The Update Demand Forecast program updates each product's lead time, based on lead time parameters set at the system, buy line, or product level. Lead time is the number of days it takes for you to prepare and process the purchase order, the vendor to ship the material, and your warehouse to receive the material. The system also includes tagged purchase orders except when the orders are marked as exceptional.
Lead time parameters include the following:
Lead Factor - Defines the maximum number of processed purchase orders in the forecast period.
Minimum Lead Samples - Identifies the minimum number of processed purchase orders in the forecast period.
Default Lead Time Days - Defines the default lead time set at the buy line and system level.
To view a workflow of how the system calculates lead time for a product or buy link click here.
The system uses the following three steps when calculating the lead time:
Checks for an override and determines which lead time to use.
Determines the range of purchase orders to use for calculating the lead time.
In order to calculate lead time, the system checks for overrides. Overrides can also be set at the system, buy line, or product level. For example, your vendor calls you to tell you they are snowed in and it will take an additional three days to get the items to you. You can use the override settings to change the lead time for those items.
The system makes several checks to determine the lead time:
The system first checks for a lead time override at the buy line level or the product level.
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If the product is... |
Then... |
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in a buy line |
If an override lead time is set in Buy Line Maintenance or Override Lead Time Maintenance, the system checks for an expiration date:
If an override lead time is not set at the buy line level, then the system checks for a lead time override at product level. |
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not in a buy line |
The system checks for an override lead time at the product level. |
You can set a manual override in the Lead Days field in Forecast Parameters Maintenance, or in the Ovrd LT Days column in Override Lead Time Maintenance. Setting a value in one field or column causes the same value to display in the other field or column.
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Is an override set at the product level? |
Then... |
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Yes |
The system checks for an expiration date:
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No |
The system checks the Lead Fctr field in Forecast Parameters Maintenance to determine how the system calculates the lead time. |
The Lead Fctr field in Forecast Parameters Maintenance controls how the system calculates the lead time for the product.
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If the Lead Fctr field is set to... |
Then... |
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null or blank |
The system uses the default lead factor set in the Dflt LFctr field in Buy Line Maintenance. |
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0 |
The system checks for a value in the Lead Days field:
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> 0 |
The system determines the lead time by checking a sample of most-recent purchase orders. See Determining the Range of Purchase Orders to Use, below. |
If there are no overrides at the product or buy line level, the system checks for a minimum and maximum number of purchase orders to sample for the lead time.
Because recent data is more accurate for estimating lead times, the system checks the lead time derived from recent purchase orders in the forecast period for the product. The system checks a range of purchase orders to derive an accurate median lead time value using the minimum samples up to the lead factor. If there are insufficient purchase orders within the forecast period, the program resorts to a default lead time. For more information, see How Standard and Median Forecasting Works and Entering Forecast Period Parameters to determine your forecast periods.
The system makes several checks to determine which range to use:
The system determines the minimum number of purchase orders in the forecast period to use in calculating a product's lead time. If the Min LF field on the Forecast Parameters Maintenance screen is set to null, then, the system checks:
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If... |
Then the system... |
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Product is in a buy line |
Uses the value of Min Sample in Buy Line Maintenance to determine the minimum number of purchase orders to use for calculating lead time. |
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Product is not in a buy line |
Uses the value of the Minimum Lead Samples control maintenance record to determine the minimum number of purchase orders to use for calculating lead time. |
Otherwise, the system uses the value of Min LF as the minimum number of purchase orders to use for calculating lead time.
The system determines the maximum number of purchase orders in the forecast period to use in calculating a product's lead time. If the Lead Fctr field on the Forecast Parameters Maintenance screen is not 0, then the system checks:
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If the Lead Fctr is ... |
And the product is in a buy line... |
And the product is not in a buy line... |
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null or blank |
if the Dflt LFctr in Buy Line Maintenance is null or 0, lead time is equal to the value of the Default Lead Time Days If Product And Buy Line Have None control maintenance record. otherwise, use the Dflt LFctr in Buy Line Maintenance to determine the number of purchase orders within the forecast period to use for calculating the product's lead time. |
use the value of the Minimum Lead Samples control maintenance record to determine the number of purchase orders within the forecast period to use for calculating the product's lead time. |
Otherwise, use the value of Lead Fctr on the Forecast Parameters Maintenance screen as the maximum number of purchase orders to use for calculating lead time.
The system then calculates a final lead time based on the determined range of purchase orders. After determining the minimum and maximum samples of purchase orders to check, the system calculates the median lead time for the product.
The system then does the following:
Compares the number of purchase orders in the forecast period with the minimum lead samples and lead factor parameters to be used for the product:
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If the number of purchase orders in the forecast period is... |
Then... |
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less than the minimum lead samples |
if the product is in buy line, the lead time is equal to the default lead time listed in the Dflt Ld Tm field of Buy Line Maintenance.
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if the product is not in a buy line, the lead time is equal to the value of the Default Lead Time Days If Product And Buy Line Have None control maintenance record. |
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equal to the minimum lead samples |
the system calculates the lead time days using a number of purchase orders equal to the minimum lead samples. |
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more than the minimum lead samples but less than the lead factor |
the system calculates the lead time days using the available purchase orders within the forecast period. |
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equal to or greater than the lead factor |
the system calculates the lead time days using a number of purchase orders equal to the lead factor. |
Note: The values selected for the lead factor and minimum lead samples can be determined at two different levels. For example, the lead factor can be determined at the product level and the minimum lead samples can be determined at the buy line or system level.
Calculates and records the lead time of the selected purchase orders:
Purchase Order Lead Time = Purchase Order Create Date - Purchase Order Receive Date
Selects the median lead time.
This value is the calculated lead time entered on the Lead Days field in Forecast Parameters Maintenance.
See Also: