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3 New Item & Locations Task
This chapter describes the capabilities around forecasting New Items and New Stores. Forecast generation for New Items can be fully automated, while for New Stores the process is manual.
In general, an item is eligible to be considered new if it satisfies the following condition:
- Forecast start date override is in the future or Sales history length is less than the time series duration parameter
An item is eligible to be considered a Like Item if it satisfies these conditions:
-
Its recent sales density needs to be larger than a threshold or zero for a special case.
-
Its sales history needs to be longer than the time series duration parameter.
-
Finally, we provide the Like Item exclusion mask measure, which can be populated by custom rules through which the implementer can include any other eligibility conditions.
Once a New Item is assigned a system recommended Like Item, it is not processed it in the next New Item batch because it is considered already taken care of.
If you set up the New Item to do manual approve first, all the New Items in the system are handled as manual approval.
In general, if auto approval is turned on, and batch is ran, the items already processed will be skipped in the batch as we only look at refresh New Item in each batch.
These workspaces help you achieve this task:
-
New Item Maintenance Workspace
-
New Store Maintenance Workspace
-
New Item Management Workspace
New Item & Locations Workspaces, Steps, and Views
The following table lists the workspaces, steps, and views for the New Item & Locations task.
Table 3-1 New Item & Locations Workspaces, Steps, and Views
| Workspace | Steps | Views |
|---|---|---|
| New Item Maintenance | New Item Settings Step | New Item Basic Parameters View |
| Workspace | Like Item-Select and Approve Step | New Item Forecast View New Item Statistics View Select and Approve View |
| New Store Maintenance Workspace | Like Store Assignment Step | Product Like Store Assignment View |
Table 3-1 (Cont.) New Item & Locations Workspaces, Steps, and Views
| Workspace | Steps | Views |
|---|---|---|
| New Item | Settings Step | New Item Basic Parameters View |
| Management Workspace | Manage Step | New Item Attributes View New Item Statistics View Select and Approve View New Item Forecast View |
| View Step | Attribute Value View | |
| Similarity Score View |
New Item Maintenance Workspace
Note
There are two workspaces that can help you with setting up New Items for forecast generation:
-
New Item Maintenance Workspace—Use when item attributes are not available and you need to manually select Like Items from the New Item Maintenance workspace.
-
New Item Management Workspace —Use when item attributes are available, the Like Item selection can be automated using the New Item Management workspace.
It is recommended to use only one of the two workspace options, depending on whether or not attributes are available. The other workspace can be easily hidden using Access Rights.
The workflow in the New Item Maintenance workspace starts by selecting the New Items. An item is defined as new if it has a forecast startdate override that is in the future, that is later than the RPAS_TODAY date. The date can be loaded in the measure if available. If not, the date can be entered manually. Once you identified the New Item and the forecast startdate override is populated, you can select the substitution method. Depending on your selection, you may need to enter additional information. The workflow message measure guides you through the process. For instance, if you choose the Like Item option, you need to specify a Like Item. If you do not specify a Like Item, the workflow message warns you and displays User Specified Like Item Not Set . You have successfully set up a New Item for forecasting when the workflow message is cleared and the Approval flag is selected. You finish by running the Approve New Items custom menu.
Note
You can work on multiple New Items and run the custom menu after you have set them all up.
Select Products
IPOCS-Demand Forecasting calculates the escalated base rate of demand. The forecast for the new item is given by::
Forecast at time t = base rate of demand (coming from escalation level) * seasonality at time t (coming from escalation level) * promo and price effects (coming from pooling level)
- User Input
This method is very similar to Base Rate of Demand, with the difference that you have to manually specify a base rate of demand. The forecast is then generated using the same formula as for Base Rate of Demand.
Threshold Recent Sales Density
In this measure, you enter the threshold for the data density. If the actual density is larger than the threshold, the time series qualifies to serve as Like Item/location for a new/item/location. The data density is calculated as:
data density = number of periods with demand larger than zero / total length of demand
For a time series with the following demand values:
0,1,0,1,0,today
The data density is 2/4 = 50%
History Time Series Duration
In this measure you can enter the threshold for the historical demand duration to determine if a time series is considered. If the demand history is less than the threshold, the forecast of the new time series is generated using the New Item/store functionality. If the demand length is larger than the threshold, the time series is not considered new anymore, and its own demand is used to generate the forecast.
