Calculated demand
Calculated Demand is a method which utilizes estimated store order quantities to determine how much product to order at the warehouse level.
The system will take all the current active items at each store and simulate orders going forward for 365 days. Starting with the current stock, undelivered quantities and current demand as a base, the system will then use the set order frequency, lead time (and additional lead time if applicable) and item minimums to create simulated orders for each item/store combination. The process considers future stock and undelivered quantities based on projected sales and assumes that the product is delivered on time for each of the simulated order that gets created. Once the process is completed, the item order quantities are aggregated together based on the item number and order date. The item and order date data points now become the projected demand at the warehouse.
In the examples below, the green bars represent the total estimated order quantities the stores will be placing with the warehouse. Again note, the store orders are placed taking in account the store order frequency, lead time (and additional lead time if set), thus the product should be in the store to meet projected forecasted sales. The warehouse orders will now be placed to ensure that the warehouse has sufficient stock to satisfy the store orders.
