A demand forecast lets you create planned demand for MRP planning, so the requisition worksheet and the planning worksheet can suggest purchase, production, and transfer orders before you have actual sales orders. The forecast creates a fictive demand for periods where you have no real demand yet.
You typically use demand forecasts when your purchase lead time is much longer than your sales lead time. If customers expect short delivery times but your inbound lead time is long, the forecast helps you plan ahead.
Use the same period for all forecast entries. We recommend forecasting per month, since that matches how most customers work. Always forecast per location, because MRP planning in both the requisition worksheet and the planning worksheet runs per location regardless of how you enter the forecast.
When you change a forecast quantity, Business Central does not overwrite the existing entry. It creates a new entry with the difference, so the system keeps a full history of who changed the forecast and when.
What a demand forecast does in MRP planning
A demand forecast feeds the MRP calculation in the requisition worksheet and the planning worksheet. When the system calculates demands and suggests orders for purchase, production, and transfer, the forecast supplies a fictive demand for periods where no sales orders exist.
This is useful when your outbound lead time on the sales side needs to be much shorter than your inbound lead time on the purchase side. If you have a long purchase lead time and a short sales lead time, you can create a sales forecast or demand forecast to bridge the gap and plan supply in advance.
Choosing the forecast period
You can define different demand forecasts. Some companies set one up per year, others run a rolling forecast. We normally recommend a rolling demand forecast, but it works either way.
When you set up a forecast, you choose the period you want to work in. The important rule is to use the same period consistently. We normally suggest month, because that is what most of our customers use in practice.
How forecast changes are recorded
You enter forecast quantities per item and period. For example, you might forecast 90 pieces of a city bike in May. If you then change it to 92 pieces, the system does not edit the original number. It creates a new entry of 2 pieces, with the date and the user who made the change.
This means you can drill down and see the full history of forecast changes. The system logs every change to the forecast entries rather than overwriting them.
Forecasting on sales items and component items
You can forecast on sales items or on component items. A sales item forecast covers the demand from sales orders. A component item forecast covers the demand coming from production order component lines.
If you forecast 90 on the sales side and 12 on the component side, the combined view shows 104 for that city bike. View only the sales side and you see 90. View only the component side and you see the component amount.
When you use forecast type Both, you cannot change the quantities directly, because the system needs to know whether you mean the sales item or the component item. You get a validation message until you select one of the two views.
How the forecast is consumed
The forecast is written down by actual demand. Sales orders write down the sales forecast amount, and production order component lines write down the component amount. In that way the forecast acts as a demand for both component lines and sales lines.
The forecast works within a specific period. A forecast for May is only written down by demands in May. The forecast overview always displays the full figure, for example 104 with 90 from the sales forecast and the rest from the component forecast. But when the MRP journal calculates for May, it looks at the sales orders and quantities already sold in that period and subtracts them.
If you forecast a quantity in May and you already have an open sales order for 100 pieces in May, the remaining forecast effect is only the difference. So a forecast of 104 with 100 already on order leaves a net forecast effect of 4.
Keeping forecast entries inside the correct period
Be careful when you view and enter forecasts by a smaller period such as week. The first day of a week does not always line up with the first day of a month. The Monday of week 18, for example, may fall on 29 April rather than 1 May.
If you change a forecast while viewing by week, the system can detect a conflict and suggest moving the entry to the start of the period. Accept this. If you say no, you split the quantity. Part of it lands on 29 April and the rest remains in May, which means your April forecast period only covers two days. To avoid this, keep all forecasts on the same period.
Forecasting per location
If you use locations, you should forecast per location. When a forecast entry has no location code, it only creates demand on the blank location.
MRP planning in both the requisition worksheet and the planning worksheet runs per location no matter what you do. So you should forecast on a main location, or at least split the forecast across the relevant locations.
Mixing entries with and without a location code causes problems. If some entries carry a location code and others are blank, you get an error when you try to add more, because the system cannot tell which location the new quantity belongs to. You then have to enter against either the blank location or a specific location such as location code Sample 1. Be deliberate about how you enter location on every forecast line.
All of these parameters feed directly into the MRP planning in the requisition worksheet and the planning worksheet.
Q&A
What is a demand forecast used for in Business Central?
A demand forecast creates planned, fictive demand for MRP planning. It lets the requisition worksheet and the planning worksheet suggest purchase, production, and transfer orders for periods where you have no actual sales orders yet.
When should you use a demand forecast?
Use it when your purchase lead time on the inbound side is much longer than your sales lead time on the outbound side. The forecast lets you plan supply ahead of demand so you can still meet short delivery times.
What period should you use for a demand forecast?
Use the same period consistently across all forecast entries. We normally recommend month, because that matches how most customers work.
What happens when you change a forecast quantity?
The system does not overwrite the original entry. It creates a new entry for the difference, with the date and user, so you keep a full history of all forecast changes.
Can you forecast on both sales items and component items?
Yes. Sales item forecasts cover demand from sales orders, and component item forecasts cover demand from production order component lines. When you use forecast type Both, you must select one of the two views before you can edit the quantities.
How is a demand forecast consumed by actual demand?
Within the forecast period, sales orders write down the sales forecast amount and production order component lines write down the component amount. The MRP calculation subtracts what is already sold or ordered, leaving only the net forecast effect.
Why should you forecast per location?
MRP planning in the requisition worksheet and the planning worksheet always runs per location. A forecast entry without a location code only creates demand on the blank location, and mixing entries with and without location codes causes errors.