14 Understand Planning Bill Forecasts
This chapter contains these topics:
14.1 About 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.
You can use a planning bill to configure a hypothetical average parent item that is not actually 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 of all the bikes you sell, 60% are 10-speeds and 40% are 15-speeds, your planning bill includes an average parent bike that is neither a 10-speed nor a 15-speed, but a hybrid pseudo bike that is 60% 10-speed and 40% 15-speed.
Use planning bills during master scheduling and/or material planning. You can forecast with a planning bill to determine component demand within the MPS, MRP, and DRP systems.
14.1.1 Example: Pseudo Parent Item
Your sales history shows that 60% of the bikes that you sell are 10-speeds and 40% are 15-speeds. For 10-speeds, 70% are blue and 30% are green. For 15-speeds, 80% are blue and 20% are green. You use these percentages to configure a pseudo parent item.
The average parent bike will be:
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60% 10-speed
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40% 15-speed
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42% blue 10-speed (70% of 60%)
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18% green 10-speed (30% of 60%)
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32% blue 15-speed (80% of 40%)
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8% green 15-speed (20% of 40%)
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You decide to manufacture or purchase at these percentages.
Summary forecasts are more accurate than detail forecasts. A forecast for the total number of bikes that will sell in 1998 is more accurate than a forecast for blue 10-speed bikes 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.
14.2 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 a phantom 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 latter 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.
14.2.1 Example: Exploding the Forecast
You use a planning bill to configure an average parent item that represents total bike sales. This pseudo parent bike represents the top level of the item hierarchy and is configured as follows:
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60% 10-speed
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40% 15-speed
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 phantom parent bikes on the second level of the item hierarchy. These phantom parents are configured as follows:
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10-speed:
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70% blue
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30% green
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15-speed:
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80% blue
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20% green
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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-speeds and total 15-speeds on the second level) as parent items. You use planning code 5 to designate the end item bikes (for example, blue 15-speeds) on the bottom level as components of the phantom parent items.
You assign user defined codes to several additional forecast types you want to include in the processing options to supplement the types that come 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 assign 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," the percentage of total products that include particular 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% for the 10-speed feature and 40% 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 will read the forecast for the second level, which it will then apply to the saleable end items (blue and green 10-speeds and blue and green 15-speeds).
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:
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60% of the 20,000 total bikes = 12,000 10-speed bikes
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40% of the 20,000 total bikes = 8,000 15-speed bikes
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70% of the 12,000 10-speeds (42% of total bike sales) = 8,400 blue 10-speed bikes
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30% of the 12,000 10-speeds (18% of total bike sales) = 3,600 green 10-speed bikes
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80% of the 8,000 15-speeds (32% of total bike sales) = 6,400 blue 15-speed bikes
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20% of the 8,000 15-speeds (8% of total bike sales) = 1,600 green 15-speed bikes
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