This setting will assume the demand beyond the projected period by taking the average demand of the last X months specified.

This parameter can be set to 12 months for a more stable forecast or 3 months for forecasts that need to adjust more dynamically.

Be sure to give the Extended planning horizon module article a read if a longer planning horizon sounds useful.

Pro tip: Highly seasonal businesses should set this parameter to 12 months.

Suppose the Extended Planning Horizon module is not enabled and we are working with a forecast horizon of 12 months. The item in question has a lead time of 9 months, safety stock of 3 months and a replenishment cycle of 3 months. As the projection or cover forward period is greater than the 12 months forecast horizon, we need to determine how the forecast outside the horizon should be calculated. This parameter specifies which months should be used to calculate the average forecast beyond the demand horizon.

If set to a value of 3 months, 6 months or 9 months, the forecast beyond the demand horizon will be as follows:

Value: 3 months

Value: 6 months

Value: 9 months