Forecast - Forecast - Maximum decline (%)

Limits the forecast decline in comparison to sales history. This setting works in conjunction with the Reactivity parameter. A “High” reactivity forecast will be limited based on more recent sales, while a “Low” reactivity forecast will be limited based on a longer history.

It is best to set the Maximum growth percentage higher than the Maximum decline percentage. This approach allows for faster recognition of positive growth, while preventing excessive forecast reductions that could lead to stock-outs.

These percentages become especially important when the Reactivity parameter is set to “High.” See the explanation of the Reactivity parameter for more detail.

You should also consider the type of business when determining appropriate limits. The Reactivity and Maximum decline percentage parameters should always be configured together, as one directly affects the other.

💡Tip: Leave these settings at their default values initially. Allow demand planners to forecast as usual, review where forecasts fall short, and adjust these parameters based on those findings.

Imagine an item with sales history showing a consistent 20% decline each month. Normally, the forecast would follow this trend and continue decreasing at 20% month over month.

If a Minimum decline limit of 10% is applied, the forecast will instead decline more gradually, as shown below:

These examples also assume a Reactivity setting of “High,” meaning the most recent sales data carries greater weight than older history.

If the Reactivity setting were “Low,” the forecast would smooth out the decline, placing more emphasis on long-term averages, resulting in a flatter forecast: