What is it used for?
Average Daily Usage (ADU) is a key factor in DDMRP buffer calculations, shaping replenishment decisions to align inventory levels with actual demand patterns. It serves as a representation of demand and can be calculated using various methods, such as averaging past demand over different time horizons, incorporating future expected demand from forecasts, or a combination of both approaches.
Relying directly on forecasts to size and program replenishment orders often leads to excess inventory or shortages due to their inherent level of error and range of probability. ForgeFlow Cloud ERP’s DDMRP system takes a different approach—using demand forecasts to calculate Average Daily Usage (ADU), which then determines buffer sizes and replenishment system characteristics. This ensures service levels remain independent of forecast accuracy thanks to inventory buffers, while dynamically adapting to demand fluctuations through the inherent flexibility of DDMRP buffers.
Learn more