1. Using ITEMPLANNING with SALES FORECASTING
ITEMPLANNING is the tool which displays true projected (-or expected) inventory availability on every point in time. It answers the important questions: When can we deliver and how many, but also when we want to investigate potential shortage situations related to both external and internal supply chain operations. On top of working with this tool, we can apply simulation capabilities to answer “what-if” questions.
ITEMPLANNING operates on various NAV data: Items, production bill of materials, assembly bill of materials and production orders.
This presentation is on how you work properly with forecasts and sales orders, and at the same time optimising your expected inventory over time.
We will work with our item number 1000 Bicycle to see how the use of production forecasts operates in Itemplanning.
This is relevant for most trading companies carrying inventory and Make To Stock manufactures to optimize various kinds of inventory - raw materials, semi fabricated products and others.

2. Using ITEMPLANNING with SALES FORECASTING
Click on the row to select the row with September the first.

3. Using ITEMPLANNING with SALES FORECASTING
Among other, we here see a production forecast with a quantity of 200. And further down 150 pieces for the month of october.
Click on the cell Independent Demand with the quantity 25.
This is a sales order for delivery in september. We call it independent demand, as sales orders and forecast can be seen as coming from the outside.

4. Using ITEMPLANNING with SALES FORECASTING
Click on the cell Independent Demand with the quantity of 27.

5. Using ITEMPLANNING with SALES FORECASTING
This is another sales order for delivery in september.
If you add the sales order quantities for the month of september, you reach a quantity of 268 pieces. Or more correct, total sales order quantity within a forecast period. A forecast period which can be variable - month, week, day, etcetera.
This actual sales quantity is a bigger number than our own sales forecast.
The planning engine in NAV, uses this greater demand quantity as the basis for the master schedule planning.

6. Using ITEMPLANNING with SALES FORECASTING
Click on the cell Forecastperiod Sales with the quantity of 16.

7. Using ITEMPLANNING with SALES FORECASTING
This figure reflects the shipped and invoiced quantity in the forecast period September.

8. Using ITEMPLANNING with SALES FORECASTING
Click on the cell Maximum Demand or Forecast with the quantity of 268.
This figure is the greater demand of forecast and sales orders remaing in the month of september.
So this quantity is exactly the quantity the planning engine uses as input to generate planned orders in the NAV planning worksheet.
You will not find this important figure anywhere in the standard NAV

9. Using ITEMPLANNING with SALES FORECASTING
Now we have 2 columns further right. The expected inventory with forecast, and expected inventory without forecasts.
The first represents the expected inventory balance, including forecasts. The other column, reduced with or without the forecasts.
So in short, these 2 columns are very important together in deciding a proper supply plan.
Basically it is all about, if sales lives up to their own expectations. If not, we better look for additional storage facilities and money to finance this increasing inventory.
You have seen how efficient the master plan can be managed at the item level.
As told previously, the planning engine always uses the greater demand as input to generate planned orders.