ForecastX Wizard Tutorial 6.0

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ForecastX Wizard
Tutorial
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Table of Contents
ForecastX Wizard Tutorial
Table of Contents
Part One: Introduction Tutorial Overview ForecastX Wizard Features and Functionality ForecastX Wizard Technical and Statistical Methods System Requirements and Installation Part Two: Getting Started with the ForecastX Wizard One Step Forecasting Data Cleansing Group Forecasting Event and Promotional Modeling Part Three: Enhancing the Forecasting Process Other ForecastX Products and Services Who Is John Galt? Purchase Order
Privileged and Confidential. Copyright John Galt Solutions, Inc. Do not duplicate without permission.
Table of Contents
ForecastX Wizard
Define your forecasting process and build your baseline forecast today! The ForecastX Wizard is part of the Forecast Xpert Toolkit. It is an easy to use tool that will assist you in defining and improving your forecasting process. This tutorial for the ForecastX Wizard will show you how effortless and easy it is to create accurate forecasts. This tutorial will help you take advantage of the power and accuracy of the ForecastX Wizard. The ForecastX Wizard has the ability to perform one-step forecasting utilizing the Procast Method. This method picks the best forecast technique for each data series and has been rated one the easiest to use by PC Magizine. INSEAD Universitys M3 Competition rated ForecastX Wizard one of the most accurate forecasting tools in the world among all other forecasting products. Generally, this level of accuracy is achieved through complex steps such as rewriting the format of a particular data series, an extensive understanding of statistical methods, and having to import data into an outside forecasting tool. However, with ForecastX Wizard all levels of users novices, intermediates and expert statisticians can become Forecast Xpert.
Key Features and Functionality ForecastX Wizard

The range of functionality makes the ForecastX Wizard a solution that never stops growing with the end user. For instance, a non-statistician can use the Wizard to produce fast, accurate forecasts in an environment they are familiar with; Microsoft Excel. At the same time, an advanced mathematician can use the Wizard to determine all the seasonal indices and smoothing parameters of a data set. Features Full integration with Microsoft Excel No data preparation required One-step forecasting with expert selection Unlimited batch forecasting Management & audit trail reports Promotional modeling Functionality Expert selection that includes new product Easy to use data cleansing Grouping and Allocation Customize parameters within the forecast Full Causal Regression Safety Stock for replenishment forecasting Distribution Requirements Planning(DRP) Stocking levels for Slow Moving items Pivot table reporting for drill down analysis
ForecastX Wizard Benefits

Work directly in Excel for increased efficiency and analytical power Spend valuable time defining the forecast instead of formatting your data See where promotional plans stack up against best-case and worst-case scenarios Perform profitability analysis with events and promotions Plan successful new product launches Involve business partners to improve the overall forecasting process and accuracy Report how your forecast is going to be consume by with the DRP report Build your baseline forecast effortlessly and efficiently
Table of Contents
ForecastX Wizard Forecasting Techniques and Statistical Methods Forecasting Techniques

Adaptive Exponential Smoothing Bass Model Box Jenkins (ARIMA modeling) Browns Double Exponential Smoothing Browns Triple Exponential Smoothing Census II X-11 (Additive and Multiplicative) Crostons Intermittent Method Decomposition (Additive and Multiplicative) Event / Promotional Modeling Holts Double Exponential Smoothing Holt Winters (Additive and Multiplicative) Linear Regression Moving Average Multiple Regression New Product Forecasting Polynomial Regression with Stepwise Enhancement Procast Simple Exponential Smoothing Stepwise Regression w/ Dynamic Lagging Weighted Moving Average
Accuracy Statistics (cont.)

Mean Square Error Normality Error R Square Root Mean Square Error Standard Deviation of Error Sum of Squared Error Theils Statistic
Distributions
Erlang B Erlang C Poisson
Descriptive Statistics
Auto Correlation Auto Covariance Coefficient of Determination Coefficient of Variance Covariance Correlation Coefficient Durbin-Watson Kurtosis Ljung Box Max Mean Mean Absolute Deviation Mean Square Deviation Median Min Mode Partial Auto Correlation Coefficient Range Root Mean Square Skewness Standard Deviation Sum of Square Deviation Variance
Replenishment Statistics
Confidence Interval Safety-Stock Stocking Level (Slow Moving Method)
Accuracy Statistics
AIC Adjusted R Square BIC Chi-Square Cochrane-Orcutt Confidence Interval Error Mean Absolute Percent Error Mean Error Mean Absolute Error
For definitions and explanations of the listed forecasting techniques and statistical methods, visit John Galts website at www.johngalt.com and go to the education page, then the statistical methods page, or go directly to www.johngalt.com/stat_meth.asp.
Table of Contents
System Requirements for Using the ForecastX Wizard

