What Is Forecast Consumption in Demand Planning?

Forecast consumption is the rule that prevents a demand from being counted twice when a firm order arrives inside a period that already carries a forecast. A forecast is a planner's estimate of demand; a firm order is a piece of that demand becoming a committed reality. If the plan simply added the two, it would double-count. The consumption rule reconciles forecast and firm into a single gross requirement for each time bucket, so the plan absorbs one demand, not two.

This entry defines forecast consumption and shows how it behaves inside EDGEBIC by User Solutions. For the wider index of planning terms, see the manufacturing glossary, and for the demand figure it produces, see projected available balance.

How it works

Picture a bakery that forecasts 100 loaves of demand for next week and bakes ahead to meet it. On Monday, three cafes place firm orders totaling 60 loaves. Those 60 are not new demand on top of the 100; they are 60 of the 100 turning into real orders. If the bakery treated the week as needing 160, it would bake far too much. Forecast consumption is the accounting that keeps the total at 100.

Manufacturing planning offers two standard rules for this reconciliation, and the right one depends on how your firm orders relate to your forecast:

• GreaterOf sets gross requirements to max(forecast, firm). Firm orders are assumed to land inside the forecast, so the larger number wins. This is the safer default when confirmed orders normally replace forecasted ones.
• MinusConsumed sets gross requirements to max(0, forecast - firm) + firm. Firm orders eat into the forecast first, and only the uncovered remainder of the forecast is added on top. This is correct when firm orders are additional to, rather than a substitute for, the forecast.

A key property of both rules is that firm demand is never suppressed. Real committed orders always flow into requirements at full value; the rules differ only in how they treat the forecast surplus around those orders.

A concrete example

Take a make-to-stock product with a forecast of 100 for the week.

If firm orders are 60:

• GreaterOf gives max(100, 60) = 100.
• MinusConsumed gives max(0, 100 - 60) + 60 = 40 + 60 = 100.

Both agree, because the firm orders sit comfortably inside the forecast.

Now suppose firm orders are 130, above the forecast of 100:

• GreaterOf gives max(100, 130) = 130.
• MinusConsumed gives max(0, 100 - 100) + 130 = 0 + 130 = 130.

Both again land on 130, but the reasoning shows why the choice matters in edge cases. The moment forecast and firm interact differently in your business, for instance when surplus forecast should persist as genuine additional demand, MinusConsumed's additive shape and GreaterOf's larger-wins shape diverge. Choosing the rule that matches how your orders behave is what keeps gross requirements honest and prevents both over- and under-building.

How EDGEBIC uses it

In EDGEBIC, forecast consumption is a per-product setting applied inside the Inventory Calendar projection. Each product carries a forecast consumption rule, GreaterOf by default, and the projection engine applies it to combine forecast and firm demand into the gross requirement that projected available balance subtracts each bucket. For make-to-order products the engine skips forecast entirely and uses only firm demand, matching the reality that custom work is not built on estimate.

Forecast rows are never mutated when firm demand arrives. Consumption is computed fresh every time the projection runs, so the same stored forecast produces different gross requirements as real orders evolve. This keeps forecasts as durable planning intent while letting the math re-reconcile against the latest firm demand on every calendar refresh. The near-term picture is further protected by the demand time fence, inside which only firm demand counts and forecast is suppressed, preventing a stale estimate from over-building against orders that have already overtaken it.

To see the consumption rules with worked numbers and their interaction with time fences, read EDGEBIC forecasting and replenishment explained. To follow how the resulting demand feeds a build plan, continue with firm demand in planning and the master production schedule bucket.