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:
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 (UDCs) to additional forecast types that you want to include in the processing options which were not supplied with the system. For this forecast, you plan to use forecast types that 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 as 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 - Enter Bill of Material Information 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 that is based on forecast type 13 which it applies to the next level. You also designate 13 as the second forecast type to be read as input so that 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).
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 equals 12,000 10 speed bikes.
40 percent of the 20,000 total bikes equals 8,000 15 speed bikes.
70 percent of the 12,000 10 speed bikes (42 percent of total bike sales) equals 8,400 blue 10 speed bikes.
30 percent of the 12,000 10 speed bikes (18 percent of total bike sales) equals 3,600 green 10 speed bikes.
80 percent of the 8,000 15 speed bikes (32 percent of total bike sales) equals 6,400 blue 15 speed bikes.
20 percent of the 8,000 15 speed bikes (8 percent of total bike sales) equals 1,600 green 15 speed bikes.