Forecast’s Quantitative Method for S&OP and Master Planning in

ERP Systems: SAP, Oracle & MS Dynamics

Presented by
Dr. Eng. Samir Lotfi ALI
Founder and Management Consultant
Management & Development Center
Mobile: (+2) 01001790797
Email : s.ali@mdcegypt.com
LinkedIn : linkedin.com/in/dr-eng-samir-lotfi-ali-89072721
Web site: www.mdcegypt.com
YouTube : youtube.com/channel/UCT1zIJRUHcuiIsjaI6AinWw

Forecasts in ERP 1
1. Features Comparison Table

Forecasts in ERP 2
2. Features Comparison Table

Forecasts in ERP 3
3. Features Comparison Table

Forecasts in ERP 4
SAP- FORECAST METHODS
Sales & Operations Planning (LO-LIS-PLN)

Forecasts in ERP 5
 SAP- Forecast Methods

• The forecast is one way to obtain planning data in Sales & Operations
Planning (SOP).
• In standard SOP, you can forecast the sales quantities of a product group or
material.
• The system bases the forecast on the historical consumption of materials. It
then aggregates these results to the product group level.
• In the case of level-by-level planning, you can define the forecast profile
such that the forecast is based on consumption data or on the consumption
data of a reference material.
• Before you run the forecast, you can check and, if necessary, change the
historical values on which the forecast will be based.
• The Interactive Graphics help you to spot patterns and modify your
historical data directly in the graphic.

Forecasts in ERP 6
 1. Creating Information Structure

• Planning is based on historical sales from Information structure in SAP.

• Information structure is synonymous to a standard table in SAP.
• Standard Information Structures
• Can be used for the standard SOP
• Used to updates the Sales Quantities, for a given product group/material, plant and
production version, characteristics combination on a real time basis
• Self Defined Information Structures (Created Manually)
• for pulling historical sales data (defined in terms of key figures) lying at
various organization units or levels (as defined in terms of characteristics)
• used to gather the sales quantities (order quantities) or sales value for a
given organization level combination – for example - sales organization,
distribution channel, division, material combination.

https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-set-parameters-for-info-structures-and-key-figures?authuser=0

Forecasts in ERP 7
 1. Creating Information Structure

• Information structure is a combination of:

• Key figures
• Represents the actual data of certain key interest fields that has to be collected
for the organizational units.
• One could choose sales quantities, delivered sales quantities, billed sales
quantities , (material’s historical consumption i.e. goods issues) or (sales data
as recorded, on a real time basis, in absolute values,)
• Characteristics
• Represents the organizational units or organization levels (arranged in
hierarchical sequence) for which the key figure data has to be collected.
• Periods
• Represents the periods type and the period dates for which the key figure data
is collected for the characteristics combination, i.e., it represents the date type
and the actual date for which the key figure data is collected.

Forecasts in ERP 8
 1. Creating Information Structure

https://blogs.sap.com/2013/05/31/information-structures-in-sap/
Forecasts in ERP 9
 2. Set Parameters for Info Structures and Key Figures

• Consistent planning
• Any change in data at any one level is automatically disaggregated or aggregated
to all the other levels,
• This defines the consistency in key figure data between the levels.
• Level by level planning
• The plan is prepared for each level; the disaggregation or aggregation of
key figures values from one level to the other level is triggered out
manually.
• The data at each level in a planning table (information structure) can be
changed without affecting data at other levels..

https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-set-parameters-for-info-structures-and-key-figures?pli=1
https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-creating-planning-hierarchy?authuser=0
Forecasts in ERP 10
 3. Creation of a Planning Hierarchy:

https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-creating-planning-hierarchy?authuser=0
https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-set-parameters-for-info-structures-and-key-figures?pli=1
Forecasts in ERP 11
 4. Events in Flexible Planning

• Major events, national occasions, planned promotions, and festivals,

seasons, can affect the sales quantities (increase or decrease)
• You can spike or decrease your sales quantities using a functionality
called events.
• Cumulative events
• Enter the actual value to add or subtract from the plan quantities in a given
period..
• Proportional Events
• Entering the percentage hike or percentage decrement that should be
installed in the plan

https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-creation-of-sop-events?authuser=0

Forecasts in ERP 12
 5. Planning Types

• Planning Type is the skeleton framework to carry out the planning using
the information structure,
• The planning type becomes the format/layout/template of the planning
table with all the key figures arranged in the required way.
• Standard SAP Planning Types
• Planning type for the planning of individual product groups.
• Planning type for the planning of individual materials.
• Planning type for the dual-level planning of product group hierarchies.

