series Column 01. This column will hold Time Series
Dates or Quantities.
Period 52 Time Series Column 52. This column will hold Time Series
Dates or Quantities.

See Also

• Reviewing a Summary Forecast to review the processing options for

Enter/Change Summaries

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Working with Planning Bill Forecasts

Planning bills are groups of items in a bill of material format that reflect how an
item is sold rather than how it is built. Planning bills allow you to account for the
variety of possible options and features that might be included as components in a
saleable end item.

Working with planning bill forecasts consists of the following tasks:

GUnderstanding Planning Bill Forecasts

GSetting Up a Planning Bill

GGenerating Planning Bill Forecasts

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Understanding Planning Bill Forecasts

You can use a planning bill to configure a hypothetical average parent item that is
not manufactured, but represents the components needed to satisfy demand for all
the combinations of options and features that you expect to sell. For example, if
your sales history shows that 60 percent of all the bikes you sell are 10-speed bikes
and 40 percent are 15-speed bikes, your planning bill includes an average parent
bike that is neither a 10-speed bike nor a 15-speed bike, but a hybrid bike that is 60
percent 10-speed bike and 40 percent 15-speed bike.

Use planning bills during master scheduling or material planning. You can forecast
with a planning bill to determine component demand within the MPS, MRP, and
DRP systems.

Example: Average Parent Item

Your sales history shows that 60 percent of the bikes that you sell are 10-speed
bikes and 40 percent are 15-speed bikes. Of the 10-speed bikes, 70 percent are blue
and 30 percent are green. Of the 15-speed bikes, 80 percent are blue and 20
percent are green. You use these percentages to configure an average parent item.

Total Bike Sales

100%

Summary
Forecasts
10-speed bike 15-speed bike
60% 40%

Blue Green Blue Green

10-speed 10-speed 15-speed 15-speed
bike bike bike bike
70% 30% 80% 20% Detail
Forecasts

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Forecasting

The average parent bike will be:

• 60 percent 10-speed
• 40 percent 15-speed
• 42 percent blue 10-speed (70 percent of 60 percent)
• 18 percent green 10-speed (30 percent of 60 percent)
• 32 percent blue 15-speed (80 percent of 40 percent)
• 8 percent green 15-speed (20 percent of 40 percent)
You decide to manufacture or purchase at these percentages.

Summary forecasts are more accurate than detail forecasts. For example, a forecast
for the total number of bikes that will sell in 1998 is more accurate than a forecast
for blue 10-speed bikes that will sell in 1998.

The forecast is based upon total bike sales history. This is the summary forecast.
The option percentages produce a production (or purchase) forecast for each of
the options. This is the detail forecast.

Exploding the Forecast to the Item Level

You use the planning bill to explode a forecast for the total number of products
down to the level of the specific combination of options and features included in
each saleable end item.

As you set up a planning bill, you designate each level of the item hierarchy above
the end item level as an average parent with a planning code of 4. You designate
the saleable end items as components of the phantom parents with a planning
code of 5.

As you generate the planning bill forecast, you use processing options to designate
a forecast type to be read as input and a forecast type to be calculated for the
components. You also designate the calculated forecast type as the second type to
be read so that it can be exploded down through each level of the hierarchy until
the forecast is applied to the saleable end items.

Example: Exploding the Forecast

You use a planning bill to configure an average parent item that represents total
bike sales. This average parent bike represents the top level of the item hierarchy
and is configured as follows:

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 Understanding Planning Bill Forecasts

• 60 percent 10-speed bike

• 40 percent 15-speed bike
Because bikes with both the 10-speed and 15-speed options can be further divided
into blue and green bikes, both the total of all 10-speed bikes and the total of all
15-speed bikes are represented by average parent bikes on the second level of the
item hierarchy. These average parents are configured as follows:

• 10-speed bikes:
• 70 percent blue
• 30 percent green
• 15-speed bikes:
• 80 percent blue
• 20 percent green
The system enables you to process multiple parent items as in this example. You
use planning code 4 to designate each of the phantom products on the two higher
levels of the hierarchy (total bikes on the top level and total 10-speed bikes and
total 15-speed bikes on the second level) as parent items. You use planning code 5
to designate the end item bikes (for example, blue 15-speed bikes) on the bottom
level as components of the phantom parent items.

You assign user defined codes to additional forecast types you want to include in
the processing options that were not supplied with the system. For this forecast,
you plan to use forecast types you have defined and assigned to codes 13 and 16.
You designate 16 in processing options as the forecast type to be read as input for
the top-level parent item and 13 as the forecast type to be created for calculating
the forecast for the components.

The system reads the forecast for total bike sales determined by forecast type 16
and assigns a percentage of the total forecast to each of the portions of the total on
the next level of the hierarchy (total 10-speed and total 15-speed sales).

These percentages are based on feature planned percents. Feature planned

percents are the percentage of total products that include features that differentiate
some products in the total from others. You define the feature planned percent on
the Enter/Change Bill form. In this example, the feature planned percents are 60
percent for the 10-speed feature and 40 percent for the 15-speed feature.

The system then calculates a forecast based on forecast type 13 that it applies to
the next level. You also designate 13 as the second forecast type to be read as input
so the system reads the forecast for the second level, which it then applies to the
saleable end items (blue and green 10-speed bikes and blue and green 15-speed
bikes).

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Forecasting

The system reads forecast type 16 and calculates a type 13 forecast of 20,000 total
bikes. The system then reads the forecast and explodes it down the hierarchy to
the end item level as follows:

• 60 percent of the 20,000 total bikes = 12,000 10-speed bikes

• 40 percent of the 20,000 total bikes = 8,000 15-speed bikes
• 70 percent of the 12,000 10-speed bikes (42 percent of total bike sales)
= 8,400 blue 10-speed bikes
• 30 percent of the 12,000 10-speed bikes (18 percent of total bike sales)
= 3,600 green 10-speed bikes
• 80 percent of the 8,000 15-speed bikes (32 percent of total bike sales)
= 6,400 blue 15-speed bikes
• 20 percent of the 8,000 15-speed bikes (8 percent of total bike sales) =
1,600 green 15-speed bikes

See Also

• Working with Multi-Level Master Schedules in the Manufacturing and Distribution

Planning Guide

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Setting Up a Planning Bill

You must set up a planning bill before you generate a planning bill forecast. You
use the Product Data Management system to set up a planning bill. Then the
system uses the planning bill to generate a forecast for the hypothetical average
parent item. The forecast shows the component level exploded.

Setting up a planning bill consists of the following tasks:

GSetting up item master information

GEntering planning bills

Setting Up Item Master Information

Before you enter the criteria that you want to use on the planning bill, you must set
up item master information on which the planning is based. The system stores this
information in the Item Master table (F4101).

The Item Branch table (F4102) also stores the item information. After you add
item master records for appropriate part numbers, the system retrieves item
information from the Item Branch table.

► To set up item master information

From the Inventory Master/Transactions (G4111) menu, choose Item Master.

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Forecasting

1. On Work With Item Master Browse, click Add.

2. On Item Master Revisions, complete the following fields and click OK:

• Item Number

• Description

• Stocking Type

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 Setting Up a Planning Bill

• G/L Class

• Kit Pricing Method

3. Choose the item and then choose Category Codes from the Row menu.

4. On Category Codes, complete the following field and click OK:

• Master Planning Family

Depending on how the processing options are set, other forms might
display.

