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drugs in the United States. This company has 6 drugs in the top 100 drugs

by U.S. sales. It has multi variations in various kinds of drugs. Their one of

the best selling anti-infective cream is Pevisone which has a very large

demand all over the world. So the volume of sales is also very high for its

increment demand.

treatm

ent

with

PEVAR

YL

should

be

starte

Introduction

d and

contin

ued

until

compl

ete

cure is

obtain

is

ed

highly

effective

topical

steroid

with

rapid

anti-inflammatory,

Occlus

allergic action, at the concentration chosen for PEVISONE-- the two active

ive

dressi

full activity.

ngs

should

dermatophytes, yeasts and fungi, accompanied by distinct inflammatory

or allergic symptoms, e.g.. eczematous mycoses; diaper dermatitis;

eczema marginaturn;intertrigo; folliculitis trichophytica; sycosis barbae.

not be

used.

Like

with

any

other

region of body folds where inflammation or intolerance of drugs or

adjutants may develop.

PEVISONE is applied to the affected are and gently rubbed in with the

finger; this should be done once or twice a day; in the morning and/or n

the evening. A two-week therapy with PEVISONE is usaually sufficient to

control the concomitant inflammatory symptoms of mycoses.Thereafter,

G FORECASTIN

of 3-4 weeks, as

otherwise the skin may be damaged by the steroid effect (atrophy,

telangicetases, striae)

Objective and Rationale of Sales Volume of Pevison Anti-Fungal

Cream Forecasting

of the theories taught in the course Operation Management (BUS 650).

In additional to serve this purpose it tries to find out all the necessary

information that one person needs to know about forecasting.

By building an appropriate forecasting model, a future big

picture of sales volume can be achieved.

Scope

and

Limit

ations

of

The

Study

This

study

has

been

done

based

on the

risk stock out situation.

fourty

maximum sales revenue.

quarte

can be attained.

sales

customers.

e from

2

3

4

5

forecasting is important for uninterrupted distribution of rooms in

peak seasons.

four

rs

of

volum

2001

to

2011.

We tried to propose suitable model for forecasting with the data series in

hand. We have also tried to forecast sales volume based on several

forecasting techniques. Scope of the study also included the Testing of the

forecasting accuracy.

Here, we took quarter sales volume & used it for the remaining quarters.

Not enough statistical data has allowed little space for in depth analysis &

thus to some extent might have hampered the accuracy.

G FORECASTIN

Data Source

anti-fungal cream's data set. The Sanofi Aventis produce Pevison cream as

anti fungal cream to cure the fungal skin diseases. Data has been

collected from a primary source and is also available in secondary data

source.

Quali

tative

Meth

ods:

Qualit

ative

foreca

Forecasting

sting

techni

ques

gener

example might be

ally

emplo

judgm

ent of

expert

the

s

Types of Forecasting

in

the

appro

Mainly,

the forecasting can be classified as:

1

Qualitative methods

2

Quantitative methods

priate

field

to

be applied in situations where historical data are simply not available.

Moreover, even when historical data are available, significant changes in

environmental conditions affecting the relevant time series may make the

use of past data irrelevant and questionable in forecasting future values of

the time series.

G FORECASTIN

sales

of the

produc

t.

calcul

that relies heavily on historical demand data to project the future size of

ate

the

To

foreca

Forecasting Techniques and Analysis

sting

accura

on time series data that exhibits linear trend. The techniques applied on

the quarterly demand data to make a four quarter forecast of 2012. To

determine the forecasted quarterly we have used the following techniques

of forecasting:

1

2

Time Series Decomposition/ Seasonal Analysis

cy, we

have

used

the

followi

ng

techni

ques:

1

Mea

n

a

b

s

o

l

u

t

e

Trend Analysis

Winters Method

eviation (MAD)

2

3

Tracking Signal(TS)

For preparing this report we have used Microsoft Word, MS-Excel and

MINITAB

G FORECASTIN

Moving average forecast uses a number of the most recent actual data

values in generating a forecast. Under this method effect of extreme data

values is neutralized by other observations depending upon the number of

periods used. The Moving Average forecast for time period t (Ft) is

computed using the following equation:

5

n

F MA

t

Where,

i

i1

be averaged

Ai = Actual Occurrence in the past period for up to n periods

weights is equal to 1. An n-period weighted moving average allows you to

place more weight on more recent time periods by weighting those time

periods more heavily.

F =W A

+W A

+W A

++W A

t

1 t1

2 t2

3 t3

n tn

Where,

Wt =Weight given to time period t occurrence.