Pentium based machine Windows 95, or Higher A minimum of 32MB of memory (64MB recommended) Microsoft office 2000 or Higher
Installing ForecastX Wizard

1. 2. 3. 4. 5. 6. 7. 8. 9. Insert the ForecastX CD-ROM into your CD drive Within Windows Explorer, select the CD drive Double click the ForecastXWizard.exe Follow the setup wizard as directed, when prompted, call John Galt at 312.701.9026 for an installation key When given a license key from a John Galt representative, enter it into the box labeled key Click Install Key. Then follow the prompt by clicking OK When you return to the John Galt Install Key screen, click EXIT You should then see files transferring ForecastX will then be installed successfully
Once the ForecastX Wizard is installed you will see a folder open with several different Microsoft Excel spreadsheets. These spreadsheets will be used throughout this tutorial booklet. The ForecastX Wizard Icon should appear within your Microsoft Excel toolbar. If you dont see the ForecastX Wizard icon, please contact a John Galt representative at sales@johngalt.com or 312.701.9026.
Getting Started with the ForecastX Wizard

ForecastX Wizard Will Jump Start Your Forecasting Process

ForecastX Wizard enables users to perform a one-step, expert selection forecast, known as Procast. The amount of data does not limit Procast at all; you can run Procast on a single data series or many series at once. The Wizard has no limits on the amount of data that it can be processed, it is only limited by the power of Microsoft Excel. Once Procast has been activated, the Wizard will determine the best forecasting technique for each data series in your particular data set. Procast chooses from among the most complex forecasting techniques list on Page 3. By clicking only once on the ForecastX Wizard icon, you can produce fast, accurate and easy-to-read results.
New Product Curve

The ForecastX Wizard will also take new product growth curves into consideration. This technique is useful when planning new product launches and determining when the product launch ramp period will end.
Safety Stock and Confidence Levels

ForecastX Wizard allows you to customize the safety stock levels and confidence limits. With the Safety Stock settings, you can set customer service levels and lead time. With the Confidence Level, you can set the confidence interval. Users can go to the Statistics tab and click on the more button to find these two options.
Collaboration through Reconciliation

Use the ForecastX Wizard to begin defining your process, and building an internal collaborative network. With the reconciliation feature you have the ability to not only track the changes that are made by different departments, but reconcile those figures with the final forecast.
Stocking Level (Slow Moving Method) Forecast

The Stocking Level Forecast is useful to forecast items that are slow moving and have sporadic demand streams. The results provide reliable forecast values and predictable Stocking levels, which enables you to meet the desired service level of orders met.
Distribution Requirements Planning (DRP) Reporting

The ForecastX Wizard also supports the creation of demand requirement values. The ForecastX Wizard will use data included in the file for fields such as; initial onhand, minimum periods covered, reorder point, reorder quantity, reorder point flags, order lead time, safety stock and service levels for individual items. If the DRP fields are not included in the data file, default values can also be set. The resulting DRP information is displayed in the DRP report.

The One-Step Forecast with Procast

Session 1: One-Step Forecasting with Procast 1) Open the ForecastXTrainingSet.xls spreadsheet that accompanies the ForecastX Wizard,(the default location is C:\Program Files\ForecastX\Samples) and click on the sheet labeled Procast. 2) When the spreadsheet opens, select a cell that contains data. Click on the ForecastX Wizard icon within the Microsoft Excel toolbar to start the Wizard.
The Intelligent Data Recognizer looks at the data and determines the following:
Organization: Automatically detects whether your data is in rows or columns Forecast Range: Determines the data range to be forecasted Dates: Determines whether your data contains dates and how those dates are formatted Labels: Determines that your data contains descriptive labels Paras: Determines the number of DRP fields that follow the labels Seasonality: Let ForecastX find the seasonality in your data or select it yourself Forecast: Set the number of periods to forecast out into the future
You are now ready to create your first forecast! 1) Simply click the Procast button to complete your forecast. 2) When the forecast is complete, click the Done button. ForecastX automatically produces a Standard Report that appears on a separate worksheet. The worksheet lists what forecasting method the ForecastX Wizard chose for each of the data series. The fitted values are listed in italics below the actual values for each series. As you scroll to the right on the spreadsheet, you will notice that the ForecastX Wizard has listed the forecast values in bold. To the right of the forecasted values, the ForecastX Wizard has produced four accuracy statistics that can help you determine how trustworthy the forecast is.
Mean Absolute Percentage Error (MAPE) tells you the overall average of the error measurements ForecastX produced. This value should be close to or below 20% to be considered accurate.