https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-creation-of-planning-type?authuser=0

Forecasts in ERP 13
 6. Modifying the Historical Values
• Before you run the forecast, you can check and change the historical values on which the
forecast will be based.
• The Interactive Graphics help you to spot patterns and trends at a glance.
• You can modify your historical data directly in the graphic.
• To correct Outliers automatically in the
historical data you select Outlier control in the
forecast profile.
• The system then calculates a tolerance lane
for the historical time series, based on the
sigma factor.
• Historical data that lies outside the tolerance
lane is corrected so that it corresponds to the
ex-post value for that point in time

https://help.sap.com/docs/SAP_S4HANA_ON-
PREMISE/d853922bdd584e8e83027e5a0b8122f2/096eb6531de6b64ce10000000a174cb4.html?q=interactive%20Forecas
ting%20screen.
Forecasts in ERP 14
6. Forecasting Models and Strategies Selection

Forecasts in ERP 15
6. Forecasting Models and Strategies Selection

Forecasts in ERP 16
 6. Forecasting Models and Strategies Selection

Forecast Forecast Strategy Description

Strategy
10 Constant model
11 Constant model with first-order exponential smoothing
12 Constant model with automatic alpha adaptation and first-order exponential smoothing
13 Constant model based on the moving average model
14 Constant model based on the weighted moving average model
20 Trend model
21 Trend model with first-order exponential smoothing
22 Trend model with second-order exponential smoothing
23 Trend model with automatic alpha adaptation and second-order exponential smoothing
30 Seasonal model
31 Seasonal model based on the Winters’ method
40 Seasonal trend model
41 Seasonal trend model with first-order exponential smoothing
Forecasts in ERP 17
 6. Forecasting Models and Strategies Selection

Forecast Forecast Strategy

Strategy

50 Automatic model selection

51 Automatic model selection with test for trend
52 Automatic model selection with test for season
53 Automatic model selection with test for trend and season
54 Automatic model selection assuming a seasonal pattern and with an additional test for a trend pattern
55 Automatic model selection assuming a trend pattern and with an additional test for a seasonal pattern
60 Historical data is copied

Tracking signal = │ FS/MAD │

The system automatically sets the tracking limit (the default value is 4.00).
You can change it, however, when maintaining the article master record.

Forecasts in ERP 18
 6. Forecasting Models and Strategies Selection

Forecast Forecast Strategy

Strategy

50 Automatic model selection

51 Automatic model selection with test for trend
52 Automatic model selection with test for season
53 Automatic model selection with test for trend and season
54 Automatic model selection assuming a seasonal pattern and with an additional test for a trend pattern
55 Automatic model selection assuming a trend pattern and with an additional test for a seasonal pattern
60 Historical data is copied

Tracking signal = │ FS/MAD │

The system automatically sets the tracking limit (the default value is 4.00).
You can change it, however, when maintaining the article master record.

Forecasts in ERP 19
 7. Forecast Parameters

Forecast Parameters Dependent on the Forecast Model

Specified model/model to be tested Mandatory parameters
Constant models:
First-order exponential smoothing model Alpha factor
First-order exponential
smoothing model with optimization of the -
smoothing factors
Moving average model Number of historical values
Weighted moving average model Weighting group

Trend models:
First-order exponential smoothing model Alpha and beta factors
Second-order exponential smoothing model Alpha factor
Second-order exponential
smoothing model with optimization
of the smoothing factors

Seasonal model:
Winters' method Alpha and gamma factors
Periods per season

Seasonal trend model:

First-order exponential smoothing model Alpha, beta, and gamma factors
Periods per season

https://help.sap.com/docs/SAP_ERP/a5822ccc7c174662b87423ce5f63b778/f46db6531de6b64ce10000000a174cb4.html?
version=6.18.latest

Forecasts in ERP 20
 8. Forecast Evaluation Criteria

The SAP calculates the following parameters for evaluating a forecast’s quality:
• Error total
• Mean absolute deviation (MAD)
• Tracking signal
• Theil coefficient

https://help.sap.com/docs/SAP_ERP/42ad0c855a03441abde4d5db2fef5a65/1e6eb6531de6b64ce10000000a174cb4.html
#forecast-evaluation-criteria

Forecasts in ERP 21
 9. Model Initialization

• As a general rule, the forecast model is initialized automatically.