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Forecasting

5. On Additional System Information, click the Manufacturing Data tab,

complete the following field, and then click OK:

• Planning Code

6. On Item Branch Revisions, click Cancel to return to Item Master Browse.

7. On Work With Item Master Browse, click Find and locate your item.

Field Explanation
Item Number A number that identifies the item. The system provides
three separate item numbers plus an extensive cross-
reference capability to alternate item numbers. These item
numbers are:
1. Item Number (short) - An 8-digit, computer-
assigned item number.
2. 2nd Item Number - The 25-digit, free-form, user
defined, alphanumeric item number.
3. 3rd Item Number - Another 25-digit, free-form,
user defined, alphanumeric item number.
In addition to these three basic item numbers, the system
provides an extensive cross-reference search capability.
Numerous cross-references to alternate part numbers can
be user defined (for example, substitute item numbers,
replacements, bar codes, customer numbers, or supplier
numbers).

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 Setting Up a Planning Bill

Field Explanation
Description A description can be:
• Brief information about an item
• A remark
• An explanation
Stocking Type A user defined code (41/I) that indicates how you stock an
item, for example, as finished goods or as raw materials.
The following stocking types are hard-coded and you
should not change them:
0 Phantom item
B Bulk floor stock
C Configured item
E Emergency/corrective maintenance
F Feature
K Kit parent item
N Nonstock
The first character of Description 2 in the user defined
code table indicates if the item is purchased (P) or
manufactured (M).
G/L Class A user defined code (41/9) that identifies the G/L offset
that system uses when it searches for the account to which
it posts the transaction. If you do not want to specify a class
code, you can enter **** (four asterisks) in this field.
You can use automatic accounting instructions (AAIs) to
predefine classes of automatic offset accounts for the
Inventory, Procurement, and Sales Order Management
systems. You might assign G/L class codes as follows:
IN20 Direct Ship Orders
IN60 Transfer Orders
IN80 Stock Sales
The system can generate accounting entries based upon a
single transaction. For example, a single sale of a stock item
can trigger the generation of accounting entries similar to
the following:
Sales-Stock (Debit) xxxxx.xx
A/R Stock Sales (Credit) xxxxx.xx
Posting Category: IN80
Stock Inventory (Debit) xxxxx.xx
Stock COGS (Credit) xxxxx.xx
The system uses the class code and the document type to
find the AAI.
Master Planning Family A user defined code (41/P4) that represents an item
property type or classification, such as commodity type or
planning family. The system uses this code to sort and
process like items.
This field is one of six classification categories available
primarily for purchasing purposes.

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Forecasting

See Also

• Entering Item Master Information in the Inventory Management Guide

Entering Planning Bills

You enter a planning bill in the Product Data Management system to change the
percentages on which the hypothetical average parent item is based. This action
allows you to account for any planning variations on which you might want to base
forecasts.

► To enter planning bills

From the Daily PDM Discrete (G3011) menu, choose Enter/Change Bill.

1. On Work with Bill of Material, complete the following fields and click Find:

• Item Number

• Branch/Plant

2. Choose the item number and click Select.

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 Setting Up a Planning Bill

3. On Enter Bill of Material Information, complete the following fields and

click OK:

• Item Number

• Quantity

• Feat Plan %

4. Review the default value in the following field:

• Is Cd

5. To return to Work with Bill of Material, click Cancel.

6. Choose the record.

7. Choose BOM Inquiry from the Row menu.

8. On Bill of Material Inquiry - Multi Level, choose Multi Level from the View
menu to view the multilevel bill of material.

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Forecasting

9. Complete the following fields and click OK:

• Item Number - Unknown Format Entered

• Branch

Field Explanation
Feat Plan % The percentage of demand for a specified feature based on
projected production. For example, a company might
produce 65% of their lubricant with high viscosity, and
35% with low viscosity, based on customer demand.
The Material Planning system uses this percentage to
accurately plan for a process’s co-products and by-products.
Enter percentages as whole numbers, for example, enter
5% as 5.0. The default value is 0%.

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 Setting Up a Planning Bill

Field Explanation
Is Cd A code that indicates how the system issues each
component in the bill of material from stock. In Shop Floor
Management, it indicates how the system issues a part to a
work order. Valid values are:
I Manual issue
F Floor stock (there is no issue)
B Backflush (when the part is reported as complete)
P Preflush (when the parts list is generated)
U Super backflush (at the pay-point operation)
S Sub-contract item (send to supplier)
Blank Shippable end item
You can issue a component in more than one way within a
specific branch/plant by using different codes on the bill of
material and the work order parts list. The bill of material
code overrides the branch/plant value.

Processing Options for Enter/Change Bill

Defaults

1. Enter a ’1’ to default the Component

Branch to the Parent Branch
displayed at the top of the form.

Default Component Branch ____________

2. Enter the following default values:

Type Bill of Material ____________

3. Enter a ’1’ to default the as of date

to the current date. If left blank,
all dates will be shown.

Default to Current Date ____________

Display

1. Enter a ’1’ by the following fields

to activate them:

Bill Type ____________

Batch Quantity ____________

Versions

Enter the version for each program. If

left blank, version ZJDE0001 will be
used.

1. Single Level BOM Print ____________

(P30410)
2. Multi Level BOM Print (P30415) ____________
3. ECO Workbench (P30225) ____________
4. Component Maintenance (P3015) ____________
5. ECO Header [P30BREV] ____________

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Forecasting

6. Bill of Material Where Used ____________

(P30201)
7. Item Master (P4101B) ____________
8. Co/By Produced Inquiry ____________
(P30211)
9. Bill of Material Inquiry ____________
(P30200)

Edits

1. Enter a ’1’ to validate for an

existing Branch/Item record.

Item Branch validation ____________

Sort

1. Enter a ’1’ to sequence by Line

Number or enter a ’2’ to sequence by
Operation. (FUTURE)

Sequence By ____________

Interop

1. Enter the Transaction type for the

interoperability transaction. If
left blank, outbound
interoperability processing will not
be performed.

Transaction Type ____________

2. Enter the version of “Process

Outbound Bill of Material”
(R3002Z1O). If left blank ZJDE0001
will be used.

Outbound Processing Version ____________

3. Enter a ’1’ to write the before

image for a change transaction. If
left blank, only the after image
will be written.

Before Image Processing ____________

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Generating Planning Bill Forecasts

From the Single Site Periodic Planning Operations (G3422) menu, choose DRP
Regeneration.

After setting up a planning bill, you can generate a planning bill forecast to help
you plan configurations for end products. The material planning generation
program reads the detail forecast for the selected parent planning bill items and
explodes it to create a forecast for the planning bill components for the same time
periods.

Before You Begin

GEnter a planning bill. See Entering Planning Bills.

GRun Enter/Change Forecast manually to add the forecast for the parent
item.

