WILKINS,A ZURN

COMPANY
Demand Forecasting

Gaurav Jain(FT11125)

GROUP
Vaishali Singh (FT11370)
Kiran Muley (FT11425)
Nirmaan Parekh (FT11436)

9
Porag Dutta (FT11438)
Pravin Patil (FT11440)
Rachna Saini(FT11443)
Vanshika (FT11471)
The Case
Problem
Identification of a forecasting techniques which
can predict the demand for existing and new
products.
Issues
Ease of using forecasting process
Reliability of the sales forecast
Impact of occasional price promotions
Use of economic information to facilitate forecasts
Methods to forecast demand of new product
Approach
Wilkins deals in two products PVB and fire
valves, the two products have distinct
demand patterns and hence their
forecasting methods should be different.
Demand Pattern for Demand Pattern for Fire
PVB
140,000 Valve
700

120,000 600

100,000 500

80,000 400

60,000 300

40,000 200

20,000 100

0 0
1 2 3 4 5 6 7 8 9 10 11 1213 14 1516 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Forecasting for PVB valve
The demand data for PVB valve displays
trend and seasonality so we use Winters
model (Trend and seasonality corrected
exponential smoothing) to forecast future
demand.
Summary of results

Forecast for 1st Quarter2005 = 45,182 units ,

current forecasting methods yield forecast value
of 53,560 units. Actual sales = 48,159 units
MAD = 3,346 units, MAPE = 5.33
Forecasting for PVB valve
140,000

120,000

100,000

80,000
Demand
60,000 Forecast

40,000

20,000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Graph of demand v/s forecast using winters

model
Forecasting for Fire valves
Standard
MAP Deviation
S.N Forecasting Method MAD
E of forecast
error
Three Period Moving
1 105 27% 128
Average
Four Period Moving
2 102 26% 128
Average
Weighted Avg. 1
3 97 27% 122
(70%,20% and 10%)
Summary of resultsAvg. 2
Weighted
4By using holts model - Forecast for
101 26%
1st Quarter2005 =122
310
(50%,30% and 20%)
5units ,current
Holts forecasting methods 93
Model yield forecast
24% value118 of 559
units. Actual sales = 580 units
MAD = 93 units, MAPE = 24 %
Forecasting for Fire valve
700

600

500

400
Demand
300 Forecast

200

100

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Graph of demand v/s forecast using holts

model
Analysis using causal
forecasting
Product Fire Valves
Dependent Variable Quarterly sales
Predictor Variables

Unemployment Rate
Bank Prime Loan Rate
Housing starts
Regression Analysis
Results of regression Analysis
Regression between Quarterly sales and Unemployment Rate
R2 = 0.35
Adjusted R2 = 0.29
Regression between Quarterly sales and Bank Prime Loan Rate
R2 = 0.09
Adjusted R2 = 0.00
Regression between Quarterly sales and Housing starts
R2 = 0.10
Adjusted R2 = 0.02

The values of R2 tells us that the percentage of fluctuation in

the dependent variable, Quarterly sales explained by the
predictor variables - Unemployment Rate, Bank Prime Loan
Rate and Housing starts is low hence we discard causal
forecasting for predicting demand of fire valves.
Regression Analysis
The minimum sample size data required for
conducting regression analysis is 25, since the
regression was conducted on sample size of 13,
the relationship between the dependent variable
and predictor variables needs to be re-checked
Relationship with other predictor variables such
as advertising expense, price promotions and
other economic indicators should be established
to check if they account for fluctuation in the
dependent variable, Quarterly sales.
Summary
Winters model (Trend and seasonality corrected
exponential smoothing) is appropriate to forecast
PVB valves
The values of & should be modified at specified
intervals to represent the actual trend and
seasonality effects when error increases.
The values of & should be modified during
discounts, moreover causal elements should be
taken into consideration to avoid bull whip effect.
Qualitative methods should be used along with time
series or causal forecasting for predicting demand
for new products, in this case the fire valves.
Thank You