Preliminary The observed demand can be broken down into two components: Observed demand(O)=systematic component(S) random component(R) Systematic component-expected value of demand -Level(current deseasonalized demand) Trend(growth or decline in demand) Seasonality (predictable seasonal fluctuation) .Random component-part of forecast that deviates from systematic component Forecast error-difference between forecast and actual demand SEIEE AU406 Supply Chain Management 10Preliminary  The observed demand can be broken down into two components: Observed demand (O) = systematic component (S) + random component (R) • Systematic component – expected value of demand − Level (current deseasonalized demand) − Trend (growth or decline in demand) − Seasonality (predictable seasonal fluctuation) • Random component – part of forecast that deviates from systematic component • Forecast error – difference between forecast and actual demand SEIEE AU406 Supply Chain Management 10