Processing Options for DRP Regeneration

Horizon

1. Generation Start Date ____________

2. Past Due Periods 0 ____________
(default) 1 2

3. Planning Horizon Periods

Number of planning days ____________

Number of planning weeks ____________
Number of planning months ____________

Parameters

1. Generation Mode 1 = net ____________

Change 2 = gross
gegeneration
2. Generation Type 1 = ____________
single level MPS/DRP 2 =
planning bill 3 =
multi-level MPS 4 = MRP
with or without MPS 5 =
MRP with frozen MPS
3. UDC Type ____________
4. Version of Supply/Demand ____________
Inclusion Rules

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Forecasting

On Hand Data

1. Include Lot Expiration Dates ____________

blank = do not include 1 =
include
2. Safety Stock Decrease ____________
blank = do not decrease 1 =
decrease

3. Receipt Routing Quantities

Quantity in Transit ____________

blank = do not include in on-hand
inventory 1 = include in
on-hand inventory
Quantity in Inspection ____________
blank = do not include in on-hand
inventory 1 = include in
on-hand inventory
User Defined Quantity 1 ____________
blank = do not include in on-hand
inventory 1 = include in
on-hand inventory
User Defined Quantity 2 ____________
blank = do not include in on-hand
inventory 1 = include in
on-hand inventory
4. Lot Hold Codes (up to 5) ____________
blank = inlclude no held lots in
calculation of on-hand
inventory * = include all
held lots in calculation of
on-hand
inventory

Forecasting

1. Forecast Types Used ( up to 5 ____________

)
2. MPS Forecast Type for Planning ____________
Bills
3. Forecast Consumption logic ____________
blank = do not use forecast
consumption 1 = use
forecast consumption

Document Types

1. Purchase Orders ____________

2. Work Orders ____________
3. Rate Schedules ____________

Lead Times

1. Purchased Item Safety Leadtime ____________

2. Manufactured Item Safety ____________
Leadtime
3. Expedite Damper Days ____________
4. Defer Damper Days ____________

Performance

1. Clear F3411/F3412/F3413 Tables

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 Generating Planning Bill Forecasts

blank = do not clear tables ____________

1 = clear tables

2. Initialize MPS/MRP Print Code.

blank = do not flag these items ____________

1 = flag these items
3. Messages and Time Series for ____________
Phantom Items blank = do not
generate 1 = generate
4. Ending Work Order Status ____________
blank = all messages exploded
5. Extend Rate Based Adjustments ____________
blank = do not extend 1 =
extend
6. Closed Rate Status ____________

Process Mfg

1. Process Planning blank ____________

= discrete 1 = process

What You Should Know About Processing Options

Document Types Used in When you choose a Forecast Type to use with a planning
Planning (1) bill, you must also enter the type code for this forecast as a
Forecast Type to be read. This allows the system to read the
forecast and explode it down to the component level. You
can designate up to five Forecast Types to be read in a
sequence you specify.

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Working With Interoperability

To address the information requirements of an enterprise, companies sometimes

use products from different software and hardware providers. Interoperability
between different products is key to successfully implementing the enterprise
solution. Full interoperability among different systems results in a flow of data
between the different products that is seamless to the user. The OneWorld
Interoperability function provides an interface that facilitates exchanging
transactions with external systems. These transactions include both inbound and
outbound.

External systems send information to the interface tables, using either an external
program or flat files and the Inbound Flat File Conversion program. The sending
party is responsible for conforming to format and other requirements for the
interface tables.

You run a transaction process (a batch program) that validates the data, updates
valid data to the J.D. Edwards application tables, and sends action messages to the
Employee Work Center about any invalid data.

You use an inquiry function to interactively review the data for correctness, and
then run the transaction process again. You can repeat this process if necessary.

You set a processing option to specify the transaction type for the outbound
transaction. The system uses the master business function for the type of
transaction, creates a copy of the transaction, and places the copy in the interface
table where external systems can access it.

You use the purge function to remove obsolete and unnecessary data from
interface tables. Your system is more efficient when you keep these tables as small
as possible.

Working with interoperability consists of the following tasks:

GConverting flat files to interface tables

GReceiving transactions from external systems

GReviewing and revising inbound transactions

GSending transactions to external systems

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Forecasting

Interoperability Programs

The interoperability programs for the Forecasting system are as follows:

• Inbound Flat File Conversions (R47002C)

• Forecast Transaction Revisions (P3460Z1)
• Process Inbound Forecast Transactions (R3460Z1I)
• Purge Forecast Transactions (R3460Z1P)

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Converting Flat Files to Interface Tables

External systems can use a variety of methods to send data to the interoperability
interface tables. One method is to enter the data in a flat file. If you use this
method, the system converts the flat file to the interface table.

You can set a processing option to start the transaction process when the
conversion completes successfully.

Converting flat files to interface tables consists of the following tasks:

GSetting up the flat file cross-reference

GRunning the conversion program

Before You Begin

GEnsure that the flat file is a comma-delimited ASCII text file stored on the
hard drive of your personal computer.

GEnsure that the data conforms to the specified format. See Converting Data
from Flat Files into EDI Interface Tables in the Data Interface for Electronic Data
Interchange Guide for requirements.

Setting Up the Flat File Cross-Reference

From the Forecast Interoperability menu (G36301), choose Flat File Cross-
Reference.

Before you can convert a flat file, you must provide a cross-reference from the flat
file fields to the interface table fields.

See Also

• Converting Data from Flat Files into EDI Interface Tables in the Data Interface for
Electronic Data Interchange Guide for information about converting data

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Forecasting

Running the Conversion Program

From the Forecast Interoperability menu (G36301), choose Inbound Flat File
Conversions.

The Inbound Flat File Conversion program converts the flat file to the interface
table. If you set the related processing option, the system starts the transaction
process following a successful conversion.

See Also

• Receiving Transactions from External Systems for information about the

transaction process programs

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Receiving Transactions from External Systems

From the Forecast Interoperability menu (G36301), choose Process Inbound

Forecast Transactions.

When an external system sends inbound transactions, the system stores the data in
interface tables. These tables contain unedited transactions. The next step is to run
the appropriate transaction process to edit the transactions and update the
application tables. For example, if you receive a transaction in the F3460Z1
interface table, you run the Process Inbound Forecast Transactions (P3460Z1I) to
update the Forecast table (F3460).

Note: When you run the Inbound Flat File Conversion program and it completes
successfully, the system automatically starts the transaction process if specified in
the processing option for the conversion.

To be received in the interface tables, data from an external system must conform
to the minimum field requirements specified for the interface table.

The transaction process performs the following:

• Validates the data in the interface table (for example, F3460Z1) to ensure
that the data is correct and conforms to the format defined for the
Forecasting system
• Updates the associated application table (for example, F3460) with validated
data
• Produces a report that lists invalid transactions and sends an action message
for each invalid transaction to the employee work center
• Marks in the interface tables those transactions that are successfully updated
to the application tables
If the report indicates errors, access the Employee Work Center program from the
Workflow Management menu (G02) and review the messages in the message
center. Then use the associated inquiry function to review and revise the
transactions and rerun the transaction process.

Before you run any of the inbound transaction programs, specify the appropriate
processing values in the processing options.

