Professional Documents
Culture Documents
ABSTRACT
The study is targeted at developing appropriate
forecasting models for the production of Coca-Cola
products using Box-Jenkins method. This method is
based on a group of stages which are (definingestimating-diagnosing-and forecasting). The time series
of five (5) products of the company were examined
namely; Coke, Fanta, Sprite, Limca and Schweppes)
which were tagged Product 1, 2, 3, 4 and 5
respectively. Each of the products was also examined
separately on both monthly and quarterly basis. The
results of this study showed that the suitable and
efficient model to represent the data of the time series
according to AIC, BIC, MSE and RMSE criteria with
the smallest values as well as the Box-Ljung test are the
fitted models; SARIMA (0,1,0) (1,1,1) 4, SARIMA
(1,1,0) (1,1,1) 4, SARIMA (1,1,1) (0,1,0) 4, SARIMA
(1,1,0) (1,1,1) 12 & SARIMA (0,1,0) (1,1,1) 12.
According to these results, the future demand of the
products has been forecasted from 2015 to 2019 and
those values gotten showed harmony with their
counterparts in the original time series. It provided us
with the image of the reality of the expected demand in
future.
Keywords: Akaike and Bayesian Information Criteria
(AIC & BIC), Demand, Forecasting, Seasonality, Time
Series.
1. INTRODUCTION
Forecasts for the soft drink industry are made using
Volume (in gallons) and revenue (in naira).
Consumption from a volume perspective is expected to
increase as a result of an anticipated increase in
consumer spending as the recession ends, above-average
expansion of the 55-and-older age groups, faster-paced
lifestyles that demand convenience products, and rising
demand for functional beverages. A number of factors
determine demand for soft drinks; price, income,
consumers lifestyles and tastes. The absence of
www.ijsret.org
259
International Journal of Scientific Research Engineering & Technology (IJSRET), ISSN 2278 0882
Volume 5, Issue 4, April 2016
non-seasonal AR order,
order,
non-seasonal differencing,
differencing,
seasonal
seasonal
1.
2.
DATA PREPARATION
Transform data to stabilize variance
Difference data to obtain stationary
1.
2.
MODEL SELECTION
Examine data ACF and PACF
Select best model
ESTIMATION
Estimate parameters in potential models
1.
2.
3.
non-seasonal MA order,
seasonal AR
DIAGNOSTICS
Check ACF/PACF of residuals
Do portmanteau test of residuals
Are the residual White noise?
NO
OO
OO
YES
FORECASTING
Use selected model to forecast
FIGURE 1: Schematic Representation of the Box-Jenkins Methodology for Time Series Modeling [9]
Use selected model to forecast
www.ijsret.org
260
International Journal of Scientific Research Engineering & Technology (IJSRET), ISSN 2278 0882
Volume 5, Issue 4, April 2016
Where
backshift operator,
number of seasons,
Process
AR (p)
MA (q)
non-seasonal
differencing,
pre-differencing
transformation.
2.2. Identification of Potential Models: After the time
series data has been certified stationary (i.e. the mean,
variance and autocorrelations are constant). Haven
applied both seasonal and non-seasonal differences of
order 1 to make the time series data stationary
(i.e.
). Therefore, the Autocorrelation
Function (ACF) and Partial Autocorrelation Function
(PACF) of the stationary time series of the case study
were then examined. Fig. 2 shows the basic
characteristics for the identification of
in
the form of Equation (1).
degree of
Autocorrelation Function
(ACF)
Tails off towards zero
(exponential decay or damped
sine wave)
Cuts off to zero after lag p
Partial Autocorrelation
Function (PACF)
Cuts off to zero after lag p
(3)
(4)
Where
variable,
time,
number of lags,
response
predictor variable
P2
www.ijsret.org
BIC
261
International Journal of Scientific Research Engineering & Technology (IJSRET), ISSN 2278 0882
Volume 5, Issue 4, April 2016
P3
P2
P4
P3
P5
P4
P5
AIC
BIC
Finally, the models that has the least values of AIC and
BIC for each product were then selected and
summarized in Table 3.
