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. They 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 changes to “Order” as opposed to “Stock” and the safety stock gets set to 0 automatically.
- 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.
- 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.
- 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.