DEVELOPING DEMAND FORECASTING MODEL FOR FMCG PRODUCT

1. BY
Gagan

2. Two major focusing areas
 DEMAND FORECASTING
the activity of estimating the quantity of a product or service that
consumers will purchase.
 FMCG
Packaged consumable goods
People buy at regular interval
 Ex., Toiletries
 Soaps and detergents
 Cosmetics
 Pharmaceuticals
 Further, the packaged food products and drinks are also sold
under the FMCG, since these
 mobile phones, MP3 players, external hard drives.

3. Importance of Demand Forecasting at SKU level
efficient operations & high levels of customer service
Underestimation
Poor service
Additional ordering expenses
Overestimation
Dead stock
Losses of investments

4. FMCG
Indian FMCG Sector is expected to reach USD 33.4 billion by the year
2015.
Development by the Indian government.
Increase in the disposable income.
Uncertainty in demand

5. FORECASTING TECHNIQUES

6. FORECASTING ERROR

7. The Need of Modelling of Adjustments
61.2 % of users make regular managerial adjustments to
software generated forecasts
Experts examine the model-based forecast st,i
and can adjust it in the light of their domain knowledge.
The final forecast becomes
ft,i=st,i + at,i
where at,i - size of adjustment,
Judgmentally adjusted forecasts are
Highly subjective
Biased and inefficient
Statistical modelling of adjustments is needed to
Improve the quality of the final forecasts
by optimally handling the available information
Obtain objective interval forecasts

8. The Proposed Developments
The study aim:
Development of a demand forecasting model for products
following non-homogeneous demand pattern
Development of a comprehensive framework for demand
forecasting of FMCG products.
The proposed developments are based on Bayesian approach,
which allows to
use more flexible and robust modes
obtain exact interval forecasts
find optimal estimations according to a specified loss function

9. Research Methodology
Application of Quantitative techniques for
development of forecasting model.

10. THANK YOU…..