What is consumption reference factor in SAP SCM-FRE - Forecasting and Replenishment?

SAP Term: consumption reference factor

• Component: SCM-FRE

• Component Name: Forecasting and Replenishment

• Description: Specifies the multiplication factor that the system applies to the consumption values of an original product when merging its transaction data with that of a follow-up product in the product substitution process.

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• Key Concepts: 
  Consumption reference factor is a parameter used in the Forecasting and Replenishment (FRE) component of SAP SCM. It is used to calculate the forecasted demand for a product based on the historical consumption of that product. The consumption reference factor is calculated by dividing the total historical consumption of a product by the total number of days in the period for which the consumption was recorded. 
  
  How to use it: 
  The consumption reference factor can be used to calculate the forecasted demand for a product. To do this, you need to multiply the consumption reference factor by the number of days in the period for which you want to forecast demand. This will give you an estimate of how much of the product will be consumed during that period. 
  
  Tips & Tricks: 
  When calculating the consumption reference factor, it is important to make sure that you are using data from a period that is representative of current demand. If you use data from an old period, your forecast may not be accurate. Additionally, it is important to consider any seasonal fluctuations in demand when calculating the consumption reference factor. 
  
  Related Information: 
  The consumption reference factor is just one of many parameters used in SAP SCM's Forecasting and Replenishment component. Other parameters include safety stock, lead time, and order quantity. Understanding how these parameters interact with each other can help you create more accurate forecasts and better manage your inventory.