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Forecasting

See Also

• Reviewing and Revising Inbound Transactions for more information about using
the Inquiry function

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Reviewing and Revising Inbound Transactions

Running the transaction process, Forecast Transaction Revisions, often identifies

one or more inbound transactions that contain invalid transactions. For example, a
forecast might have an invalid inclusion rule. In that case, the program cannot add
that forecast to the Forecast table (F3460). Instead, the program sends an error
message to the the Employee Work Center, indicating the transaction number for
the transaction in error.

Use the inquiry menu selection to review and revise inbound transactions; and then
to add, change, or delete transactions containing errors. Then run the transaction
process again. Continue to make corrections and rerun the transaction process
until the program runs without errors.

► To review and revise inbound transactions

From the Forecast Interoperability menu (G36301), choose Forecast Transaction

Revisions.

1. On Work With Transactions (All), complete the following fields to limit the
search to specific transactions and click Find:

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Forecasting

• User ID

• Batch Number

• Transaction Number

2. Choose the transaction to review and revise, and click Select.

3. On Forecast Transaction Revision, review and revise as needed, and then

click OK.
After you correct the errors identified by the Inbound Work Order Processor, run
the transaction process again. If other errors are identified, correct them and run
the transaction process again.

Field Explanation
User ID For World, the IBM-defined user profile.
For OneWorld, the identification code for a user profile.
Batch Number The number that the transmitter assigns to the batch.
During batch processing, the system assigns a new batch
number to the J.D. Edwards transactions for each control
(user) batch number it finds.
Transaction Number The number that an Electronic Data Interchange (EDI)
transmitter assigns to a transaction. In a non-EDI
environment, you can assign any number that is meaningful
to you to identify a transaction within a batch. It can be the
same as a J.D. Edwards document number.

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 Reviewing and Revising Inbound Transactions

See Also

• Understanding EDI Document Inquiry and Revision in the Data Interface for
Electronic Data Interchange Guide for information about reviewing and revising
inbound product activity data transactions
• Accessing the Employee Work Center in the OneWorld Foundation Guide for more
information about the Employee Work Center

Processing Options for Forecast Transactions Revisions

Display

1. Enter ’1’ to inquire at the ____________

batch level, leave Blank to
inquire at the transaction level.
2. Enter ’1’ for Processed ____________
Records, ’2’ for Unprocessed or
Blank for both.
3. Enter ’1’ for Inbound records, ____________
’2’ for Outbound Records or Blank
for both.

Version

1. Enter the version for “Process ____________

Inbound Forecasts” for batch of
One. If left blank, ZJDE0001 will
be used

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Sending Transactions to External Systems

You might send transactions you create or change in the Forecasting system to
another system. For example, if your organization uses hand-held scanning
devices, you can use interoperability transactions to update the database used by
the scanning devices.

The default outbound transaction is a copy of a data transaction after you created
or changed it (an “after image”). With interoperability, you can also send a copy of
each transaction as it was before you changed it (a “before image”). Creating and
sending “before images” requires additional processing time. To control the type
of image, you set a processing option in the application programs that create
transactions.

You can send transactions to an external system from the Enter/Change Forecast
program in the Forecasting system.

To create outbound transactions, specify the appropriate transaction type in the

related processing option. The system places a copy of the transaction in the
interface table for that type of transaction. For example, when you run
Enter/Change Forecast with the interoperability processing option turned on, the
system places a copy of updated forecast data in the F3460Z1 interface table. The
data is then available for an external system to use.

The system creates the outbound transaction in EDI format. External systems can
process the transactions using standard EDI processing, including extraction.

Before You Begin

GDefine the data export controls for the type of outbound transaction. The
system uses data export controls to determine the batch programs or
business processes that third parties supply for use in processing
transactions.

See Also

• Revising Detail Forecasts for information about entering forecasts

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Appendices
Appendix A: Forecast Calculation Methods

The Forecasting system uses 12 methods of calculating forecasts. Most of these

methods provide for limited user control. For example, the weight placed on
recent historical data or the date range of historical data used in the calculations
can be specified by the user. The following examples show the calculation
procedure for each of the available forecasting methods, given an identical set of
historical data.

Forecast calculation methods consist of the following tasks:

• Historical sales data

• Forecast performance evaluation criteria
• Evaluating the forecasts

Historical Sales Data

The method examples under the Forecast Performance Evaluation Criteria topic
use part or all of the following data set, which is historical data for the years 1996
and 1997.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1996 125 123 115 137 122 130 141 128 118 123 139 133
1997 128 117 115 125 122 137 140 129 131 114 119 137

This sales history data is stable, with small seasonal increases in July and
December. This pattern is characteristic of a mature product that might be
approaching obsolescence.

Forecast Performance Evaluation Criteria

Depending on your selection of processing options and on trends and patterns in

the sales data, some forecasting methods perform better than others for a given
historical data set. A forecasting method that is appropriate for one product might
not be appropriate for another product. It is also unlikely that a forecasting

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Forecasting

method that provides good results at one stage of a product’s life cycle will remain
appropriate throughout the entire life cycle.

You can choose between two methods to evaluate the current performance of the
forecasting methods: Mean Absolute Deviation (MAD) and Percent of Accuracy
(POA). Both of these performance evaluation methods require historical sales data
for a user specified period of time. This period of time is called a holdout period or
periods of best fit. The data in this period are used as the basis for recommending
which forecasting method to use in making the next forecast projection. This
recommendation is specific to each product, and may change from one forecast
generation to the next.

The two methods (MAD and POA) are demonstrated in Evaluating the Forecasts
topic, which follows examples of the 12 forecasting methods.

Method 1: Percent Over Last Year

The Percent Over Last Year formula multiplies sales data from the previous year
by a user specified factor, then projects that result over the next year. This method
may be useful in budgeting to simulate the impact of a specified growth rate or
when sales history has a significant seasonal component.

Forecast specifications: multiplication factor. For example, specify 110 in the

processing option to increase the previous year’s sales history data by 10 percent.

Required sales history: one year for calculating the forecast plus the user specified
number of time periods required for evaluating the forecast performance (periods
of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 128 117 115 125 122 137 140 129 131 114 119 137

Forecast, 110% Over Last Year

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 141 129 127 138 134 151 154 142 144 125 131 151

January 1998 = 128 * 1.1 = 140.8 or 141

February 1998 = 117 * 1.1 = 128.7 or 129

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 Appendix A: Forecast Calculation Methods

March 1998 = 115 * 1.1 = 126.5 or 127

Method 2: Calculated Percent Over Last Year

The Calculated Percent Over Last Year formula multiplies sales data from the
previous year by a factor calculated by the system, then projects that result for the
next year. This method may be useful in projecting the impact of extending the
recent growth rate for a product into the next year while preserving a seasonal
pattern present in sales history.

Forecast specifications: range of sales history to use in calculating the rate of

growth. For example, specify n = 4 in the processing option to compare sales
history for the most recent four periods to those same four periods of the previous
year. Use the calculated ratio to make the projection for the next year.

Required sales history: one year for calculating the forecast plus the user specified
number of time periods required for evaluating the forecast performance (periods
of best fit).

