Consumption types are different models used to calculate consumption relative to forecast. The forecast may be a statistically derived value or a user defined forecast depending on the forecast source setting.
The consumption types are set in system settings, the consumption type drop-down in item planning detail view, and the item options tab.
There are 5 consumption options:
- Make / Purchase to Order: Used for items that are made or purchased to order. Typically, this consumption type is applied to items that are not inventoried thus there is no forecast or safety stock calculated. As orders arrive a replenishment order is created to fulfill the requirement. If an item is made and has a BOM, its quantity is allocated to its components. When using this consumption type, the stock type should be manually changed to “Order” as opposed to “Stock” and the safety stock be set to 0. This consumption type may also be used when applying min / max logic to an item since it turns off forecasting from driving replenishment orders. In the case of min/max, a safety stock value may be applied as the minimum.
- Statistical Forecast: A statistical forecast is generated to project future demand using independent demand as the basis. If there are open customer orders greater than the forecast, they are NOT included in the projection beyond the lead time. During the lead time, these open orders are treated as allocations (NOTE - We will be removing the means to which open customer orders are handled during the lead time when statistical forecast consumption types are applied - during the lead time, open customers order will not be considered - we recommend using Order/Statistical Forecast consumption type with Forecast consumption rules instead of Statistical Forecast consumption).
- Order/Statistical Forecast: A statistical forecast is generated to project future demand. If an item has an open order that is greater than the forecast for a given period, the order quantities override the forecast in that one period. This is the most common forecast / consumption option. Please note that there are times, particularly in low or even medium order frequency items that the forecast will be overstated using this methodology.
- MTO Order/Forecast: This a hybrid make/purchase to order and forecast consumption model used to explode requirements for non-stocked finished goods or sub-assembles to their components. The make/purchase order model is used during the items lead time whereas beyond the lead time a forecast is generated to drive demand to an items components. When using this consumption type, the stock type should be manually changed to “Order” as opposed to “Stock” and the safety stock be set to 0.
- MTO Forecast: Same as above but instead of taking the greater of customer orders or forecasts beyond the lead time, only the forecast quantities are applied. When using this consumption type, the stock type should be manually changed to “Order” as opposed to “Stock” and the safety stock be set to 0.