How Average Daily Demand Is Calculated in Oracle Replenishment Planning

This topic explains how average daily demand is calculated in Oracle Replenishment Planning.

Settings That Affect Average Daily Demand

The following settings affect the calculation of the average daily demand:

Whether the history or forecast is to be considered
Whether policy parameters or segment-level defaults have been defined in the policy assignment set for a replenishment plan

How Average Daily Demand Is Calculated

How average daily demand for an item-location combination is calculated depends on whether you selected History or Forecast in the Days of Cover Basis field on the Policy Parameters subtab for the policy assignment set.

Selection in Days of Cover Basis Field	Calculation of Average Daily Demand	Example
History	These steps are taken: The value in the Horizon for Average Daily Demand field on the Policy Parameters subtab is read. The working days in the calendar are considered. If there's no attached calendar, all days are considered. The MSC_DFLT_SHIPMENT_HIST_MEASURE profile is used for determining which shipment history measure must be used for the history data. The shipment history is collected or uploaded through a CSV file. If the history is unavailable, the default daily demand defined at the segment level is used. The shipment history is divided by the number of days. The result of Step 3 is multiplied by the value entered in the Extrapolation Percentage field on the Policy Parameters subtab. The results of Steps 3 and 4 are added for the calculation of the average daily demand.	The horizon for the average daily demand is 30, and the calendar is open on all days. The shipment history is 600. The extrapolation percentage is 15. This calculation provides the average daily demand: 600/30 + 15% of (600/30) = 20 + 3 = 23
Forecast	These steps are taken: The gross forecast is read. The source of the gross forecast can be one of the following: A demand plan A replenishment plan for which the Generate forecast check box is selected on the Plan Options page An external forecast The value in the Default Daily Demand field on the Default Policy Parameters subtab, if the other forecast sources are unavailable The number of days is identified. The gross forecast is considered during these days. The value in the Horizon for Average Daily Demand field on the Policy Parameters subtab is read. The working days in the calendar are considered. If there's no attached calendar, all days are considered. Only those days within the planning horizon of the replenishment plan are considered. The gross forecast is divided by the number of days for the calculation of the average daily demand.	The gross forecast for the next 20 days is 500. The number of days is 20, and the calendar is open on all days. This calculation provides the average daily demand: 500/20 = 25

Selection in Days of Cover Basis Field

Calculation of Average Daily Demand

Example

History

These steps are taken:

The value in the Horizon for Average Daily Demand field on the Policy Parameters subtab is read.

The working days in the calendar are considered. If there's no attached calendar, all days are considered.
The MSC_DFLT_SHIPMENT_HIST_MEASURE profile is used for determining which shipment history measure must be used for the history data.

The shipment history is collected or uploaded through a CSV file.

If the history is unavailable, the default daily demand defined at the segment level is used.
The shipment history is divided by the number of days.
The result of Step 3 is multiplied by the value entered in the Extrapolation Percentage field on the Policy Parameters subtab.
The results of Steps 3 and 4 are added for the calculation of the average daily demand.

The horizon for the average daily demand is 30, and the calendar is open on all days.

The shipment history is 600.

The extrapolation percentage is 15.

This calculation provides the average daily demand: 600/30 + 15% of (600/30) = 20 + 3 = 23

Forecast

These steps are taken:

The gross forecast is read.

The source of the gross forecast can be one of the following:
- A demand plan
- A replenishment plan for which the Generate forecast check box is selected on the Plan Options page
- An external forecast
- The value in the Default Daily Demand field on the Default Policy Parameters subtab, if the other forecast sources are unavailable
The number of days is identified. The gross forecast is considered during these days.

The value in the Horizon for Average Daily Demand field on the Policy Parameters subtab is read.

The working days in the calendar are considered. If there's no attached calendar, all days are considered. Only those days within the planning horizon of the replenishment plan are considered.
The gross forecast is divided by the number of days for the calculation of the average daily demand.

The gross forecast for the next 20 days is 500.

The number of days is 20, and the calendar is open on all days.

This calculation provides the average daily demand: 500/20 = 25