R-Square lets you know how well the fitted values compare to the actual values, and should be considered accurate the closer it is to 100%. Mean gives you the average values of each series. Standard Deviation tells you how far away each data point is from the average data point in the data set.
You have just produced an accurate, one-step forecast with Procast. Data Cleansing As an advanced option, ForecastX Wizard users can use the Data Cleansing button to improve the accuracy of the forecast. Options found on the Data Cleansing Screen include: Replacement of Outliers Replacement of Missing Values Removal of Zeros Apply Tracking Signal Holdback Evaluation Range Forecast

Group Forecasting
The Group By tab provides Top Down and Bottom Up allocation. Top Down Allocation is a useful technique to use when data at a detail level does not provide an accurate forecast but the aggregate level provides stability for a more accurate forecast. The aggregate level forecast is then allocated down to the detail series. Using the same spreadsheet, ForecastXTrainingSet.xls and the Procast worksheet, open the ForecastX Wizard. 1) Click the ForecastX icon, and the Data Capture screen appears, click on the Group By tab 2) Under Group By, check the Group Forecast box 3) For Allocation Type, check the Top Down option 4) Under Group By, check the Description circle and make sure that Column A is showing in the pull down box 5) For the Allocation By section, check Historical and then click finish! Reviewing the results, Notice that ForecastX Wizard created forecasts for Total Shirts and Total Pants as well as the detailed level forecasts.

Event and Promotional Modeling

The Wizard can take special events and promotions into account while youre developing your forecast. When you are able to identify major promotions that impact sales, you enhance the accuracy of the forecast. With the ForecastX Wizard, you can tag past events and tag when the event will occur in the future. The Wizard will take the past events, measure how it effected history and apply a lift factor to the forecast. Using the Excel file ForecastXTrainingSet.xls, click on the Event Modeling worksheet. Here you will see columns, Newspaper Sales and the Marketing Plan and the data associated with those sales.
1) Highlight the Months and Newspaper Sales data (rows 1-40, columns A & B) and open
the ForecastX Wizard.
With the Data Capture screen open, notice that the Wizard has recognized that the data is arranged in columns, not rows. 2) Click on the Reports tab and select Standard and the check Chart. 3) Click Finish and review the forecast.

The Wizard creates the standard report and a graph of the results. You will notice that the forecasted results and error measurements reflect a forecast without any type of event modeling. Using the same workbook, ForecastXTrainingSet.xls, and the Event Modeling worksheet, you can now see what happens when Event Modeling is used. 1) Highlight Months and Newspaper Sales (rows 1-40, columns A & B) and open the ForecastX Wizard. 2) With the Data Capture screen open, click on the Forecast Method tab.
3) Under Forecasting Techniques, use the pull down bar to select Event Model.
4) Under Event Flags, click inside the box. This will bring up the Data Selection screen.
5) Define the event flag data ranges by highlighting column C Marketing Plan and then click Done which brings you back to the Forecast Method screen. 6) Click on the Report tab to bring up the Report Options screen. Uncheck the Standard report, check Audit and click Finish!.
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Now we can understand the effect of the events on Newspaper Sales and see how our error measurements have improved. The Audit Trail report provides you with additional statistical data. By selecting the More tab on the Statistics screen, additional statistical choices may be added. This report includes an event index, which represents each events lift factor over the base forecast.
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Distribution Requirements Planning Report

