RAW MATERIAL DEMAND FORECASTING IN A

PLASTIC PRODUCTS MANUFACTURING INDUSTRY

RAM KUMAR P
(19MF34)

Mini project Dissertation submitted in partial fulfillment of the requirements for

the degree of

MASTER OF ENGINEERING

BRANCH: MECHANICAL ENGINEERING

SPECIALIZATION: INDUSTRIAL ENGINEERING

Anna
University
Chennai

DECEMBER 2019

DEPARTMENT OF MECHANICAL ENGINEERING

PSG COLLEGE OF TECHNOLOGY
(Autonomous Institution)
COIMBATORE – 641 004
 PSG COLLEGE OF TECHNOLOGY
(Autonomous Institution)
COIMBATORE – 641 004

RAW MATERIAL DEMAND FORECASTING IN A PLASTIC

PRODUCTS MANUFACTURING INDUSTRY

Bonafide record of work done by

RAM KUMAR P
(19MF34)

Mini project Dissertation submitted in partial fulfillment of the requirements for

the degree of

MASTER OF ENGINEERING

BRANCH: MECHANICAL ENGINEERING

SPECIALIZATION: INDUSTRIAL ENGINEERING

Anna
University
Chennai
DECEMBER
2019

...……………………… ... .……..……………….

Dr.A.Prabukarthi Dr.V.Jaiganesh

Faculty Guide Program Coordinator

Certified that the candidate was examined in the viva-voce examination held on 14-12-19

…………………………..
(Internal Examiner)
 ACKNOWLEDGEMENT

I wish to express my gratitude to Dr.K.Prakasan, Principal, PSG College of

Technology for providing an opportunity and necessary facilities to carry out this
project.

I express my sincere thanks to Dr.Thyla.PR, Head of the Department,

Mechanical Engineering, for providing the necessary equipment and support to
successfully carry out this project.

I would like to express my thanks to Dr.V.Jaiganesh, Program Coordinator-

Industrial Engineering, Department of Mechanical Engineering, PSG College of
Technology, for his continuous support and guidance.

I wish to place on record my sincere thanks and deep sense of gratitude to my

guide Dr.A.Prabukarthi, Assistant Professor (Sr.Gr), Department of Mechanical
Engineering, for his continuous supervision, inspiring guidance and constant
encouragement in carrying out this project.

I would like to express my gratitude to Project Review Committee Members,

who, with their managerial skills and along with their expertise and personality, guided
me throughout the course of my project.

I like to express my thanks to all teaching and non-teaching staff members in

the Department of Mechanical Engineering.

Last but not least, I would like to pay high regards to my parents, my friends and the
omnipresent God for giving me strength in all the critical situations and supporting me
spiritually throughout my life.
 ABSTRACT

Forecasting is the process of estimation in unknown situations. Prediction is a similar, but

more general term, and usually refers to estimation of time series, cross-sectional or
longitudinal data. In more recent years, Forecasting has evolved into the practice of demand
planning in everyday business forecasting for manufacturing companies. The discipline of
demand planning, also sometimes referred to as supply chain forecasting, embraces both
statistical forecasting and consensus process.
This project is about an analysis on demand and forecasting of raw material requirement in
a plastic product manufacturing industry located in Bangalore (Micro plastics limited).Based
on a study conducted over a period of 1year an attempt is made to forecast the future value
using two statistical software and comparison study to see which yields optimal results.

This projects is also aimed at identifying potential demand for the plastic product at different
areas in Bangalore. To estimate raw material requirements in near future. To find out the
consumption rate of plastic product .To identify competitor market demand.
 TABLE OF CONTENTS

Chapter Title Page

No. No.

