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We tried to generate a robust model for demand forecasting.

We chose to take a
combination of incremental and multiplicative pickup, and regression data.
First we created incremental and multiplicative pickup matrices for the demand we realised,
and we estimated demands for D-0 using the average pickups and the multiplicative ratios.
For this we used as inputs the demand values for D-1, D-2, D-3, D-4, D-7 and D-14.
We also conducted a regression of the inputs on the D-0 values. We got a very bad
regression equation when we took all the inputs. This was because D-2, D-3, D-4 and D-7
data were highly correlated.
On filtering the variables, we obtained a better model using D-1 and D-14 data alone.
Regression Analysis: D-0 versus D-1, D-14, D-2, D-3, D-4, D-7
The regression equation is
D-0 = 14.2 + 0.954 D-1 - 0.250 D-14 - 0.004 D-2 + 0.295 D-3 - 0.263 D-4
+ 0.019 D-7
Predictor
Constant
D-1
D-14
D-2
D-3
D-4
D-7

Coef
14.153
0.9543
-0.2504
-0.0040
0.2954
-0.2630
0.0191

S = 7.68181

SE Coef
3.035
0.1165
0.1219
0.2422
0.3169
0.2899
0.1755

R-Sq = 86.3%

T
4.66
8.19
-2.05
-0.02
0.93
-0.91
0.11

P
0.000
0.000
0.043
0.987
0.354
0.367
0.914

VIF
7.172
1.485
19.092
23.993
17.268
4.821

R-Sq(adj) = 85.3%

Analysis of Variance
Source
Regression
Residual Error
Total
Source
D-1
D-14
D-2
D-3
D-4
D-7

DF
1
1
1
1
1
1

DF
6
80
86

SS
29832.9
4720.8
34553.7

MS
4972.2
59.0

F
84.26

P
0.000

Seq SS
29430.1
326.1
12.4
3.0
60.7
0.7

Unusual Observations
Obs
4
11
13
17

D-1
75
59
61
53

D-0
98.000
95.000
86.000
86.000

Fit
82.118
70.232
70.238
67.781

SE Fit
2.310
1.398
1.387
2.394

Residual
15.882
24.768
15.762
18.219

St Resid
2.17R
3.28R
2.09R
2.50R

R denotes an observation with a large standardized residual.

---------------------------------------------------------------------------------------------------------------

Regression Analysis: D-0 versus D-1, D-14


The regression equation is

D-0 = 14.8 + 0.988 D-1 - 0.229 D-14


Predictor
Constant
D-1
D-14

Coef
14.799
0.98816
-0.2285

S = 7.55454

SE Coef
2.903
0.04319
0.1004

T
5.10
22.88
-2.28

R-Sq = 86.2%

P
0.000
0.000
0.025

VIF
1.051
1.051

R-Sq(adj) = 85.9%

Analysis of Variance
Source
Regression
Residual Error
Total
Source
D-1
D-14

DF
1
1

DF
2
85
87

SS
30345
4851
35196

MS
15173
57

F
265.85

P
0.000

Seq SS
30050
296

Unusual Observations
Obs
4
11
12
13
17

D-1
75
59
38
61
53

D-0
98.000
95.000
67.000
86.000
86.000

Fit
82.969
69.215
51.892
69.820
66.257

SE Fit
1.409
0.873
1.671
1.191
1.321

Residual
15.031
25.785
15.108
16.180
19.743

St Resid
2.03R
3.44R
2.05R
2.17R
2.65R

R denotes an observation with a large standardized residual.

Residual Plots for D-0


=======================================================================
=============================================================================

Regression Analysis: D-0 versus D-1, D-14, D-2, D-3, D-4, D-7
The regression equation is
D-0 = 13.7 + 0.995 D-1 - 0.278 D-14 + 0.055 D-2 + 0.063 D-3 - 0.192 D-4 + 0.083 D-7
Predictor

Coef

SE Coef

Constant

13.693

2.562

5.34

0.000

D-1

0.99462

0.09858

10.09

0.000

D-14
D-2
D-3
D-4
D-7

0.2777
0.0548
0.0628
-0.1923
0.0827

0.1049
0.2116
0.2821
0.2483
0.1480

S = 6.43845

-2.65
0.26
0.22
-0.77
0.56

R-Sq = 90.5%

0.010
0.796
0.824
0.441
0.578

VIF
7.255
1.480
20.329
26.758
17.691
4.809

R-Sq(adj) = 89.7%

Analysis of Variance
Source
Regression
Residual Error

DF
6
76

SS
29968.4
3150.5

MS
4994.7
41.5

F
120.49

P
0.000

Total

82

Source
D-1
D-14
D-2
D-3
D-4
D-7

DF
1
1
1
1
1
1

33118.9

Seq SS
29529.0
406.6
0.1
6.7
13.0
12.9

Unusual Observations
Obs
10
14
21
76

D-1
38
43
59
42

D-0
67.000
67.000
84.000
42.000

Fit
51.163
52.606
71.274
54.481

SE Fit
1.826
1.250
1.494
2.020

Residual
15.837
14.394
12.726
-12.481

St Resid
2.57R
2.28R
2.03R
-2.04R

R denotes an observation with a large standardized residual.


