Auxiliary Forecasts

Abstract

Management often needs forecasts unlike the models described in the earlier chapters that are generated using the flow of demands from the history months. This chapter describes some of the more commonly needed forecasts of this type. A first concerns the forecasts for the first future month and the demand-to-date as the month is progressing. For the first month, a forecast has already been generated, and as the month progresses, the demand-to-date demand is evolving. The forecast for the remaining portion of the month is generated along with the associated standard deviation. Another scenario occurs for parts when some demands are ordered for future deliveries, called advance demands. A forecast for the future month has already been generated in the usual way from the flow of history demands. An adjustment to the future month’s forecast is developed based on the advance demand information. Another situation that often occurs in service parts inventory is when a forecast is needed on a part even when no history demands are available. This happens when a new part is included on the bill-of-material of a finished good item due to an engineering change or a redesign, and the part is to be immediately held in inventory at the service part location. This situation is called the initial buy quantity. Another condition that takes place often in service parts locations is when the supplier will stop supplying the part, even when the service part location is obliged to carry the part for future possible needs from its customers. This is called the all-time-buy.

Summary

Forecasts of the following type are described: (1) The month-1 forecast is adjusted as the month progresses and the demand-to-date becomes available. The forecast includes the remaining portion of the month-1 and the associated standard deviation . (2) Advance demand forecasts are needed when demands arrive months before the customer wants delivery. The advance demand forecast for a month is based on the flow of demands from the history months and also the advance demand for the future month. (3) In service parts , a forecast is often needed for a part that has no history demands. This occurs when the part is new on the bill-of-material , but yet the part is needed in stock at the service part holding location. (4) Also in service parts, a supplier may inform that the part will no longer be available and the service part location will need an all-time-buy . This requires a forecast on demands that may occur over the coming years for the obligation period of the part.