Base Demand
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.
Description
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)
Key:
| 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) |
| i | = | Period number |
| 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