In this section we will describe how Forecast Pro reconciles the forecast hierarchy when overrides are made to more than one level of the hierarchy.
Important: There are many ways that this type of reconciliation could be performed—each one leading to different forecasts. If you plan to make overrides at more than one level of the hierarchy, it is essential that you understand how Forecast Pro performs the reconciliation.
Figure 4 below depicts a forecast hierarchy where ItemA1 has been overridden to equal 75. (It is identical to Figure 2.)
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Total S = 5 F = 79 |
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GroupA S = 2 F = 76 |
GroupB S = 3 F = 3 |
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ItemA1 S = 1 O = 75 F = 75 |
ItemA2 S = 1 F = 1 |
ItemB1 S = 1 F = 1 |
ItemB2 S = 2 F = 2 |
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Figure 4.
Let’s now modify the above hierarchy by overriding the forecast for Total to equal 475. This results in the hierarchy shown in Figure 5 below.
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Total S=5 O = 475 F = 475 Locked=75 Unlocked=400 |
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GroupA S=2 Unlocked S=1 Unlocked Allocation from Total=100 Locked=75 F = 175 Unlocked=100 |
GroupB S=3 Unlocked S=3 Unlocked Allocation from Total=300 Locked=0 F = 300 Unlocked=300 |
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ItemA1 S=1 O = 75 F = 75 |
ItemA2 S=1 Unlocked S=1 F = 100 |
ItemB1 S=1 Unlocked S=1 F = 100 |
ItemB2 S=2 Unlocked S=2 F = 200 |
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Figure 5.
Making adjustments at more than one level introduces the concept of locked and unlocked volume and forecasts. Proportional allocations of unlocked volume are made using unlocked forecasts.
Notice that:
1.) When we adjusted Total to 475, 75 units were locked due to the override on ItemA1 and 400 units were unlocked and needed to be allocated downward.
2.) Forecast Pro used the Unlocked statistical forecasts for GroupA and GroupB to determine the allocation proportions for the 400 unlocked units from Total.
3.) Forecast Pro did not alter the committed Forecast value for ItemA1 because it had been explicitly overridden (i.e., it was locked). Therefore, the 100 units of unlocked volume from GroupA was allocated exclusively to ItemA2 (the only unlocked item in GroupA).
4) Forecast Pro used the Unlocked statistical forecasts for ItemB1 and ItemB2 to determine the allocation proportions for the 300 unlocked units from GroupB.
Let’s now modify the above hierarchy by overriding the forecast for Item A2 to equal 75. This results in the hierarchy shown in Figure 6 below.
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Total S=5 O = 475 F = 475 Locked=150 Unlocked=325 |
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GroupA S=2 Unlocked S=0 Unlocked Allocation from Total=0 Locked=150 F = 150 Unlocked=0 |
GroupB S=3 Unlocked S=3 Unlocked Allocation from Total=325 Locked=0 F = 325 Unlocked=325 |
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ItemA1 S=1 O = 75 F = 75 |
ItemA2 S=1 O = 75 F = 75 |
ItemB1 S=1 Unlocked S=1 F = 108.33 |
ItemB2 S=2 Unlocked S=2 F = 216.67 |
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Figure 6.
Notice that GroupA has no unlocked volume so the 325 units of unlocked volume from Total are allocated exclusively to GroupB.