When the cumulative time of manufacturing is longer than the delivery time that customers expected for goods shipping, it can became a problem. Deliveries delays leads to the poor business relations with customers. If we want to ship our finish goods in time, we need to make production plan. Because of that we have to make production forecast.

Production Forecast

Forecasts are never completely exact. If the forecast is greater than anticipated demand (optimistic sale scenario), we can unnecessary make too much inventory stock increase. Large stock is great cost. If the forecast is smaller than future anticipated demand (pessimistic sale scenario), we will make stocks lose and our shipment will delay.

It is very important to differentiate indirect and direct item requirements.

  • Direct requirement is item requirement for end product (finish goods). These are usually items on BOM header.
  • Indirect requirement is item requirement for materials we consume in production process. This requirement is based on requirement in production process of end product. These are usually items on BOM lines.

Sometimes, the same item may have direct and indirect requirements in the same time. This is case when one item san be sold and can be component in BOM of other item in the same time.

Every time when we make forecast, we do that based on data from the past. We start with existed requirements in previous period and try to make prediction of future sales (anticipated demand). Based on these data, we can make sales budgets, and based on sales budgets we can make Production Forecast.

There are no automatic in copying of Sales Budget to Production Forecast. We have to fill Production Forecast manually (or copy existing forecast to new) in the same-name window. You can find this window on Manufacturing->Planning->Production Forecasts. When we open this window we can choose one of existing forecast or make new. We need to run ‘Edit Production Forecast’ command and open Production Forecast matrix page.

Forecasting functionality is used to create anticipated demand; actual demand is created from Sales and/or Production Orders. During creation of the Master Production Schedule (MPS), the forecast is netted against the sales and production orders. The Component option on the forecast determines which type of requirements to take into consideration in the netting process. If the forecast is for a sales item, only sales orders net the forecast. If it is for components, only dependent demand from production order components net the forecast.

Forecasting allows your company to create "what if" scenarios and efficiently and cost-effectively plan for and meet demand. Accurate forecasting can make a critical difference in customer satisfaction levels with regard to order promising dates and on-time delivery.

The forecast consists of a number of records each stating item number, forecast date, and forecasted quantity. The forecast of an item covers a period, which is defined by the forecast date and the forecast date of the next (later) forecast record. From a planning point of view, the forecasted quantity should be available at the start of the demand period.

You must designate a forecast as Sales Item, Component, or Both. The forecast type Sales Item is used for sales forecasting. The production forecast is created using the Component type. The forecast type Both is only used to give the planner an overview of both the sales forecast and the production forecast. With this option, the forecast entries are not editable. By designating these forecast types here, you can use the same worksheet to enter a sales forecast as you do a production forecast, and use the same sheet to view both forecasts simultaneously. Note that the system treats the different inputs (sales and production) differently when calculating planning, based on item, manufacturing, and production setup.

The component forecast can be seen as an option forecast in relation to a parent item. This can, for example, be useful if the planner can estimate the demand for the component.

As the component forecast is designed to define options for a parent item, the component forecast should be equal or less than the sales item forecast quantity. If the component forecast is higher than the sales item forecast, the system treats the difference between these two types of forecast as independent demand.

The forecast period is valid from its starting date until the date the next forecast starts. The time interval window gives you multiple choices to insert the demand at a specific date in a period. It is therefore recommended not to change the forecast period scope unless you want to move all forecast entries to the starting date of this period.

Principe of Production Forecasting against Sales Demand is described in my other post: https://community.dynamics.com/nav/b/nav4construction/archive/2013/08/29/inventory-planning-part-5-microsoft-dynamics-nav.aspx#.Uieamja-2m5

Net Requirements

Complete inventory planning process looks Production Forecast as all other inventory demand in gross requirement.

Inventory planning system can calculate separately by Master Plan Schedule (MPS) or Material Requirements Planning (MRP), or using both of this methods (combined). If we want to use combined method, you have to look for necessary manufacturing setup in my older post: https://community.dynamics.com/nav/b/nav4construction/archive/2013/08/31/inventory-planning-part-6-microsoft-dynamics-nav.aspx#.UibS2za-2m4

Descriptions of these methods are:

  • MPS calculation is based on independent demand. Independent demand implies only demands from Sales Orders and/or Production Forecast.
  • MRP calculation is based on dependent demand based on the MPS. This mean that MRP cover non-MPS items (materials as components of finish goods). The MRP will thus include both independent and dependent demand.
  • Combined calculation is combination of MPS and MRP calculation directly from the production forecast (require specific setup I just said). While this would eliminate the step of calculating the MRP afterwards, it would also eliminate the possibility of editing the MPS. If you do not edit the MPS, the results of calculating first an MPS and then an MRP are the same as calculating a combined MPS/MRP.

