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Max/Min forecast increase field in Demand Sensing

Former Member
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Hi All,

I am working on SAP IBP Demand Sensing. There are four field in Demand sensing (full) Algorithm. The fields are: Maximum forecast increase,Maximum forecast increase(%),Maximum forecast decrease,Maximum forecast decrease(%) associate with consensus forecast.(Attachment)


There are some questions: a) If I set "Maximum forecast increase"=50. The incremental limit will be affecting the "consensus forecast" or "Sensed Demand Qty" which is output of Demand Sensing(DS) algo.

b) If I set "Maximum forecast increase"=50 and "Maximum forecast increase(%)"=30. Which will become effective absolute value 50 or 30%.

Could anybody give me light on the topics.

Thanks,

Somenath

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Answers (1)

Answers (1)

Former Member
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Hi Somenath,

in general the following simple rule applies:

For smaller volumes absolutes are picked, while for larger volumes percentages are picked.


But let me give a short example to illustrate this a bit more.


Example:

  • Max Forecast Increase (absolute value): 50 PC (MAX_INCREASE)
  • Max Forecast Increase (percentage value): 30% (MAX_PCT_INCREASE)
  • The consensus demand is 100 PC (CONSENSUSDEMAND)
  • The sensed demand that would be calculated without taking the Forecast Increase factors into account is 300 PC
  • The open orders for the week sum up to 130 PC (WEEKLY_OPEN_ORDERS)
  • Result: The sensed demand is capped to 150 PC in this case.


Steps:

UPPER_BOUND=Max(CONSENSUSDEMAND + MAX_INCREASE, CONSENSUSDEMAND * (1 + MAX_PCT_INCREASE))

LOWER_BOUND =Min(CONSENSUSDEMAND - MAX_DECREASE,CONSENSUSDEMAND * (1 - MAX_PCT_DECREASE))

In our case: UPPER_BOUND = Max (100+50 , 100*1,3) = 150

So, if the final sensed demand numbers does not fall within this range, then it is capped

If SensedDemand > UPPER_BOUND

                SensedDemand = MAX( UPPER_BOUND,SUM(WEEKLY_OPEN_ORDERS))                                               

Else If SensedDemand < LOWER_BOUND

                SensedDemand = MAX(LOWER_BOUND, SUM(WEEKLY_OPEN_ORDERS))           

End if


In our case: Sensed Demand (300 PC) > UPPER_BOUND (150 PC)
--> Sensed Demand = MAX (150 , 130) = 150 PC

--> Thus, for smaller volumes absolutes are picked, while for larger volumes percentages are picked.


Best regards, Jens.

Former Member
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Thanks Jens for your response and example. The example is helpful to understand it.

I will check this in my system.

Thanks,

Somenath