History Used in the Forecast Calculation, Given n = 4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1996 118 123 139 133
1997 128 117 115 125 122 137 140 129 131 114 119 137

Calculation of Percent Over Last Year, Given n = 4

1996... 118 + 123 + 139 + 133 = 513
1997... 131 + 114 + 119 + 137 = 501
501
ratio % = ------------ * 100 % = 97.66%
513
Forecast, 97.66% Over Last Year

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 125 114 112 122 119 134 137 126 128 111 116 134

January 1998 = 128 * 0.9766 = 125.00 or 125

February 1998 = 117 * 0.9766 = 114.26 or 114

March 1998 = 115 * 0.9766 = 112.31 or 112

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Forecasting

Method 3: Last Year to This Year

The Last Year to This Year formula copies sales data from the previous year to the
next year. This method may be useful in budgeting to simulate sales at the present
level. The product is mature, has no trend over the long run, but there might be a
significant seasonal demand pattern.

Forecast specifications: none.

Required sales history: one year for calculating the forecast plus the number of
time periods required for evaluating the forecast performance (periods of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 128 117 115 125 122 137 140 129 131 114 119 137

Forecast, Last Year to This Year

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 128 117 115 125 122 137 140 129 131 114 119 137

January 1998 = January 1997 = 128

February 1998 = February 1997 = 117

March 1998 = March 1997 = 115

Method 4: Moving Average

Moving Average (MA) is a popular method for averaging the results of recent sales
history to arrive at a projection for the short term. One characteristic of the MA
forecast method is that it lags trends. Forecast bias and systematic errors occur
when the product sales history exhibits strong trend or seasonal patterns. This
method works better for short-range forecasts of mature products rather than for
products in the growth or obsolescence stages of the life cycle.

Forecast specifications: n = the number of periods of sales history to use in the

forecast calculation. For example, specify n = 4 in the processing option to use the
most recent four periods as the basis for the projection into the next time period.
A large value for n (such as 12) requires more sales history. It results in a stable
forecast, but will be slow to recognize shifts in the level of sales. On the other
hand, a small value for n (such as 3) will be quicker to respond to shifts in the level

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 Appendix A: Forecast Calculation Methods

of sales, but the forecast may fluctuate so widely that production cannot respond
to the variations.

Required sales history: n plus the number of time periods required for evaluating
the forecast performance (periods of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 131 114 119 137

Calculation of Moving Average, Given n = 4

(131 + 114 + 119 + 137) / 4 = 125.25 or 125
Moving Average Forecast, Given n = 4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 125 124 126 128 126 126 127 127 126 126 126 126

January 1998 = (131 + 114 + 119 + 137) / 4 = 125.25 or 125

February 1998 = (114 + 119 + 137 + 125) / 4 = 123.75 or 124

March 1998 = (119 + 137 + 125 + 124) / 4 = 126.25 or 126

Method 5: Linear Approximation

Linear Approximation calculates a trend based upon two sales history data points.
Those two points define a straight trend line that is projected into the future. Use
this method with caution, as long range forecasts are leveraged by small changes in
just two data points.

Forecast specifications: n = the data point in sales history that will be compared to
the most recent data point for the purpose of identifying a trend. For example,
specify n = 4 to use the difference between December 1997 (most recent data) and
August 1997 (four periods prior to December) as the basis for calculating the
trend.

Minimum required sales history: n plus 1 plus the number of time periods required
for evaluating the forecast performance (periods of best fit).

History Used in the Forecast Calculation

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Forecasting

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 129 131 114 119 137

Calculation of Linear Approximation, Given n = 4

(137 - 129) / 4 = 2.0
Linear Approximation Forecast, Given n = 4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 139 141 143 145 147 149 151 153 155 157 159 161

January 1998 = Dec. 1997 + Trend

= 137 + (1) 2 = 139

February 1998 = 137 + (2) 2 = 141

March 1998 = 137 + (3) 2 = 143

Method 6: Least Squares Regression

Linear Regression, or Least Squares Regression (LSR), is the most popular method
for identifying a linear trend in historical sales data. The method calculates the
values for a and b to be used in the formula:

Y = a + bX.
This equation describes a straight line, where Y represents sales and X represents
time. Linear regression is slow to recognize turning points and step function shifts
in demand. Linear regression fits a straight line to the data, even when the data is
seasonal or better described by a curve. When sales history data follow a curve or
have a strong seasonal pattern, forecast bias and systematic errors occur.

Forecast specifications: n = the periods of sales history that will be used in

calculating the values for a and b. For example, specify n = 4 to use the history
from September through December 1997 as the basis for the calculations. When
data are available, a larger n (such as n = 24) would ordinarily be used. LSR defines
a line for as few as two data points. For this example, a small value for n (n = 4)
was chosen to reduce the manual calculations required to verify the results.

Minimum required sales history: n periods plus the number of time periods
required for evaluating the forecast performance (periods of best fit).

History Used in the Forecast Calculation

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 Appendix A: Forecast Calculation Methods

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 131 114 119 137

Calculation of Linear Regression Coefficients, Given n = 4

X Y XY X2
Sep. ’97 1 131 131 1
Oct. ’97 2 114 228 4
Nov. ’97 3 119 357 9
Dec. ’97 4 137 548 16
SX= 10 S Y = 501 S XY = 1264 S X2 = 30

n S XY - S XS Y 4(1264) - (10 * 501) 5056 - 5010 46

b = ---------------- = ------------------- = ------------- = ------ = 2.3
n S X2 - (S X)2 4(30) - (10) 2 120 - 100 20
SY SX 501 10
a = ------- - b --------- = ------- - (2.3) ----- = 119.5
n n 4 4
Linear Regression Forecast, Given Y = 119.5 - 2.3 X, where X = 1 => Sep. 1997

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 131 133 136 138 140 143 145 147 149 152 154 156

January 1998 = 119.5 + (5 * 2.3) = 131

February 1998 = 119.5 + (6 * 2.3) = 133.3 or 133

March 1998 = 119.5 + (7 * 2.3) = 135.6 or 136

Method 7: Second Degree Approximation

Linear Regression determines values for a and b in the forecast formula Y = a +

bX with the objective of fitting a straight line to the sales history data. Second
Degree Approximation is similar, but, this method determines values for a, b, and
c in the forecast formula:

Y = a + bX + cX2

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Forecasting

The objective of this method is to fit a curve to the sales history data. This method
is useful when a product is in the transition between life cycle stages. For example,
when a new product moves from introduction to growth stages, the sales trend
might accelerate. Because of the second order term, the forecast can quickly
approach infinity or drop to zero (depending on whether coefficient c is positive
or negative). This method is useful only in the short term.

Forecast specifications: the formulae find a, b, and c to fit a curve to exactly three
points. You specify n, the number of time periods of data to accumulate into each
of the three points. In this example, n = 3. Therefore, actual sales data for April
through June are combined into the first point, Q1. July through September are
added together to create Q2, and October through December sum to Q3. The
curve is fitted to the three values Q1, Q2, and Q3.

Required sales history: 3 * n periods for calculating the forecast plus the number of
time periods required for evaluating the forecast performance (periods of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Q0 Q1 Q2 Q3
384 400 370

1997 125 122 137 140 129 131 114 119 137

Q1 = 125 + 122 + 137 = 384

Q2 = 140 + 129 + 131 = 400
Q3 = 114 + 119 + 137 = 370

The next step involves calculating the three coefficients a, b, and c to be used in
the forecasting formula Y = a + bX + cX2.