Acknowledgement iii

Abstract iv

List of Figures vii

List of Tables viii

1 Introduction 1

1.1. Introduction to forecasting 1

1.1.1 Qualitative and Quantitative methods 1

1.1.2 Demand forecasting 3

1.2. Software used 1

1.2.1 Microsoft Excel 4

1.2.2 Minitab 5

1.3. Introduction to organization 6

2 Literature Review 8

3 Problem Definition & Objectives 7

3.1 Problem Definition 10

3.2 Objectives of the Project 10

4 Methodology 11
Chapter Title Page
No. No.

5 Data collection from industry 12

6 Forecasting using statistical software 13

6.1 Forecasting using MS Excel 13

6.1.1 Data entry in MS Excel spreadsheet 13

6.1.2 Simple moving average method 13

6.1.3 Weighted moving average method 14

6.1.4 Exponential smoothing 14

6.2 Forecasting using Minitab 15

6.2.1 Data entry in Minitab

15

6.2.2 Trend analysis

15

6.2.3 Time series plot

16

6.2.4 Moving average

17

6.2.5 Single exponential smoothing

18

7 Results & Discussion 19

7.1. Microsoft excel results 19

7.2. Minitab results

24

8 Future Works and Conclusion 28

References
 LIST OF FIGURES

Figure Page
Title
No. No.
4.1 Methodology 11

6.1 Trend analysis steps 16

6.2 Time series plot steps 16
6.3 Moving average steps 17
7.1 Trend analysis plot
22
7.2 Trend analysis results
22
7.3 Moving average plot
23
7.4 Moving average results
23
7.5 Single exponential Smoothing plot
24
7.6 Single exponential smoothing results
24
7.7 Time series plot
 LIST OF TABLES

Table Page
Title
No. No.
5.1 Data collection from industry 12
6.1 Excel data entry 13
6.2 Minitab data entry 15
7.1 Simple Moving average 19
7.2 Weighted moving average 20
7.3 Exponential smoothing 21
8.1 Excel vs Minitab comparison 26
Introduction Chapter 1

CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION TO FORECASTING
Forecasting is a technique that uses historical data as inputs to make informed
estimates that are predictive in determining the direction of future trends. Businesses
utilize forecasting to determine how to allocate their budgets or plan for anticipated
expenses for an upcoming period of time. This is typically based on the projected
demand for the goods and services offered. Risk and uncertainty are central to
forecasting and prediction; it is generally considered good practice to indicate the
degree of uncertainty attaching to forecasts. In any case, the data must be up to date
in order for the forecast to be as accurate as possible. In some cases the data used to
predict the variable of interest is itself forecasted.

Why Forecast?
 To plan for the future by reducing uncertainty.
 To anticipate and manage change.
 To increase communication and integration of planning teams.
 To anticipate inventory and capacity demands and manage lead times.
 To project costs of operations into budgeting processes.
 To improve competitiveness and productivity through decreased costs and
improved delivery and responsiveness to customer needs.

General Methods of Forecasting:

1.1.1 Qualitative and Quantitative Methods

Qualitative methods
They are based on expert or informed opinion regarding future product demands. This
information is intuitive and based on subjective judgment. Qualitative techniques
include gathering information from customer focus groups, groups of experts, think
tanks, research groups, etc.
Time Series Analysis: Time series analysis is based on the idea that data relating to
past demand can be used to predict future demand. Past data may include several
components, such as trend, seasonal, or cyclical influences.

1
Introduction Chapter 1

Causal Forecasting: Causal forecasting assumes that demand is related to some

underlying factor for factors in the environment. Causal forecasting methods develop
forecasts after establishing and measuring an association between the dependent
variable and one or more independent variables.
Market Research: Market research is used mostly for product research in the sense
of looking for new product ideas, like and dislikes about existing products, which
competitive products within a particular class are preferred, and so on.
Panel Consensus: In a panel consensus, the idea that two heads are better than one
is extrapolated to the idea that a panel of people from a variety of positions can develop
a more reliable forecast that a narrow group. Panel forecasts are developed through
open meetings with free exchange of idea from all levels of management and
individuals.
Historical Analogy: In trying to forecast demand for a new product, an ideal situation
would be where an existing product or generic product could be used as a model.
There are many ways to classify such analogies - for example, complementary
products, substitute or competitive products, and products as a function of income.
Delphi Method: The Delphi method conceals the identity of the individuals
participating in the forecasting. Everyone has the same weight. Procedurally, a
moderate creates a questionnaire and distributes it to participants. Their response are
summed and given back to the entire group along with a new set of questions.