G FORECASTIN

Percent

2500

Variable

Actual

Fit

s

Forecasts

95.0% PI

Moving

Average

Lengt

h

3

Accuracy

Measures

MAPE

60

MAD

327

MSD

169515

2000

Demand

1500

1000

500

0

-500

-1000

1

10

15

20

Index

25

30

35

(response is Demand)

99

95

90

40

45

F

i

g

u

r

e

:

P

r

o

b

a

b

i

l

i

t

y

p

l

o

t

G FORECASTIN

Percent

2500

Variable

Actual

Fits

2000

Forecasts

95.0% PI

Moving

Average

Length 5

Accuracy

Measures

MAP

E

55.2

MAD

237.9

MSD

97994.8

Demand

1500

1000

500

0

10

15

20

Index

25

30

35

(response is Demand)

99

95

90

80

40

45

F

i

g

u

r

e

:

P

r

o

b

a

b

i

l

i

t

y

p

l

o

t

s

G FORECASTIN

moving average models. It does this automatically by weighting past data

with weights that decrease exponentially with time; that is, the more

recent the data value, the greater its weighting. Effectively, SES is a

weighted moving average system that is best suited to data that exhibits

a flat trend.

=

1)

1

+ (

= Smoothing constant

At1 = Actual demand for previous period

Single

Exponent

ial

Method

250

0

Variable

Actual

Fits

Forecasts

95.0% PI

200

0

Demand

150

0

Smoothing Constant

100

0

Alpha

0.263014

Accuracy Measures

MAPE

58

MAD

303

14897

MSD

7

500

0

-500

1

10

G FORECASTIN

Smoothing method of

forecasting

(response is Demand)

99

95

90

Percent

80

70

60

50

40

30

20

10

5

-1000

-500

0

Residual

500

method of forecasting

Double exponential smoothing provides short-term forecasts for

the time series data. It works well when a trend is present. This

method utilized two estimates for level and trend components. It

is also called trend-adjusted exponential smoothing as it employs

a level component and a trend component at each period. Using

two smoothing constants, it updates the components at each

period. The double exponential smoothing equations are:

+1

Where,

= Smoothed Forecast

= Current Trend

Estimate

=

=

+ (

+ (

0<

<= 1

0<

G FORECASTIN

Percent

80

Demand

Double Exponential

Method

70

60

50

40

30

20

Variabl

e

Actual

Fits

Forecasts

4000

3000

2000

95.0% PI

10

Smoothing Constants

Demand

1000

Alpha (level)

Gamma

(trend)

1.37580

0.01000

Accuracy Measures

MAPE

61

-1000

MAD

MSD

373

208377

-2000

-3000

-4000

1

10

15 20

25 30

Index

35

40

45

forecasting

(response is Demand)

99

95

90

-1

Fi

gu

re:

Pr

ob

ab

ilit

y

pl

ot

s

for

10

G FORECASTIN

Trend Analysis

Trend analysis represents a picture about the position and pattern of data.

It deals with the consistency and ups and downs of the obtained data. It

can be parabolic trend, Exponential trend or growth curve. A simple plot of

data often can reveal the existence and nature of trend. A linear trend

model is used to predict future values of estimate.

=

+

Where,

t = Specified number

of time periods from t = 0 ,

Ft =forecast for

period t,

a =value of Ft at t =

0,

b =slope of the line.

We obtain the fitted linear trend

equation as follows:

Trend

Analysis

Plot for

Demand

Linear

Trend

Model

Yt =

1620 30.357

6*t

2500

Demand

2000

1500

1000

500

0

1

10

Variable

Actual

Fits

Forecasts

Accuracy

Measures

MAPE

MAD

MSD

G FORECASTIN

forecasting with Trend

Equation

11

dividi

ng the

Normal Probability

Plot

data

(response is Demand)

with

Percent

99

the

95

trend

90

comp

80

onent.

70

60

50

40

30

20

10

12

-1000

-500

0

Residual

500

forecasting

The simple seasonal method is the most basic method of computing

the seasonal factors for a given series of data. A widely used scheme to

estimate the initial values of the seasonal factors involves simply

dividing the observation in each period by the average for the season.

