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.

Introduction

PEVISONE Cream: A white cream containing 1% econazole nitrate BP and 0.1%

triamcinolone acetonide BP.

Econazole nitrate is a broad spectrum antifungal agent. Its range of application covers
dermatophytes, yeasts and moulds. Moreover, it has antibacterial effect on Gram-positive
pathogens. Triamcinolone acetonide is a highly effective topical steroid with rapid antiinflammatory, antipruritic and anti-allergic action. At the concentration chosen for antiallergic action, at the concentration chosen for PEVISONE-- the two active substances
econazole nitrate and triamcinolone acetonide develop their full activity.

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.

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, treatment with PEVARYL should be started and continued until
complete cure is obtained Occlusive dressings should not be used. Like with any other

FOR
ECA
STIN
G

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.
Proper forecasting of sales revenue can help manage avoiding risk stock out
situation.
Proper forecasting is important for the planning to ensure the maximum sales
revenue.
By an appropriate forecasting of sales, consumption pattern can be attained.
Sales forecasting ensures supply of the product to the valued customers.
Sales revenue has some seasonal variation and precise forecasting is important for
uninterrupted distribution of rooms in peak seasons.
Scope and Limitations of The Study

This study has been done based on the fourty four quarters of sales volume from 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.

FOR
ECA
STIN
G

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.

Forecasting

Forecasting is the process of making statements about events whose actual outcomes
(typically) have not yet been observed. A commonplace example might be estimation for
some variable of interest at some specified future date. Prediction is a similar, but more
general term. Forecasting is an important tool for the future of demand condition. This is a
prediction of future events used for planning purposes. Forecasting is needed to aid in
determining what resources are needed, scheduling existing resources and acquiring
additional resources.

Types of Forecasting

Mainly, the forecasting can be classified as:

Qualitative methods
Quantitative methods

Qualitative Methods: Qualitative forecasting techniques generally employ the judgment of

experts in the appropriate 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.

FOR
ECA
STIN
G

Quantitative Methods: include causal methods and time-series analysis. Causal methods
are historical data on independent variables, such as promotional campaigns, economic
conditions and competitors actions to predict demand or supply. Time series analysis is a
statistical approach that relies heavily on historical demand data to project the future size of
demand or supply and recognizes trends and seasonal patterns.

Forecasting Techniques and Analysis

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:
Moving Averages (3 & 5 period)
Single Exponential Smoothing
Double Exponential Smoothing
Time Series Decomposition/ Seasonal Analysis
Trend Analysis
Winters Method
After forecasting, applying different techniques, we have found out the forecasting accuracy
and the appropriate techniques for forecasting the sales of the product. To calculate the
forecasting accuracy, we have used the following techniques:
Mean absolute deviation (MAD)
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

FOR
ECA
STIN
G

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:

Ft MAn

Ai
i 1

Where, 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.
Ft = W1 At1 + W2 At2 + W3 At3 + + Wn Atn

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.

FOR
ECA
STIN
G

Three Period Moving Averages:

Moving Average Plot for Demand

2500

Variable
A ctual
Fits
Forecasts
95.0% PI

2000
1500

Mov ing A v erage

Length 3

1000
Demand

A ccuracy Measures
MA PE60
MA D327
MSD169515

500
0
-500
-1000
1

10

15

20

25
Index

30

35

40

45

Figure: 3 Quarterly Moving Average

Normal Probability Plot

(response is Demand)
99

95
90
80
70

Percent
60
50
40
30
20
10
5

-1000

-500

0
Residual

500

Figure: Probability plots for three quarter moving average methods

1000

FOR
ECA
STIN
G

Five Period Moving Averages:

Moving Average Plot for Demand

2500

Variable
A ctual
Fits
Forecasts
95.0% PI

2000

Mov ing A v erage

Length 5

1500
Demand

A ccuracy Measures
MA PE55.2
MA D237.9
MSD97994.8

1000

500

10

15

20

25
Index

30

35

40

45

Figure: 5 quarter Moving Average

Normal Probability Plot

(response is Demand)
99

95
90
80
70

Percent
60
50
40
30
20
10
5

-1000

-500

0
Residual

Figure: Probability plots for five quarter moving average methods

500

FOR
ECA
STIN
G

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.

