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 Execution of “Phase-Out Forecast” Planning Service

Purpose

In the Phase-Out Forecast planning service the system calculates the values of the phase-out forecast for selected location products and saves them.

Process

  1. The system filters the location products according to the following criteria:

    • The system excludes all location products that are not entry locations.

    • The system excludes all location products to which you have not assigned a phase-out group in the forecast profile.

    • The system excludes all location products for which you have not specified a production end date.

    • The system excludes all location products whose production end date falls in the future.

  2. For the location products that remain, the system reads the yearly demand history of the year in which the production end date of the respective location product falls. If the production end date of a location product falls in the current year, the system calculates the demand value by taking the forecast value from the current date to the end of the year, and adding it to the demand history to the current date.

  3. For each location product, the system chooses a phase-out profile depending on the phase-out group that the location product is assigned to. The system uses the demand history of the year in which the production end date falls as the basis to create a forecast for the time of discontinuation, . The system defines the value of this demand history as 100 percent. The system then uses it to derive the demand for the coming years. To do so, it applies the respective percentage that is assigned to each period in the phase-out profile to this value.

    Example Example

    The production end date of product A is in 2005. The demand history of product A in 2005 is 500 pieces.

    The following percentages were defined for the phase-out profile of the phase-out group to which location product A is assigned:

    • Current year t:100 Percent

    • t+1: 77.36 Percent

    • t+2: 46.59 Percent

    • t+3: 25.30 Percent

    • t+4: 5 Percent

    This results in the following results of the phase-out forecast for product A:

    • t+1: 77.36 percent of 500 pieces = 386.8 pieces

    • t+2: 46.59 percent of 500 pieces = 232.95 pieces

    • t+3: 25.30 percent of 500 pieces = 126.5 pieces

    • t+4: 5 percent of 500 pieces = 25 pieces

    End of the example.
Exponential Updating

If the number of values of the available phase-out profile does not go far enough into the future, the system takes the two previous values to extend the profile using exponential updating according to the following formula:

forecast(t) = forecast(t-1) x forecast(t-1) / forecast(t-2)

t is the current year, (t-1) is the year before the current year, and (t-2) is two years before the current year.

If the last available value (current year) is greater that the penultimate available value, the system updates this trend behavior for one more year, and then reduces the value by the Percentage for Reduction of Phase-Out Forecast parameter for each coming year. You can specify this parameter in Customizing for Advanced Planning and Optimization , under Start of the navigation path Supply Chain Planning Next navigation step Service Parts Planning (SPP) Next navigation step Forecasting Next navigation step Define Phase-Out Group End of the navigation path in the Percentage for Red. field.

Example Example

The last value of the available phase-out profile is for 2005. The value is 300 pieces.

The forecast in 2004 was 160 pieces.

You defined the Percentage for Red. parameter as 0.3.

The system calculates the phase-out forecast for 2006 as following:

Forecast value = (300 x 300) / 160 = 562.50

The system calculates the phase-out forecast for 2007 as following:

Forecast value = 562.50 x (1 x -0.3) = 393.75

The system calculates the phase-out forecast for 2008 as following:

Forecast value = 393.75 x (1 x -0.3) = 275.625

End of the example.