Time series seasonal decomposition model used a centered moving

average with a length equal to the length of the seasonal cycle. When

the seasonal cycle length is an even number, a two-step moving

average is required to synchronize the moving average correctly. It

divides the moving average into multiplicative model to obtain what

are often referred to as raw seasonal values. For corresponding time

periods in the seasonal cycles; this model determines the median of

the raw seasonal values. This model uses the seasonal indices to

seasonally adjust the data and fits a trend line to the seasonally

adjusted data using least squares regression. The data is de-trended by

G FORECASTIN

Multiplicative

Model

Detrended Data by

Season

Seasonal Indices

2.0

1.2

1.5

1.0

1.0

0.8

0.5

0.6

1

Percent Variation by

Season

Residuals by Season

400

30

200

20

0

10

0

-200

1

The seasonal Indices are as

follows:

FORECASTING

13

Multiplicative Model

2500

Demand

Multiplicative Model

Original Data

Detrended Data

2000

2000

2.0

1000

Demand

1.5

1.0

0.5

0

1

18

27

36

1500

1000

18

Index

500

Data

400

2000

200

1000

0

-200

0

1

18

27

36

Index

18

Figure:

Decomposition Plot

of Demand

Demand

14

Fitted Trend Equation is as follows:

Yt = 1647.9 - 31.3036*t

Demand

G FORECASTIN

Win

ter

s

Met

hod

(response is Demand)

99

95

Wint

90

ers'

80

Meth

Percent

70

60

50

40

30

od

smo

20

othe

1

0

s

data

by

Holt-

Wint

ers

expo

nent

ial

-400

-300

-200

-100

0

Residual

Decomposition

100

200

smo

othi

ng

and

use this procedure when both trend and seasonality are

present, with these two components being either

additive or multiplicative and hence this model may be

interpreted as a type of triple exponential smoothing.

Winters' Method calculates dynamic estimates for three

components: level, trend, and seasonal. The HoltWinters' model is multiplicative when the level and

seasonal components are multiplied together.

magnitude of the seasonal pattern in the data depends

on the magnitude of the data. In other word, the

magnitude of the seasonal pattern increases as the data

values increase, and decreases as the data values

decrease. Winters' method employs a level component,

a trend component, and a seasonal

15

G FORECASTIN

th

se

as

on

al

co

po

ne

nt,

p=

Se

as

on

al

pe

L

T

S

Where, Lt==

Level

at time t1 ,

Weight for the level,

Tt= Trend at time t,

St= Is the seasonal component at time t1 ,

= Weight for

/

(Y S

rio

d,

Yt= Is the

data

value at

time t,

[L L

(Y / L )

t

=

Fitte

d

valu

e,

or

one

peri

odahe

adfore

t

(L

t 1

cast at time t.

16

G FORECASTIN

90

80

Percent

Demand

Multiplicative Method

3000

70

60

50

40

30

20

10

Smoothing

Constants

Alpha

(level)

Gamma

(trend)

Delta

(seasonal)

Accuracy

Measures

MAPE

MAD

MSD

Demand

2000

1000

-1000

1

10

15

20

25

30

Index

35

40

45

-1500

Figure:

Probabil

ity Plot

for

Winters

Method

of

Forecas

ting

Forecasting

17

Normal Probability Plot

(response is Demand)

99

95

-1000

G FORECASTIN

Single

Exponential

Smoothing for

Demand

Double

Exponential

Smoothing for

Demand

Time Series

Decomposition

for

Demand

Winters' Method

for

Demand

forecasting methods. We tried some methods in trial

and error basis and some models by following

assumptions

and

rules.

The

comparisons

are

narrowed down our research work by focusing only

those models which give the best accuracy. In the

following part of our work we will discuss only these

narrowed

down

significant

forecasting

models

individually.

Four Months Forecasts for different methods of

Forecasting:

Quarter

1

Forecasting

Methods

Jan-Mar,

2011

Quarter

2

AprilJune,

2011

Quarter

3

July-Sep,

2011

Quarter

4

OctDec,

2011

Trend Analysis

Moving Average

for

Demand (3

Period)

Moving Average

for

Demand (5

253.713

223.356

192.998

162.641

40

158.111

158.111

158.111

158.111

60

MAP

E

18

292.121

292.121

292.121

292.121

55.2

323.54

150.76

148.48

139.16

G FORECASTIN

Accuracy Test

of squared error and MAPE is the average percent error.

The formulas used to compute MAD, MSE and MAPE are

Con

troll

ing

the

Fore

cast

given below:

MAD =

MSE =

Trac

|Actual Forecast|

n

king

(Actual Forecast)2 n 1

Sign

however, it is more sensitive to a few large errors than

MAD. Consequently, MAD, the average of the absolute

discrepancies between the actual and fitted values in a

given time series is often preferred. If a model fits the

past time-series data perfectly, the MAD value would be

zero. As the fit worsens, the value of MAD increases. In

other words, a small value of MAD is desirable. In

addition, when forecast errors are normally distributed,

an estimate of the standard deviation of the forecast

al:

Man

y

fore

cast

s are

mad

e on

a

regu

lar

inter

val.