Quantitative methods

Regression: A method of fitting an equation to a data set. Simple regression involves

one independent variable and one dependent variable. Least squares is the most
common method of regression.
Moving Average: An arithmetic average of a certain number n of the most recent
observations. As each new observation is added, the oldest observation is dropped.
The value of n (the number of periods to use for the average) reflects responsiveness
versus stability in the same way that the choice of smoothing constant does in
exponential smoothing.
Weighted Moving Average: Whereas the simple moving average gives equal weight
to each component of moving average database, a weighted moving average allows

2
Introduction Chapter 1

any weights to be on each element, providing, of course, that the sum of all weights
equals 1.

Exponential Smoothing: A type of weighted moving average forecasting techniques

in which past observations are geometrically discounted according to their age. The
heaviest weight is assigned to the most recent data. The techniques makes use of a
smoothing constant to apply the difference between the most recent forecast and the
critical sales data.
Trend Effects in Exponential Smoothing: An upward or downward trend in data
collected over a sequence of time periods causes the exponential forecast to always
lad behind (be above or below) the actual occurrence.

Factors affecting forecast are given below:

 Business cycle
 Random variation
 Customer’s plan
 Product’s life cycle
 Competition’s efforts and prices
 Customer’s confidence and attitude
 Quality
 Credit policy
 Design of goods or services
 Reputation for service
 Sales effort
 Advertising

1.1.2 Demand Forecasting

Demand Forecasting is the process in which historical sales data is used to develop
an estimate of an expected forecast of customer demand. To businesses, Demand
Forecasting provides an estimate of the amount of goods and services that its
customers will purchase in the foreseeable future. Critical business assumptions like
turnover, profit margins, cash flow, capital expenditure, risk assessment and
mitigation plans, capacity planning, etc. are dependent on Demand Forecasting.

3
Introduction Chapter 1

 Passive Demand Forecasting: Passive Demand Forecasting is carried out for

stable businesses with very conservative growth plans. Simple extrapolations
of historical data is carried out with minimal assumptions. This is a rare type
of forecasting limited to small and local businesses.
 Active Demand Forecasting: Active Demand Forecasting is carried out for
scaling and diversifying businesses with aggressive growth plans in terms of
marketing activities, product portfolio expansion and consideration of
competitor activities and external economic environment.
 Short-term Demand Forecasting: Short-term Demand Forecasting is carried
out for a shorter term period of 3 months to 12 months. In the short term, the
seasonal pattern of demand and the effect of tactical decisions on the
customer demand are taken into consideration.
 Medium to long-term Demand Forecasting: Medium to long-term Demand
Forecasting is typically carried out for more than 12 months to 24 months in
advance (36-48 months in certain businesses). Long-term Forecasting drives
the business strategy planning, sales and marketing planning, financial
planning, capacity planning, capital expenditure, etc.
 External macro level Demand Forecasting: This type of Forecasting deals with
the broader market movements which depend on the macroeconomic
environment. External Forecasting is carried out for evaluating the strategic
objectives of a business like product portfolio expansion, entering new
customer segments, technological disruptions, a paradigm shift in consumer
behavior and risk mitigation strategies.
 Internal business level Demand Forecasting: As the name suggests, this type
of Forecasting deals with internal operations of the business such as product
category, sales division, financial division, and manufacturing group. This
includes annual sales forecast, estimation of COGS, net profit margin, cash
flow, etc.

1.2 SOFTWARES USED

1.2.1 MICROSOFT EXCEL

Microsoft Excel is a spreadsheet developed by Microsoft for Windows, MAC OS,

Android and iOS. It features calculation, graphing tools, pivot tables, and a macro

4
Introduction Chapter 1

programming language called Visual Basic for Applications. It has been a very widely
applied spreadsheet for these platforms, especially since version 5 in 1993, and it has
replaced Lotus 1-2-3 as the industry standard for spreadsheets. Excel forms part of
the Microsoft Office suite of software. Microsoft Excel has the basic features of all
spreadsheets, using a grid of cells arranged in numbered rows and letter-named
columns to organize data manipulations like arithmetic operations. It has a battery of
supplied functions to answer statistical, engineering and financial needs. In addition, it
can display data as line graphs, histograms and charts, and with a very limited three-
dimensional graphical display. It allows sectioning of data to view its dependencies on
various factors for different perspectives (using pivot tables and the scenario
manager). It has a programming aspect, Visual Basic for Applications, allowing the
user to employ a wide variety of numerical methods, for example, for solving
differential equations of mathematical physics, and then reporting the results back to
the spreadsheet. It also has a variety of interactive features allowing user interfaces
that can completely hide the spreadsheet from the user, so the spreadsheet presents
itself as a so-called application, or decision support system (DSS), via a custom-
designed user interface, for example, a stock analyzer, or in general, as a design tool
that asks the user questions and provides answers and reports. In a more elaborate
realization, an Excel application can automatically poll external databases and
measuring instruments using an update schedule, analyze the results, make a Word
report or PowerPoint slide show, and e-mail these presentations on a regular basis to
a list of participants.