Complete inventory planning process in manufacturing is as picture below:

It is important do make difference of actual and forecasted demand in inventory planning process. In planning process, actual demand neutralize forecasted demand; actual demand consume quantity in forecasted demand. Detailed process of this is graphically described in my older post: https://community.dynamics.com/nav/b/nav4construction/archive/2013/08/29/inventory-planning-part-5-microsoft-dynamics-nav.aspx#.Uigxpja-2m5

Planning Worksheets

We use Planning Worksheet window for calculating and adjusting an item replenishment plan. We can enter items in the worksheet in the following ways:

  • Enter the items manually in the worksheet and fill in the relevant fields.
  • Use the Calculate Plan batch job. This calculates a replenishment plan for items and SKUs that have been set up with a requisition system of Purchase, Prod. Order, Transfer, or Assembly.

Calculate Plan Methods

Before you run the Calculate Plan batch job, you must select either of these two calculation methods:

Calculate Regenerative Plan:

Use this method to plan for all items, irrespective of changes since the previous planning run.

The reason to calculate a regenerative plan, as opposed to a net change plan, is that there are changes to master data or capacity, such as shop calendars, that affect all items and therefore the entire supply plan.

Calculate Net Change Plan:

Use this method to only plan for items that had the following types of changes to their demand-supply pattern since the last planning run:

  • Change in demand for the item, such as forecast, sales, or component lines.
  • Change in the master data or in planned supply for the item. This could be changes to the BOM or routing, changes to planning parameters, or unplanned inventory discrepancies.

The reason to calculate a net change plan, as opposed to a regenerative plan, is to save time and system resources when the demand-supply pattern has not changed for all items since the last planning run.

We can run this window using Manufacturing->Planning->Planning Worksheets.

Planning Worksheet window look as picture bellow:

Calculate Plan

We can run one of functions using commands on Ribbon:

You can select one of the following calculation methods, we described in previous chapter.

The Calculate Plan batch job performs the following steps:

1)    Investigates the demand and supply situation of the item and calculates the projected available balance. The balance is calculated as: Inventory + Scheduled Receipts + Planned Receipts - Gross Requirement

2)    States net requirements for the item.

Creates an item replenishment plan to fulfill net requirements. The plan is presented in the planning worksheet as detailed order proposal lines that are accompanied by action messages that suggest specific user actions. The action message options are:

  • New: Creates new supply orders.
  • Change Qty.: Changes quantity on existing supply orders
  • Reschedule: Reschedules existing supply orders.
  • Resched. & Chg.: Reschedules existing supply orders and changes the quantity of existing supply orders.
  • Cancel: Cancels excess supply orders.

You can accept the action message on the planning line and process it further. If you do not want to accept it, then you can also manually change or delete lines in the planning worksheet.

When you have approved a planning line for purchase, production, assembly, or transfer, you use the 'Carry Out Action Msg. - Plan.' batch job to convert the line to a purchase order line, a production or assembly order, or a transfer order line.

Option of calculation could be:

  • Calculate MPS: Specifies whether to calculate a master production schedule (MPS) based on independent demand. The results will appear in the planning worksheet, and you can change them. You can then calculate a materials requirement plan (MRP) to include dependent demand.
  • Calculate MRP: Specifies whether to calculate an MRP, which will calculate dependent demand that is based on the MPS. The MRP will include both independent and dependent demand. The results will appear in the planning worksheet, and you can change them.

Starting Date: Specifies the date to use for any new orders. This date is used to evaluate inventory. If inventory is below the reorder point, then the replenishment order is scheduled forward from this date.

Only supply and demand events with due dates on or after the starting date are considered by the planning run. Any events with due dates before the planning starting date are consolidated into one emergency supply order for the item to arrive on the planning starting date. For more information, see Warning.

Ending Date: Specifies the date where the planning period ends. Demand is not included beyond this date.

Stop and Show First Error: Specifies whether to stop the planning run when it encounters an error. If the planning run stops, then a message is displayed with information about the first error. If an error exists, then only the successful planning lines that were made before the error was encountered are included in the planning worksheet.