Tip
Consider the threshold is set to five periods, and the first week of sales is 10 weeks ago, In this case, the item is not considered new anymore. Whatever Like Item strategy was selected for the item is not applied anymore and the forecast is generated based on its own demand.
Like Item - Select and Approve Step
This step contains views that allow you to set up the forecasting strategy for New Items.
The available views are:
-
New Item Forecast View
-
New Item Statistics View
-
Select and Approve View
New Item Forecast View
In this view you are able to view the forecast of the New Item based on the selected strategy.
| Selectand Approve | |||
|---|---|---|---|
| vy 6 | Location gy SS | 2 | S |
| a | Measure(Default | ) ~ | |
| Location Measure | 1006 Chicago | t | 1057 Green Bay T |
| Substitute Method | None * | ||
| User Provided Base Dermand | 0.00 | 0.00 | |
| User Selected Like Item | ¥ | ¥ | |
| Liketem Average Sales | |||
| Forecast Start Date Override | |||
| Approve Flag | oO | oO | |
| Approve Date | |||
| Adjustment Factor | 1.00 | 1.00 | |
| WorkflowMessage | Existingltem |
No forecast is created for the New Item.
- Like Item
The forecast is created using the base demand of a Like Item. The Like Item is selected in the User Selected Like Item measure in the Like Item - Select and Approve view. The forecast of the New Item is given by:
Base demand New Item = base demand Like Item * Adjustment Factor
Forecast at time t = base demand New Item * seasonality at time t (coming from
escalation level) * promo and price effects (coming from pooling level)
- Base Rate of Demand
IPOCS-Demand Forecasting calculates the escalated base rate of demand. The forecast for the new item is given by::
Forecast at time t = base rate of demand (coming from escalation level) * seasonality at time t (coming from escalation level) * promo and price effects (coming from pooling level)
- User Input
This method is very similar to Base Rate of Demand, with the difference that you have to manually specify a base rate of demand. The forecast is then generated using the same formula as for Base Rate of Demand.
User Provided Base Demand
If the User Input substitution method was selected, you have to enter here the base rate of demand that is going to be used for the New Item when generating forecast.
User Selected Like Item
If the Like Item substitution method was selected, you have to select here the Like Item whose base demand is going to be used for the New Item when generating forecast.
Like Item Average Sales
If you selected the Like Item substitution method, and have chosen a Like Item from the list, this measures displays the average sales of the Like Item. This is useful because it gives you an idea of the base rate of demand that is going to be used when generating the forecast for the New Item. It is not the exact value because it is recalculated every time the forecasting batch is run, but it is likely be very close.
Forecast Startdate Override
This is a very important measure because it identifies an item as being new. It can be loaded if the information can be interfaced from another system. If not available, you can manually set it.
Approve Flag
When the set up process for forecasting the New Item was successful, this measure becomes True and the measure displays a check mark. You are now ready to run the Approve New Items custom menu to approve the New Item forecast strategy.
Approve Date
This measure displays the date when the Like Item recommendation was approved by running the custom menu.
Adjustment Factor
The only demand component needed to generate forecast for New Items is base demand. If the Like Item substitution method is selected, the adjustment factor specifies what percent of a Like Item’s base demand will be copied to the New Item.
Workflow Message
The information in this measure guides you through the forecast setup process for New Items. It informs you on the next steps depending on the substitution method that you selected.
Table 3-2 Workflow Message
| Message | Cause | Action |
|---|---|---|
| Substitution Method Not Set | You have identified a New Item and set the Forecast Startdate Override, but did not select a substitution method. | Select a Substitution Method |
| User Specified Like Item Not Set | You have identified a New Item and selected Like Item as substitution method, but you did not select a Like Item. | Select a User Selected Like Item |
| Base Demand Not Input By User | You have identified a New Item and selected Base Rate of Demand as substitution method, but you did not input a User Provided Base Demand. | Input a User Provided Base Demand |
| Existing Item | You have entered a Forecast Startdate Override for an item that is not new | Either clear the date to avoid confusion. Even if you do not, no action is taken for the item with respect to New Item forecast setup. |
Custom Menus
There are a two custom menus relevant to this view.
- Approve New Items
After you set up the strategy to forecast New Items, then running the custom menu approves the strategy. The setup includes selecting a substitution method, Like Items, and percent contribution, among others. After running the Approve New Items custom menu, the Approve Date measure is populated with the current date.
