Demand classification

Demand Analysis classifies demand at all site/customer-product-period combinations. The demand classification flow is illustrated in the following diagram:

The values used for demand classification are defined in the following table:

Class descriptions

Demand classification identifies demand as one of the following classes:

• Extremely Slow
• Extremely Variable
• Extremely Small
• Non-Intermittent – Classes are:
  • Smooth
  • Erratic
• Intermittent – Classes are:
  • Low Variable
    • Slow
    • Lumpy
  • High Variable
    • Slow
    • Lumpy

In many cases, it is easiest to understand the classifications by comparing one to another, as shown in the following graphs.

Extremely Slow

Extremely slow demand occurs when the demand count is very low (by default, fewer than 3) over the period (or model horizon in a single period model) as shown below:

This demand will have a large Inter-Demand Interval Mean. In this case, no inventory policy or associated parameters are recommended.

Extremely variable

Extremely variable demand occurs when the coefficient of variability (COV) is greater than or equal to 5. This is determined as demand std dev / demand mean. This demand is highly variable and Safety Stock Optimization may recommend holding significant safety stock. An inventory policy and parameters are returned.

Extremely small

Extremely small demand occurs when the Non-Zero Demand Mean is less than 1. In this case, no inventory policy or associated parameters are recommended.

Non-intermittent – smooth vs. erratic

With non-intermittent demand, the Inter-Demand Interval Mean is small, meaning that demand occurs regularly with few exceptions in the period (or model horizon in a single period model). This demand is further classified as either smooth or erratic based on relative variability, with smooth having a lower value for Non-Zero Demand CV2 than erratic:

Intermittent – low vs. highly variable

With intermittent demand, the Inter-Demand Interval Mean is greater than for non-intermittent demand. This means that there is irregularity in when demand occurs over the period (or model horizon in a single period model). Intermittent demand is considered to be either low variable or highly variable. Low variable demand has a lower Non-zero Demand Std Dev than highly variable demand:

Intermittent – slow vs. lumpy

Intermittent demand is further classified as either slow or lumpy based on relative variability, with slow having a lower value for Non-Zero Demand CV2 than lumpy:

Class mapping

The table below shows the mapping between Demand Class Details and four demand class outputs statistics: