Start with something familiar
A spare bicycle tube can sit unused for months and then be needed suddenly. Averaging only days when it is replaced exaggerates the routine rate of use. At the same time, a family budget must add up: amounts assigned to people cannot silently exceed the household total. Sparse demand and inconsistent totals are different problems, but both depend on remembering what each number measures before combining it with another number.
Words to know: Intermittent demand, Coherence, Data grain.
Keep zero exposure periods
For weekly demand [0,0,8,0,0,0,4,0], total twelve over eight observed weeks gives 1.5 per week. Averaging only positive events gives six per event, a different unit. Removing zeros changes exposure and inflates the weekly rate. First verify that zeros are genuine observations rather than missing exports or stockout artifacts.
A rate is not an event schedule. Demand of 1.5 per week does not mean exactly one or two arrive each week. Keep event sizes and gaps visible and inspect totals over replenishment lead time. This course uses transparent rate and event scenarios; a tiny history does not justify an elaborate probability claim.
Map the aggregation paths
Four leaves A-North,A-South,B-North,B-South can add by product or region. Leaves 18,12,12,9 total 51, with product totals thirty and twenty-one and region totals thirty and twenty-one. Use the same time bucket and unit throughout. Adding a monthly revenue forecast to weekly bottle demand is not reconciliation.
If an independent company forecast is 55 while leaves sum to 51, choose a documented rule. Bottom-up keeps leaves. Proportional adjustment multiplies leaves by 55/51 and preserves their shares. It creates coherent totals but is not automatically most accurate. Explain why the total or leaf detail deserves priority in this decision.
Preserve known information
A firm new order assigned to A-North should not automatically be spread across every leaf. Hold justified fixed information and allocate only the unresolved remainder. Structural zeros, such as a product not sold in a region, need special handling. Mathematical convenience is not a reason to invent demand where the product is unavailable.
Check performance at both total and operating levels. Opposite regional errors can cancel at company level while creating two service problems. Keep fractional expected forecasts during evaluation. If whole-unit allocation is needed, define a rounding rule that preserves the chosen total, and distinguish that operational allocation from a forecast of individual events.
- Define target
- Check evidence
- Calculate
- Challenge assumptions
- Record decision
Handle sparse demand and coherent totals — worked case
All inputs below describe fictional Northstar bottles. Keep the stated units and timing when reproducing the calculation.
| Measure | Values |
|---|---|
| Accessory eight weeks | 0,0,8,0,0,0,4,0 |
| Bottle leaves | 18,12,12,9 |
- 1. Accessory rate = 12/8 = 1.5; positive event size = 12/2 = 6.
- 2. Leaves sum to 51.
- 3. Multiply leaves by 55/51 for a proportional top total of 55.
Adjusted leaves approximately [19.4118,12.9412,12.9412,9.7059], summing to 55 before rounding.
Assumptions
- Periods and quantities use the definitions stated in this example.
- Only explicitly supplied events or adjustments are included.
Where this can fail: The arithmetic checks the stated assumptions; it does not establish that uncertain future events will occur.
Build, test and explain a plan
X twelve weeks [0,0,8,0,0,0,4,0,0,12,0,0]; Y [0,3,0,0,3,0,0,3,0,0,3,0]. Bottle forecasts for three future weeks: A-North [18,20,22], A-South [12,14,16], B-North [12,10,8], B-South [9,11,13]. Top totals [55,55,65]. All units are bottles unless stated otherwise. Use a spreadsheet or ruled paper. Eight hours includes construction, comparison, writing, and teach-back; this is a planning estimate, not an experimentally validated completion time.
Use paper or a spreadsheet. The estimates below include the study and worked example already on this page.
| Estimated hours | Activity |
|---|---|
| 0.5 | Study the lesson and write a data dictionary defining every field, time bucket, unit, and cutoff. Separate observed facts from assumptions. Identify two ways a colleague could misread the target and rewrite its definition to prevent those errors. |
| 0.5 | Reproduce the worked example independently, showing formulas and intermediate values. Compare against the answer and keep a correction log explaining each difference. Check one result a second way using a total, balance, or direct manual calculation. |
| 3 | Build weekly and four-week accessory rate views without deleting zeros. Build bottle product,region,total views. Compare bottom-up and proportional reconciliation; round using largest fractional remainders, ties in listed leaf order. Keep inputs separate from formulas, label every origin and target, and add independent row and total checks. Produce an annotated chart with at least two observations tied to specific rows; include a brief explanation of why each check matters. |
| 2 | Compare accessory event scenarios six units every three weeks versus twelve every six weeks. For bottles, hold A-North fixed and proportionally allocate the remaining top total across other leaves. Preserve each variant separately. Create an output comparison table and explain which changed assumption caused each movement. Identify a scenario that affects timing differently from totals and state what the planner should do with that distinction. |
| 1 | Write a 400-word decision memo using your own numerical outputs. State the proposed action, evidence, two limitations, an owner for the next check, and a measurable condition that would change your recommendation. Attach the model so a reader can audit every cited value. |
| 1 | Prepare a five-minute teach-back using one worked row and one scenario comparison. Explain it aloud to a colleague or recording. Write three skeptical questions, answer them with evidence, and revise the memo or model where your explanation exposes an unsupported assumption. |
Your deliverables
- Auditable input and formula model with checks
- Scenario comparison and annotated chart
- Decision memo, correction log, and teach-back notes
Check your practice work
- X total 24, weekly rate two, positive event size eight. Y total twelve, rate one, event size three.
- Bottom-up totals [51,55,59]; top gaps [4,0,6].
- Week-one proportional whole units [19,13,13,10], total 55.
- Fixed A-North eighteen leaves 37 allocated 12:12:9, approximately [13.4545,13.4545,10.0909].
- Both accessory scenarios average two units weekly; shorter-window exposure differs.
Keep these three ideas
- Preserve zero periods and reconcile product and regional forecasts to one common total.
- Keep original evidence distinct from modeled values and assumptions.
- A precise output remains conditional on definitions and timing.
Common mistakes
- Overwriting the original evidence after a revision.
- Reporting a number without its unit, period, cutoff, and assumptions.
Optional video study
Preserve zero periods and reconcile product and regional forecasts to one common total.
- Keep zero exposure periods
- Map the aggregation paths
- Preserve known information
One half of the module narration, with a distinct Northstar calculation and a bridge to the paired lesson.
Open the module media & quizPut this idea to use
Carry your assumptions into a practical tool, then compare your result with a short guide.
Open a related planning toolRead the related planning guidePractice with the planning gameThis saves a completion marker in this browser only. It does not verify time spent.