Sanofi-Aventis manufactures, markets and/or distributes more than 247

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

PEVISONE Cream: A white cream containing 1% econazole nitrate BP

ued

and 0.1% triamcinolone acetonide BP.

until
compl

Econazole nitrate is a broad spectrum antifungal agent. Its range of

ete

application covers dermatophytes, yeasts and moulds. Moreover, it has

cure is

antibacterial effect on Gram-positive pathogens. Triamcinolone acetonide

obtain

is

ed

highly

effective

topical

steroid

with

rapid

anti-inflammatory,

antipruritic and anti-allergic action. At the concentration chosen for anti-

Occlus

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

ive

substances econazole nitrate and triamcinolone acetonide develop their

dressi

full activity.

ngs
should

The major indications of PEVISONE are dermatomycoses caused by

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

PEVISONE is also indicated for the treatment of mycoses located in the

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

steroidal preparation the duration treatment should be limited to a period

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

The objective of the term paper is to learn the practical implementations

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

Proper forecasting of sales revenue can help manage avoiding

risk stock out situation.

fourty

Proper forecasting is important for the planning to ensure the

maximum sales revenue.

quarte

By an appropriate forecasting of sales, consumption pattern

can be attained.

sales

Sales forecasting ensures supply of the product to the valued

customers.

e from

2
3
4
5

Sales revenue has some seasonal variation and precise

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

This paper investigates the prediction pattern in sales volume of Pevison

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

Forecasting is the process of making statements about events whose

ques

actual outcomes (typically) have not yet been observed. A commonplace

gener

example might be

ally

estimation for some variable of interest at some

specified future date.

Prediction is a similar, but more general term.

emplo

Forecasting is an important tool for the future of demand condition. This is

a prediction of future events used for planning purposes. Forecasting is

judgm

needed to aid in determining what resources are needed, scheduling

ent of

existing resources and acquiring additional resources.

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

generate forecasts. A key advantage of these procedures is that they can

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

Quantitative Methods: include causal methods and time-series analysis.

sales
of the

Causal methods are historical data on independent variables, such as

produc

promotional campaigns, economic conditions and competitors actions to

t.

predict demand or supply. Time series analysis is a statistical approach

calcul

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

ate

demand or supply and recognizes trends and seasonal patterns.

the

To

foreca
Forecasting Techniques and Analysis

sting
accura

A number of forecasting techniques are used for making forecasts based

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

Moving Averages (3 & 5 period)

Single Exponential Smoothing

Double Exponential Smoothing

Time Series Decomposition/ Seasonal Analysis

cy, we
have
used
the
followi
ng
techni
ques:

1
Mea
n

After forecasting, applying different techniques, we have found out the

a
b
s
o
l
u
t
e

forecasting accuracy and the appropriate techniques for forecasting the

Trend Analysis
Winters Method

eviation (MAD)
2
3

Mean squared error (MSE)

Mean absolute percent error (MSE), and

Tracking Signal(TS)

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

G FORECASTIN

Moving Average Method

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

Ft= Forecast for the coming period n=Number of Periods to

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

Weighted Moving Average: The weighted moving average permits an

unequal weighting on prior time periods such that summation of the

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,

Ft= Forecast for the coming period

At1 = Actual Occurrence in the past period for up to n periods

Wt =Weight given to time period t occurrence.

G FORECASTIN

Percent

Three Period Moving Averages:

Moving Average Plot for Demand

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

Figure: 3 Quarterly Moving Average

Normal Probability Plot

(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

s for three quarter moving average methods

G FORECASTIN

Percent

Five Period Moving Averages:

Moving Average Plot for Demand

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

Figure: 5 quarter Moving Average

Normal Probability Plot

(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

for five quarter moving average methods

G FORECASTIN

Single Exponential Smoothing

Single Exponential Smoothing (SES) largely overcomes the limitations of

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.
=

Where, Ft = Forecast for period t

1)
1

+ (

Ft1= Forecast for previous period

= Smoothing constant
At1 = Actual demand for previous period

Smoothing Plot for Demand

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

Figure: Single Exponential

Smoothing method of
forecasting

Normal Probability Plot

(response is Demand)
99

95

90

Percent

80
70
60
50
40
30
20
10
5

-1000

-500

0
Residual

500

Figure: Probability plots for Single Exponential Smoothing

method of forecasting

Double Exponential Smoothing 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

Smoothing Plot for

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

Figure: Double Exponential Smoothing method of

forecasting

Normal Probability Plot

(response is Demand)
99

95
90

-1

Fi
gu
re:
Pr
ob
ab
ilit
y
pl
ot
s
for

Double Exponential Smoothing method of forecasting

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

Figure: Trend method of

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

Figure: Probability plots for Trend method of

forecasting

Time Series Decomposition:

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

Seasonal Analysis for Demand

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

Figure: Seasonal Analysis for demand

The seasonal Indices are as
follows:

FORECASTING

13
Multiplicative Model
2500

Component Analysis for

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

Seas. Adj. and Detr.