• In order to do this, the system requires a certain number of historical values.
• This number depends on the forecast model, as shown in the following table.

Model No. of historical values

Constant model 1
Trend model 3
Seasonal model 1 season
Seasonal trend model 1 season + 3
2nd-order exp. smoothing 3
Moving average 1
Weighted moving average 1

https://help.sap.com/docs/SAP_ERP/42ad0c855a03441abde4d5db2fef5a65/006eb6531de6b64ce10000000a174cb4.html

Forecasts in ERP 22
 10. Ex-Post Forecast

• Ex-post forecast is carried out automatically If historical values are available >
required for initialize
• The historical values are divided into two groups: the first group with the older
values is used for initialization; the more recent values in the second group are
used to carry out an ex-post forecast
• The basic value, the trend value, the seasonal index, and (MAD) are modified in
every ex-post period. These values are used to calculate the forecast. The error
total is calculated using the ex-post forecast results.

https://help.sap.com/docs/SAP_ERP/42ad0c855a03441abde4d5db2fef5a65/006eb6531de6b64ce10000000a174cb4.html

Forecasts in ERP 23
 11. Creating a Forecast Profile
The forecasting profile contains the following parameters:
a. The period or interval for the historical data, to be used during forecasting.
b. The period or interval of the required future
c. The forecasting strategies/models that should be used to carry out the forecast.
d. The factory calendars to specify the holidays or the fiscal year variant.
e. The number of periods in a season, in case there is seasonal trend.
f. Maximum number of historical periods.
g. Indicator to base the forecast of historical consumption as in standard SOP’s level
by level planning forecast based on material consumption history.
h. Correcting historical values
i. Forecast Parameters” Alpha factor to smoothen the basic values, Beta factor to
smoothen the trend values and Gamma factor to smoothen the seasonal index.

https://sites.google.com/site/sapswords/home/sap-sop/sap-sop-forecasting?authuser=0
Forecasts in ERP 24
 12. Execute the actual forecasting process

The list of Forecast Results

• Original historical values
• Corrected historical values
• Values determined by the ex-post forecast
• Original values determined by the forecast
• Corrected forecast values
• Seasonal indices
`A message is displayed at the bottom of this window, informing you of any unusual or
unexpected values detected during the forecast.

https://help.sap.com/docs/SAP_S4HANA_ON-
PREMISE/d853922bdd584e8e83027e5a0b8122f2/0c6eb6531de6b64ce10000000a174cb4.html?q=interactive%20Forecas
ting%20screen.
Forecasts in ERP 25
 13. Changing the Forecast Results

• You correct the forecast results in the same way as you correct the historical
values on which the forecast is based.
• One method is to enter a new value in the Corrected forecast value column of
the Forecast Results dialog box.
• Alternatively, you can use the interactive graphics:

https://help.sap.com/docs/SAP_S4HANA_ON-
PREMISE/d853922bdd584e8e83027e5a0b8122f2/0f6eb6531de6b64ce10000000a174cb4.html?q=interactive%20Forecast
ing%20screen.

Forecasts in ERP 26
 14. Forecast Versions

• By saving many versions of the forecast for one key figure and characteristic
values combination, you can compare, for example,
• forecasts based on different models but using the same historical data,
• or forecasts with corrected and uncorrected historical time series.
• In consistent planning, forecast versions are saved at the detailed level only.
• In level-by-level planning, forecast versions are saved at the level on which you
create them.

https://help.sap.com/docs/SAP_S4HANA_ON-
PREMISE/d853922bdd584e8e83027e5a0b8122f2/186eb6531de6b64ce10000000a174cb4.html?q=interactive%20Forecas
ting%20screen.

Forecasts in ERP 27
 15. Aggregation and Disaggregation

• You can plan both Top-down and Bottom-up throughout a complex planning
hierarchy. Thus, both Centralized and Decentralized planning are supported.
• The planning method in standard SOP is Level-by-level Planning; Aggregation
or Disaggregation.
• Flexible Planning: wide choice of possibilities for aggregating & disaggregating :
• Consistent planning: aggregated and disaggregated Automatically
• Level-by-level: Manual aggregation and disaggregation.
• Delta planning: Aggregated Automatically but Not Disaggregated, Automatically.

https://help.sap.com/docs/SAP_S4HANA_ON-
PREMISE/d853922bdd584e8e83027e5a0b8122f2/fa6dbd534f22b44ce10000000a174cb4.html?q=interactive%20Forecasti
ng%20screen
.

