Base demand is a calculated demand normalized from actual demand corrected for seasonal and period length variations. Actual demand is also corrected with any manual forecast adjustments. Non-representative demand is also excluded.
Base demand is used in calculating base forecasts.
Base Demand Calculation
The following formula is used to calculate base demand.
D(i) = ((Dr(i) - M(i)) / (L(i) / (Ln * 12 / p)) / S(i)
|D(i)||=||Base demand during period (i)|
|Dr(i)||=||Actual demand during period (i)|
|M(i)||=||Manual forecast adjustment for period (i)|
|L(i)||=||Number of workdays in period (i)|
|Ln||=||Average number of workdays per month|
|S(i)||=||Seasonal index for period (i)|
|p||=||Number of periods per year|
Assume the following demand data for an item.
|Actual demand Nov. 95||119|
|Manual forecast adjustment Nov. 95||10|
|Seasonal index Nov. 95||1.15|
|Number of workdays in Nov. 95||21|
|Average number of workdays per month||19|
|Number of periods per year||12|
The following base demand is calculated for November 1995.
D(Nov.) = ((119 - 10) / (21 / (19 * 12 / 12)) / 1.15 = (109 / 1.10) / 1.15 = 86.2