Forecast Time Fence

Creating and maintaining forecasts allows a company to sufficiently plan production activities. A forecasted quantity represents estimated demand for an item (typically this estimate is performed according to certain criteria, such as historical demand, seasonal requirements, etc). By scheduling production activities according to a forecast, the user is not dependent on the entry of sales orders to drive production.

The Quick Planner Worksheet uses a number of different factors to determine demand requirements for an item, including forecast quantities. The user can set a days view that will instruct the system how far into the future it should look when it determines item demand. Any forecast quantities or transactions that require an item which are scheduled to occur within the defined days view are summed together to calculate the item's total demand. The Quick Planner then compares this to supply data from within the same days views to determine whether production activity is necessary.

Although a forecasted quantity is helpful when planning production activity that occurs further into the future, its usefulness diminishes as the forecast date grows closer to the actual date. For example, if the production planner is looking at anticipated production requirements over the next 4 weeks, a forecast quantity with a date 2 weeks from now may be useful. When anticipated production requirements are viewed 13 days later, that forecast quantity now exists for the following day. At this point, the production planner probably does not want to include this forecast quantity when determining demand.

So that the impact of entered production forecasts may be discounted when they are too close to the current date to be of value, it is possible to establish what is called a forecast time fence.

Defining the Forecast Time Fence

The forecast time fence is defined in the Process Setup window. It is entered as a time interval (for example, 1W). The program calculates a forecast time fence date by applying this interval to the work date. For example, if the user defines a forecast time fence interval of 4 days, on 07/15/06 the program would calculate a forecast time fence date of 07/19/06.

The various supply and demand quantities on the Quick Planner are determined by the days view. If the forecast time fence interval exceeds this days view, the Quick Planner will not include any forecast quantities in its demand calculations. If you wish to factor production forecasts into production planning, you should make sure that the forecast time fence time interval is not greater than the days view intervals that you typically use with the Quick Planner.

Demand Calculations

When demand is calculated for an item on the Quick Planner, different criteria are used for the periods before and after the forecast time fence. Any forecast quantities that exist on dates that fall prior to the time fence are ignored by the system. Only demand requirements from transactions such as sales orders are factored into an item's demand.

Beginning with the forecast time fence date, forecast quantities are taken into consideration by the program. An item's forecast quantity is compared to the post-time fence sales order quantity, and the greater value is added to the pre-time fence demand quantity to determine the item's total demand.

For example, between the work date and the forecast time fence date, an item has a production forecast quantity of 5 units and a sales order quantity of 10 units. Between the forecast time fence date and the defined days view, the item has a production forecast quantity of 10 units and sales order quantity of 15 units. In the first period, the forecast quantity is discounted, so the item demand is based solely upon the entered sales order quantity of 10 units. In the second period, the forecast and sales order quantities are compared and the larger of the two, in this case the sales order quantity of 15 units, is added to the amount from the first period. In this scenario, the item demand would be calculated as 25 units.

If the days view is adjusted so that new demand requirements are included or excluded, this may change the values that are used to calculate demand. If the user adjusted the days view to include a few more days so that the item's post-time fence forecast and sales order quantities were 30 and 20 units, respectively, it would now be the forecast quantity that was added to the pre-time fence demand, resulting in a total demand of 40 units.