500
Data

Seasonally Adjusted Data

400
2000

200
1000

0
-200

0
1

18

27

36

Index

18

Figure:
Decomposition Plot
of Demand

Figure: Component Analysis for

Demand

14
Fitted Trend Equation is as follows:
Yt = 1647.9 - 31.3036*t

Time Series Decomposition Plot for

Demand

G FORECASTIN

Win
ter
s
Met
hod

Normal Probability Plot

(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

Figure: Probability Plot for

Decomposition

100

200

smo
othi
ng
and

provides short to medium-range forecasting. One can

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.

In this study we chose multiplicative model as the

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

component at each period. It uses three weights, or

smoothing parameters, to update the components at

se

each period. Smoothing parameters, for the level, trend,

as

and seasonal components take values between 0 and 1.

on

Regardless of the component, large weights result in

al
co

more rapid changes in that component; small weights

result in less rapid changes. The components in turn

po

affect the smoothed values and the predicted values.

ne

Initial values for the level and trend components are

nt,

obtained from a linear regression on time. Initial values

p=

for the seasonal component are obtained from a

Se

dummy-variable regression using de-trended data. The

as

equations involving level, trend seasonal components

on
al

and forecasts are given below:

pe
L

T
S

Where, Lt==
Level
at time t1 ,
Weight for the level,
Tt= Trend at time t,

= Weight for the trend,

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

Winters' Method Plot for

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

Figure: Winters Method of

Forecasting

17
Normal Probability Plot
(response is Demand)
99

95

-1000

G FORECASTIN

Narrowing Down of Forecasting

Single
Exponential
Smoothing for
Demand
Double
Exponential
Smoothing for
Demand
Time Series
Decomposition
for
Demand
Winters' Method
for
Demand

We have prepared several models for each type of

forecasting methods. We tried some methods in trial
and error basis and some models by following
assumptions

and

rules.

The

comparisons

are

conducted based on MAD, MSE, and MAPE. We then

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

MAD is the average absolute error, MSE is the average

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

MSE is similar to the variance of a random sample;

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

error is given by 1.25 times MAD. We also considered

val.

MAPE test. The advantage of this measure of accuracy is

Beca

that MAPE is not dependent on the magnitude of the

use

values of demand.

forecast errors are the rule rather than exception, there

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

forecast is tracking signal (TS), it is the ratio of

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

TS = Running Sum of Errors for period T / Running MAD for

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

errors in which individual errors can be obscured.

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

method of forecasting are presented below:

Tracking Signal : Moving Average Method (3 quarters)

5.00
0.00

-5.00

9
1011121314151617181920212223242526272829303132333435363
1 23 45 6 78
738394041

-10.00
-15.00
-20.00
-25.00

Figure: Tracking Signal of three period moving average

Tracking Signal : Moving Average Method (5 quarters)

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

Figure: Tracking Signal of five period moving average

Tracking Signal : Single Exponential Smoothing

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

Figure: Tracking Signal of single exponential smoothing

Tracking Signal : Decomposition Method

20.00

21

G FORECASTIN

Tracking Signal : Winter's

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

Figure: Tracking Signal of Winters Method

0.00

12

According to the plotted tracking signal the effective method of forecasting are
presented below:

-1.00

-2.00

15.00

TS: Linear Trend Analysis

10.00
5.00
0.00

-5.00

9
10111213141516171819202122232425262728293031323334353637383
12 34 567 8
94041424344

-10.00
-15.00

Figure: Tracking Signal of Linear Trend Analysis (Except 2 Random

Variation)

Fi
g
u
r
e
:
T
r
a
c
k
i
n
g
S
i
g
n
a
l
o
f

Double Exponential method of forecasting (Maximum

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

22

G FORECASTIN

Conclusion

A
prelimi

This term paper is mainly conducted to forecast the sales of Pevisone

nary

10gm Cream IN Bangladesh. We have taken statistical data from Sanofi-

exami

aventis Bangladesh Limited. The quarterly consumption of Pevisone 10gm

nation

Cream in Bangladesh is considered as equal of sales for that medicine and

reveal

a statistical analysis is conducted. The sales of Pevisone 10gm Cream are

ed

forecasted using various models to determine which model generates the

that

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

two

several

simple

models

including

trend

analysis,

moving

average,

single

exponential smoothing, double exponential smoothing, trend analysis, and

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.

Availability of online books regarding forecasting is very low

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

Edition, - William J. Stevenson

2Operation Management Blue Book,- Abdul Hannan Chowdhury,

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

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