Explanation Variables
[To Demand Planning]
Usage
Use this window to create, remove, select and view a graphical and table presentation of all the demand plan server data elements of explanation variables. To select which explanation variable that is displayed in the graph you must move the table cursor to a cell in the explanation variables column. Then that explanation variable is shown in the graph. There are 2 graph tabs, the Graph tab and the Scatter tab.
Graph
The x-axis unit is time (periods) from the first period of historical data for the current item to the last period of the forecasting horizon. The choice of period unit (week, month or quarter) is done once and for all in the Period Version Setup. The left y-axis is the selected explanation variables unit. The right y-axis is for the currents parts adjusted demand, the unit can be either the standard unit for the Part No (number) or the Cost Price changed by the (Select Unit) toolbar. The y-axis is automatically scaled to fit the data that is presented. If the window is too small to fit all the data into the x-axis, then scrolling buttons are activated in the bottom left and right corners of the window. The graph may also be scrolled by dragging the x-axis scale in the desired direction.
Scatter
The x-axis unit is historical demand from the current selected part or group in Demand Planning, the unit can be either the standard unit for the Part No (number) or the Cost Price changed by the (Select Unit) toolbar. The left y-axis is the selected explanation variables unit. The y-axis is automatically scaled to fit the data that is presented. If the window is too small to fit all the data into the x-axis, then scrolling buttons are activated in the bottom left and right corners of the window. The graph may also be scrolled by dragging the x-axis scale in the desired direction. The graph is not updateable in scatter mode. The black thin line is the regression line trough the scatter points, a positive slope indicates positive correlation between the part/group and the explanation variable, while a negative correlation will give a negative slope of the regression line. The distance the points have from the correlation line indicates how strong the correlation is.
| Element | Color | Read/Write | Description |
| Adjusted demand |  |
Read-only | The demand data is adjusted in order to provide the best possible basis for calculating forecasts, e.g., removing outliers (such as unusually large or small data values and non-annual campaigns), entering data in zero sales periods (due to missing data), run-out situations, strikes, etc. Editing must be performed in the Forecast Table window, e.g., removing exceptionally large or small values and entering data for periods where data is missing. |
| The Selected Explanation Variable |  |
Read-Write | This is the graph line for the explanation variable selected in the table. This line can be changed both in the past and future. When this line is changed the Refresh button in the Select Part toolbar is enabled, indicating that the regression has changed and therefore the forecast shown is no longer valid. It is also possible to change the explanation variable form the table see below. This is the only graph element in scatter mode. |
Toolbar
The toolbar area is places on the top left corner of the window above the table, it consists of 3 buttons.
 |
Opens the add explanation variable dialog box. |
 |
Refreshes the explanation variable, only available for variables that have been linked to parts / groups in Demand Planning. Clicking this will put the values of the explanation variable part/group source into the explanation variable. |
 |
Opens the edit explanation variable dialog box, where you are allowed to edit the variables properties. |
Legend
The legend is a vertical bar in the right side of the window. It can
be maximized or minimized by using the appropriate buttons in the upper part of the legend
area: 
and 
respectively. When
maximized, use the legend to select the data elements that are to be presented in the
graph, as well as to view the colors representing each element. This applies for both the
forecast graph and the forecast error graph. In the forecast error graph the user
can click on the descriptions of the elements to activate connected elements in one click.
Legend does not exist in scatter mode.
Notes Button 
This button presents the following information when you point at or drag one or several periodical data elements: the specific data element, the specific period, and the on-line value.
Graph Adjustments
The Data in Explanation variable can be changed directly in the graph by dragging the graph elements. The system displays the on-line value of the periodical elements as they are dragged if the Notes function is activated. Graph adjustments only possible in graph mode.