Forecasts in ERP 28
 Demand Forecasting and Planning Dashboard

https://blogs.sap.com/2021/09/21/demand-forecasting-planning-using-sap-analytics-cloud/

Forecasts in ERP 29
 SAP Forecast time Series

Forecasts in ERP 30
MS DYNAMICS – FORECAST METHODS

31
Forecasts in ERP
 1. Demand forecasting Overview
• Key features of Demand forecasting
• Used to predict Independent Demand from sales orders and Dependent demand at
any Decoupling Point for customer orders.
• The enhanced Demand Forecast Reduction rules provide an ideal solution for Mass
Customization.
• Use a dynamic set of forecast dimensions.
• Visualize demand trends, confidence intervals, and adjustments of the forecast.
• Remove outliers.
• Create measurements of forecast accuracy.
• Limitations
• Might not be the best fit for customers in industries such as commerce, wholesale,
warehousing, transportation, or other professional services

• https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/introduction-demand-forecasting

Forecasts in ERP 32
 1. Demand forecasting Overview
• Different ways to create forecast lines for products:
• Manually create forecast lines for products.
• Generate a statistical baseline forecast.
• Import historical data for demand forecasts.
• Generate the forecast by using a Microsoft Azure Machine Learning web service.
• Import demand or supply forecast lines by using the data management framework
• Major themes in demand forecasting
• Modularity – Demand forecasting is modular and easy to configure
• Machine Learning experiments Demand forecasting (Microsoft stack) lets you quickly
and easily create Predictive Analysis as Demand Estimation experiments,.
• They look for a best fit among five time series forecasting methods to calculate a
baseline forecast.

• https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/introduction-demand-
forecasting
Forecasts in ERP 33
 1. Demand forecasting Definitions
• Forecast Allocations
• Forecast allocations are used to split forecasts where the forecasts passed to Master
Planning need more dimensions than the forecasts generated by Demand Forecasting
• Forecast Allocation Rules are used to set up percentage allocations that override those
calculated from demand history in the Forecast Allocations table.
• They are particularly important for new items where insufficient or no demand history is
available to calculate percentage allocations
• Item allocation keys
• To include an item in a demand forecast, you must assign it to an item allocation key.
• Demand forecasting uses the item allocation key to calculate forecast at the aggregated
item level (which share the same forecast setup).
• An item and its Dimensions must be part of only one item allocation key

• https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/demand-forecasting-setup

Forecasts in ERP 34
 1. Demand forecasting Definitions

• Six item dimensions supported by Demand Forecasting

• Configuration, Colour, Size, Style , Site, Warehouse.
• Forecast Groups
• Forecast Item Groups used to group items for display and to allow for forecasts to
be manually adjusted at a group level and distributed over the items in the group
(e.g. same product manager)
• Forecast Customer Groups to group customers with characteristics to consolidate
demand for forecast calculation purposes. (e.g. same retail chain)
• Forecast Sales Groups are used to group customers for collaborative forecasting
purposes where different users manage forecasts for different customers within the
same Forecast Customer Group. (linked to an employee)
• Forecast Dimension Groups (different combinations of product & storage
dimensions than those required by Master Planning)

• https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/demand-forecasting-setup

Forecasts in ERP 35
 1. Demand forecasting Definitions

• Collaborative Forecasting
• Each customer is assigned a Forecast Sales Group as well as a Forecast Customer Group
• It enables forecasts to be exported to spreadsheets for offline updating and subsequent
re-importing. A different spreadsheet is generated for each Forecast Sales Group.
• Intercompany planning groups
• In Dynamics 365 Supply Chain Management, companies that are planned together are
grouped into the same intercompany planning group.
• You should associate an item allocation key with the intercompany planning group
member.
• Hierarchical forecasts
• Forecasts at different levels are required to roll up the hierarchy in a consistent manner,
being either Top-Down or Bottom-Up.

• https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/demand-forecasting-setup
• https://cloudblogs.microsoft.com/dynamics365/it/2020/02/26/predictive-sales-forecasting-in-dynamics-365-sales/

Forecasts in ERP 36
 1. Demand forecasting Definitions

Modular forecast
• The forecasting task can be viewed as composed from three components
• Closed Won: between T start and T now.
• Pipeline revenue prediction:: would potentially be generated from opportunities that are
currently open.
• Unborn revenue prediction: Revenue that would be potentially generated from
opportunities not yet existing in the system that are expected be won before T horizon.

