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 Application of Stability Rules in DMA Model

Use

For the forecast with the dynamic moving average (DMA) model, the system applies stability rules after it has calculated the forecast. The system does so in various ways, depending on whether it is applying stability rules for the order item forecast, for the average demand size per order item (demand/item) forecast, or for the demand forecast.

Features

Stability Rules for Order Items

If one of the following conditions is met, the system takes the standard deviation and the mean absolute deviation (MAD) for the number of order items of the last periods as the forecast value, the standard deviation, and the MAD for the number of order items:

  • In the previous month there were no order items and the forecasted number of order items is greater than the forecasted number of order items in the previous period.

  • The number of order items in the previous month is less than the forecasted number of order items in the previous period and the forecasted number of order items is greater than the forecasted number of order items in the previous period.

  • The number of order items in the previous month is greater than or equal to the forecasted number of order items and the forecasted number of order items is less than the forecasted number of order items in the last period.

Stability Rules for Average Demand Size per Order Item (Demand/Item)

If one of the following conditions is met, the system takes the forecast value, the standard deviation, and the mean absolute deviation (MAD) for the average demand size per order item of the previous period as the forecast value, the standard deviation, and the MAD for the average demand size per order item:

  • There were no order items in the previous month.

  • The forecasted average demand size per order item is greater than the average demand size per order item of the previous month and the forecast of the average demand size per order item is greater than the forecasted average demand size per order item of the previous period.

  • The forecasted average demand size per order item of the previous period is less than or equal to the average demand size per order item of the previous month and the forecasted average demand size per order item is less than the forecasted average demand size per order item of the previous period.

Stability Rules for Demand

If one of the following conditions is met, the system takes the forecast value, the standard deviation, and the mean absolute deviation (MAD) for the demand of the previous period as the forecast value, the standard deviation, and the MAD for the demand:

  • The demand of the previous month is less than the forecasted demand and the forecasted demand is greater than the forecasted demand of the previous period.

  • The demand of the previous month is greater than the forecasted demand and the forecasted demand is less than the forecasted demand of the previous period.