The Wizard uses Distribution Requirements Planning (DRP) information provided from the data file or established defaults to calculate values such as; safety stock, ending inventories, unsupported forecast and turns. DRP information is included on the DRP Report. This format provides a visual representation of the key values in the planning process. Open the Excel file ForecastX_Samples.xls and click on the DRP Sample worksheet. Here you will see columns of descriptive information, DRP fields of information and history information. The DRP fields include Onhand, PerCoverage, ReorderPoint, Reorder Qty and ROP flag.
1) Highlight the first cell of data and open the ForecastX Wizard. 2) On the Data Capture screen verify that the Paras Option is set to 5. 3) Click on the Reports tab and select DRP Report and the DRP Options screen appears. 4) Assign the fields contained in the data file to those on the DRP Options screen. a. Assign the Onhand field to the Initial Onhand option. b. Assign the PerCoverage field to the Min. Period Cov. option. c. Assign the Reorder Qty field to the Initial Reorder Point option. d. Assign the ROP Flag field to the UseROP option. e. Click the selection box for the Order Lead Time Same as Safety Stock Lead Time option. 5) Click OK to save the report parameters and return to the Reports screen. 7) Uncheck the Standard report and click Finish!.
8) When the forecast is complete, click Done. 9) A new workbook is created containing the DRP Report. Click on the new workbook to
display.
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This report provides all pertinent DRP information needed to make solid planning decisions about your business. It also allows you to understand the effect changes in safety stock and order lead time can have on the overall planning process and inventory levels. The Auto Filter option allows you to customize the data displayed on the report. For example, you can view just the Turns for Pants only. 1) Click on the Category pull down and select the Pants option.
2) Click on the Type pull down and select the Turns option. The report redisplays with
only the turns information for pants.
Click the Auto Filter button to toggle this feature on or off.
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Enhancing the Forecasting Process

Who Is John Galt?

For companies addressing their inventory and demand planning processes, John Galt offers comprehensive and cost effective Supply Chain Planning Solutions We provide superior business forecasting accuracy combined with a comprehensive view of the balance between supply and demand by integrating marketing, inventory and sales and operations planning. Together, we can help your company to decrease inventory cost, optimize production, and improve customer service. John Galt offers the ability to effectively realize, manage and understand your demand planning and business forecasting needs. By using our proven methodologies, services and products you will achieve desired results.
John Galts User Forum and User Group
John Galt has additional support for its product lines. Check out the Online User Forum and ask your sales representative about joining a User Group in your area: Interact with Other John Galt Users Via an Online Forum Exchange Information and Brainstorm on Best Practices Share Knowledge and Experiences in Forecasting, Demand Planning, and ForecastX Products Maximize your Knowledge and Investment
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The ForecastX Xpert Toolkit

To help you with defining your companys forecasting process and building your baseline forecast John Galt has created the Forecast Xpert Tool Kit. It includes: 1. The Forecast Wizard 6.0 2. Business Forecasting 2 Edition by Dr. Barry Keating, University of Notre Dame and Dr. Holt Wilson, Central Michigan University 3. The Forecast Xpert Training Course, a 2 day class either onsite or at John Galts Training Facilities.
nd
________________________________________________________________ John Galts Atlas Planning Suite

Address all of your forecasting, demand planning and S&OP needs with one integrated suite
Key components:
Demand Management Engine Inventory Management Rough Cut Capacity Planning Promotional Performance Management, Sales and Operation Planning Sarbanes Oxley Reporting and the Planning Portal.
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www.johngalt.

125 S. Clark St., Suite 1950

Chicago, IL 60603 Phone: 312.701.9026 Fax: 312.701.9033

Key Features and Functionality ForecastX Wizard

ForecastX Wizard Benefits

ForecastX Wizard Forecasting Techniques and Statistical Methods Forecasting Techniques

Accuracy Statistics (cont.)

System Requirements for Using the ForecastX Wizard

Installing ForecastX Wizard

Getting Started with the ForecastX Wizard

ForecastX Wizard Will Jump Start Your Forecasting Process

New Product Curve

Safety Stock and Confidence Levels

Collaboration through Reconciliation

Stocking Level (Slow Moving Method) Forecast

Distribution Requirements Planning (DRP) Reporting

Getting Started with the ForecastX Wizard

The One-Step Forecast with Procast

Getting Started with the ForecastX Wizard

Getting Started with the ForecastX Wizard

Getting Started with the ForecastX Wizard

Event and Promotional Modeling

Getting Started with the ForecastX Wizard

Getting Started with the ForecastX Wizard

Getting Started with the ForecastX Wizard

Distribution Requirements Planning Report

Getting Started with the ForecastX Wizard

Click the Auto Filter button to toggle this feature on or off.

Enhancing the Forecasting Process

Who Is John Galt?

John Galts User Forum and User Group

Enhancing the Forecasting Process

The ForecastX Xpert Toolkit

________________________________________________________________ John Galts Atlas Planning Suite

Enhancing the Forecasting Process

Purchase Order No. _________

Subtotal S&H Taxes Total

30-Day Money Back Guarantee

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