Changes to other elements of the Demand Plan (Adjusted Forecast, Adjusted Demand, Budget, and Target Sales Plan) may be done in the Forecast Table. You can make advanced graphical adjustments by holding down the Ctrl and Shift buttons when dragging:
| Key | Name | Description |
| - | Single period | Drag an individual forecast element up or down directly in the graph to raise or lower the forecast value, while holding down the left mouse button. |
| Shift | Straight line | Drag an index value to the right while holding the Shift key to arrange the elements in a straight line from the initial position of the period to where it was finally dropped. |
| Ctrl | Level | Hold the Ctrl key while dragging any forecast element up or down to raise or lower all elements of this type equally. |
| Shift+Ctrl | Free Draw | Hold the Shift+Ctrl key while dragging any forecast element up or down to draw a freeform line of forecasts. |
Activity Diagrams
N/A
Activities
| Menu Choice | Activity |
| Copy as Bitmap | Copy the graph to the clipboard. After this command it is possible to paste the graph into other files. |
| Legend | Turn legend on/off. |
| Tool tip | Turn tool tip notes on/off. |
Fields
N/A
The Table part
Usage
Use this window to visualize and work with explanation variables. The top row (check boxes) is where you add/remove a explanation variable to a part/group, this is done by checking/clearing the check box in the row of the explanation variable that is to be added or removed. Available data elements for the table are:
| Element | Read/Write | Description |
| Adjusted demand | Read-only | This is the demand data adjusted to provide the best possible basis for calculating forecasts, e.g., removing outliers and non-annual campaigns, entering data in zero-sales periods (due to missing data), run-out situations, strikes, etc. |
| Explanation Variables | Read/Write | There is a column for each explanation variable that is added to the demand plan server, the explanation variable where the cell cursor is placed is the explanation variable that is shown in the graph. |
Any active selection in the table, the sum and average of the cells in the selection will be displayed in the status bar.
Activity Diagrams
N/A
Activities
| Menu Choice | Activity |
| Format Cells | Cell formatting in the table is limited to specifying the number of decimal places to be used and whether to use the 1000 separator. |
| Copy (also Ctrl+C or Ctrl+Insert) | Copies the selected cells to the clipboard. |
| Paste (also Ctrl+V or Shift+Insert) | Copies the contents of the clipboard into the table. |
| Copy To Excel | Saves the entire table contents to an Excel file with the suggested name "'ExplanationVariables.xls." |
Fields
This window contains:
| Rows: | The top row called included, it is in this row you can add/remove explanation variables that is to e included in the multiple regression model for this part/group. In addition to this one top row there is a row for each monthly periodic value of the data elements. The time interval extends from the first period having existing data on the current part/group to the last period of the forecast horizon. Labels are in the following format: YYYY-PP (where Y = year and P = period). |
| Columns: | One column for each existing
explanation variable, and one row with the adjusted demand.
|
Multicollinearity
At the bottom of the table the table changes contents. Down here we have something called a correlation matrix, this matrix shows the correlation between the different explanation variables and the other explanation variables and the adjusted demand of the selected part/group. Here the Row labels indicates the explanation variable that the correlations coefficient on that row represents. A rule of thumb any r value (cell number) above 0.7 at the left of the far right column indicates multicollinearity.
In some sense, the collinear variables contain the same information about the dependent variable. If nominally "different" measures actually quantify the same phenomenon then they are redundant. Alternatively, if the variables are accorded different names and perhaps employ different numeric measurement scales but are highly correlated with each other, then they suffer from redundancy.
Consequences of multicollinearity
In some cases it will not be possible for Demand Planning to calculate the regression. In the presence of multicollinearity, the estimate of one explanation variable's impact on y (the forecast) while controlling for the other explanation variables tends to be less precise than if the explanation variables were uncorrelated with one another. The usual interpretation of a regression coefficient is that it provides an estimate of the effect of a one unit change in an explanation variable, X1, holding the other explanation variables constant. If X1 is highly correlated with another explanation variable, X2, in the given data set, then we only have observations for which X1 and X2 have a particular relationship (either positive or negative). We don't have observations for which X1 changes independently of X2, so we have an imprecise estimate of the effect of independent changes in X1.