= 1 +( (1 1 )
Where, Ft = Forecast for period t
Ft1= Forecast for previous period
= Smoothing constant
At1 = Actual demand for previous period

Smoothing Plot for Demand

Single Exponential Method
2500

Variable
A ctual
Fits
Forecasts
95.0% PI

2000

Smoothing C onstant
A lpha0.263014

1500
Demand
1000

A ccuracy Measures
MA PE58
MA D303
MSD148977

500

-500
1

10

15

20

25
Index

30

35

40

45

Figure: Single Exponential Smoothing method of forecasting

FOR
ECA
STIN
G

Normal Probability Plot

(response is Demand)
99

95
90
80
70

Percent
60
50
40
30
20
10
5

-1000

-500

0
Residual

500

1000

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 < <= 1

= 1 +( ( 1 1 )

FOR
ECA
STIN
G

Smoothing Plot for Demand

Double Exponential Method
4000

Variable
A ctual
Fits
Forecasts
95.0% PI

3000
2000

Smoothing C onstants
A lpha (lev el)1.37580
Gamma (trend)0.01000

1000
Demand
0

A ccuracy Measures
MA PE61
MA D373
MSD208377

-1000
-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
80
70

Percent
60
50
40
30
20
10
5

-1000

-500

0
Residual

500

Figure: Probability plots for Double Exponential Smoothing method of forecasting

10

1000

FOR
ECA
STIN
G

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.

= +
t = Specified number of time periods from t = 0 ,

Where,

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 - 30.3576*t
2500

Variable
A ctual
Fits
Forecasts

2000
A ccuracy Measures
MA PE40
MA D266
MSD116755

1500
Demand

1000

500

0
1

10

15

20

25
Index

30

35

40

45

Figure: Trend method of forecasting with Trend Equation

11

FOR
ECA
STIN
G

Normal Probability Plot

(response is Demand)
99

95
90
80
70

Percent
60
50
40
30
20
10
5

-1000

-500

0
Residual

500

1000

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 dividing the data
with the trend component.

12

FOR
ECA
STIN
G

Seasonal Analysis for Demand

Multiplicative Model
Seasonal Indices

Detrended Data by Season

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

-200

Figure: Seasonal Analysis for demand

The seasonal Indices are as follows:

Period
Quarter 1
Quarter 2
Quarter 3
Quarter 4

Seasonal
Components
0.62078
0.86668
1.32630
1.18624

13

FOR
ECA
STIN
G

Component Analysis for Demand

Multiplicative Model
Original Data

Detrended Data
2.0

2000

1.5
1000

1.0
0.5

0
1

18

27

36

18

Index

27

36

Index

Seasonally Adjusted Data

Seas. Adj. and Detr. Data

400

2000
200
0

1000

-200
0
1

18

27

36

18

Index

27

36

Index

Figure: Component Analysis for Demand

Fitted Trend Equation is as follows:

Yt = 1647.9 - 31.3036*t

Time Series Decomposition Plot for Demand

Multiplicative Model
2500

Variable
A ctual
Fits
Trend
Forecasts

2000

A ccuracy Measures
MA PE24.7
MA D145.2
MSD29026.8

1500
Demand

1000

500

0
1

10

15

20

25
Index

30

35

40

Figure: Decomposition Plot of Demand

14

45

FOR
ECA
STIN
G

Normal Probability Plot

(response is Demand)
99

95
90
80
70

Percent
60
50
40
30
20
10
5

-400

-300

-200

-100

0100
Residual

200

300

400

500

Figure: Probability Plot for Decomposition

Winters Method

Winters' Method smoothes data by Holt-Winters exponential smoothing 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

FOR
ECA
STIN
G

component at each period. It uses three weights, or smoothing parameters, to update the
components at each period. Smoothing parameters, for the level, trend, and seasonal
components take values between 0 and 1. Regardless of the component, large weights
result in more rapid changes in that component; small weights result in less rapid changes.
The components in turn affect the smoothed values and the predicted values. Initial values
for the level and trend components are obtained from a linear regression on time. Initial
values for the seasonal component are obtained from a dummy-variable regression using
de-trended data. The equations involving level, trend seasonal components and forecasts
are given below:
Lt (Yt / S t p ) (1 )[ Lt 1 Tt 1 ]
Tt [ Lt Lt 1 ] (1 )Tt 1
S t (Yt / Lt ) (1 ) S t p
Yt ( Lt 1 Tt 1 ) S t p

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 the seasonal component,
p= Seasonal period,
Yt = Is the data value at time t,

Yt = Fitted value, or one-period-ahead-forecast at time t.

16

FOR
ECA
STIN
G

Winters' Method Plot for Demand

Multiplicative Method
Variable
A ctual
Fits
Forecasts
95.0% PI

3000

Smoothing C onstants
A lpha (lev el)0.2
Gamma (trend)0.2
Delta (seasonal)0.2

2000
Demand
1000

A ccuracy Measures
MA PE50
MA D349
MSD233366

-1000
1

10

15

20

25
Index

30

35

40

45

Figure: Winters Method of Forecasting

Normal Probability Plot

(response is Demand)
99

95
90
80
70

Percent
60
50
40
30
20
10
5

-1500

-1000

-500

0
Residual

Figure: Probability Plot for Winters Method of Forecasting

17

500

1000

FOR
ECA
STIN
G

Narrowing Down of Forecasting

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:

