Demand Forecasting

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  • Topic: Time series, Exponential smoothing, Time series analysis
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A PROJECT REPORT
ON

DEMAND FORECASTING OF RETAIL SUPPLY CHAIN MANAGEMENT USING STATISTICAL ANALYSIS By
AVINASH KUMAR SONEE2005B3A8582G
KRISHNA MOHAN YEGAREDDY2006B3PS704P
AT
HETERO MED SOLUTIONS LIMITED
Madhuranagar, Hyderabad
A Practice School–II station of
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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, PILANI
DECEMBER, 2009

A PROJECT REPORT
On
DEMAND FORECASTING OF RETAIL SUPPLY CHAIN MANAGEMENT USING STATISTICAL ANALYSIS by

AVINASH KUMAR SONEE - (M. Sc. (Hons.) Economics) - 2005B3A8582G KRISHNA MOHAN YEGAREDDY - (M. Sc. (Hons.) Economics) - 2006B3PS704P

Prepared in partial fulfillment of the Course
PRACTICE SCHOOL-2
Submitted to
Mr. J. T. RAO
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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, PILANI
DECEMBER, 2009

ACKNOWLEDGEMENTS

We would like to thank the founder and chairman of our PS Hetero Drugs Ltd., Mr. B. Parthasaradhi Reddy for giving us the opportunity to work in the prestigious company. Mr. B. Vamsi Krishna, MD, Hetero Med Solutions Ltd. has inspired and guided us since the beginning of the project and we owe a great deal of knowledge earned during the project to him. We also thank Mr. Suresh, Manager, I. T. Department and the in charge of our project for his invaluable assistance, encouragement and suggestions for improvement and taking his time to guide us for the entire project.

We are indebted to Mr. G. Sundar, Dean, Practice School Division BITS-Pilani for the opportunity to work at Hetero Drugs . Ltd. Hyderabad as part of Practice school- II programme. We owe our sincere thanks to Prof. J. T. Rao, our PS Instructor for extending his constant support and guidance. We also are grateful to few other people who have directly or indirectly helped us in our successful completion of the project.

BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE
PILANI (RAJASTHAN)
Practice School Division
Station: Hetero Med Solutions Ltd.Centre: Hyderabad
Duration: Six months (From: 2 July, 2009 to: 12 December, 2009) Date of Submission: 10th Dec, 2009

Title of the Project: DEMAND FORECASTING OF RETAIL SUPPLY CHAIN MANAGEMENT USING STATISTICAL ANALYSIS

ID No.: 2005B3A8582G Name: AVINASH KUMAR SONEE
2006B3PS704P KRISHNA MOHAN YEGAREDDY Discipline: M. Sc. (Hons.) Economics

Name(s) of Experts:
Mr. B. Vamsi Krishna, Managing Director, Hetero Med Solutions Ltd. Mr. Suresh, Manager, I. T. Dept., Hetero Med Solutions Ltd.

Name of the PS Faculty:
Prof. J. T. Rao

Key Words: ARIMA, Auto ARIMA, Lead Time, Moving Average, Re-Order Level (ROL), Seasonality, Safety Stock, Time Series.

Project Areas: Demand Forecasting, R Programming, Inventory Management.

Abstract
Demand Forecasting is an integral part of any retail supply chain management system and we have presented a case of Retail Pharmacy (Hetero Pharmacy) for our project using the historical Sales data of different drugs. We analyzed the data and then applied different statistical models using R Programming and Spreadsheet. We have also studied cases of seasonality and trends and forecasted the values for those series by de-seasonalizing. After forecasting, we have also calculated the Re-Order Level (ROL) which is used to control the inventory levels.

Signature of Student Signature of PS Faculty Date: Date:

CONTENTS

1.NATURE AND SOURCES OF ECONOMIC DATA- 8 -

1.1.Economic data- 8 -

1.2.Time series data- 8 -

2.DEMAND FORECASTING- 10 -

2.1.Qualitative forecasting methods- 11 -

2.2.Quantitative forecasting methods(Time Series Forecasting Methods)- 11 -

2.3.Qualitative Forecasting Method – Example- 12 -

2.4.Quantitative forecasting methods- 14 -

2.4.1.Simple moving average method- 14 -

2.4.2.Weighted moving average method- 15 -

2.4.4.Double exponential smoothing (Trend-adjusted exponential smoothing)-...
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