1.2.2 MINITAB
Minitab is a statistics package developed at the Pennsylvania State University by
researchers Barbara F. Ryan, Thomas A. Ryan, Jr., and Brian L. Joiner in 1972. It
began as a light version of OMNITAB 80, a statistical analysis program by NIST.
Statistical analysis software such as Minitab automates calculations and the creation
of graphs, allowing the user to focus more on the analysis of data and the interpretation
of results. Minitab helps companies and institutions to spot trends, solve problems and
discover valuable insights in data by delivering a comprehensive and best-in-class
suite of statistical analysis and process improvement tools. Combined with
unparalleled ease-of-use, Minitab makes it simpler than ever to get deep insights from
data. For over 40-years, Minitab has helped organizations drive cost containment,

5
Introduction Chapter 1

enhance quality, boost customer satisfaction and increase effectiveness. Thousands

of businesses and institutions worldwide use Minitab Statistical Software, Companion,
and Quality Trainer to uncover flaws in their processes and improve them. In 2017,
Minitab acquired Salford Systems, a leading provider of advanced analytics which
delivers a suite of powerful data mining, predictive analytics and modelling capabilities.

1.3 INTRODUCTION TO ORGANIZATION

Micro plastics private limited is one of the leading manufacturers of high quality
plastic injection component, tooling and sub-assemblies to automotive sports
equipments,power tools,appliances,electricals,electronics,telecom and heavy
engineering. They are one the leading contract manufacturer and exporter of toys,
model hobby kits and sports equipment’s to US,UK and other European brands.it was
started in the year 2005 and has a manufacturing facilities over 400000 sqft spread
across three locations in Bangalore, India. The main raw material used by the industry
is polyethylene (PE).

A wide variety of plastics raw materials are produced to meet the material
needs of different sectors of the economy. These polymeric materials are broadly
categorized as commodity, engineering and specialty plastics. Commodity plastics
are the major products that account for bulk of the plastics and in turn for
petrochemical industry. Commodity plastics comprise of Polyethylene (PE),
Polypropylene (PP), Polyvinyl Chloride (PVC) and Polystyrene. While engineering
and specialty plastics are plastics that exhibit superior mechanical and thermal
properties in a wide range of conditions over and above more commonly used
commodity plastics and are used for specific purpose. These include styrene
derivatives (PS/EPS & SAN/ABS), polycarbonate, poly methyl methacrylate,
polycarbonates, poly oxy methylene (POM) plastics etc. There are three broad types
of PE, viz: Low-density Polyethylene (LDPE), High-density Polyethylene (HDPE) and
Linear Low-density Polyethylene (LLDPE). Major plastic materials like PE and PP are
derived from Ethylene and Propylene respectively, while other plastics such as PVC,
PS & ABS and PC are produced from benzene, butadiene and other feedstock.

Polyethylene or polythene (abbreviated PE; IUPAC name polyethene or poly

(methylene)) is the most common plastic. As of 2017, over 100 million tons of
polyethylene resins are produced annually, accounting for 34% of the total plastics

6
Introduction Chapter 1

market. Its primary use is in packaging (plastic bags, plastic films, geomembranes,
containers including bottles, etc.). Many kinds of polyethylene are known, with most
having the chemical formula (C2H4)n. PE is usually a mixture of similar polymers of
ethylene with various values of n. Polyethylene is a thermoplastic; however, it can
become a thermoset plastic when modified (such as cross-linked polyethylene).

7
Literature Review Chapter 2

CHAPTER 2
LITERATURE REVIEW

Decision makers in the public and private sectors would benefit from more accurate
forecasts of demand for goods and services. Most forecasting practitioners are
unaware of discoveries from experimental research over the past half-century that can
be used to reduce errors dramatically, often by more than half. The objective of this
paper is to improve demand forecasting practice by providing forecasting knowledge
to forecasters and decision makers in a form that is easy for them to use.

