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ScienceAsia 27 (2001)

275

F X X X X X X X X X X X X X X X t t t t t t t t t t t t t t t 0 3 6 9 5 1 0 2 0 1 3 2 0 0 7 4 3 9 0 0 3 3 2 5 1 2 3 1 2 1 3 1 4 1 5 2 4 2 5 2 6 2 7 3 6 3 7 3 8 3 9 . . . . 0 . 3 0 6 9 5 - 0 . 1 8 2 1 3 0 . 0 6 1 8 0 + 0 . 0 3 6 6 7 + 0 . 0 1 2 2 8 + 0 . 0 1 0 2 1 0 . 0 0 6 0 6 + 0 . 6 8 6 6 0 0 . 2 5 3 7 1 0 . 2 1 0 7 5 + 0 . 1 2 5 0 5 + 3 5 4 . 4 5 1 5

MSE and MAPE than the decomposition model. Therefore, the ARIMA model should be used to forecast the aggregate demands of Groups 2 and 3. For other product groups, however, the decom- position model should be used because it is more simple yet still adequate.

(2)

The forecast errors of the decomposition and ARIMA models for Groups 2 and 3 are presented in Table 2. It reveals that the ARIMA model has lower

Group 2

4,363,290

3,112,974

31.86

29.05

Group 3

2,227,592

1,235,788

15.97

13.18

Table 2. Forecast errors of the decomposition and ARIMA models.

Products

MSE Decomposition ARIMA

MAPE (%) Decomposition ARIMA

The comparison of the demand forecast errors obtained from the forecasting models and those from the current practice of the marketing department (as presented in Table 3) indicates that the errors of the forecasting models are substantially lower than those of the current practice.

Demand Forecasts of Individual Products

The demand forecast of product i for period t, dit, is obtained by multiplying the aggregate demand forecast of the product group (obtained from the previous steps) by the corresponding product mix (as presented in Table 4).

Group 1

16,672,342

9,879,330

-

30.58

26.97

-

Group 2

4,394,693

-

3,112,974

34.68

-

29.05

Group 3

4,988,962

-

1,235,788

23.50

-

13.18

Group 4

4,754,572

4,507,990

-

25.73

23.24

-

Group 5

19,787,102

10,039,690

-

17.54

13.14

-

Group 6

795,621

574,108

-

42.70

34.80

-

Group 7

849,420

636,755

-

38.36

34.45

-

Group 8

1,060,301

883,811

-

37.93

28.76

-

ARIMA

Table 3. Forecast errors of the current practice, decomposition, and ARIMA models.

Product

ARIMA

MSE

Current practice

Decomposition

MAPE (%)

Current practice

Decomposition

Table 4. Product mix.

Product group

Product

1

2

3

45

6

7

8

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

0.17 0.20 0.26 0.23 0.14

1.0

0.53 0.47

0.65 0.35

1.0

1.0

1.0

0.3 0.7

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