Q1, Q2, and Q3 are shown on the following graph, where time is plotted on the
horizontal axis. Q1 represents total historical sales for April, May, and June and is
plotted at X =1, Q2 corresponds to July through September, Q3 corresponds to
October through December, and Q4 represents January through March 1998.

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 Appendix A: Forecast Calculation Methods

Q2
400 Q1 Q3

380

360

340
Q4=?
320
a

300

280

0 1 2 3 4

Three equations describe the three points on the graph:

(1) Q1 = a + bX + cX2, where X = 1 (Q1 = a + b + c)

(2) Q2 = a + bX + cX2, where X = 2 (Q2 = a + 2b + 4c)

(3) Q3 = a + bX + cX2, where X = 3 (Q3 = a + 3b + 9c)

Solve the three equations simultaneously to find b, a, and c:

Subtract equation (1) from equation (2) and solve for b

(2) - (1) = Q2 - Q1 = b + 3c
b = (Q2 - Q1) - 3c
Substitute this equation for b into equation (3)

(3) Q3 = a + 3 [(Q2 - Q1) - 3c] + 9c

a = Q3 - 3 (Q2 - Q1)
Finally, substitute these equations for a and b into equation (1)

(1) [Q3 - 3 (Q2 - Q1)] + [(Q2 - Q1) - 3c] + c = Q1

c = [(Q3 - Q2) + (Q1 - Q2)] / 2
The Second Degree Approximation method calculates a, b, and c as follows:

a = Q3 - 3 (Q2 - Q1) = 370 - 3 (400 - 384) = 370 - 3(16) = 322

c = [(Q3 - Q2) + (Q1 - Q2)] / 2 = [(370 - 400) + (384 - 400)] / 2 = -23
b = (Q2 - Q1) - 3 c = (400 - 384) - (3 * -23) = 16 + 69 = 85

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Forecasting

Calculation of Second Degree Approximation Forecast

Y = a + b X + c X2 = 322 + 85 X + (-23)( X2)
When X = 4, Q4 = 322 + 340 - 368 = 294. The forecast = 294 / 3 = 98 per period
When X = 5, Q5 = 322 + 425 - 575 = 172. The forecast = 172 / 3 = 57.33 or 57 per period
When X = 6, Q6 = 322 + 510 - 828 = 4. The forecast = 4 / 3 = 1.33 or 1 per period
Forecast, Last Year to This Year

Q4 = 294 Q5 = 172 Q6 = 4 Q7 = negative

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 98 98 98 57 57 57 1 1 1 -- -- --

Method 8: Flexible Method

The Flexible Method (Percent Over n Months Prior) is similar to Method 1,

Percent Over Last Year. Both methods multiply sales data from a previous time
period by a user specified factor, then project that result into the future. In the
Percent Over Last Year method, the projection is based on data from the same
time period the previous year. The Flexible Method also has the capability to
specify a time period other than the same period last year to use as the basis for the
calculations.

Forecast specifications:

• Multiplication factor. For example, specify 110 in the processing option to

increase previous sales history data by 10 percent.
• Base period. For example, n = 4 causes the first forecast to be based on
sales data in September 1997.
Minimum required sales history: the user specified number of periods back to the
base period, plus the number of time periods required for evaluating the forecast
performance (periods of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 131 114 119 137

Forecast, 110% Over n = 4 months prior

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 Appendix A: Forecast Calculation Methods

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 144 125 131 151 159 138 144 166 174 152 158 182

Method 9: Weighted Moving Average

The Weighted Moving Average (WMA) method is similar to Method 4, Moving

Average (MA). However, with the Weighted Moving Average you can assign
unequal weights to the historical data. The method calculates a weighted average of
recent sales history to arrive at a projection for the short term. More recent data is
usually assigned a greater weight than older data, so this makes WMA more
responsive to shifts in the level of sales. However, forecast bias and systematic
errors occur when the product sales history exhibits strong trend or seasonal
patterns. This method works better for short range forecasts of mature products
rather than for products in the growth or obsolescence stages of the life cycle.

Forecast specifications:

• n = the number of periods of sales history to use in the forecast calculation.

For example, specify n = 4 in the processing option to use the most recent
four periods as the basis for the projection into the next time period. A large
value for n (such as 12) requires more sales history. It results in a stable
forecast, but will be slow to recognize shifts in the level of sales. On the
other hand, a small value for n (such as 3) will respond more quickly to
shifts in the level of sales, but the forecast may fluctuate so widely that
production cannot respond to the variations.
• The weight assigned to each of the historical data periods. The assigned
weights must total to 1.00. For example, when n = 4, assign weights of 0.50,
0.25, 0.15, and 0.10, with the most recent data receiving the greatest weight.
Minimum required sales history: n plus the number of time periods required for
evaluating the forecast performance (periods of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 131 114 119 137

Calculation of Moving Average, Given n = 4

[(131 * 0.10) + (114 * 0.15) + (119 * 0.25) + (137 * 0.50)] / (0.10 + 0.15 + 0.25 + 0.50) = 128.45 or
128
Weighted Moving Average Forecast, Given n = 4

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Forecasting

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 128 128 128 129 129 129 129 129 129 129 129 129

January 1998 =

[(131 * 0.10)+(114 * 0.15)+(119 * 0.25)+(137 * 0.50)] /

(0.10+0.15+0.25+0.50)
= 128.45 or 128
February 1998 =

[(114 * 0.10)+(119 * 0.15)+(137 * 0.25)+(128 * 0.50)] / 1 = 127.5 or 128

March 1998 =

[(119 * 0.10)+(137 * 0.15)+(128 * 0.25)+(128 * 0.50)] / 1 = 128.45 or 128

Method 10: Linear Smoothing

This method is similar to Method 9, Weighted Moving Average (WMA). However,

instead of arbitrarily assigning weights to the historical data, a formula is used to
assign weights that decline linearly and sum to 1.00. The method then calculates a
weighted average of recent sales history to arrive at a projection for the short term.
As is true of all linear moving average forecasting techniques, forecast bias and
systematic errors occur when the product sales history exhibits strong trend or
seasonal patterns. This method works better for short range forecasts of mature
products rather than for products in the growth or obsolescence stages of the life
cycle.

Forecast specifications:

• n = the number of periods of sales history to use in the forecast calculation.

