Basic MRP Forecasting

My latest course, SAP Business One: Production and Logistics, is out in the LinkedIn Learning Library, and I want to celebrate with some extra material to the course. While I cover the MRP module, I left out one feature of MRP I’d like to show you now: Forecasting. 

Forecasting is an artificial addition to the demand in MRP. I have a similar MRP scenario to the Production and Logistics course, a purchased tablet and a produced set with that tablet as a component. For simplicity, I’ve zeroed out everything except an initial inventory of five tablets. 

 I’ll make a few changes. I have a planning horizon of May to December going by months. 

I’ll include historical data in case anything old will show up on this report. 

I’ll now add a forecast. I can do this directly from the wizard by selecting the Define Newselection in forecasts. 

Create a code and name for your forecast. You set your forecast range which is fine for me. I’ll add the item I’m forecasting for below LMT-01 and LMT-02. 

I’ll add what I want for demand for the pizza tablet. I’ll forecast ten tablets for most months and add a few more for the holiday season. 

Click Add, save the scenario, then run. 

The tablet supply and demand have changed by the increased demand. I had five tablets already available in June. My supply is five since I got zero inventory after the point.  

I get the correct recommendations for purchase orders for those tablets. 

I’ll close the MRP module without saving the recommendations. I’ll go to forecasts in the MRP menu. I’ll search for LMT and get the forecast. 

I’ll add forecasts for the Pizza tablet sites from a spreadsheet I have available. I can copy the row and paste them in from Excel. I’ve increased the sets for November and December. 

Update the forecast and rerun the MRP wizard. We get a lot more going on here. Open up the tablet and look at what’s going on. 

November has 110 in demand. If you check the pegging recommendations, You’ll see demand is from the 50 forecasted demand and the demand from the tablet set of 60. The bill of materials broke down what it needed. 

You’ll notice a similar thing with printer power supplies. Open that up. 

You’ll see the forecast drop the inventory until in September we’ll need more. 

I’m sure you see why and when you could use forecasts. If you have products with lead times and have an idea of the demand, forecasts can help you plan production orders and purchase orders necessary to keep inventory ready for shipment. In my example, I added a higher volume for the holiday season since I expect that the restaurants using this tablet for tabletop ordering will have higher consumer volumes and thus more breakage plus people buying this tablet for gifts.  

 In our next newsletter, I’ll continue to cover forecasting with more features of forecasts.  Also, check out the video below where I demonstrate all of this with more explanation.