Osama Moselhi [1] presented a study conducted in collaboration with large Canadian
engineering, procurement and construction management (EPCM) firm to identify areas
of improvement in the current process of progress reporting and forecasting project
status at different targeted future dates. The study focused mainly on trending and
time/Cost control of engineering, procurement and construction (EPC) projects. It
encompassed a field study of the practices of the industrial collaborator, study of
related materials from the literature, and development of standalone computer
applications, which serves as add-on utilities to the propriety project management
software of the industrial partner. The paper presents a model for improving trending
and forecasting of time and cost in construction operations. The proposed model has
3 main functions: 1) trending of estimate accuracy, 2) integrated control and
forecasting, and 3) progress visualization. Windows SharePoint Server and visual
basic for application (VBA) are used to develop 3 add-on tools to implement the
developments made in the above 3 functions. Numerical examples based on a set of
data from a pilot training project, developed by the industrial partner, are presented to
illustrate the essential features of the developed model.

Ezeliora Chukwuemeka Daniel [2] applied forecasting method to analyze the

production demand in millennium plastic industry. The data were analyzed using
double exponential smoothing and winters methods to see if the products were going
to either decreasing or increasing in future demand. This technique will help during
production planning.

8
Literature Review Chapter 2

J. Scott Armstrong & Kesten C. Green [3] have reviewed forecasting research to
identify which methods are useful for demand forecasting, and which are not, and
develops checklists of evidence-based forecasting guidance for demand forecasters
and their clients. The primary criterion for evaluating whether or not a method is useful
was predictive validity, as assessed by evidence on the relative accuracy of ex ante
forecasts. This paper also identifies and describes 17 evidence-based forecasting
methods and eight that are not, and provides five evidence-based checklists for
applying knowledge on forecasting to diverse demand forecasting problems by
selecting and implementing the most suitable methods.

Jenni Moisanen [4] has investigated demand forecasting in the apparel industry
through two parts. The theory section introduces the most relevant concepts
comprehensively and the case study utilizes the findings in order to select and endorse
the most valid forecasting measure and method. The case study section of this thesis
was conducted in co-operation with a global apparel company, which in the public
version of the thesis will remain anonymous. The company’s demand forecasting
method was evaluated and measured through weighted absolute percentage error
calculations which indicated a need for improvement in forecasting. Two improvement
suggestions were introduced: 1) standardize the existing judgmental forecast method
which is most suitable for the company by applying the presented five principles, and
2) enhance the agility of the existing supply chain.

9
Problem Definition & Objectives Chapter 3

CHAPTER 3
PROBLEM DEFINITION & OBJECTIVES

3.1 PROBLEM DEFINITION

Micro plastics Ltd, a plastic item manufacturing plant located in Bangalore has a
varying raw material (polyethylene) demand patterns over a period of 12 months.
Compute the demand forecast for the 1st month of the upcoming year so as to meet
the upcoming production demand. Select an appropriate method for evaluation.

3.2 OBJECTIVES OF THE PROJECT

 Main objective is to forecast the raw material demand for the succeeding month
using a statistical software with the help of real-time data collected from the
industry with minimum possible deviation and to compare which software provides
best results.
 To find out the consumption rate of plastic product in that particular location.
 Since forecasting is considered to be backbone of the Company sales, this
progression will lead to the success of the company’s expansions strategy.
 This analysis help to know the opportunities and threats of plastic product demand.

10
Methodology Chapter 4

CHAPTER 4
METHODOLOGY

From the literatures reviewed the following methodology (Fig.4.1) is found suitable
for raw material demand forecasting in industry.

Literature Review

Problem identification

Monthly raw material demand data Collection from Micro plastics Pvt Ltd

Forecasting the given data in Microsoft excel and Minitab

Comparison of results to choose the best method

Fig 4.1 Methodology

11
Data Collection Chapter 5

CHAPTER 5
DATA COLLECTION

The following data has been collected from Micro plastics pvt limited. The tabular column
below contains the polyethylene demand data over a period of 12 months. Data has been
collected for the year 2018 .we can see fluctuations in demand rate over the given time
duration. Using this base data an attempt has been made to forecast the demand for the
first month of 2019.Forecasting has been done using 2 statistical software ie,Microsoft Excel
and Minitab, all possible ways of solving the given problem has been exploited through these
softwares.The results generated are compared and the best method is chosen.