• https://cloudblogs.microsoft.com/dynamics365/it/2020/02/26/predictive-sales-forecasting-in-dynamics-365-
sales/
Forecasts in ERP 37
 1. Demand forecasting Definitions

Forecasted Transactions
1. Sales orders lines – Requested ship date
2. Sales invoice lines – Invoice date
3. Production issues – Physical date on the inventory transaction
4. Project issues – Physical date on the inventory transaction
Forecasting Formulas
• There are currently 6 forecasting formulas provided to automatically generate
forecasts from demand history.
1. Demand history +/- percentage
2. N periods moving average (simple average)
3. N periods moving average with trend (simple average with trend)
4. Average of same periods last 2 years
5. Average of same periods last 2 years with trend

Forecasts in ERP 38
 1. Demand forecasting Definitions

Forecasting Formulas
6. Expert selection This option lets the system select the best option for the demand
pattern from a list of industry-standard forecasting formulas
• Simple Moving Averages
• Discrete Data Models
• Croston’s Intermittent Demand Model
• 9 Exponential Smoothing Models
• Univariate Box-Jenkins Model
• Event Models
• 4 Curve Fitting Models
• Dynamic Multiple Regression

Forecasts in ERP 39
 1. Demand forecasting Definitions

Forecasting Model for Microsoft Dynamics 365 Business Central Microsoft Azure AI
• Time_series_model (String) -Specifies the time series model to use.
• The model supports the following algorithms, and combinations of them:
• ARIMA (Autoregressive Integrated Moving Average)
• ETS (Error, Trend & seasonal)
• STL (Seasonal and Trend decomposition using Loess)
• ETS+ARIMA (returns average as result)
• ETS+STL (returns average as result)
• ALL
• TBATS (Trigonometric Regressors, Box-Cox Transformations, ARMA errors,
Trend, Seasonality)
• If you choose ALL the model compares the results and returns the one that has the lowest
mean absolute percentage error (MAPE).
• Confidence_level (Numeric) The range that future values are predicted to fall within, with the
probability defined by the confidence level.

Forecasts in ERP 40
 1. Demand forecasting Definitions

Default Parameters for demand forecasting models

• Confidence level percentage – A confidence interval consists of a range of
values that act as good estimates for the demand forecast
• Force seasonality – Specifies whether to force the model to use a specific type
of seasonality.
• This parameter applies to ARIMA and ETS only. Options: AUTO (default), NONE,
ADDITIVE, MULTIPLICATIVE.
• Forecasting model – Specifies which forecasting model to use.
• Options: ARIMA, ETS, STL, ETS+ARIMA, ETS+STL, ALL. To select the best-fit
model, use ALL.
• Maximum forecasted value – Specifies the maximum value to use for
predictions.
• Minimum forecasted value – Specifies the minimum value to use for predictions.

Forecasts in ERP 41
 1. Demand forecasting Definitions

Default Parameters for demand forecasting models

• Missing value substitution – Specifies how gaps in historical data are filled.
• Options: (numeric value), MEAN, PREVIOUS, INTERPOLATE LINEAR,
INTERPOLATE POLYNOMIAL.
• Missing value substitution scope – only to the date range of each individual
granularity attribute, or to the entire dataset.
• Seasonality hint – number of buckets that a demand pattern repeats itself for.
For example, enter 6 for data that repeats itself every six months.
• Test set size percentage – Percentage of historical data to be used as a test set
for forecast accuracy calculation.

Forecasts in ERP 42
 1. Demand forecasting Definitions

Forecasting Level of Detail

Forecasts are calculated and stored at the following level of detail

Forecast Item Group Mandatory

Forecast Customer Group Mandatory
Forecast Sales Group Collaborative forecasting only
Item Mandatory
Configuration
Colour
Size Optional, determined by the Input
Style Forecast Dimension Group
Site
Warehouse
Period Monthly, weekly or user-defined

Forecasts in ERP 43
 2. Set up Demand forecasting parameters

System Setup
• Forecast Models
• Forecast Periods
• Forecast Item Groups
• Forecast Customer Groups
• Forecast Sales Groups
• Forecast Dimension Groups
• Forecast Parameters
• Item Setup
• Customer Setup
• Forecast Allocation Rules
• Importing Demand History

Forecasts in ERP 44
 3. Generate a Statistical Baseline Forecast

1. Generate demand history

• At the beginning of each new period to update the demand history .
• The user should specify the number of periods of history to recalculate
2. Generate forecast allocation;
• Remove Outliers from historical transaction data when calculating a demand forecast
• Updates forecast allocation quantities using demand history
• Allocation quantities are recalculated based on the forecasting parameter ‘Number of
item distribution periods’.
3. Generate baseline forecasts (will not alter the following data)
• Any forecasts within the freeze time fence specified in the forecast parameters
• Forecasts in any period where the forecast has been manually changed
4. Finalize forecasts
• Check Forecast Allocations
• Copy to Final Forecast model that is used by Master Planning.

