Demand Analysis Options

These options affect Demand Analysis, whether run on its own or as part of Safety Stock Optimization.

Aggregation Level

Select the type of time bucket to use when aggregating demand. The value corresponds to the User Defined Customer Forecast Profile and User Defined Site Forecast Profile input tables, and the Customer Demand Profile and Site Demand Profile output tables. The aggregation time buckets are:

• Day – Demand Analysis looks at the demand series with weekend days and non-work days taken out. It then aggregates demand data to daily demand. The first bucket starts on the first day in the model horizon that is not a non-work day. To set this value in a scenario, select the “Aggregation Level” in the Inventory Optimization Options table and select "Day" as the value.
• Week – The week is Sunday through Saturday and uses the calendar to determine the start date of the week. Demand Analysis combines the demand from all days in a week that are not non-work days to create aggregated demand. When non-work days are defined, a week could have a different number of valid days. Demand Analysis will calculate the average number of valid days per aggregation level to be used in Safety Stock Optimization. To set this value in a scenario, select the “Aggregation Level” in the Inventory Optimization Options table and select "Week" as the value.
• Month – The month is the first day through the last day of the month, based on the calendar. Demand Analysis combines the demand from all days in the month that are not non-work days to create aggregated demand. When non-work days are defined, a month could have a different number of valid days. Demand Analysis will calculate the average number of valid days per aggregation level to be used in Safety Stock Optimization. To set this value in a scenario, select the “Aggregation Level” in the Inventory Optimization Options table and enter "Month" as the value.

Days in Work Week

Defines whether a week is 5 days or 7 days, to determine the number of blank demand records to consider within the demand profile. To set this value in a scenario, select the “Days in Work Week” field in the Inventory Optimization Options table and select either "5" or "7" as the value.

Work Week Scaling

You use the Days in Work Week option to select whether the week is 5 days or 7 days. If you have set this value to 7, the lead times in the model must be scaled in order to accurately capture the risk period in the supply chain. For example, if it takes 2 weeks to ship product from the MFG to the DC, the lead time is either 10 days (for a 5 day week) or 14 days (for a 7 day week).

To set this value in a scenario, select the “Work Week Scaling” field in the Inventory Optimization Options table and select "Yes".

Run Demand Analysis with

• Demand Series – This method of demand propagation is intended to provide a more robust demand propagation than Formula-based by handling all kinds of demand data such as extremely slow and extremely small. To set this value in a scenario, select the “Demand Propagation Method” field in the Inventory Optimization Options table and select "Demand Series" as the value.
• Formula – This method uses the statistically acceptable formula for combining the standard deviations of constituent customers. The standard deviation for each customer is individually determined then combined. To set this value in a scenario, select the “Demand Propagation Method” field in the Inventory Optimization Options table and select "Formula" as the value.

Include Customers

If this option is checked, Demand Analysis generates customer demand profile data. To set this value in a scenario, select the "Include customers” field in the Inventory Optimization Options table and select "Yes" as the value.

Include Site Propagation

If this option is checked, Demand Analysis generates site demand profile data. Site demand profile data is propagated through the supply chain using the method specified with Run Demand Analysis With. To set this value in a scenario, select the “Include site propagation” field in the Inventory Optimization Options table and select "Yes" as the value.

Populate Site Demand Series

When running Inventory Simulation, if you prefer to make use of historical demand, Safety Stock Optimization must first be run with the Populate Site Demand Series check box selected. When this option is checked, Safety Stock Optimization populates the Site Demand Series table for all sites: both customer-facing and non customer-facing.

If you want to populate the site demand series, your propagation method must be “Demand Series”. If this option is set to “Formula”, the Site Demand Series table will not be populated.

When you run Inventory Simulation, select Run Simulation Using Historical Demand in Inventory Simulation Options to use the site demand series data.

To set this option in a scenario item, select the “Populate Site Demand Series” field in the Inventory Optimization Options table and select "Yes" as the value.

If Outliers are Detected

Select either:

• Do Nothing - Outliers are detected, but still included in demand statistics.
• Replace with Non-Zero Demand Mean - Outliers are replaced with an average demand size excluding the outlier, and adjusted demand is used in the analysis. To set this value in a scenario, select the “Smooth Demand” field in the Inventory Optimization Options table and select "Yes" as the value.

Demand Propagation Batching Options

• Allow Batching Using Replenishment Frequency – When this option is selected, batching during demand propagation uses Replenishment Frequency in Transportation Policies. Orders are placed based on the value of Replenishment Frequency.

For example, assume Replenishment Frequency = 3 days:

To set this value in a scenario, select “Safety Stock Optimization Options” as the table, “Allow Batching Using Replenishment Frequency” as the field and select "Yes" as the value.

• Allow Batching Using Minimum Order Quantity (MOQ) – When this option is selected, batching during demand propagation uses Minimum Order Quantity in Sourcing Policies. Orders are placed based on the value of Minimum Order Quantity.

For example, assume minimum order quantity = 50:

To set this value in a scenario, select “Inventory Optimization Options” as the table, “Allow Batching Using Minimum Order Quantity (MOQ)” as the field and select "Yes" as the value.

Demand Classification Thresholds

These options affect how demand is classified and how Safety Stock Optimization determines the appropriate approach for safety stock calculation. Demand Analysis allows you to adjust the demand classification threshold values based on conditions specific to your business.

The threshold parameters and their default values are shown below:

Use Normal Distribution For Lead Time Demand

When this option is selected, normal distribution is assumed and used for all site/products regardless of what the demand class is. To set this value in a scenario, select the “Use Normal Distribution For Lead Time Demand” field in the Inventory Optimization Options table and select "Yes".

Customer Model Demand

Select which data is used for customer demand:

• Run from Demand table – Customer demand comes from the Customer Demand table. This demand is at the product level, aggregated into time periods.
• Run from Orders table – Customer demand comes from the Customer Orders table. Demand is at the SKU-level.

To set this value in a scenario, select the “Customer Model Demand” field in the Inventory Optimization Options table and select one of "Run from Demand" table or "Run from Orders" table.

Site Model Demand

Select which data is used for site demand:

• Run from Demand table – Site demand comes from the Site Demand table. This demand is at the product level, aggregated into time periods.
• Run from Orders table – Site demand comes from the Site Orders table. Demand is at the SKU-level.

To set this value in a scenario, select the “Site Model Demand” field in the Inventory Optimization Options table and select one of "Run from Demand table" or "Run from Orders table".