Polyethylene demand
Months
(in metric ton)
Jan-18 95
Feb-18 100
Mar-18 87
Apr-18 123
May-18 90
Jun-18 96
Jul-18 75
Aug-18 78
Sep-18 106
Oct-18 104
Nov-18 89
Dec-18 83

Table 5.1 Data collection from industry

12
Forecasting using Statistical Software Chapter 6

CHAPTER 6
FORECASTING USING STATISTICAL SOFTWARE

6.1 Forecasting using MS Excel

6.1.1 Data Entry in MS Excel Spreadsheet

Table 6.1 Excel data entry

6.1.2 Simple moving average method

A moving average (MA) is a widely used indicator in technical analysis that helps
smooth out price action by filtering out the “noise” from random short-term price
fluctuations. It is a trend-following, or lagging, indicator because it is based on past
prices. The most common applications of moving averages are to identify the trend
direction and to determine support and resistance levels.

Here, moving average period (n) =3

MA= (dt1+dt2+dt3)/n

dt1 is the demand during first month

dt2 is the demand during second month

dt3 is the demand during second month

13
Forecasting using Statistical Software Chapter 6

6.1.3 Weighted Moving Average Method

Weighted average is an average that has multiplying factors to give different weights
to data at different positions in the sample window. A weighted moving average (WMA)
has the specific meaning of weights that decrease in arithmetical progression. The
weighted average is calculated by multiplying the given data by its associated
weighting and totaling the values. The formula for the 3 month WMA is as follows:

WMA= (w1*A1 + w2*A2 + w3*A3)

3

w1, w2, w3 are the corresponding weight factors

6.1.4 Exponential Smoothing

A type of weighted moving average forecasting techniques in which past observations

are geometrically discounted according to their age. The heaviest weight is assigned
to the most recent data. The techniques makes use of a smoothing constant to apply
the difference between the most recent forecast and the critical sales data.

F t = α A t - 1 + (1 - α) F t - 1

Where, Ft = New forecast.

A t - 1 = Latest demand.

F t - 1 = Previous forecast.

α = Smoothing factor. (0 ≤ α ≤ 1)

14
Forecasting using Statistical Software Chapter 6

6.2 Forecasting Using Minitab

6.2.1 Data Entry in Minitab worksheet

Table 6.2 Minitab Data entry

6.2.2 Trend Analysis

An upward or downward trend in data collected over a sequence of time periods

causes the exponential forecast to always lad behind (be above or below) the actual
occurrence. To correct the trend, smoothing constant delta (δ) can be used. The delta
reduces the impact of the error that occurs between the actual and the forecast.

FIT t = F t+ T t

F t = FIT t - 1+α (A t - 1-FIT t - 1)

T t = T t - 1+δ (F t-FIT t - 1)

Where Tt = the exponential smoothed trend for period t.

Where FITt = the forecast including trend for period t.

15
Forecasting using Statistical Software Chapter 6

Fig 6.1 trend analysis steps

6.2.3 Time series plot

Time series analysis comprises methods for analyzing time series data in order to
extract meaningful statistics and other characteristics of the data. Time series
forecasting is the use of a model to predict future values based on previously observed
values. Time series plot is generated with the given input data between demand and
month.

Figure 6.2 time series plot steps

16
Forecasting using Statistical Software Chapter 6

6.2.4 Moving Average

A moving average (MA) is a widely used indicator in technical analysis that helps
smooth out price action by filtering out the “noise” from random short-term price
fluctuations. It is a trend-following, or lagging, indicator because it is based on past
prices. The most common applications of moving averages are to identify the trend
direction and to determine support and resistance levels. The method which is used
for this forecasting is 3 month Moving Average.

Figure 6.3 Moving average steps

17
Forecasting using Statistical Software Chapter 6

6.2.5 Single exponential smoothing

Exponential smoothing is a time series forecasting method for univariate data that can
be extended to support data with a systematic trend or seasonal component.
Exponential smoothing forecasting methods are similar in that a prediction is a
weighted sum of past observations, but the model explicitly uses an exponentially
decreasing weight for past observations. Specifically, past observations are weighted
with a geometrically decreasing ratio.