(5)
OR
Models
A
B
(6)
C
Where;
model,
The residual
The number
The
D
E
www.ijsret.org
262
International Journal of Scientific Research Engineering & Technology (IJSRET), ISSN 2278 0882
Volume 5, Issue 4, April 2016
Versus Fits
99
1000
90
Residual
Percent
50
10
1
-1000
-1000
0
Residual
1000
120000
Histogram
1000
Residual
Frequency
4.5
3.0
1.5
0.0
-1000
-1000
-500
0
Residual
500
1000
6
8 10 12 14 16
Observation Order
Residual
Percent
1000
0
-1000
-2000
-2000
-1000
10000
0
1000
Residual
2000
85000
90000
Histogram
1
-10000
-5000
0
5000
Residual
-5000
300000
10000
315000
330000 345000
Fitted Value
360000
2000
1000
2
1
0
Histogram
Versus Order
10000
4.8
Residual
3.6
2.4
5000
7500
0
-1000
-2000
-2000
-1000
0
Residual
1000
2000
6 8 10 12 14 16
Observation Order
18
20
0
-5000
0
2500
Residual
105000
5000
1.2
-5000 -2500
95000
100000
Fitted Value
Versus Order
4
Residual
50
5000
Frequency
Residual
Percent
50
10
Frequency
2000
90
Versus Fits
90
0.0
Versus Fits
99
20
10
18
132000
Versus Order
6.0
6
8 10 12 14 16
Observation Order
18
20
www.ijsret.org
263
International Journal of Scientific Research Engineering & Technology (IJSRET), ISSN 2278 0882
Volume 5, Issue 4, April 2016
Residual
90
Percent
Versus Fits
99
50
0
-10000
10
1
-20000
-20000
-10000
0
Residual
10000
-10000
Histogram
10000
Versus Order
10000
16
12
Residual
Frequency
0
Fitted Value
0
-10000
4
0
-20000
-18000
-12000 -6000
Residual
6000
1 5 10 15 20 25 30 35 40 45 50 55
Observation Order
Versus Fits
99
0
Residual
Percent
90
50
10
1
-10000
-5000
-10000
-40000
5000
Residual
Histogram
-20000
0
20000
Fitted Value
40000
Versus Order
0
12
Residual
Frequency
16
-5000
4
0
-8000
-6000
-4000 -2000
Residual
2000
-10000
1 5 10 15 20 25 30 35 40 45 50 55
Observation Order
www.ijsret.org
264
International Journal of Scientific Research Engineering & Technology (IJSRET), ISSN 2278 0882
Volume 5, Issue 4, April 2016
3. Discussion of Results
265
International Journal of Scientific Research Engineering & Technology (IJSRET), ISSN 2278 0882
Volume 5, Issue 4, April 2016
REFERENCES
. The demand forecast of Period 21 was made
Model-E (monthly) was used to make forecast for
Products 1, 3 and 5 after the model has been fitted
as
. The
made
demand
forecast
of
Period
21
was
. Note
CL).
3. Conclusion
The study mainly intended to develop forecasting
models using Box-Jenkins Autoregressive Integrated
Moving Average (SARIMA) to make future predictions.
The statistical tests show that the time series of the
monthly and quarterly Coca-Cola production of Nigerian
Bottling Company (NBC), Enugu is not stable and has
seasonal changes. To ensure stability in the series,
firstly, the general trend was removed using differences
of the first lag, second, the seasonal differences of lag
12. The most appropriate models were chosen using the
balancing standards (the smallest value of each: AIC,
BIC, MSE and RMSE as well as the Box-Ljung test).
The models developed were able to replicate the
stochastic process that generated the time series thereby
eliminate other factors that might affect the demand of
these products as demonstrated in Fig. 8-12. Coca-Cola
products have become leading products in soft drink
industry, adopting the results of these findings would
help the company to meet future demand of their
products and customers satisfaction. Effort should be
made to have a centralized forecasting method to
www.ijsret.org
266