| Forecast method: moving average |  |
| If the Forecast Method field is Moving Average, ERP LN determines the demand forecast as follows: The relevant parameters for this forecast method are the following fields in the Plan Items - Forecast Settings (cpdsp1110m000) session: Forecast Method Moving Average Period ERP LN determines the mean deviation of the actual demand from the estimated demand for each forecast period. The mean deviation of the actual demand from the estimated demand is determined by past demand figures, the Forecast Method field, and the Moving Average Period field. If desired, the average demand is adjusted for the trend influence and seasonal influence, which were determined earlier. This is computed as follows:
    TD(t) = AV
    		  (withouttrend influence)
    TD(t) = CS + TF x t (linear trend influence)
    TD(t) = BS x TF ^(t-1) (progressive trend influence)
    ED(t) = TD(t) + SF(t) (constant seasonal influence)
    ED(t) = TD(t) x SF(t) (progressive seasonal influence)
    MA = SUM((AD(t) - ED(t)) / PR)
Where:
TD(t) | the trend-based demand for period t
ED(t) | the estimated demand for period t
AD(t) | the actual demand for period t
SF(t) | the seasonal factor for period t
AV | average demand (*)
CS | constant demand
BS | base demand (the estimated demand for period 1)
TF | trend factor
MA | trend-adjusted and season-adjusted mean deviation from the demand for the period for which the moving average must be calculated
PR | number of periods for which the moving average must be computed
(*) The average demand is the sum of the historical demand figures by period, divided by the number of periods with demand history. The forecast demand is computed as follows:
     FD(t) = ED(t) + MA
Where:
FD(t) | the demand forecast for period t
ED(t) | the estimated demand for period t
MA | trend-adjusted and season-adjusted mean deviation from the demand for the period for which the moving average must be calculated
Related topics Algorithm for demand forecasting Forecasting methods |