For example, specify n = 4 in the processing option to use the most recent
four periods as the basis for the projection into the next time period. The
system will automatically assign the weights to the historical data that decline
linearly and sum to 1.00. For example, when n = 4, the system assigns
weights of 0.4, 0.3, 0.2, and 0.1, with the most recent data receiving the
greatest weight.
Minimum required sales history: n plus the number of time periods required for
evaluating the forecast performance (periods of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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 Appendix A: Forecast Calculation Methods

1997 131 114 119 137

Calculation of Weights, Given n = 4

(n2 + n) / 2 = (16 + 4) / 2 = 10
September weight = 1/10
October weight = 2/10
November weight = 3/10
December weight = 4/10
Total weight = 10/10
Calculation of Moving Average, Given n = 4
[(131 * 0.1) + (114 * 0.2) + (119 * 0.3) + (137 * 0.4)] / (0.1 + 0.2 + 0.3 + 0.4) = 126.4 or 126
Linear Smoothing Forecast, Given n = 4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 126 127 128 128 128 128 128 128 128 128 128 128

Method 11: Exponential Smoothing

This method is similar to Method 10, Linear Smoothing. In Linear Smoothing the
system assigns weights to the historical data that decline linearly. In Exponential
Smoothing, the system assigns weights that exponentially decay. The Exponential
Smoothing forecasting equation is:

Forecast = alpha (Previous Actual Sales) + (1 - alpha) Previous Forecast

The forecast is a weighted average of the actual sales from the previous period and
the forecast from the previous period. Alpha is the weight applied to the actual
sales for the previous period. (1 - alpha) is the weight applied to the forecast for
the previous period. Valid values for alpha range from 0 to 1, and usually fall
between 0.1 and 0.4. The sum of the weights is 1.00 (alpha + (1 - alpha) = 1).

You should assign a value for the smoothing constant, alpha. If you do not assign
a value for the smoothing constant, the system calculates an assumed value based
upon the number of periods of sales history specified in the processing option.

Forecast specifications:

• alpha = the smoothing constant used in calculating the smoothed average

for the general level or magnitude of sales. Valid values for alpha range from
0 to 1.

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Forecasting

• n = the range of sales history data to include in the calculations. Generally,

one year of sales history data is sufficient to estimate the general level of
sales. For this example, a small value for n (n = 4) was chosen to reduce the
manual calculations required to verify the results. Exponential Smoothing
can generate a forecast based on as little as one historical data point.
Minimum required sales history: n plus the number of time periods required for
evaluating the forecast performance (periods of best fit).

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 131 114 119 137

Calculation of Exponential Smoothing , Given n = 4, alpha = 0.3

October Smoothed Average* = September Actual
= alpha (September Actual) + (1 - alpha) September Smoothed Average
= 1 * (131) + (0) (0) = 131
November Smoothed Average = 0.3 (October Actual) + (1 - 0.3) October Smoothed Average
= 0.3 (114) + 0.7 (131) = 125.9 or 126
December Smoothed Average = 0.3 (November Actual) + 0.7 (November Smoothed Average)
= 0.3 (119) + 0.7 (126) = 123.9 or 124
January Forecast = 0.3 (December Actual) + 0.7 (December Smoothed Average)
= 0.3 (137) + 0.7 (124) = 127.9 or 128
February Forecast = January Forecast
March Forecast = January Forecast
* Exponential Smoothing is initialized by setting the first smoothed average equal to the first specified
actual sales data point. In effect, alpha = 1.0 for the first iteration. For subsequent calculations, alpha
is set to the value specified in the processing option.
Exponential Smoothing Forecast, Given alpha = 0.3, n = 4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 128 128 128 128 128 128 128 128 128 128 128 128

Method 12: Exponential Smoothing with Trend and Seasonality

This method is similar to Method 11, Exponential Smoothing, in that a smoothed

average is calculated. However, Method 12 also includes a term in the forecasting
equation to calculate a smoothed trend. The forecast is composed of a smoothed

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 Appendix A: Forecast Calculation Methods

averaged adjusted for a linear trend. When specified in the processing option, the
forecast is also adjusted for seasonality.

Forecast specifications:

• Alpha = the smoothing constant used in calculating the smoothed average

for the general level or magnitude of sales. Valid values for alpha range from
0 to 1.
• Beta = the smoothing constant used in calculating the smoothed average for
the trend component of the forecast. Valid values for beta range from 0 to
1.
• Whether a seasonal index is applied to the forecast.
Note: Alpha and beta are independent of each other. They do not have to add to
1.0.

Minimum required sales history: one year plus the number of time periods required
for evaluating the forecast performance (periods of best fit). When two or more
years of historical data is available, the system uses two years of data in the
calculations.

Method 12 uses two Exponential Smoothing equations and one simple average to
calculate a smoothed average, a smoothed trend, and a simple average seasonal
index.

A) An exponentially smoothed average

Dt
At= α + (1- α ) ( A t- 1+ T-t 1)
S t- L

B) An exponentially smoothed trend

Tt = β ( A t - A -t 1) + (1 - β ) T -t 1

C) A simple average seasonal index

St = ( Dt-L + Dt-2L
n = (t-1)
*L )
Σ ∆ν
n = (t-2L)
D) The forecast is then calculated using the results of the three equations:

Ft + m = (At + Ttm) St - L + m
Where:

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Forecasting

• L is the length of seasonality (L = 12 months or 52 weeks)

• t is the current time period
• m is the number of time periods into the future of the forecast
• S is the multiplicative seasonal adjustment factor indexed to the appropriate
time period

History Used in the Forecast Calculation

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
1996 125 123 115 137 122 130 141 128 118 123 139 133 1534
1997 128 117 115 125 122 137 140 129 131 114 119 137 1514

Calculation of Linear and Seasonal Exponential Smoothing, Given alpha = 0.3, beta = 0.4

Initializing the Process:

January 1997 Seasonal Index, S1

= (125 + 128/1534 + 1514) * 12 = 0.083005 * 12 = 0.9961

January 1997 Smoothed Average*, A1

= January 1997 Actual/ January Seasonal Index

= 128/0.9960
= 128.51
January 1997 Smoothed Trend*, T1

= 0 insufficient information to calculate first smoothed trend

February 1997 Seasonal Index, S2

= (123 + 117/1534 + 1514) * 12 = 0.07874 * 12 = 0.9449

February 1997 Smoothed Average, A2 =

D2
A2 = α + (1 - α ) ( A 1 + T1)
S2
117
A 2 = 0 .3 + (1 - 0 .3 )(128 .51 + 0 ) = 127 .10
0 .9449
February 1997 Smoothed Trend, T2 =

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 Appendix A: Forecast Calculation Methods

T2 = β ( A 2 - A 1) + (1 - β ) T1

T2 = 0 .4 (127 .10 - 128 .51 ) + (1 - 0 .4 )∗ 0 = - 0 .56

March 1997 Seasonal Index, S3 = (115 + 115/1534 + 1514) * 12

= 0.07546 * 12 = 0.9055
March 1997 Smoothed Average, A3 =

D3
A3 = α + (1 - α ) ( A 2 + T 2 )
S3
115
A 3 = 0 .3 + (1 - 0 .3 )(127 .10 - 0 .56 ) = 126 .68
0 .9055
March 1997 Smoothed Trend, T3 =

T 3 = β ( A 3 - A 2 ) + (1 - β ) T 2

T3 = 0 .4 (126 .68 - 127 .10 ) + (1 - 0 .4 ) *- 0 .56 = - 0 .50

(Continue through December 1997)

December 1997 Seasonal Index, S12

= (133 + 137/1534 + 1514) * 12 = 0.08858 * 12 = 1.0630

December 1997 Smoothed Average, A12 =

D 12
A 12 = α + (1 - α ) ( A 11 + T11)
S 12
137
A 12 = 0 .3 + (1 - 0 .3 )(124 .64 - 1.121 ) = 125 .13
1.0630
December 1997 Smoothed Trend, T12 =

T12 = β ( A 12 - A 11) + (1 - β ) T11

T12 = 0 .4 ( 125 .13 - 124 .64 ) + (1 - 0 .4 ) *- 1.121 = - 0 .477

Calculation of Linear and Seasonal Exponentially Smoothed Forecast

* Exponential Smoothing with Trend and Seasonality calculations are initialized by setting the first
smoothed average equal to the deseasonalized first actual sales data. The trend is initialized at zero for the
first iteration. For subsequent calculations, alpha and beta are set to the values specified in the processing
options.