If you do not select this field, then the Calculate Plan batch job continues until it has completed, and errors will not interrupt the batch job. If one or more errors exist, then a message is displayed after completion saying how many items are affected. The Planning Error Log window then opens to provide more details about the error and links to the affected item card or cards.

Use Forecast: Specifies a forecast that should be included as demand when running the planning batch job.

Exclude Forecast Before: Specifies how much of the selected forecast to include in the planning run by entering a date before which forecast demand is not included.

Respect Planning Parameters for Exception Warnings: By default, this field is selected.

Supply on planning lines with warnings is normally not modified according to planning parameters. Instead, the planning system only suggests a supply to cover the exact demand quantity. However, you can define certain planning parameters for planning lines to be respected with certain warnings.

Carry Out Action Messages

When you use this batch job, the program automatically fills in the Action Message field with a suggestion for an action you can take to replenish the item. This could be increasing the item quantity on an existing order or creating a new order, for example.

Planning worksheet lines contain detailed information about the items that need to be replenished and the corresponding order proposals that the program has made. You can edit and delete the lines to adjust your replenishment plan, and you can further process the lines by using the Carry Out Action Message batch job.

When you run the batch job, the program carries out the proposed actions and changes the existing replenishment plan accordingly. This could result in any of the following situations (or a combination of them):

  • The program changes existing replenishment orders according to the action message proposal. This could be, for example, changing the quantity or rescheduling the due date.
  • The program deletes any existing replenishment orders that carry the action message Cancel.
  • The program converts planning lines with the action message New to new supply orders. This can be production, purchase, transfer, or assembly orders.
  • The program copies the planning line proposals for purchase and/or transfer orders to the requisition worksheet, where they can be processed further. This may be practical, for example, if one user is responsible for planning from the planning worksheet, and another user is responsible for planning from the requisition worksheet.

You can define what is included in the batch job by selecting the Accept Action Message field for the relevant lines. You can also remove the check mark if you want to. The program includes only those lines that have accepted action messages in the batch job.

The batch job deletes the lines in the planning worksheet after it has performed the action message. The other lines remain in the planning worksheet until they are either accepted at a later date or else deleted. You can also delete the lines manually.

Fill the following fields to specify which supply order to create:

  • Production Order: Creates production orders for item with the Prod. Order replenishment system. You can select to create either planned or firm planned production orders, and you can have the new order documents printed.
  • Assembly order: Create assembly orders for items with the Assembly replenishment method. You can have the new order documents printed.
  • Purchase Order: Create purchase orders for items with the Purchase replenishment method. You can have the new order documents printed.
  • Template Name: Copies the planning line proposals for purchase orders to this requisition worksheet template name if you selected Copy to Req. Wksh. In the Purchase Order field.
  • Worksheet Name: Copies the planning line proposals for purchase orders to the requisition worksheet name if you selected Copy to Req. Wksh. In the Purchase Order field..
  • Transfer Order: Create transfer orders for items with the Transfer replenishment method in the SKU card. You can have the new order documents printed.
  • Template Name: Copies the planning line proposals for transfer orders to this requisition worksheet template name if you selected Copy to Req. Wksh. In the Transfer Order field.
  • Worksheet Name: Copies the planning line proposals for transfer orders to this requisition worksheet name if you selected Copy to Req. Wksh. In the Transfer Order field.
  • Combine Transfer Orders: Combines transfer orders with the same transfer-from and transfer-to codes into one transfer order with multiple lines.
  • Stop and Show First Error: Stops as soon as the batch job encounters an error. At the same time, a message is displayed with information about the (first) error. If an error exists, only the planning lines processed before the error was encountered will result in supply orders. If you do not select this field, then the batch job continues until it has completed, that is, errors will not interrupt the batch job. If one or more errors exist, the program will display a message after completion saying how many items are affected.

Warnings

Any planning line that is created for an unusual situation will display a warning icon in the Warning field that you can click to read additional information.

On such lines, the Accept Action Message field is by default not checked because the lines require special attention before they can be accepted.

Apart from the different warnings, planning lines may include red text in two situations:

  • If a planning line suggests a starting time earlier than the work date, the value in the Starting Date-Time field is in red text.
  • If a planning line suggests to change a released purchase or production order, the value in Ref. Order No. field is in red text.