Forecasting
Methods
Trend Analysis
Moving Average for
Demand (3 Period)
Moving Average for
Demand (5 Period)
Single Exponential
Smoothing for
Demand
Double Exponential
Smoothing for
Demand
Time Series
Decomposition for
Demand
Winters' Method for
Demand

Quarter 1
Jan-Mar,
2011

Quarter 2
April-June,
2011

Quarter 3
July-Sep,
2011

Quarter 4
Oct-Dec,
2011

MAPE

MAD

MSE

253.713

223.356

192.998

162.641

40

266

116755

158.111

158.111

158.111

158.111

60

327

169515

292.121

292.121

292.121

292.121

55.2

237.9

97994.8

323.548

323.548

323.548

323.548

58

303

148977

150.767

119.382

87.997

56.612

61

373

208377

148.489

180.177

234.211

172.344

24.7

145.2

139.162

142.401

146.359

18

78.715

50

349

29026.8

FOR
ECA
STIN
G

233366

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 given
below:

MAD =

|Actual Forecast|
n

(Actual Forecast)2
MSE =
n1
11
= ||

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 error is given by 1.25 times MAD. We also considered MAPE test. The advantage of
this measure of accuracy is that MAPE is not dependent on the magnitude of the values of
demand.
Controlling the Forecast
Tracking Signal: 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. Tracking the
forecast errors and analyzing them can provide useful insight on whether or not forecasts
are performing satisfactorily. A 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

FOR
ECA
STIN
G

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 errors in which individual errors
can be obscured.

FOR
ECA
STIN
G

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 method of forecasting are presented below:

Tracking Signal : Moving Average Method (3 quarters)

5.00
0.00
-5.00

1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041

-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
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839
-10.000
-20.000
-30.000

Figure: Tracking Signal of five period moving average

Tracking Signal : Single Exponential Smoothing

10.00
0.00
1

11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43

-10.00
-20.00
-30.00

Figure: Tracking Signal of single exponential smoothing

Tracking Signal : Decomposition Method

20.00
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

Figure: Tracking Signal of Decomposition Method of Forecasting

21

FOR
ECA
STIN
G

Tracking Signal : Winter's Method

100.00
0.00
1

11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43

-100.00
-200.00
-300.00

Figure: Tracking Signal of Winters Method

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

15.00

TS: Linear Trend Analysis

10.00
5.00
0.00
1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041424344
-5.00
-10.00
-15.00

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

4.00

Tracking Signal : Double Exponential Smoothing

3.00

2.00

1.00

0.00
1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041424344
-1.00

-2.00

Figure: Tracking Signal of Double Exponential method of forecasting

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

22

FOR
ECA
STIN
G

Conclusion

This term paper is mainly conducted to forecast the sales of Pevisone 10gm Cream IN
Bangladesh. We have taken statistical data from Sanofi-aventis Bangladesh Limited. The
quarterly consumption of Pevisone 10gm Cream in Bangladesh is considered as equal of
sales for that medicine and a statistical analysis is conducted. The sales of Pevisone 10gm
Cream are forecasted using various models to determine which model generates the most
reliable result. This report also examines the forecasting accuracy of several models
including trend analysis, moving average, single exponential smoothing, double exponential
smoothing, trend analysis, and winters method. We have used quarterly consumption data
from Sanofi-aventis 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 timeseries analysis.

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.

A preliminary examination revealed that two simple forecasting methodologies would be

appropriate for the data series Double 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

FOR
ECA
STIN
G

We faced few problems conducting the research which are Bibliography

Many forecasts are made on a regular interval. Because forecast errors are the
Operations Management, 8th Edition, - William J. Stevenson
rule rather than exception, there will be a succession of forecast errors. By
Operation
Management
Blue
Book,Hannan
tracking
the forecast
errors
and Abdul
analyzing
themChowdhury,
can provide useful insight on
or not forecasts are performing satisfactorily.
Trendwhether
detection in control data: Optimizatio and Interpretation of Triggs Technique
Forecasting is only a part of our operations management course, so it covers only
for Trend
Analysis. - George S. Cembrowski, James O. Westgard, Arthur A. Eggert, and
a limited field of interest.
E. Clifford Toren Jr.
Availability of online books regarding forecasting is very low
Tutorial
- Meet Minitab 16, for Windows January 2007
We only used Minitab and Excel for this work, where as there are several other
And the World Wide Web, i.e.
software dedicated for forecasting, i.e. R stat. but we could not use them
because of the limitation of our technical knowhow.
http://www.duke.edu/~rnau/seasarim.htm
http://www.sanofi.com.bd/l/bd/en/layout.jsp?scat=2B2B8263-1505-4358-B9E451C279398C98#p30
http://home.ubalt.edu/ntsbarsh/stat-data/forecast.htm#rAutorModels
http://en.wikipedia.org/wiki/Autoregressive_integrated_moving_average

FOR
ECA
STIN
G

24
25