- Recalculate Eligible Like Items
When the workbook is built, the set of eligible Like Items is calculated using the last committed threshold values. You can change some threshold values in the workspace. For instance, lowering the Threshold Recent Sales Density will likely increase the number of eligible Like Items. To see the result of the threshold change, the Recalculate Eligible Like Items custom menu needs to be run.
New Store Maintenance Workspace
Use this workspace to assign like stores to handle forecasting for New Stores. The like store assignment is manual and there is a good reason for it. New stores have a large financial impact, so it makes sense having a business person making the like store selection.
It is probably more appropriate than going with an automatic selection based on something like store attributes. Also, new store introductions are infrequent compared to New Item introductions, so manually handling New Stores is not a significant overhead activity.
To build the New Store Maintenance workspace, perform these steps:
Forecast Start
This measure specifies the first date for which forecast is generated for the new store.
New Item Management Workspace
Note
There are two workspaces that can help you with setting up New Items for forecast generation:
-
New Item Maintenance Workspace—Use when item attributes are not available and you need to manually select Like Items from the New Item Maintenance workspace.
-
New Item Management Workspace —Use when item attributes are available, the Like Item selection can be automated using the New Item Management workspace.
It is recommended to use only one of the two workspace options, depending on whether or not attributes are available. The other workspace can be easily hidden using Access Rights.
The workflow in the New Item Management workspace starts by selecting the New Items. An item is defined as new if it has a forecast startdate override that is in the future, that is., past RPAS_TODAY . The date can be loaded in the measure if available. If not, the date can be entered manually. Once you identified the New Item and the forecast startdate override is populated, you can select the substitution method. Depending on your selection, you may need to enter additional information. The workflow message measure will guide you through the process. For instance, if you choose User Input , you need to provide the User Provided Base Demand . If you do not provide the User Provided Base Demand , the workflow message warns you and displays Base Demand Not Input By User. You have successfully set up a New Item for forecasting when the workflow message is cleared and the Approval flag is selected. You finish by running the Approve New Items custom menu.
Note
You can work on multiple New Items and run the custom menu after you have set them all up.
Another helpful tool in the process of setting up New Items is the Workflow Message Count measure. It displays the number of item/store combinations that have been flagged as new, but have not yet been successfully set up. When setting up the New Items was successful the measure will display a count of zero.
There are a few key features that are available in the New Item Management that are not included in New Item Maintenance:
-
System Recommended Like Item based on the similarity between new and existing items
-
Ability to display a User Selected Like Item list that is sorted by the similarity between new and existing items
-
Ability to control how many items are included in the User Selected Like Item list
-
None
No forecast is created for the New Item
- Like Item
The forecast is created using the base demand of a Like Item. The Like Item is selected in the User Selected Like Item measure in the Like Item - Select and Approve view. The forecast of the New Item is given by:
Base demand New Item = base demand Like Item * Adjustment Factor
Forecast at time t = base demand New Item * seasonality at time t (coming from
escalation level) * promo and price effects (coming from pooling level)
- Base Rate of Demand
IPOCS-Demand Forecasting calculates a base rate of demand based on items in the same class (dimension is configurable). The forecast for the New Item is given by:
Forecast at time t = base rate of demand * seasonality at time t (coming from escalation level) * promo and price effects (coming from pooling level)
- User Input
This method is very similar to Base Rate of Demand, with the difference that you have to manually specify a base rate of demand. The forecast is then generated using the same formula as for Base Rate of Demand
Threshold Recent Sales Density
In this measure, you enter the threshold for the data density. If the actual density is larger than the threshold, the time series qualifies to serve as Like Item/location for a new/item/location. The data density is calculated as:
data density = number of periods with demand larger than zero / total length of demand
For a time series with the following demand values:
0,1,0,1,0,today
The data density is 2/4 = 50%
If the value for the threshold is zero, an item that is not actively selling can also be eligible as Like Item if it has an approved base demand.
This can be useful when the item to be introduced is a replacement or similar to an item that sold last season. In this case the base demand of the New Item will be modeled after the approved base demand of the item that it replaced.
History Time Series Duration
In this measure you can enter the threshold for the historical demand duration to determine if a time series is considered. If the demand history is less than the threshold, the forecast of the new time series is generated using the New Item/store functionality. If the demand length is larger than the threshold, the time series is not considered new anymore, and its own demand is used to generate the forecast.
