Method 10-11

These processing options let you specify which forecast types that 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 that was chosen from the Date Fiscal Patterns table (F0008). For weekly forecasts, verify that you have established 52 period dates.

1. Linear Smoothing

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 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. Values are:

Blank: Does not use this method.

1: Uses the Linear Smoothing formula to create summary forecasts.

2. Number of Periods

Specify the number of periods to include in the Linear Smoothing forecast method. Enter the number to use or select it from the Calculator.

3. Exponential Smoothing

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

Blank: Does not use this method.

1: Uses the Exponential Smoothing formula to create summary forecasts.

4. Number of Periods

Specify the number of periods to include in the Exponential Smoothing forecast method. Enter the number to use or select it from the Calculator.

5. Alpha Factor

Specify the alpha factor (a smoothing constant) that 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.