MFG/PRO 9.0 User Guide Volume 3: Manufacturing - QAD.com

212 MFG/PRO USER GUIDE — MANUFACTURING
Table 11.4
Overview of
Forecast Methods
Method # Type Description
05 Classic
Decomposition
06 Simple
Regression
Table 11.4 shows each of the predefined forecast methods and indicates
the sales patterns they are typically used to quantify, the number of years
of shipment history required for calculation, and whether they use alpha
and trend factors.
Alpha and Trend Factors
Recognizes three separate elements of demand
patterns in sales history: trend, seasonal, and cyclical
factors. See Table 11.1 on page 210 for information
about demand patterns.
Classic Decomposition is usually the preferred
method for forecasting seasonal, high-cost items. It
requires at least two years of history.
Also called the least squared method, this method
analyzes the relationship between sales and time span
to ensure that the forecast quantity is equally likely to
be higher or lower than the actual quantity sold.
Useful for products with a stable history, or
horizontal demand pattern.
01 02 03 04 05 06
Cyclical Yes
Trend Lags Lags Yes Yes
Seasonal Yes Yes
Horizontal Yes
Years of History 1 1 1 2 2–3 1
Trend Factor Yes
Alpha Factor Yes Yes
Some forecast methods use alpha and trend factors to weight shipment
history when calculating forecasts.
When method 03 or 04 is used to calculate forecasts, alpha factors
determine the relative importance given to more recent sales history. For
new products with rapidly changing sales quantities, you may want to
enter an alpha value closer to one to give more weight to recent sales
history. However, for products with long and stable sales histories, you
might specify a smaller alpha value to produce smoother forecast results.