How do you choose your aggregation levels?Demand Planning
When it comes to aggregation you could traditionally choose top-down or bottom-up. That is not necessarily the case anymore.
The Institute of Business Forecasting & Planning said, “Middle-out forecasting is another option, starting somewhere in the middle of a hierarchy; for example, from a specific product line or category. Others prefer a hybrid approach, forecasting some items at lower levels and others aggregated. It is clear that often, forecasts can and should be done and multiple levels of aggregation.”
No matter which method you use, it’s important to use this tool to make your forecasting more accurate. Which method would work best for you?
Aggregation Levels For Forecasting
The most common forecasting hierarchies are:
Each one is an attribute that may have many levels of aggregation.Despite all the potential attributes, levels of aggregation, and combinations of them, historically the debate has been condensed down to only two options, top down and bottom up,
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