Start with something familiar
A cafe has ten muffins left when fifteen people ask for one. The till records ten sales, but fifteen people wanted muffins. Three customers from yesterday still expect reserved muffins as well. The kitchen needs to track both today's arrivals and yesterday's promises. It cannot infer all demand from today's till, and it should not call the old promises new arrivals. A demand bridge keeps these different stories visible.
Words to know: Demand, Sales, Backlog, Censoring, Forecast consumption.
Name the target
Northstar forecasts bottles newly wanted next week before supply limits. This target differs from revenue, shipments, capacity, and a sales quota. State the product, location, bucket, and cutoff. If customers requested fifty but only forty shipped, investigate the ten-unit difference: some customers may wait, some cancel, and some leave without a recorded request.
Sales can be censored by stockouts. A stockout flag tells us observed sales may understate demand; it does not reveal the missing quantity. Preserve observed shipments and any documented lost-demand estimate separately. A confident-looking replacement number is still an assumption when nobody measured the unmet requests.
Keep a demand bridge
An order is firm evidence, but adding it to a forecast can double count. If next week's forecast of 51 already includes a ten-unit customer order, fresh demand remains 51. Match orders to forecast scope using SKU, customer where relevant, and due period. Only genuinely incremental information justifies increasing the forecast.
Six old valid units owed plus 51 new units imply 57 obligations. This is the workload before stock, not 57 newly wanted units. If three old units are cancelled, obligations become 54 while fresh demand stays 51. Distinct columns make the effect of cancellations and carryover clear.
Connect to the decision
With eighteen usable stock units and ten arriving before demand, the 57 obligations leave 29 units to obtain. This does not establish that a supplier can deliver 29. It identifies the requirement for the supply team, which must assess timing, quality, and constraints. Keep demand and feasible shipments as separate views.
Define returns and replacements too. A return can reduce revenue without creating negative fresh demand. If management needs net sales and unconstrained demand, publish both with a bridge. The purpose is a shared definition that another planner can reproduce, not a single number that conceals incompatible business questions.
- Define target
- Check evidence
- Calculate
- Challenge assumptions
- Record decision
Define demand before forecasting — worked case
All inputs below describe fictional Northstar bottles. Keep the stated units and timing when reproducing the calculation.
| Item | Units |
|---|---|
| Fresh demand | 51 |
| Included order | 10 |
| Old backlog | 6 |
| Usable stock | 18 |
| On-time receipt | 10 |
- 1. The included ten-unit order adds zero.
- 2. Obligations = 51 + 6 = 57.
- 3. Net requirement = 57 - 18 - 10 = 29.
Fresh demand 51; obligations 57; net requirement 29.
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
Four weekly fresh forecasts are [51,54,50,58], included orders [10,12,8,14], initial backlog six, initial stock eighteen, and receipts [10,40,50,60]. Every unsatisfied unit remains backlog; no lost sales or cancellations. 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 four rows of fresh demand, included orders, incoming backlog, stock, receipts, shipments, ending stock, and ending backlog. Ship the smaller of supply and obligations. Carry the balances forward. 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 | Run separate variants: week-two receipt becomes 55; three initial backlog units cancel; week-three fresh demand rises to 65. 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
- Original shipments [28,40,50,60]; ending backlog [29,43,43,41]; ending stock zero.
- Fresh demand totals 213; obligations including old backlog 219; supply 178; final gap 41.
- Receipt 55 variant backlog [29,28,28,26].
- Cancellation variant backlog [26,40,40,38].
- Week-three demand 65 variant ends with backlog 56.
Keep these three ideas
- Separate fresh demand, shipped sales, and old backlog without counting orders twice.
- 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
Separate fresh demand, shipped sales, and old backlog without counting orders twice.
- Name the target
- Keep a demand bridge
- Connect to the decision
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.
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