Forecasts in ERP 45
 4. Make Manual Adjustments to the Baseline Forecast

1. Forecast Aggregation and De-aggregation

• When the adjustment of the forecasted quantity is made at an aggregated level,
the system uses weighted allocation to distribute the change among the lines
that create the aggregation.
• You can also make manual adjustments on the Demand forecast lines page, by
modifying either the Total quantity value or the Quantity cells in the de-
aggregation grid.

https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/manual-adjustments-baseline-forecast

Forecasts in ERP 46
 4. Make Manual Adjustments to the Baseline Forecast

2. Viewing details of the forecast

• The historical demand that the forecast predictions are based on.
• The current forecast that is used by Master planning.
• The new demand forecast values and the amounts they have been manually
adjusted by.
• The confidence interval for the forecasted values.
• The forecast model that was used to generate the forecast.
• If you're viewing aggregated data, you will see the list of all the methods
that were used for all the aggregated time series.
• The internal model accuracy (MAPE)

Forecasts can be displayed to any level of detail using the 3 groups and the
display settings (these control the display of item dimensions).

https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/manual-adjustments-baseline-forecast

Forecasts in ERP 47
 4. Make Manual Adjustments to the Baseline Forecast

3. New Items forecast

• Use Item Supersessions to automatically create demand history for the new
item from an existing item whenever Generate Demand History is run.
• Use the Item Demand History Copy function to copy the demand history of
another item to the new item
• Use the Forecast Review function to manually enter forecasts for the new item
until enough demand history exists for the automatic calculation to be used.

Forecasts in ERP 48
 5. Authorize an adjusted forecast

• Not all forecast data must be authorized immediately.

• You can specify the start and end dates of the period that the forecast is
authorized for.
• This functionality lets you freeze specific buckets.
• You can select the companies and the forecast models to authorize the forecast
for use.
• Save the manual adjustments made to the baseline demand forecast lets you
keep or discard all manual changes.

https://learn.microsoft.com/en-us/dynamics365/supply-chain/master-planning/authorize-adjusted-forecast

Forecasts in ERP 49
ORACLE – FORECAST METHODS

Forecasts in ERP 50
 Oracle Forecasting Methods -Demand Planning

• Automatically determine the best forecast model

• Incorporate seasonality and outliers
• Forecast is based on shipments or booking
• Can be managed on different hierarchy like product family
• Can use the history of similar product create the forecast for new item
• Can LOAD forecast from exterior system
• Consensus forecast
• The KPIs measuring forecast accuracy :
• Mean absolute deviation (MAD),
• Mean and absolute percentage error (MAPE), and
• Weighted MAPE.
• Tracking signals and measures of forecast bias are also calculated and combined with
extensive reports and exception alerts to show you areas for improvement and to let you
track the benefits of continuous improvement programs.

Forecasts in ERP 51
 Oracle Forecasting Methods -Inventory Planning

• Automatic Calculation of buffer stock safety stock Take into consideration

• Demand variability
• Mean absolute deviation MAD
• MAPE Mean Absolute Percentage Error
• Arrival rate forecast error
• Can use days of coverage (days on hand)
• Minimize inventory
• Increase service level

Forecasts in ERP 52
 Oracle Forecasting Methods
• Refers to the statistical methods that you can use to generate forecasts in
Oracle Demand Planning.
• These are
• Linear Regression,
• Polynomial Regression,
• Exponential Fit,
• Logarithmic Fit,
• Asymptotic fit,
• Exponential Asymptotic Fit,
• Single Exponential Smoothing,
• Double Exponential Smoothing, and
• Holt-Winters.
• As an alternative to selecting a specific method, you can allow the system to
automatically determine the best-fit method.

Forecasts in ERP 53
 Oracle Forecasting Methods

https://cloud.oracle.com/en_US/supply-chain-planning-cloud/demand-management
Forecasts in ERP 54
 Oracle Forecasting Methods

https://cloud.oracle.com/en_US/supply-chain-planning-cloud/demand-management
Forecasts in ERP 55
Oracle – Supply Chain Cloud

Forecasts in ERP 56