Beca

use

values of demand.

will be a succession of forecast errors. Tracking the

forecast errors and analyzing them can provide useful

insight on whether or not forecasts are performing

satisfactorily.

good

measurement

of

controlling

cumulative forecast error to the corresponding value of

mean absolute deviation (MAD) Used to monitor a

forecast. Tracking signal is computed as:

19

G FORECASTIN

period T

Values can be positive or negative. Limits of 4 is ideal for TS and up to 8 for a

range of acceptable values of the tracking signal. If a value outside the

acceptable range occurs, that would be taken as a signal that there is a bias in

the forecast, and that corrective action is needed. The TS values are compared to

predetermined limits of 4 were used, which are roughly comparable to three

standard deviation limits. The major weakness TS is that it utilizes cumulative

FORECASTIN

G

20

After plotting the tracking signals in different methods of forecasting, we got some

effective and some

ineffective methods of forecasting. Here we considered the range of normal value

of tracking signal 8. According to the plotted tracking signal the ineffective

10.00

0.00

-10.00

-20.00

5.00

0.00

-5.00

9

1011121314151617181920212223242526272829303132333435363

1 23 45 6 78

738394041

-10.00

-15.00

-20.00

-25.00

10.000

0.000

9

101112131415161718192021222324252627282930313233343536

1 23 4 5 6 7 8

373839

Fig

ur

e:

Tra

ck

ng

Sig

na

of

De

co

m

po

sit

on

Me

th

od

of

Fo

ec

as

ing

-10.000

-20.000

-30.000

10.00

0.00

-10.00

11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43

-20.00

-30.00

20.00

21

G FORECASTIN

Method

100.00

4.00

3.00

0.00

-100.00

9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43

-200.00

2.00

1.00

-300.00

0.00

12

According to the plotted tracking signal the effective method of forecasting are

presented below:

-1.00

-2.00

15.00

10.00

5.00

0.00

-5.00

9

10111213141516171819202122232425262728293031323334353637383

12 34 567 8

94041424344

-10.00

-15.00

Variation)

Fi

g

u

r

e

:

T

r

a

c

k

i

n

g

S

i

g

n

a

l

o

f

Variation point 3.27 which is below the Idle limit of 4)

22

G FORECASTIN

Conclusion

A

prelimi

nary

exami

nation

reveal

ed

that

most reliable result. This report also examines the forecasting accuracy of

two

several

simple

models

including

trend

analysis,

moving

average,

single

winters method. We have used quarterly consumption data from Sanofiaventis statistics of Bangladesh from 2001 to 2011, which generates a

sample size of forty four observations. By the examination of these models

we will be in a position to suggest an appropriate forecasting model. Using

MSE, MAD MAPE and Tracking Signal (TS) as measures of accuracy, we

determine that model provides the best fit for the time-series analysis.

foreca

sting

metho

dologi

es

would

be

appro

priate

Since our data is having high trend, we can certainly say that in the near

future demand will be changed regarding the seasonal impact. Though

lack of a very long historical data and high seasonality has impacted on

the accuracy of the forecast.

for the

data

series

Doubl

e

Exponential Smoothing and Trend Analysis methods are applicable for the

data set in hand. These models were tested for post forecast accuracy and

each proved to be capable of generating relatively accurate forecasts of

the demand volume estimates, with the curve fit/seasonal dummy

variable models holding the edge.

23

G FORECASTIN

We faced few problems conducting the research which are Many forecasts are made on a regular interval. Because

forecast errors are the rule rather than exception, there will be a

succession of forecast errors. By tracking the forecast errors and

analyzing them can provide useful insight on whether or not

forecasts are performing satisfactorily.

Forecasting is only a part of our operations management

course, so it covers only a limited field of interest.

We only used Minitab and Excel for this work, where as there

are several other software dedicated for forecasting, i.e. R stat.

but we could not use them because of the limitation of our

FORECASTING

technical knowhow.

24

Bibliography

1Operations Management, 8

th

3Trend detection in control data: Optimizatio and Interpretation of

Triggs Technique for Trend Analysis. - George S. Cembrowski, James

O. Westgard, Arthur A. Eggert, and E. Clifford Toren Jr.

4Tutorial - Meet Minitab 16, for Windows January 2007

And the World Wide Web, i.e.

http://www.duke.edu/~rnau/seasarim.htm

scat=2B2B8263-1505-4358-B9E4- 51C279398C98#p30

FORECASTING

http://home.ubalt.edu/ntsbarsh/stat-data/forecast.htm#rAutorModels

http://en.wikipedia.org/wiki/Autoregressive_integrated_moving_average

25

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