============================================================================

Correlations: D-1, D-2, D-3, D-4, D-7, D-14


D-1

D-2

D-3

D-4

D-7

D-2

0.919

D-3

0.824

0.940

D-4

0.748

0.868

0.954

D-7

0.561

0.687

0.795

0.866

D-14

0.234

0.344

0.433

0.465

0.553

Cell Contents: Pearson correlation


P-Value

After having gotten demand estimates using the three methods (incremental pickup, multiplicative
index and regression), we tried to merge them into a hybrid model by attaching weights to the
estimates from each model.
We obtained these weights by conducting a regression of the original demand over these three
estimates.
Regression Analysis: Actual versus Incre, Regre, Multi
The regression equation is
Actual = - 8.40 + 0.347 Incre + 0.803 Regre - 0.0257 Multi
Predictor
Constant
Incre
Regre

Coef
-8.396
0.34725
0.80312

SE Coef
3.273
0.07151
0.05031

T
-2.57
4.86
15.96

P
0.012
0.000
0.000

VIF
3.274
1.903

Multi

-0.02574

S = 6.41407

0.02227

R-Sq = 90.2%

-1.16

0.251

2.090

R-Sq(adj) = 89.8%

Analysis of Variance
Source
Regression
Residual Error
Total
Source
Incre
Regre
Multi

DF
1
1
1

DF
3
84
87

SS
31741
3456
35196

MS
10580
41

F
257.17

P
0.000

Seq SS
18679
13007
55

Unusual Observations
Obs
36
53
61
67

Incre
79
37
86
83

Actual
34.000
59.000
95.000
86.000

Fit
50.788
46.617
72.860
72.060

SE Fit
1.858
1.701
1.050
1.752

Residual
-16.788
12.383
22.140
13.940

St Resid
-2.73R
2.00R
3.50R
2.26R

But here we observed that Multiplicative pickup estimate was insignificant. On eliminating this
forecast, we got a better forecast estimate:

Regression Analysis: Actual versus Incre, Regre


The regression equation is
Actual = - 7.56 + 0.289 Incre + 0.826 Regre
Predictor
Constant
Incre
Regre
S = 6.42674

Coef
-7.564
0.28851
0.82551

SE Coef
3.199
0.05041
0.04652

R-Sq = 90.0%

T
-2.36
5.72
17.75

P
0.020
0.000
0.000

VIF
1.621
1.621

R-Sq(adj) = 89.8%

Regression Analysis: Actual versus Incremental, Regression


The regression equation is

Actual = - 7.56 + 0.289 Incremental + 0.826 Regression


Predictor
Constant
Incremental
Regression

Coef
-7.564
0.28851
0.82551

SE Coef
3.199
0.05041
0.04652

S = 6.42674

T
-2.36
5.72
17.75

P
0.020
0.000
0.000

R-Sq = 90.0%

VIF
1.621
1.621

R-Sq(adj) = 89.8%

Analysis of Variance
Source
Regression
Residual Error
Total
Source
Incre
Regre

DF
1
1

DF
2
85
87

SS
31686
3511
35196

MS
15843
41

F
383.57

P
0.000

Seq SS
18679
13007

Unusual Observations
Obs
36
61
67

Incre
79
86
83

Actual
34.000
95.000
86.000

Fit
50.005
73.207
70.372

SE Fit
1.734
1.008
0.971

Residual
-16.005
21.793
15.628

St Resid
-2.59R
3.43R
2.46R

Hence, we propose this model for a more robust demand forecast rather than using each forecast
model individually.
Regression Analysis: D-0 versus D-1, D-14
The regression equation is
D-0 = 13.6 + 1.00 D-1 - 0.278 D-14
Predictor
Coef
Constant
13.647
D-1
1.00450
D-14
-0.27782
S = 6.30794

SE Coef
T
2.459
5.55
0.03689
27.23
0.08691
-3.20
R-Sq = 90.4%

P
VIF
0.000
0.000
1.058
0.002
1.058
R-Sq(adj) = 90.1%

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