Figure 6.4 Single exponential smoothing steps

18
Results & Discussions Chapter 7

CHAPTER 7
RESULTS & DISCUSSIONS

7.1 Microsoft Excel Results

Methods discussed from the previous chapter 6.1 are executed in Microsoft Excel and
the results are recorded.

7.1.1 Three month simple moving average

Table 7.1 simple moving average

Where n is the number of datas given,

MAD is the Mean Absolute Deviation which is 12.305

TS is the Tracking Signal which is -0.677

Forecast Value is 92 metric ton

19
Results & Discussions Chapter 7

7.1.2 Three month weighted moving average

Table 7.2 weighted moving average

Where n is the number of datas given,

Weight factors are 0.2,0.3,0.5

Mean Absolute Deviation(MAD) is 9.500

Tracking Signal(TS) is -4.021

Forecast Value is 89 metric ton

20
Results & Discussions Chapter 7

7.1.3 Exponential Smoothing

Table 7.3 exponential smoothing method

Where n is the number of datas given

Smoothing Constant(α) is 0.2

Initial Forecast(Ft-1) is 95 metric ton

Mean Absolute Deviation(MAD) is 11.382

Tracking Signal(TS) is -1.366

Forecast Value is 91.89 metric ton

21
Results & Discussions Chapter 7

7.2 Results from Minitab

Methods discussed from the previous chapter 6.2 are executed in Minitab and the
results are recorded.

7.2.1 Trend analysis

Figure 7.1

Figure 7.2

Where Mean Absolute Deviation(MAD) is 9.750

Mean Square Deviation(MSD) is 153.40

Forecast value is 88.06 metric ton

22
Results & Discussions Chapter 7

7.2.2 Three month moving average

Figure 7.3

Figure 7.4

Where Mean Absolute Deviation(MAD) is 16.407

Mean Square Deviation(MSD) is 340.85

Forecast value is 92 metric ton

23
Results & Discussions Chapter 7

7.2.3 Single Exponential Smoothing

Figure 7.5

Figure 7.6

Where Mean Absolute Deviation(MAD) is 12.227

Mean Square Deviation(MSD) is 207.68

Forecast value is 90.79 metric ton

24
Results & Discussions Chapter 7

7.2.4 Time-series plot

Figure 7.7 this plot shows the demand pattern with respect to time.

25
Conclusion & Future work Chapter 8

CHAPTER 8
CONCLUSION & FUTURE WORK

Table 8.1: Excel vs Minitab forecast comparison

From the present study with the use of Microsoft Excel and Minitab predictive analysis
of the raw material demand is done for the succeeding month, the results are
compared as shown in the table above and we find out that Weighted moving
average method is used for more accurate results and is efficient for short term data
since it has least mean absolute deviation. Any deviation or error with real time data
will be noted for future reference and improvements.
Raw material Demand forecast for the next month is 89 metric ton.

The future work related to this project is as follows:

 The project was developed to identify potential raw material demand for plastic
products.
 It will be helpful for the Management to expand the plant in future.
 This project can be base for students who are doing the project in the related
area.
 This analysis helps to know the opportunities and threats of plastic product
demand

26
 References

REFERENCES

[1] Mr. Kothari, C.R., “Research Methodology - Methods & Techniques” Publishers-
New Age International (P) Ltd., New Delhi, Second Edition, 2004.p.212
[2] Mr.Gupta, S.P., “Statistical Methods”, Sultan Chand & Sons Publishers, New
Delhi, Thirty Fourth Editions, 2005.
[3] Mr.R.Panneerselvam, “Production and Operations Management” Eastern
Economy Edition Prentice –hall of India private limited. New Delhi, Second Edition,
2018.p.91-114.
[4] Mr. Philip Kotler., “Marketing Management” Pearson Prentice Hall, Delhi, Twelfth
Edition, 2007.p117
[5] Nick T.Thomopoulus., ‘Demand forecasting for inventory control’, 2015.p.136.
[6] Spyros Makridakis, Steve Wheelwright, Rob J.Hyndman.,”Forecasting methods
and applications”, Wiley, Third edition, 2008.