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Forecasting

Exponential Smoothing with Trend and Seasonality Forecast, alpha = 0.3, beta = 0.4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 124.1 117.3 112.0 127.1 117.9 128.5 134.7 122.7 118.4 121.7 121.7 126.92
6 3 1 0 1 2 3 4 5 7 7

Evaluating the Forecasts

You can select forecasting methods to generate as many as 12 forecasts for each
product. Each forecasting method can create a slightly different projection. When
thousands of products are forecast, it is impractical to make a subjective decision
regarding which forecast to use in your plans for each product.

The system automatically evaluates performance for each forecasting method you
select and for each product forecast. You can choose between two performance
criteria: Mean Absolute Deviation (MAD) and Percent of Accuracy (POA). MAD
is a measure of forecast error. POA is a measure of forecast bias. Both of these
performance evaluation techniques require actual sales history data for a user
specified period of time. This period of recent history is called a “holdout period”
or periods of best fit.

To measure the performance of a forecasting method, use the forecast formulae to

simulate a forecast for the historical holdout period. There will usually be
differences between actual sales data and the simulated forecast for the holdout
period.

When multiple forecast methods are selected, this same process occurs for each
method. Multiple forecasts are calculated for the holdout period, and compared to
the known sales history for that same period of time. The forecasting method
producing the best match (best fit) between the forecast and the actual sales during
the holdout period is recommended for use in your plans. This recommendation is
specific to each product, and might change from one forecast generation to the
next.

Mean Absolute Deviation

MAD is the mean (or average) of the absolute values (or magnitude) of the
deviations (or errors) between actual and forecast data. MAD is a measure of the
average magnitude of errors to expect given a forecasting method and data history.
Because absolute values are used in the calculation, positive errors do not cancel
out negative errors. When comparing several forecasting methods, the one with
the smallest MAD has shown to be the most reliable for that product for that
holdout period. When the forecast is unbiased and errors are normally distributed,

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 Appendix A: Forecast Calculation Methods

there is a simple mathematical relationship between MAD and two other common
measures of distribution, standard deviation and Mean Squared Error:

• MAD = ( S | Actual - Forecast | ) / n

• Standard Deviation, (s) @ 1.25 MAD
• Mean Squared Error @ -s2
The following shows the calculation of MAD for two of the forecasting methods.
This example assumes that the user has specified in the processing option that the
holdout period length (periods of best fit) is equal to 5 periods.

Method 1, Last Year to This Year

History Used in the Calculation of MAD, Given Periods of Best Fit = 5

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1996 128 118 123 139 133

110 Percent Over Last Year Forecast for the Holdout Period

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 141 130 135 153 146

Actual Sales History for the Holdout Period

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 129 131 114 119 137

Absolute Value of Errors, Actual - Forecast

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
12 1 21 34 9

Mean Absolute Deviation = (12 + 1 + 21 + 34 + 9) / 5 = 15.4

Method 4, Moving Average, n = 4

History Used in the Calculation of MAD, Given Periods of Best Fit = 5, n = 4

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Forecasting

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 125 122 137 140

Moving Average Forecast for the Holdout Period, Given n = 4

(125 + 122 + 137 + 140) / 4 = 131 Aug. ‘97
(122 + 137 + 140 + 129) / 4 = 132 Sep. ‘97
(137 + 140 + 129 + 131) / 4 = 134.25 or 134 Oct. ‘97
(140 + 129 + 131 + 114) / 4 = 128.5 or 129 Nov. ’97
(129 + 131 + 114 + 119) / 4 = 123.25 or 123 Dec. ‘97

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 131 132 134 129 123

Actual Sales History for the Holdout Period

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 129 131 114 119 137

Absolute Value of Errors, Actual - Forecast

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2 1 20 10 14

Mean Absolute Deviation = (2 + 1 + 20 + 10 + 14) / 5 = 9.4

Based on these two choices, the Moving Average, n = 4 method is recommended

because it has the smaller MAD, 9.4, for the given holdout period.

Percent of Accuracy

POA is a measure of forecast bias. When forecasts are consistently too high,
inventories accumulate and inventory costs rise. When forecasts are consistently
too low, inventories are consumed and customer service declines. A forecast that is
10 units too low, then 8 units too high, then 2 units too high is an unbiased
forecast. The positive error of 10 is canceled by negative errors of 8 and 2.

Error = Actual - Forecast

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 Appendix A: Forecast Calculation Methods

When a product can be stored in inventory, and when the forecast is unbiased, a
small amount of safety stock can be used to buffer the errors. In this situation, it is
not so important to eliminate forecast errors as it is to generate unbiased forecasts.
However, in service industries the above situation is viewed as three errors. The
service is understaffed in the first period, then overstaffed for the next two
periods. In services, the magnitude of forecast errors is usually more important
than is forecast bias.

S Actual sales during holdout period

POA = ---------------------------------------------------- * 100%

S Forecast sales during holdout period

Note the summation over the holdout period allows positive errors to cancel
negative errors. When the total of actual sales exceeds the total of forecast sales,
the ratio is greater than 100 percent. Of course, it is impossible to be more than
100 percent accurate. When a forecast is unbiased, the POA ratio is 100 percent.
Therefore, it is more desirable to be 95 percent accurate than to be 110 percent
accurate. The POA criteria selects the forecasting method that has a POA ratio
closest to 100 percent.

The following shows the calculation of POA for two forecasting methods. This
example assumes that the user has specified in the processing option that the
holdout period length (periods of best fit) is equal to 5 periods.

Method 1, Last Year to This Year

History Used in the Calculation of POA, Given Periods Best Fit = 5

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1996 128 118 123 139 133

110 Percent Over Last Year Forecast for the Holdout Period

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 141 130 135 153 146

Actual Sales History for the Holdout Period

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 129 131 114 119 137

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Forecasting

Sum of Actuals = (129 + 131 + 114 + 119 + 137) = 630

Sum of Forecasts = (141 + 130 + 135 + 153 + 146) = 705
POA ratio = (630 / 705) * 100% = 89.36%

Method 4, Moving Average, n = 4

History Used in the Calculation of MAD, Given Periods Best Fit = 5, n = 4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 125 122 137 140

Moving Average Forecast for the Holdout Period, Given n = 4

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 131 132 134 129 123

Actual Sales History for the Holdout Period

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1997 129 131 114 119 137

Sum of Actuals = (129 + 131 + 114 + 119 + 137) = 630

Sum of Forecasts = (131 + 132 + 134 + 129 + 123) = 649
POA ratio = (630 / 649) * 100% = 97.07%

Based on these two choices, the Moving Average, n = 4 method is recommended

because it has POA closest to 100 percent for the given holdout period.

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