Forecast at time t = base rate of demand (coming from escalation level) * seasonality at time t (coming from escalation level) * promo and price effects (coming from pooling level)
• User Input
This method is very similar to Base Rate of Demand, with the difference that you have to manually specify a base rate of demand. The forecast is then generated using the same formula as for Base Rate of Demand
.
User Provided Base Demand
If the User Input substitution method was selected, you have to enter here the base rate of demand that is going to be used for the New Item when generating forecast.
Forecast Startdate Override
This is a very important measure because it identifies an item as being new. It can be loaded if the information can be interfaced from another system. If not available, you can manually set it.
Approve Date
This measure displays the date when the Like Item recommendation was approved by running the custom menu.
Adjustment Factor
The only demand component needed to generate forecast for New Items is base demand. If the Like Item substitution method is selected, the adjustment factor specifies what percent of a Like Item’s base demand will be copied to the New Item.
Workflow Message
The information in this measure guides you through the forecast setup process for New Items. It informs you on the next steps depending on the substitution method that you selected.
| Message | Cause | Action |
|---|---|---|
| Substitution Method Not Set | You have identified a New Item and set the Forecast Startdate Override, but did not select a substitution method. | Select a Substitution Method |
| User Specified Like Item Not Set | You have identified a New Item and selected Like Item as substitution method, but you did not select a Like Item. | Select a User Selected Like Item |
| Base Demand Not Input By User | You have identified a New Item and selected Base Rate of Demand as substitution method, but you did not input a User Provided Base Demand. | Input a User Provided Base Demand |
| Existing Item | You have entered a Forecast Startdate Override for an item that is not new | Either clear the date to avoid confusion. Even if you do not, no action is taken for the item with respect to New Item forecast setup. |
Approved Like Item
This measure is relevant if you selected the Like item substitution method. If you go through the process to set up the New Item, and use the System Recommended Like Item or override by selecting another Like Item from the User Selected Like Item list, the Approval Flag is checked. Running the Approve New Items custom menu populates this measure.
System Recommended Like Item
This measure is relevant if you selected the Like item substitution method. Your environment needs to have item attributes and attributes weights, so similarities between new and existing items are calculated. In this case, the potential Like Items are sorted by their similarity scores, and the item with the highest score is displayed as the system recommendation.
Note how the Like Items are not displaying just the item label. First, you see a percentage. This represents how similar the Like Items are to the New Items. A value closer to 100% means high similarity. The second value shows the average demand of the Like Item. This is useful in selecting a Like Item, because it is an indication of forecast magnitude. This value is recalculated to reflect the latest data point, so what you see here may be outdated by a week. Finally the third element is the item label.
User Selected Like Item
This measure is relevant if you selected the Like item substitution method. It shows a list with items that you can select to override the system recommendation. The number of items displayed in the list is set in the Recommended Number of Like Items measure in the Settings step.
Note how the Like Items are not displaying just the item label. First, you see a percentage. This represents how similar the Like Items are to the New Items. A value closer to 100% means high similarity. The second value shows the average demand of the Like Item. This is useful in selecting a Like Item, because it is an indication of forecast magnitude. This value is recalculated to reflect the latest data point, so what you see here may be outdated by a week. Finally the third element is the item label.
Approve Flag
When the set up process for forecasting the New Item was successful, this measure becomes True and the measure displays a check mark. You are now ready to run the Approve New Items custom menu to approve the New Item forecast strategy.
User Forecast
This measure displays the New Item Forecast based on the user-selected Like Item. This field is only populated when the substitution method is Like Item and the user-selected Like Item is provided.
New Item Forecast
This measure displays the forecast resulting from a What-if action performed in the workbook. If the substitution method is Like Item , then this field has the New Item forecast based on the system recommended Like Item.
Current New Item Forecast
This measure displays the New Item forecast from the previous batch run for new items not yet matured. If no New Item strategy has been selected prior to the batch run, then this measure is empty.
New Item Forecast View
In this view you are able to view the forecast of the New Item based on the selected strategy.
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Measures: Similarity Score View
The Similarity Score view contains the following measures.
Similarity Scores
This measure displays the similarity scores among new and existing items.
What-if Similarity Scores
Similarity Scores are based on an item’s attribute assignment and attribute weights and calculated in AI Foundation. The higher the number between two items the more similar the two items are. .
In this guide
- Guide: IPOCS-Demand Forecasting and IPOCS-LAR User Guide
- Previous: 21 Review and Approve
- Next: 4 Forecast Setup Task