Forecast Method

A forecast method is a set of calculation principles and options for calculating and checking forecasts.


These are used to set how demand forecasts are calculated. A forecast method is specified per item/warehouse and can to a large extent be defined by the user. This is done by setting steering parameter values, control parameters, and the different tolerance limits, as well as calculation options.

The options listed below can be specified in a forecast method:

  1. Whether forecasting is manual or automatic

  2. The forecast formulas used

  3. The forecast alarm factors used

  4. The demand types used

  5. How seasonal variations are taken into account

  6. How trend changes are taken into account

  7. Tolerance limits for allowable trend changes

  8. Trend dampening method

  9. How the number of workdays in a period are taken into account

  10. The smoothing constants used for exponential smoothing

  11. Tolerance limits for smoothing constants

  12. The number of historic periods and forecast periods used

  13. The method for calculating forecast MAD

  14. The method for calculating mean forecast error.