What is proportional factor in SAP SCM-APO-FCS - Demand Planning?

SAP Term: proportional factor

• Component: SCM-APO-FCS

• Component Name: Demand Planning

• Description: Define the proportion that one characteristic value combination at detail level contributes to a total at aggregate level. Proportional factors are used when disaggregating data from the aggregate to the detail level. For example a product group consists of 5 products A, B, C, D, und E. You expect the demand to be as follows: A - 10%; B - 15%; C - 10%; D - 40%; E - 25%. These percentages are the proportional factors. If you then determine a demand of 2000 pcs at product group level, the system calculates the following demand at product level: A - 200 pcs; B - 300 pcs; C - 200 pcs; D - 800 pcs; E - 500 pcs.

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• Key Concepts: 
  Proportional factor is a parameter used in the Demand Planning component of SAP's Supply Chain Management-Advanced Planner and Optimizer (SCM-APO-FCS). It is used to adjust the forecasted demand for a particular product or service based on the historical demand for that product or service. The proportional factor is calculated by dividing the historical demand by the forecasted demand. 
  
  How to use it: 
  The proportional factor can be used to adjust the forecasted demand for a particular product or service. To do this, the historical demand for that product or service must first be determined. This can be done by looking at past sales data or other sources of information. Once the historical demand is determined, it can be divided by the forecasted demand to calculate the proportional factor. This factor can then be used to adjust the forecasted demand accordingly. 
  
  Tips & Tricks: 
  When calculating the proportional factor, it is important to consider any seasonal fluctuations in demand that may have occurred in the past. This will help ensure that the adjusted forecasted demand is more accurate and reflects any changes in customer behavior over time. Additionally, it is important to keep in mind that the proportional factor should only be used as an adjustment tool and not as a replacement for forecasting methods such as regression analysis or time series analysis. 
  
  Related Information: 
  The proportional factor is just one of many parameters used in Demand Planning within SCM-APO-FCS. Other parameters include safety stock, lead time, and order quantity. Additionally, Demand Planning also utilizes forecasting methods such as regression analysis and time series analysis to generate more accurate forecasts.